Brazil, Basch & Rameh updates

Aviation

Contributed by Basch & Rameh
Changes in Brazilian withholding tax
  • Brazil
  • 15 January 2020

The Federal Government recently issued an executive order with the potential to change the tax treatment of commercial aircraft leasing. Subject to that determination, the executive order sets new rules for commercial aircraft and engine leases. However, the executive order has created considerable confusion and doubts in the aviation sector.

Aircraft repossession in bankruptcy – Brazilian judiciary's inconsistent treatment of lessors
  • Brazil
  • 28 August 2019

A number of recent aircraft repossession actions have demonstrated that a majority of judges have correctly recognised lessor rights to repossession in the face of apparent lease agreement defaults. However, these decisions have not clearly cited the Cape Town Convention as their basis. The Brazilian judiciary's failure to unify repossession actions against a bankrupt lessee in a single court has meant that some lessors are subject to minority view decisions that can be upheld on appeal.

Aircraft repossession: judiciary fails to uphold local law or Cape Town Convention
  • Brazil
  • 12 June 2019

Following developments earlier in 2019, aircraft repossession has continued to be in the spotlight – yet again with regard to the Oceanair Linhas Aéreas SA (commonly known as 'Avianca Brazil') bankruptcy and, in particular, the experience of lessors that sought repossession of leased aircraft therefrom. In this case, and contrary to Avianca Brazil's pre-bankruptcy experience, a bankruptcy court failed to uphold the express provisions of the Bankruptcy Law 2005 and the Cape Town Convention

Recent developments in aircraft repossession
  • Brazil
  • 16 January 2019

In respect of four aircraft that were recently repossessed before Avianca Brazil obtained bankruptcy protection, the Brazilian judiciary and civil aviation agency procedures worked reasonably well and Brazil's overall performance complied with its obligations under the Cape Town Convention. While all four aircraft were exported and de-registered within approximately two weeks, Brazilian customs authorities must still reassess the current export authorisation procedure.

Changes to registration requirements: why aircraft financiers should be on alert
  • Brazil
  • 20 June 2018

A tax regulation that was promulgated in 2016 has taken effect in ways that are now affecting aircraft lessors and lenders to Brazilian carriers, including by imposing requirements concerning the identification of lessor entities' ultimate beneficial owners and increasing the document disclosure requirements on lessors and lenders in cross-border aircraft finance transactions. While the full impact of the new rules is still unclear, lessors and lenders to Brazilian operators should prepare to comply.


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