IN146 - The Isle of Man Aircraft Register

The Isle of Man Government has announced that it is launching an aircraft register in the late spring of 2007.

The aim of the register is to attract owners of private, and corporate aircraft to conduct their aviation business in the Isle of Man. The register is directed towards the high quality end of the privately owned, business jet aircraft industry, with the objective of establishing a respected register in an offshore location, convenient to Europe.

Regulation

The standard off regulation required for the Isle of Man register has been carefully considered. Regulation needs to be at an appropriately high level or problems can arise.

Why Consider the Isle of Man for the Registration of Aircraft?

The Isle of Man recognises the opportunity for a European offshore registry in a well-regulated and well-respected jurisdiction. The Isle of Man provides:

• Legislation designed in tandem with the UK CAA (United Kingdom Civil Aviation Authority). The legislation is similar to equivalent UK aviation law.
• Limited time zone differentials compared to countries in Europe.
• A convenient European location.
• A stable legislative process.
• An established, highly regarded legal system.
• Government fees which are set at a level to support the industry rather than to make excessive profit.
• The availability of strong, professional corporate service providers such as Dixcart.

What is the Taxation Position?

An Isle of Man company can be used to hold the title to the aircraft. As long as the activities of that company are limited to non Isle of Man business, the tax liability will be zero, even if the aircraft is available to be operated privately or commercially.

VAT

As in the case of a yacht owning company, an aircraft owning company can only be VAT (value added tax) registered if the aircraft is to be leased to another company for them to operate privately or commercially.

VAT on aircraft is split into two broad bands; weights below and weights above 8,000 kilos.

For an aircraft with a take-off weight of less than 8,000 kilos, the purchase, sale and leasing of the aircraft are standard-rated. VAT at 17.5% must therefore be charged if the purchase, sale and operation take place in the Isle of Man or UK.

For aircraft with a take-off weight over 8,000 kilos, the purchase, sale and leasing of the aircraft are zero-rated. VAT at 0% is therefore applicable if the purchase, sale and operation take place in the Isle of Man or UK.

It must be noted that if the purchase, sale or operation of the aircraft takes place in another EU member state there may be a requirement to register for VAT in that EU member state.

Charges

The draft Scheme of Charges for the Isle of Man aircraft register is designed to be fair and reasonable. The Scheme is expected to receive Tynwald approval in April 2007.

The explanation of registry charges below, relates to:

• Licensing
• Registration
• Airworthiness
• Operation of Aircraft
• Miscellaneous
• Investigations and inspections

Summary and Additional Information

The Isle of Man aircraft registry offers a real opportunity for aircraft registration, in particular for privately owned business jet aircraft. Not only is the Isle of Man a well-respected jurisdiction but a number of tax efficiencies are also available.

For additional information please contact Simon Kelly of Dixcart Isle of Man or speak to your usual contact.