Venha voar conosco:Venha voar conosco:

Aspectos legais e fiscaisAspectos legais e fiscais da aviação executivada aviação executiva na região: na região: comocomo os proprietáriosos proprietários e locadorese locadores podem se beneficiarpodem se beneficiar

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Lincoln D. Gomez LL.M.

Come fly with us:(us=Aruba)

Legal and fiscal aspects of business aviation in the region: How owners and lessors can benefit

Lincoln D. Gomez, LL.M., LL.M.

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AIRCRAFT AND ENGINES MUST BE FINANCED

� Aircraft may run up to $150 million

� Engines may run up to $20 million

� Different players: (i) Manufacturer/Seller; (ii) Owner/Buyer/Lessor of aircraft; (iii)Bank; (iv) airline operator/sublessor; and (v) security trustee

� Manufactures needs to get paid

� Owner/Lessor needs security interests in airplanes and engines(Mortgages and pledges, etc.)

� Operator wants to fly

� Security wants to be able to enforce and serve the note

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EXISTING PROBLEMS INAIRCRAFT/ENGINES FINANCING

� Security interests in engines are not recognized in other states

� Legal insecurity: economic risk as aircraft/engine is arrested abroad

� Makes leasing unnecessarily more expensive

� High interest to pay to lessor/financier $$

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PROBLEMS OLD CONVENTIONS

� Chicago Convention 1944

� Convention on the International Recognition of Rights in Aircraft Convention ofGeneva, 1948

� Valid in many states, but it only provides under very specific circumstances a verylimited solution

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NEW CONVENTION SOLVES THE PROBLEMSTHE CAPE TOWN CONVENTION (2001)

� The convention on international interests in mobile equipment (CIME)

� The aircraft equipment protocol (AEP)

� Other future protocols : trains, satellites, ships, containers, oil platforms

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THE PURPOSE OF THE CIME/AEP

� It becomes easier and cheaper for the airlines and other operators to acquiremodern and safe aircraft equipment

� The CIME/AEP is designed to keep the interests of both the financiers and theairlines in mind

� It reduces the financing costs of aircraft by billions of dollars per year at globallevel

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THE APPLICATION OF THE CIME/AEP

� The CIME/AEP establishes an ‘international interest’ (national security interests inaircraft equipment)

� The serial number of the aircraft frame or engine is entered into the InternationalRegistry in Ireland to make it known to the rest of the world; 24/7 and cheap

� It secures the rights of financiers and lessors

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ARUBA AS A SIGANTORY TO THE CIME/AEP

� Kingdom of the Netherlands has accepted the CIME/AEP on May 17th, 2010, forAruba

� Entered into force on September 1st, 2010

� Pet project of Gomez & Bikker Aviation Finance Practice Group

� Further customization of Aruba aviation finance laws to the needs of the industry

� Strong pro owner/lessor regime through declarations made

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THE OTHERS…….

� ARUBA VIS-À-VIS BERMUDA, Caymans, Channel Islands and other competitors

� They cannot independently accept Cape Town Convention; they must wait for theU.K. to do so first

� Aruba has a unique competitive position

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ADVANTAGES FOR ARUBA

� Aruba is strong in region of the Americas and in the global off-shore financingindustry

� Cape Town Convention creates legal certainty/less economic risk for financiers

� It is proven that today the financiers and lessors require that aircraft that areoperated in other states are registered and financed in Cape Town states

� Many foreign operated aircraft are already registered and financed in Aruba

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TAXATION

� Fiscal reform per January 1st, 2006

� Aruba introduces fiscal transparency

� Aruba Financial Center involved in fiscal reform & made sure that aviation financeindustry was safeguarded in this process

� To protect existing structures and to promote future structures

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TAXATION: CHECK THE BOX

� Aruba SPV has 30 days for incorporation to elect fiscal transparency vis-à-vis taxauthorities

� Aruba SPV has 30 days for incorporation to elect non-resident status vis-à-visCentral Bank of Aruba

� Upon this election and compliance of other requirements the Aruba SPV in Arubawill not be subject to: (i) corporate income tax; (ii) turn-over (sales) tax; (iii)dividend tax; and (iv) withholding tax on interest, royalty, technical service andlease payments

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BENEFITS FOR OWNERS

� Civil law country with modern aviation finance oriented legislation

� Cape Town declarations crafted for protection of owners & lessors

� ICAO Category I

� Tax neutrality

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Cape Town in the (L) America

• Chile

• Colombia

• Cuba

• Mexico

• Panama

Brazil = pending

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100%

HoldingCo

Brazil

Aruba

Lease

Lessee

(or sublessor)

OwnerCo/Lessor

NOSSAS PRAIAS SÃO MUITO LEGAIS TAMBÉM! ...VENHA VISITAR-NOS EM BREVE

…….www.aruba.com

THANK YOU…

Lincoln D. Gomez

lincoln@gobiklaw.com

www.gobiklaw.com

www.lincolngomez.com

http://www.linkedin.com/in/lincolngomez

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