As a general rule, for sellers and buyers with no physical or permanent presence in Denmark, there are no taxes or duties payable following the execution of an aircraft or engine sale agreement.
For sellers and buyers with a physical and/or permanent presence in Denmark, taxes and duties may be payable depending on whether the transaction is covered by a Danish double taxation treaty.
Sales of aircraft to carriers intending to operate the aircraft mainly outside Denmark are VAT-exempt.
It is advisable for a sale agreement to be in writing and for it to be in Danish, but it is not necessary for sale agreements to be translated, certified, notarised or legalised in Denmark for them to be enforceable against a domestic party.
Transfer of title is governed by the general rules in Danish law, whereby transfer takes place through a bill of sale or by exercising third-party rights, leading to a transfer of ownership.
A transfer of title will, in general, include all installed parts. As of 1 February 2016, Denmark is subject to the Cape Town Convention. It is therefore possible to transfer the title separately to an engine.
In Denmark, sale of the ownership interest in a limited liability company does not constitute sale of the entity’s assets. However, a sale of ownership interest may trigger any change-of-control clauses.
Recognition of transfer of title to an aircraft or engine inter partes between sellers and buyers in Denmark, where the bill of sale is governed by either English or New York law, will depend on the terms of the bill of sale. In relation to third parties, mandatory rules apply whereby transfer of title is recognised when the parties enter into a binding agreement. This applies regardless of what the parties may have agreed inter partes in relation to transfer of title.
There are no minimum substantive requirements that must be satisfied for a bill of sale to be recognised.
If the bill of sale is in a language other than Swedish, Norwegian, Danish or English, then a certified translation to one of these languages must be provided.
Ownership of aircraft used for commercial air transport, other commercial operations or for private flights must be registered in the Register of Danish Aircraft if the aircraft is not registered in another EU member state or any European Free Trade Association (EFTA) state. The Danish CAA should therefore be given notice of a change in ownership as soon as possible.
An applicant from outside Denmark must fill in the form "Application for registration of aircraft in the Register of Danish Aircraft. Owner resident or domiciled abroad" which must, among other things, contain the bill of sale, information regarding the value of the aircraft, the latest state of registration as well as a certificate of airworthiness.
The processing time will vary, but it is possible to apply for urgent processing.
No government applications or consents are prerequisite to the execution and delivery of a bill of sale in relation to an aircraft or engine registered in Denmark, but – as mentioned here – ownership must be registered in the Register of Danish Aircraft in order to ensure that the aircraft or engine can be used commercially.
As a general rule, there are no taxes payable for executing and/or delivering a bill of sale, or transferring the ownership interest to an entity that owns an aircraft or engine, if the seller is not subject to Danish taxation.
Executing and/or delivering a bill of sale or transferring the ownership interest to an entity that owns an aircraft or engine is not subject to special duties.
Operational, wet and financial leasing, as well as leases of engines only or other parts, are allowed and recognised in Denmark.
Parties are free to specify the law applicable to a lease involving either a domestic party or an asset situated in Denmark.
There are no Danish restrictions preventing lessees from making rent payments to foreign lessors in USD. However, the transaction may become subject to US jurisdiction and associated restrictions.
There are no exchange controls in Denmark – except for those restricting money laundering – which could prevent rent payments under a lease or any repatriation of realisation of proceeds. Nevertheless, payments to foreign companies which are currently subject to UN or EU sanctions may be subject to exchange control or currency restrictions.
For lessors and lessees with no physical or permanent presence in Denmark, there are no taxes or duties payable as a consequence of the execution of a lease in Denmark.
For lessors and lessees with a physical and/or permanent presence in Denmark, taxes and duties may be payable depending on whether the transaction is covered by a Danish double-tax treaty.
Depending on the structure of the leasing agreement, Danish tax regulation may be applicable to sublessors that are Danish entities.
A lessor does not have to be licensed or otherwise qualified, in order to do business with a domestic lessee in Denmark, but all financial lessors must be registered with the Danish FSA, according to the Act on Measures to Prevent Money Laundering and Financing of Terrorism.
Standard lease forms used for leases under either English or New York law will normally also be applicable in Denmark.
Provided they have been properly agreed, tax and other withholding gross-up provisions are permissible and enforceable.
Installed or replaced parts of an aircraft or an engine are generally covered by the lease.
Rights established after 1 February 2016 are regulated by the Cape Town Convention, according to which, it is possible to register separate rights on aircraft engines.
