Aruba provides for an excellent atmosphere for aircraft registration and financing. As a constituent country of the Kingdom of the Netherlands, Aruba enjoys a stable political and legal environment. Applying the highest safety standards, the United States Federal Aviation Administration (“FAA”) rated Aruba as a Category 1 jurisdiction. Together with its legal and tax advantages Aruba has become the flag of choice for aircraft registration.
The Department of Civil Aviation Aruba (“DCA”) issues licenses and provides for oversight of aircraft in accordance with ICAO aviation safety standards. Aruba has the necessary laws and regulations in place to support these standards. Furthermore, the DCA has the technical expertise and its inspectors are adequately trained and qualified to ensure compliance with international standards. This has earned Aruba a Category 1 rating by the FAA.
The legal system in Aruba is based on Continental European law, more in particular on the laws of the Netherlands. Legal jurisdiction lies with the Court of First Instance of Aruba. Decisions by this Court can be appealed at the Joint Court of Justice of Aruba, Curaçao, Sint Maarten and of Bonaire, Sint Eustatius and Saba, and ultimately at the Supreme Court of the Netherlands (Hoge Raad der Nederlanden) in The Hague.
The Aruba legal system provides for strong security rights that can be placed on the aircraft and on the shares of the special purpose vehicle, for loans granted by financial institutions.
Aruba has ratified both the Geneva Convention and the Cape Town Convention. Pursuant to the Geneva Convention contracting states must (inter alia) recognize aircraft mortgages (i) constituted in accordance with the laws of the contracting state in which the aircraft was registered as to nationality at the time of their constitution, and (ii) are regularly recorded in a public record of the Contracting State in which the aircraft is registered as to nationality.
The Cape Town Convention allows for the creation and registration of ‘international interest’ in aircraft and gives recognition of such interest in the member states. The Cape Town Convention also provides creditors with attractive tools for the enforcement of the international interests, with in principle no judicial intervention.
Structured properly, the registration, finance and lease of an aircraft with an offshore operation will not be taxed in Aruba. This zero taxation means amongst others, no turnover taxes, no corporate income taxes and no withholding taxes.