LITHUANIA Law and Practice Contributed by: Gintautas Šulija and Eduard Plešak, Šulija & Partners
1. Aircraft and Engine Purchase and Sale 1.1 Sales Agreements 1.1.1 Taxes/Duties Payable Upon Execution of the Sales Agreement The execution of an aircraft or engine sale agreement (including the sale of an ownership interest in an entity) does not trigger any taxes in Lithuania. Lithuania does not have a concept of trust; thus, legal and beneficial ownerships are also not separated. However, the proceeds arising from the sale of an aircraft or engine are taxable in Lithuania, subject to certain exceptions. In certain cases, a company sell - ing assets in Lithuania and forecasting sales revenue might be required to register as a VAT payer. 1.1.2 Enforceability Against Domestic Parties If the aircraft is sold on the Lithuanian soil, one should consider tax implications and the requirements of the country of registration. If the aircraft has been registered in Lithuania, an air - craft bearing Lithuanian registration will be considered as immovable property by reason of the Civil Code of Lithuania 2001 and transfer of immovable prop - erty – following overriding local laws – is subject to notarial certification in Lithuania. The public notary may notarise the agreement made in Lithuanian or both in Lithuanian and any other foreign language. Provided the engine is not considered part of an air - craft, the transfer of an engine is not required to be certified by a notary in Lithuania. However, the parties may request notarisation of such contract. A translation into Lithuanian of the sale agreement and/or bill of sale and/or other document evidenc - ing the transfer of title to an aircraft may be required for submission to the civil aviation authority for air - craft ownership re-registration purposes. However, as a matter of practice, short documents in English are being accepted by the aviation authority without translation into Lithuanian (see 1.2.3 Enforceability Against Domestic Parties ).
1.2 Transfer of Ownership 1.2.1 Transferring Title
If an aircraft is registered in Lithuania, the transfer of the aircraft must be concluded in written form and notarised by a public notary following the require - ments of Lithuanian laws. An aircraft engine is considered part of the aircraft. Thus, the title of an engine can be effected and evi - denced either by: • the aircraft sale and purchase (or similar) agree - ment; • a separate sale and purchase agreement for the engine; and • an acceptance certificate (or transfer deed), which is required but can be drafted as part of the sale and purchase agreement or signed as a separate document – the acceptance certificate does not need to be notarised. Industry practice in Lithuania applies insofar as the engine or other significant parts (auxiliary power unit or landing gears) are separately specified in the air - craft sale agreement. The sale of the ownership interest in an entity that owns an aircraft or engine is not recognised as a sale of such aircraft or engine. The same entity will remain the direct owner of aviation assets; however, as a result of the sale of ownership interest in such entity, the ultimate owner may change. 1.2.2 Sales Governed by English or New York Law The English law or New York law bill of sale is recog - nised as a document evidencing the title to an aircraft before it is registered in Lithuania. For aircraft registra - tion purposes in Lithuania, the English or New York law bill of sale needs either to be submitted in its origi - nal form for the review of a specialist from the aviation authority or as a notarised and apostilled copy. However, if the title to an aircraft that is already reg - istered in Lithuania is transferred, the asset is con - sidered to be covered by mandatory local laws. This means that such a sale and purchase (or other) agree - ment on the transfer of title needs to be notarised locally (see 1.2.1 Transferring Title ). In practice, a
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