APPLEBY

Having the right connections is
important. Wizh offices in he offshore
aircraft registry locat ons of Bermuda,
the Cayman Islands and the Isle of

Man our team is perfectly positioned

to assist with the complexities of aircraft
ownership. Knowledgeable legal and
fiduciary experts with the right

cornections. Appleby Aviation.

applebyglobatcom

 

 
  

 

THE RIGHT PEOPLE. THE RIGHT PLACES.
THE RIGHT CONNECTIONS.

 

 

 

Bermuda
British Virgin Islands
Cayman Islands
Guernsey

Hong Kong

Isle of Man
Jersey

London
Mauritius
Seychelles
Shanghai
Zurich

Offshore Legal. Fiduciary
Administration Services

Proposal
the provision
services
r o l regarding
i
p vi o of administration
mi tr
ce in
respect
to import
a corporate/private
aircraftt
s
t of
o a new
e Company
o
m
o o a
i
into the EU.
We understand that a client of Rawlinson & Hunter Limited, (“the Client”) has purchased a
Challenger 605 (“the Aircraft”) which has been registered on the UK aircraft register. The Client
intends to import the Aircraft through an Isle of Man Company (“NewCo”).
The Aircraft G-???? will be imported into the EU to obtain free circulation. The importation of the
Aircraft is evidenced by an EU Import Certificate (“C88A”) being issued which should be retained
onboard the Aircraft for inspection by EU Customs officials.
When the Aircraft is imported into the EU, VAT will be payable at the date of importation. The need
to fund the importation VAT can be offset by the establishment of a VAT registered leasing
business in the Isle of Man and the use of a VAT deferment account together with appropriate
structuring.
The NewCo would look to enter into a Dry Lease with the current BVI owner (“OwnerCo”) for the
use of the Aircraft. The NewCo will then enter into a further Dry Lease with TAG Aviation for the
use of the Aircraft. The Dry Lease would need to be charged on a commercial basis. This would
allow NewCo to register for VAT. The terms of the Dry Lease would be accepted by Isle of Man
Customs & Excise as part of the registration process to ensure that it is on a commercial basis.
Following the VAT registration, NewCo would have a right of recovery in respect of the VAT due on
importation to the EU. VAT registration must be completed prior to the importation of the Aircraft
and an Economic Operator Registration and Identification (EORI) number obtained.
By working with Ernst & Young LLC as a VAT specialist and through the use of their dedicated VAT
Deferment Account together with appropriate structuring, the need to fund the VAT would not be
required. The VAT due would effectively be paid and recovered at the same time.

I1953245.1

 Following the VAT/EORI registration of NewCo, the Aircraft would need to physically visit the Isle
of Man, arriving from outside the EU, to be imported. This will involve a short stay, normally less
than 2 hours. Once the Aircraft has landed, Isle of Man Customs and Excise would be notified and
the C88A would be issued. The current intention is for the importation to take place on Saturday 19
January 2013.
The C88A would detail the importation value of the Aircraft together with the amount of VAT that
has been paid on the Aircraft. This will ensure that the Aircraft has free circulation within the EU.
Should the Aircraft be inspected by any EU customs official, the C88A will need to be presented to
them to confirm the VAT status of the Aircraft.
Structures that are accepted by Isle of Man Customs and Excise must operate as a business and
the terms of the Dry Lease must be complied with. The payment of the rental charges for the use
of the Aircraft must be settled in a timely manner to ensure that the structure continues to
operate as a business and ensure that the VAT status of the structure remains valid. The funds
received by NewCo can be re-assigned to another group Company as required.

Please note that the above is intended as an outline only of the proposed structure and not as formal advice. The structure will be established through the
use of a qualified VAT Specialist. Appleby are not qualified to provide any form of tax or VAT advice.

I1953245.1

 New
structure
e Isle
I e of Man Company
o p n Aircraft
A
re – Summary
ry
Based on the information that we have received, a summary of the costs for the proposed
structure is as follows:
Initial
n ia fees
e
Incorporation
F
– (detailed
overleaf
n rp ra n off NewC
New
wCo and
n initial Setup Fees
e
e e )::

£3,945*
4

Draftin
under
Isle
ting of a Dry Lease
e
n
sl of
o Man
Ma Law
L between
w e OwnerCo
Ow
and
:
n NewCo:
NewCo
e

£1,500
0

Drafting
under
Isle
tin of a Dry Lease
e
n
sl of
o Man
Ma Law
L between NewCo
N
and
n TAG
A Aviation:
A t

£1,000
0

Aircraft
Fees using
ircra Importation
p rta
sin Ernst & Young LLC:

£10,000
0

Annual
Fees
n
Annual
Responsibility
Fees
n
e o
e – (detailed
e overleaf):

£6,000
0

Annual
Administration
fees
on
time sp
spent bases (capped):
n
m
f
n a tim

£6,
£6,000
0

The assumptions that we have applied are as follows:
•

Incorporation of a new Isle of Man Company under the 2006 Act using standard
documentation;

•

Provision of all services required in respect of the Company including the provision of a
Corporate Director;

•

Provision of Financial Statements, maintaining financial records, all VAT reporting and local
tax compliance;

•

Establishment of a dry leasing structure based on VAT advice to allow the recovery of the
purchase VAT on the Aircraft.

I1953245.1

 New
Aircraft
structure
N Isle
I e of Man Company
o p
A
t re
Detailed
off services to
il d breakdown
k
o be provided..
Standard
Setup and
n
a Fees
e
Our fee for the incorporation of an Isle of Man company

£1,500

Collection of client due diligence documentation

£1,000

Liaising in respect of VAT and EORI registration

£250

Establishment of a Bank Account

£750

Preparation of Minutes and respective authority for VAT Advice

£250

Government incorporation fee

£195

Aircraft
ircra Dry Lease
a
Drafting of a Dry Lease, governed by Isle of Man Law,
for the leasing of the Aircraft between OwnerCo and NewCo.

