Typical structure for cross-border aircraft financing into India
Loan repayments or lease payments from an Indian lessee or borrower may attract withholding taxes amounting to between 10% and 20% of payments.
[nonmember]Loan repayments or lease payments from an Indian lessee or borrower may attract withholding taxes amounting to between 10% and 20% of payments.::join::[/nonmember][ismember]
Loan repayment or lease payments from an Indian lessee or borrower may attract withholding taxes amounting to between 10% and 20% of payments. Most financiers chose to use a tax-friendly jurisdiction – usually Ireland – to avoid this complication.
Whilst a borrower could use a simple loan or lease financing it is typically more efficient to use this hybrid structure:
The parent or group company establishes a special purpose company (“SPC”) in Ireland. The SPC borrows funds to acquire aircraft it then leases the aircraft to a company holding a Non-Scheduled-Operator’s-Permit using an operating lease. Lease payments from the NSOP to the SPC are not eligible for withholding tax.
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