BRAZIL Law and Practice Contributed by: Renata Iezzi, Nicole René Gomes e Cunha and Marcela Correa, Basch & Rameh
• appoint an agent in Brazil to undertake the process from the SRF; and • identify its ultimate beneficial owner to the SRF. This process can be expensive and time-consuming. When aircraft are leased through trusts, the trustee must have a CNPJ number. Prior to 2016, the process was simpler and did not require compliance with these requirements. 2.1.5 Taxes/Duties Payable for Physical Execution of a Lease Nominal local fees apply to notarisation. It is custom - ary for Brazilian airlines to bear the costs of registering leases; see 1.2.5 Taxes/Duties Payable Upon Execu- tion of a Bill of Sale . 2.1.6 Licensing/Qualification of Lessors Except for the CNPJ requirement mentioned in 2.1.4 Exchange Controls , there is no prior qualification or licensing requirement for lessors in Brazil to do busi - ness with a local lessee. 2.2 Lease Terms 2.2.1 Mandatory Terms for Leases Governed by English or New York Law The Aeronautical Code requires a description of the aircraft, confirmation of the registry (which must be Brazil for Brazilian operators), the amount of rent and other charges, the lease term and whether there are purchase or extension options. These terms tend to be included in most New York and English law leases. 2.2.2 Tax and Withholding Gross-Up Provisions Gross-up provisions are permissible and enforceable. On 31 December 2021, the President issued an Exec - utive Order (later converted into a Law in May 2022) re-establishing the 0% rate on rents paid from 1 Janu - ary 2022 until 31 December 2023, and established the following progressive tax rates: • 1% from 1 January 2024 to 31 December 2024; • 2% from 1 January 2025 to 31 December 2025; and • 3% from 1 January 2026 to 31 December 2026. At the time of writing, the applicable rate is 2%.
Many different import-related taxes are reduced to zero for commercial aircraft on operating leases, including: • federal import tax; • federal excise tax; and • state circulation of goods and services tax (similar to VAT). There is an additional tax on imports, called “COFINS”, which is applicable only to the import of spare engines. The Brazilian government has established progressive additional COFINS rates for commercial spare engine leases. In 2025, the applicable rate is 0.8%. Operators regularly check the jurisdictions of the lessors or other finance providers, as the treatment given to payments to lessors/creditors located or established in “tax havens” (defined as jurisdictions with annual corporate income tax rates under 20%) may be subject to higher withholding tax. The SRF also publishes a list of countries (currently including Ireland) that are deemed to be tax havens. 2.2.3 Parts Installed or Replaced After a Lease’s Execution A lease may include parts installed or replaced dur - ing its term. Leases should be precise in determining when replacement parts and engines become subject to a lease. Whenever an engine or APU is replaced, the lease should be amended, and that amendment should be registered with the RAB. 2.2.4 Risk of Title Annexation Brazil does not adhere to the concept of title annexa - tion of engines installed on airframes. Nonetheless, leases should be exact in determining if and when the title is removed and replacement engines transferred. 2.2.5 Recognition of the Concepts of Trust/Trustee Brazil is a civil law country and the concept of a trust, as found in common law jurisdictions, is foreign to the Brazilian legal system. Brazil is not a party to the 1986 Hague Convention on Trusts. However, the RAB and other Brazilian agencies are familiar with trust structures, and aircraft may be reg - istered in the name of and leased by owner trustees.
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