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No taxes or duties are payable in Bermuda as a consequence of the execution of an aircraft or engine sale agreement, unless the agreement is physically executed in Bermuda and one of the parties is a local Bermuda company, in which case stamp duty would be payable. If the aircraft is physically located in Bermuda when the sale agreement is executed and the purchaser is a Bermuda entity, customs duties may be payable as it could be seen as importation of the aircraft.
It is not necessary for a sale agreement to be translated, certified, notarised or legalised in order to be enforceable against a Bermuda company in Bermuda.
The norm is for a Bill of Sale to be entered into to transfer title to an aircraft or engine, although usually there is also a purchase and sale agreement setting out the commercial terms of the sale. Whether such title transfer includes all installed parts (like an APU) would depend on the terms of the contract.
The sale of the ownership interest in an entity that owns an aircraft or engine would not necessarily be recognised as a sale of such aircraft or engine itself. The sale and purchase agreement relating to the entity would need to specifically cover transfer of title to the aircraft or engine to the purchaser.
A bill of sale that is governed by either English or New York law in respect of the transfer of title to an aircraft and physically delivered in Bermuda would be recognised, provided it is enforceable under its governing law.
There are no minimum substantive requirements that must be satisfied for a bill of sale to be recognised in Bermuda.
It is not necessary for a bill of sale to be translated, certified, notarised or legalised in order to be enforceable against a domestic party.
It is not necessary for a bill of sale to be registered or filed, nor is it subject to any consent from any government entity.
There are no government applications or consents required as a pre-requisite to the execution and delivery of a bill of sale in relation to an aircraft or engine registered in Bermuda.
No Bermuda taxes or duties are payable in connection with executing and/or delivering a bill of sale or consummating the sale of the ownership interest in respect of an aircraft or engine while said aircraft or engine is located in Bermuda, over international waters or in transit to/from Bermuda. However, stamp duty may be payable if the bill of sale is physically executed in Bermuda.
This article was first published in Chambers and Partners.