Ireland: The Logistics Behind Financing Aircraft In Ireland

Last Updated: 9 January 2019
Article by Kevin Butler

In order to even be in the aircraft financing game, you need to understand the tax treaties that exist where you're doing business, and if they're compatible with this number one location for aircraft leasing.

Before we examine the ins and outs of air finance in Ireland, it's important to understand why the Emerald Isle has such a high industry pedigree. It certainly hasn't been left to luck.

Here's a quick backgrounder.

The aircraft industry 'cluster effect' in Ireland began in the late 1970s with the establishment of Guinness Peat Aviation. Successive Irish governments worked hard to enhance and grow the local aviation industry. The approach taken in tax treaty negotiations over the past 50 years is one that ensures the payment of aircraft leases/rentals will maintain a very favourable withholding tax over other jurisdictions. Even an economic powerhouse such as China, which is currently trying to build its air finance hub, will struggle to match the depth of treaties for aircraft lessors that Ireland has built up over decades. Ireland has kept its eye on the prize of supporting its local aviation industry and retaining its number one position.

So what's key to know when it comes to financing aircraft in Ireland?

Can you be in the game?

Your jurisdiction's tax structuring needs to be compatible in order to set up here. For example, if you're leasing aircraft into Indonesia, you would typically choose to set up in France because Ireland doesn't have a tax treaty with Indonesia. Similarly, Ireland doesn't have an optimal agreement with Australia, so it's common to lease aircraft into that market through a UK treaty instead. The multi-stop approach is also proving increasingly popular.

You can choose to lease or buy

Ireland accommodates both air finance approaches, and the choice typically comes down to the airline itself, and its balance sheet.

A fast-growing airline opening up new routes may need to get its hands on a large number of aircraft quickly. And it probably doesn't have the balance sheet to support the capital outlay, so it will go to the leasing market. The other reason an airline might look to lease via the capital markets, is if its credit rating isn't good enough to obtain extra credit from the banks (we've seen a number airlines file for bankruptcy just in the past two years). A leasing company has the experience and knowledge to confidently take on a higher credit risk because it's an asset-backed security, and it knows how to make sure the asset is correctly managed over the course of its life. If the leasing company needs to take back the aircraft, it knows how to do so swiftly, and redeploy it equally as swiftly to another airline.

So, why buy an aircraft then? The key consideration as an airline, is whether you'd be able to get the capital markets or the banks to provide cheaper funding to you over the rates a leasing company will charge.

Through Ireland, your financing model will be optimal

This is regardless of the financing model you choose. From a purely Irish point of view, we've seen companies come in with bank debt, through fund structures, unsecured and secured debt. We've seen virtually every model possible, and they're structured to be quite efficient regardless.

You'll find experienced staff

Ireland's long history in aviation finance means we have plenty of senior staff available. They've gone through both economic recessions and boom cycles over the decades. It means they understand what happens within the industry in a stressed environment, and they know how to manage that stress in a way that means your leasing platform won't lose money.

You have more than just the personnel-clustering effect in Ireland; all the complimentary infrastructure that you need is here too. From Irish law and accounting firms to corporate service providers such as ourselves. We have a large aviation practice and are able to support the industry in a very strong manner.

There are no political surprises

Both politically and legally, Ireland is very stable. We adopted the Cape Town Convention in 2017, and both lessors and buyers can be confident that a change of government won't result in a loss of their asset. Ireland also enables you to very freely move your asset around the world.

We can show you where to begin

If you're a brand new lessor setting up in Ireland, you're going to need to make sure that your tax advice is solid, and that you can get your platform up and running efficiently. The experienced team at TMF Ireland can provide you with business scalability and introductions to tax, legal and other industry advisors.

We're here to support you from day one, with capital markets and aviation finance services that are tailored to meet your requirements. Our experienced team can help you with structure setup, purchasing of assets and the subsequent release to airlines.

We also provide essential compliance services in 'phase two' of your operations - making sure you understand the nuances of the lease documentation and that your tax obligations are properly managed.

Need more information? Contact us today.

Learn how we help our global clients to adapt to local rules and regulations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions