PANAMA Law and Practice Contributed by: María de Lourdes Marengo and Joaquín De Obarrio, Patton Moreno & Asvat
1. Aircraft and Engine Purchase and Sale 1.1 Sales Agreements 1.1.1 Taxes/Duties Payable Upon Execution of the Sales Agreement Under Panamanian law the transfer of an aircraft or engine while it is located within Panamanian territory is subject to payment of transfer of movable asset tax at a rate of 7% unless the aircraft or engine is located in a tax-free zone at the time of the transfer. 1.1.2 Enforceability Against Domestic Parties In order to be enforceable in Panama, the sale agree - ment must be translated into Spanish by an official translator in Panama and the signatures of the par - ties must be certified by a notary public and legal - ised according to the 1961 Hague Convention on the Apostille. 1.2 Transfer of Ownership 1.2.1 Transferring Title The transfer of the title to an aircraft or engine is achieved when the bill of sale or the sale purchase agreement is registered at the Public Registry Office. Unless expressly excluded, the transfer includes all installed parts including, for example, the auxiliary power unit. 1.2.2 Sales Governed by English or New York Law Panamanian law recognises the principle of freedom of the parties to subject their contractual agreements to foreign laws. The transfer of title to an aircraft or engine physically delivered in Panamanian territory may be validly subjected to English or New York law. If the bill of sale is executed outside Panama, the signa - tures of the parties must be certified by a notary public and legalised according to the 1961 Hague Conven - tion on the Apostille. Thereafter, the bill of sale must be translated into Spanish by an official translator in Panama, protocolised in a notarial deed and regis - tered with the Public Registry Office. 1.2.3 Enforceability Against Domestic Parties If the bill of sale is executed outside Panama, the signature of the parties must be certified by a notary public and legalised according to the 1961 Hague Convention on the Apostille. Thereafter, the bill of sale
must be translated into Spanish by an official transla - tor in Panama, protocolised in a notarial deed and registered with the Public Registry Office. 1.2.4 Registration, Filing and/or Consent From Government Entities Formalities The signatures in the bill of sale must be certified by a notary public and legalised according to the 1961 Hague Convention on the Apostille in the place of execution. Thereafter, these must be translated into Spanish by an official translator in Panama and filed with the Public Registry. Registration at the Public Registry may take from five to ten days. Requirements An appraisal certificate issued by the Civil Aeronautics Authority (AAC) is required to complete registration. Obtaining the appraisal certificate may take from 30 to 60 days. There are no consents required as a prerequisite to the execution and delivery of the bill of sale in relation to an aircraft or engine registered in Panama. 1.2.5 Taxes/Duties Payable Upon Execution of a Bill of Sale The transfer of an aircraft or engine located within Panamanian territory is subject to payment of trans - fer of movable assets tax at a rate of 7% and may be subject to payment of capital gains tax at a rate of 10% unless the transfer takes place while the aircraft or engine is within a tax-free zone. The transfer of an aircraft or engine in international waters is exempted from payment of transfer tax. 2. Aircraft and Engine Leasing 2.1 Overview 2.1.1 Non-Permissible Leases All type of leases on aircraft, engines or parts are per - mitted. 2.1.2 Application of Foreign Laws Panamanian law recognises the principle of freedom of the parties to subject their contractual agreements to foreign laws. Leases involving a domestic party
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