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25 July 2007
Bermuda has been predominantly known for its thriving insurance market, but other areas of business have seen increased activity, thereby helping to reinforce Bermuda as a premier offshore jurisdiction. The registration of aircraft in Bermuda is one such sector.
The Bermuda Register of Aircraft came into existence in 1931. Since then, there have been significant changes in air travel and growth in the number of aircraft in operation. There are currently almost 300 aircraft registered in Bermuda in both the public and private categories. The aircraft registered vary significantly in size, ranging from small private to large commercial aircraft.
While the majority of aircraft registered are private (eg, Gulfstream, Bombardier and Dassault), aircraft may also be registered through leasing structures utilized by commercial airlines, provided that a formal agreement is entered into between the Bermuda government and the foreign state exercising de facto regulatory oversight. Multinational companies or high net-worth individuals own many of the aircraft registered in Bermuda.
Bermuda is a Category 1 aviation regulatory authority, as rated by the US Federal Aviation Administration. Owners and operators benefit as Bermuda accepts all reputable international standards relating to airworthiness and crew licences. In addition, the Bermuda nationality and registration mark (VP-B) has the advantage of relative anonymity.
The Bermuda Department of Civil Aviation has an excellent reputation for maintaining high safety standards while remaining approachable and responsive. Certificates of airworthiness and registration are issued within a short timeframe while maintaining stringent standards. Aircraft registered in Bermuda may be operated anywhere in the world (excluding war zones, among other things).
No Bermuda income, withholding, capital gains, transfer, inheritance or estate duties are payable by a Bermuda company or its shareholders, other than those ordinarily resident in Bermuda. A Bermuda exempted company is likely to be the vehicle owning a Bermuda-registered aircraft in order to meet the qualification requirements pursuant to legislation and to limit liability associated with operation of an aircraft. The Bermuda exempted company will customarily receive a tax assurance from the minister of finance confirming that in the event of the enactment of legislation imposing tax, such tax shall not be applicable until March 2016.
Bermuda has seen a significant number of registrations on behalf of Russian clients. This is largely as a result of the relaxation of Russian customs limitations applicable to western-built equipment, as well as significant fleet growth and replacement by established and new Russian operators. As a result of easier access by Russian operators to new western-manufactured aircraft, the financing of Russian-operated aircraft by European banks, in particular, has surged.
Bermuda provides benefits to both the operators and the financial institutions that take security over the aircraft in the form of, among other things, an aircraft mortgage registered in Bermuda.
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