AUSTRIA Law and Practice Contributed by: Farid Sigari-Majd and Mathias Lehner, Freshfields
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 aircraft or engine sale agreements in and of itself (including the sale of an ownership inter - est in an entity owning an aircraft or engine) is gener - ally not subject to taxes or duties, irrespective of the location of the aircraft or the engine or the seller’s domicile. The transfer of economic ownership of the aircraft or engine is relevant for (corporate) income tax and VAT purposes. 1.1.2 Enforceability Against Domestic Parties An aircraft or engine sale agreement is not required to be translated, certified, notarised or apostilled/legal - ised to be enforceable against an Austrian party. Austrian courts may require a certified German trans - lation of the sale agreement if it is submitted in evi - dence. 1.2 Transfer of Ownership 1.2.1 Transferring Title A transfer of title to an aircraft or engine under Aus - trian property law requires a title agreement (eg, a bill of sale) as well as an act of transfer, ie: • physical delivery of the asset; • an agreement that the transferor shall hold posses - sion of the asset to the instruction of the transferee or, if the asset is already with the transferee, that the transferee shall hold it as legal owner going forward; or • an instruction to a third party to hold possession of the asset to the instruction of the transferee. The title transfer would normally: • extend to all “dependant” components ( unselb- ständige Bestandteile ) of the aircraft; and • unless agreed otherwise, extend to all “independ - ent” components ( selbständige Bestandteile ) and all ”accessories” ( Zubehör ) which have been installed on or dedicated to the aircraft at the time of the title agreement – engines or auxiliary power
units (APUs) would usually qualify as independent components or accessories. The sale of a legal entity owning an aircraft is not con - sidered to be a sale of the aircraft (or any of its com - ponents/accessories) under Austrian law. 1.2.2 Sales Governed by English or New York Law Austrian conflict of laws rules would determine the validity of a title transfer in an aircraft in accordance with: • the law of the state of registration, if the aircraft is registered in a public register; or • in all other cases, the lex rei sitae of the aircraft (or other tangible asset, such as a separate engine) at the time of completion of the (alleged) transfer. If these rules point to Austrian law, the title transfer would be recognised under Austrian law if and to the extent that it satisfies the requirements for a valid title transfer under Austrian property law (ie, title agree - ment and act of transfer – see 1.2.1 Transferring Title ). The title agreement (eg, bill of sale) itself may be gov - erned by foreign law, and an Austrian court would look to that foreign law to determine the obligations of the parties thereunder (in accordance with and subject to the limitations of Regulation (EC) No 593/2008 – the “Rome I Regulation”). An Austrian court may, however, test the foreign law-governed title agreement against the minimum requirements applicable to title agree - ments under Austrian law (eg, the relevant asset and consideration should be determined in or capable of being determined based on the title agreement). In addition, the court would test any act of transfer provided for in the title agreement against the require - ments under Austrian property law (see 1.2.1 Trans- ferring Title ). If an English or New York law-governed bill of sale does not provide for such an act of transfer or if the act of transfer falls short of such requirements, the title transfer would not be recognised in Austria on the basis of such bill of sale. Where Austrian conflict of laws rules point to foreign law as the governing law for title transfers, an Austrian court would test the relevant bill of sale against the requirements for title transfers under that foreign law.
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