HUNGARY Law and Practice Contributed by: Szabolcs Mestyán, John Fenemore, Balázs Rokob and Nóra Kertai, Lakatos, Köves & Partners
rights before the courts of Hungary, or if any dispute before courts or other authorities arises, all relevant documents will have to be officially translated into Hungarian and certified versions may be required. Where documents have been executed outside Hun - gary, they will often need to be notarised and legal - ised. 2.7.4 Filing/Registration of Lease Assignments/ Novations Engine Lease Assignments and Novations Engine lease novations do not need to be filed or reg - istered with the CAA in Hungary. Aircraft Lease Assignments and Novations Aircraft lease assignments or novations should be filed for registration with the CAA in Hungary. All rel - evant documents will have to be officially translated into Hungarian and certified versions may be required. For practical purposes, the parties often conclude a bilingual joint declaration evidencing the information required for filing purposes. Hungarian government consents are not currently required as a prerequisite for execution or delivery of aircraft/engine assignments and novations. 2.7.5 Taxes/Duties Payable on Assignment/ Novation In general, assignment/novation is treated under the tax laws as transfer of the sum of obligations and rights under an agreement. Depending on the actual circumstances of the transaction, such a transfer can result in taxable gain; however, provided that the party realising the gain is not a Hungarian tax resident entity or does not have permanent establishment in Hungary (see 1.2.5 Taxes/Duties Payable Upon Execution of a Bill of Sale ), it shall not be subject to CIT or LBT in Hungary. The fact that the contract is brought into the territory of Hungary does not result in a tax liability. Under the GLOBE Act, the taxpayer entity can be sub - ject to additional tax on the income from the novation until the effective tax rate applying to the taxpayer reaches 15%. The transfer of a contractual position is generally sub - ject to VAT (as it consists of transfer of rights and obli -
gations). However, if both parties are foreign entities which do not have fixed establishments in Hungary, the transfer would likely be outside the scope of the Hungarian VAT Act. No stamp duty would be levied on an assignment or assumption agreement. 2.7.6 Recognition of Transfer of Ownership Interests From a Hungarian law perspective, the transfer of beneficial or other ownership interest in a legal enti - ty shall be governed by the law of the jurisdiction in which the relevant entity is incorporated or trust has been created. For most practical purposes, Hungarian law is unlikely to look beyond the legal ownership of the aircraft by the foreign entity or trustee. 2.8 Aircraft Deregistration and Export 2.8.1 Deregistering Aircraft in This Jurisdiction The owner is entitled to deregister an aircraft from the Hungarian Aircraft Register. Steps to Achieve Deregistration Deregistration is typically performed by local counsel on the basis of a power of attorney from the owner. For the purpose of deregistration, an application must be filed with the CAA in bilingual form along with evi - dence of the aircraft being registered on the Hungar - ian Aircraft Register. Estimated Time Period The statutory time period for the CAA to complete deregistration is 55 days. It is feasible to request a priority process, in which case the applicable deadline is 10 days. 2.8.2 Lessee’s/Operator’s Consent As a general rule, an aircraft may not be deregistered if there is any due and payable third-party claim in respect of the aircraft (eg, a mortgage is registered), unless the relevant third party gives consent to dereg - istration. The owner of the aircraft is able to deregister the air - craft without the permission or involvement of the les - see. However, the process tends to be more straight -
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