£1,500

Drafting of a Dry Lease, governed by Isle of Man Law,
for the leasing of the Aircraft between NewCo and TAG Aviation.

£1,000

Our fees for this process includes setting up the statutory books and registers, reviewing and
compiling all KYC/due diligence materials, completing compliance checks for each relevant
stakeholder, all related correspondence, time spent liaising with you and updating our own
systems with records we are required to hold.
EU
for the Aircraft – Ernst
U Importation
I p rta
n & Young
u LLC
L
Inititial advice on structure including VAT liabilities,
place of supply and documentation required:

£1,000

Managing the importation of the Aircraft:

£3,250

Use of an approved VAT deferment account:

£5,000

Initial advice, completion and submission of a VAT registration
application, EORI application and first subsequent VAT return:

The above fees shall be charged separately by Ernst & Young LLC.

I1953245.1

£750

 Standard
Annual
n
u Responsibility
sp n
ity Feess
Fiduciary Responsibility Fees

£2,500

This fee includes the provision of the following services:
•

Registered Office Facility

•

Preparation and Filing of Company Annual Return (excluding disbursements)

•

Annual Compliance Fee

•

Provision of the services of a Registered Agent

Standard
Annual
n
u VAT, Tax
a and Accounts
co n
•

Preparation and filing of quarterly VAT returns

£1,000

•

Preparation of annual Financial Statements

£1,000

(subject to the sole activity relating to the aircraft)
•

Registration for tax purposes/preparation of annual tax returns

£500

Standard
Professional
n
ro e
l Directorship
cto ip Fees
e
Provision of the services of a Director per annum, per Director

£1,000

(NB A 2006 Act Company may have a licensed Corporate Director which, unless requested
otherwise, we would look to appoint)

Known Annual
A
l Disbursements
rse
ts
Isle of Man Government Annual Return Filing Fee

I1953245.1

£360

 Hourly
o r Rates
a
In addition to the above fees, our standard time charges would be applicable in respect of any
further work undertaken on the Company post the take-on process. Our standard hourly time
charges within Appleby Trust (Isle of Man) Limited are as follows:
Director

£375

Senior Manager

£310

Manager

£250

Senior Administrator

£175 - £195

Administrator

£100 - £110

**Our Annual Administration Fees are capped and subject to a review in 12 months.

Isle
sl of
o Man
a Companies
C m
There are two forms of Isle Of Man Company currently available for incorporation, the 1931 Act
Company and the 2006 Act Company. For the majority of clients the 2006 Act Company is the
preferred vehicle due to the reduced administration requirements and flexibility afforded.
Therefore, unless requested otherwise, we would also recommend this form of company for the
NewCo, on the basis of the information which has been made available to us at this stage.

Please note that all of our fees quoted in this Proposal are subject to VAT, where applicable, at the
prevailing rate, currently 20%. VAT does not apply to Government fees.
Forr more
please
contact:
m re information,
o a
e
c t t:
Allister
l e Crossley
Manager
g
Appleby
(Isle
p b Trust
T
I e of Man) Ltd
L

Brian Jo
Johnson
n
Director off Operations,
s,
Appleby
Limited
p b Aviation
A
d

Tel: + 44
647
4 (0)
0 1624
1
6 960
Email: ACrossley@applebyglobal.com
A ro e
y l b l m

Tel:
+ 44
647
4 (0)
0 1624
1
6 640
Email: BJohnson@applebyglobal.com
BJo so @
l b go a. o

I1953245.1

 Isle
sl of
o Man
a
•

The Isle of Man is a self-governing British Crown Dependency with its own government and laws.
The Island is not part of the United Kingdom and has no representation in the British Parliament.
The British Crown is ultimately responsible for the Island’s external relations;

•

The Isle of Man is not part of the European Union, but it has a limited relationship with the Union
under Protocol 3 to the United Kingdom’s Act of Accession in 1972. This allows for the free trade of
agricultural and manufactured products across the EU. The Isle of Man is part of the European
Common Customs Area;

•

The Isle of Man has world-class telecommunications infrastructure and services which cater for the
full range of modern corporate voice and data communications requirements;

•

The Isle of Man remains a jurisdiction committed to maintaining the highest of standards in terms
of regulation and has led the way in respect of the conclusion of Tax Information Exchange
Agreements (“TIEAs”). TIEAs are in force between the Isle of Man and a number of jurisdictions
including the USA and China;

•

The Isle of Man is the most preferred location for non-UK companies wishing to incorporate when
listing on the London Stock Exchange’s Alternative Investment Market (AIM). For instance, 75% of
the Indian companies listed on AIM are incorporated on the Island;

•

The Isle of Man retains ‘AA+’ ratings from Standard and Poor’s and ‘AAA’ from Moody’s;

•

The Island's banking industry is dominated by subsidiaries or branches of the main UK clearing
banks, although there are many other UK and foreign banks and also branches and subsidiaries of
major UK building societies. Whilst the Island's currency is sterling, deposits are accepted in all
major currencies of the world. The banking system is similar to that in the UK. Current accounts,
deposit accounts and all other services offered by UK and international banks are also offered from
the Isle of Man. Interest rates are comparable to those prevailing in the London Money Market.
Competitive returns are available in all currencies; and

•

The standard rate of corporate income tax is 0%, except for two defined activities which are taxed at
10%, namely licensed banking business; and corporate income from Manx land and property.

I1953245.1