Aircraft Registries: What are the Tax Implications?

Are some aircraft registries more advantageous than others? Should taxation be the leading reason for choosing where to register your jet? Matt Harris asks Chris Water and Marianne Domaille about the Guernsey Aircraft Registry…

Matt Harris  |  05th July 2019
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Matt Harris
Matt Harris

Matt Harris is Commissioning Editor for AvBuyer. He is an experienced General and Business Aviation journalist...

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Private jet registrations

Are some aircraft registries more advantageous than others? Should taxation be the leading reason for choosing where to register your jet? Matt Harris asks Chris Water and Marianne Domaille about the Guernsey Aircraft Registry…
Guernsey’s 2-REG began operations in December 2013 following eighteen months of intensive development. Initially three local business aircraft were added. Since then, 2-REG has experienced rapid growth, according to Chris Water, sales and marketing manager.
“The milestone 500th registration was reached in April 2019,” he says. “Today the registry is intensively utilized by lessors for transferring commercial aircraft and fluid aircraft types. The Airbus A320 is among the more common jet types to be found on the Guernsey register, and we even have a couple of A380s.
“All the while the number of registered business aircraft and AOCs continue to increase incrementally.”
Guernsey, located in the English Channel, is an independent jurisdiction governed by its own Parliament – the States of Guernsey – but is dependent on the UK for the administration of foreign affairs and defense. As an established international finance center built on political stability and low taxation, it offers a firmly established fiscal and regulatory environment.
To some, low taxation may be cause for suspicion that Guernsey’s 2-REG could be used as a means of tax avoidance among the ‘super wealthy’.
“Actually, where the aircraft is registered has little bearing on its owner’s tax liabilities and reporting obligations,” clarifies Marianne Domaille, CEO of Guernsey-based Private Office Professionals.
With extensive experience working in the fiduciary, trust and corporate service provider industry, estate planning and corporate governance, Ms. Domaille also has specialist knowledge of the aviation industry including management of Guernsey AOCs and aircraft registration.
“It is not generally possible to achieve tax mitigation from the pure registration of an aircraft because tax authorities look at other elements – such as the ownership structure; where management and control is exercised; where the aircraft is flying; and if it is being used for private, business or commercial purposes.
“There are more influential factors which will override where an aircraft is registered to determine the tax position,” she elaborates.
Aircraft Registries: They’re About More Than Tax

Domaille suggests it would be unwise to base aircraft registry decisions on tax alone. “Guernsey is indeed a great choice to set up a holding structure and register your aircraft because corporation tax is typically 0%. There are, of course, some operators who will take a short-term view and only look at which jurisdiction has the lowest current tax regime.
“However, others take a longer-term view and consider the impact of changes to the applicable tax regime in the future (i.e. the impact of Brexit on the UK’s tax framework).
“Much more important than tax, however, is to check that the choice of aircraft registration will not prevent the aircraft from flying where it needs to go.”
Among the various advantages offered by Guernsey’s aircraft register is its perception as a neutral, politically stable jurisdiction that has been whitelisted as a transparent and well-regulated offshore finance center. It is also regulated by Guernsey’s own office of the Director of Civil Aviation (DCA).
Guernsey’s acceptance of regulatory systems from the major aviation jurisdictions within North America and Europe ensures that 2-REG aircraft have a reputation of quality that is now familiar to aviation and customs authorities worldwide.
Aircraft Registries: What are the Tax Considerations?

Though there is clearly more that drives an aircraft registry choice than tax, where tax is part of a wider decision, what are the main issues an aircraft owner will need to consider?
Domaille offers an example: “An aircraft flying privately into, and around, Europe may be subject to VAT. In that case, the owner may decide to use a European registry in a jurisdiction where the VAT rate for aircraft importation is lower.
“The nature of the tax obligations on an owner will depend predominantly on where the aircraft is flying and the purpose that it is being used for,” she highlights.
Ultimately, owners considering which registry would make the best sense for their future operations would be well advised to analyze their projected airplane usage, consulting a specialist who can advise them on the tax and regulatory specifics of the jurisdictions they plan to operate in.
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