AUSTRIA Law and Practice Contributed by: Farid Sigari-Majd and Mathias Lehner, Freshfields
tice, the ACG appears to accept documents in Ger - man and English. 2.4 Lessor’s Liabilities 2.4.1 Tax Requirements for a Foreign Lessor A corporate lessor having neither its seat nor its place of management in Austria may – subject to the appli - cation of relevant double tax treaties – be subject to Austrian corporate income tax if it has a sufficient nexus to Austria (eg, a permanent establishment in Austria to which the aircraft or engine is attributable or an Austrian permanent representative). 2.4.2 Effects of Leasing on the Residence of a Foreign Lessor A non-Austrian lessor is not generally subject to (cor - porate) income taxation in Austria as a result of its being a party to or its enforcement of a lease agree - ment. 2.4.3 Engine Maintenance and Operations The parties to an aircraft lease under Austrian law are generally free to allocate the responsibility for main - tenance of the aircraft between them. The default position for operating leases under the Austrian Civil Code (ABGB) is that the lessor is respon - sible for maintaining the aircraft or engine fit for pur - pose. Austrian operating leases would typically either derogate from or clarify this position (eg, distinguish between major overhauls and ongoing maintenance). 2.4.4 Damage or Loss Caused by an Asset Under certain circumstances, Austrian law imposes strict liability on the operator ( Halter ) and the carrier ( Beförderer ) for damage caused by an aircraft to per - sons or property. Neither an owner (who is not also the operator and/or carrier), a lessor nor a finance provider would typically be liable for damage caused by the asset, except to the extent such damage was caused by their negli - gence (eg, failure to maintain the asset in accordance
the lessee does not own, the owner of the aircraft could raise a claim against such attachment ( Exszind- ierungsklage ). 2.4.6 Priority of Third Parties’ Rights A person who has paid expenses with respect to an asset on behalf of the owner is generally permitted to retain the asset until reimbursement by the owner unless a third party is liable for such expenses. Thus, third-party retention rights would not normally take priority over the owner’s interest in an aircraft or engine unless the owner/lessor is itself liable to such third party (eg, the owner’s liability for ATC charges in the event that the operator is unknown; liability for maintenance work assumed by the owner under the terms of the lease). Further, Austrian law recognises that a third party may, under certain limited circumstances, acquire an in rem (security) interest in good faith from a person (eg, the lessee) who does not hold title to and is not otherwise permitted to dispose of such asset ( gutgläubiger Erw- erb/Pfandrechtserwerb ). Such a risk can be mitigated by affixing signs and notices to the aircraft and adver - tising the title holder. 2.5 Insurance and Reinsurance 2.5.1 Requirement to Engage Domestic Insurance Companies Austrian law does not require that all or part of the insurance for the operation of an aircraft is placed with Austrian insurance companies. 2.5.2 Mandatory Insurance Coverage Requirements The operator of an aircraft is obliged to maintain liabil - ity insurance that covers: • death and injury of passengers; • damage to, and destruction and loss of, trans - ported goods; • death and injury of third parties; and • damage and destruction of third parties’ property. The minimum insurance amounts depend on the max - imum take-off weight of the aircraft as provided for by European and Austrian laws. Proof of sufficient insur - ance cover is a prerequisite for the operating licence.
with the agreed terms of a lease). 2.4.5 Attachment by Creditors
If a third-party creditor of an Austrian lessee attempts to attach an aircraft leased to the Austrian lessee that
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