FRANCE Law and Practice Contributed by: Yves Hénaff d’Estrées, HENAFF D’ESTREES
2.1.6 Licensing/Qualification of Lessors A lessor does not need to be licensed or otherwise qualified in France to do business with a domestic lessee. 2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law No mandatory terms are required in a lease (or ancil - lary documents thereto), governed by either English or New York law, that would not typically already be included. 2.2.2 Tax and Withholding Gross-Up Provisions Tax and other withholding gross-up provisions are permissible and enforceable. 2.2.3 Parts Installed or Replaced After a Lease’s Execution A lease can cover parts that are installed or replaced on an aircraft or engine after execution of the lease, if this is clearly provided for in the lease agreement. 2.2.4 Risk of Title Annexation The lease should be carefully drafted in order to mini - mise the risk of title annexation in respect of aircraft engines installed on an airframe, and it is highly advis - able to affix fireproof plates on the engine mentioning the name of the engine’s owner and the name of the lessee. 2.2.5 Recognition of the Concepts of Trust/Trustee In France, the concept of a trust and the role of an owner-trustee are recognised under a lease. 2.3 Lease Registration 2.3.1 Notation of Owner’s/Lessor’s Interests on Aircraft Register The French aircraft register is an owner’s register. The legal owner, not the beneficial owner, is registered as the aircraft owner on the register. Only dry leases may be registered. When a lease is registered, the aircraft’s registered owner will no longer be jointly liable with the lessee for damages caused by the leased aircraft. The lessee alone will be liable, unless it can be proved that the owner has been negligent.
may be due, subject to several exemptions, includ - ing an exemption for companies where at least 80% of their flights are outside French territory. A list of French exempted companies is published each year by the tax administration. The sale of an ownership interest between foreign persons in a foreign entity that owns an aircraft or engine, including where title to such aircraft or engine is transferred while it is located in France, or in transit, does not in itself create any French tax obligation regarding the aircraft or the engine owned by the entity.
2. Aircraft and Engine Leasing 2.1 Overview 2.1.1 Non-Permissible Leases
All types of operating/wet/finance leases or leases concerning only engines or parts are generally per - missible and recognised. 2.1.2 Application of Foreign Laws Foreign law may apply to an asset situated in France where there is a lease between a foreign party and a domestic party. 2.1.3 Restrictions Concerning Payments in US Dollars There are no material restrictions imposed on domes - tic lessees making rent payments to foreign lessors in US dollars. 2.1.4 Exchange Controls There are no specific exchange controls that could prevent rent payments under a lease, or any repatria - tion of realisation proceeds, if such lease is enforced by a foreign lessor. 2.1.5 Taxes/Duties Payable for Physical Execution of a Lease There are no taxes/duties payable for physically exe - cuting a lease in France with regard to a domestic party, or as a consequence of an original or copy of a lease being brought to France either physically or electronically, if the aircraft is not located in France at the time when the lease is executed.
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