Rights established before 1 February 2016 are subject to the previous regime under the Geneva Convention. Under this regime, ownership and mortgage rights regarding aircraft also cover attached components, including engines. For rights established before 1 February 2016, the attached engine is at risk of transferring the mortgage and ownership rights to an aircraft to which it is attached, if such attachment is not on a temporary basis.
Owner trustees, as they are known in other jurisdictions, work differently in Denmark and are not recognised as such.
For rights established after 1 February 2016, according to the Cape Town Convention, it is possible to register ownership interests in the International Registry of Mobile Assets.
For ownership rights falling outside the scope of the Cape Town Convention, it is possible to register the interests of the owner or lessor of an aircraft in the Danish Rights Register, which is administered by the Danish CAA.
Notation creates priority and protection against third parties from the day of application for registration. It is a prerequisite for registration of an aircraft in the Danish Rights Register that the said aircraft is registered in the Register of Danish Aircraft. Applications for registrations made the same day are given equal rights.
It is possible to register an aircraft in the Register of Danish Aircraft in the name of its owner, even if the owner is not the operator of the aircraft. It is not possible for the operator to register a lease without the consent of the owner.
If a leased flight is to be registered, it is mandatory to provide a copy of the leasing agreement for the purpose of the application. The operator is registered separately.
In Denmark, rights regarding aircraft and engines (which are covered by the Cape Town Convention) are registered in the International Registry of Mobile Assets. Rights falling outside the scope of the Cape Town Convention are registered in the Danish Rights Register. There is no specific register for registering leasing rights.
It is possible to register leasing agreements with a duration of more than six months in the Danish Rights Register, but it is only possible to register rights in this registry over aircraft that fall outside the scope of the Cape Town Convention.
The Danish CAA must consent to the registration.
An application for registration in the Danish Rights Register must include the leasing agreement between the lessor and the lessee. The lease must be signed by both the owner and the operator of the aircraft.
The processing is required by law not to exceed ten days from entry.
The aircraft must be registered in the Register of Danish Aircraft.
For a lease to be registered in the Danish Rights Register, it must be in Danish, Norwegian or Swedish; if the lease is in a different language, it must be translated into one of these languages by an authorised translator. The signature, the authority and the date of signature must be verified either by a notary public or two attesting witnesses.
If a document is signed by a foreign company, the signatory's power to bind the company must be certified by a notary public.
Previously, a fee of 1.5% of the value of the aircraft (for aircraft weighing more than 5,700 kg or registered to carry more than ten passengers) and a fee of one thousandth of the value of the aircraft (for aircraft weighing less than 5,700 kg or registered to carry no more than ten passengers) was payable when registering a lease in the Register of Danish Aircraft, but as of 1 April 2019 no fee is payable.
For leases registered in the International Registry of Mobile Assets, a fee of USD100 must be paid.
There is no official information available in this respect.
The documentation required to register ownership of an aircraft in a Danish registry includes:
Documentation proving the power of the signatories to make arrangements on behalf of the company must be enclosed with the application. If the company is not registered with the Danish Business Authority, or if it is a firm, a union or a club, the articles and signed minutes from the latest general meeting or certification by a notary must be enclosed.
Foreign lessors with no physical or permanent presence in Denmark are generally not subject to Danish tax.
A foreign lessor's leasing income is – as a general rule – not seen as a source of income in Denmark and the lessor will not therefore be liable to pay tax in Denmark, unless they are subject to Danish tax for other reasons.
Failure to maintain an aircraft and/or engine under a lease may bring the risk of third-party liability.
The doctrine of strict liability for foreign owners applies in Denmark, meaning that a foreign aircraft or engine owner or lessor under a lease or financier financing the asset on lease may be liable as a result of damage or loss caused by the asset.
The creditors of a domestic lessee of an aircraft cannot attach claims to the aircraft.
Fees due under public law, as well as expenses relating to salvage operations, take priority over a lessor’s rights, regardless of whether the lease/lessor is registered in the Danish Rights Register.
There is no requirement for insurances – either in part or in whole – to be placed with a domestic insurance company.
In Denmark, third-party liability insurances for aircraft must fulfil minimum coverage requirements. The minimum requirements are found in EC Regulation No 785/2004 of 21 April 2004 on insurance requirements for air carriers and aircraft operators. The minimum coverage per accident depends on the maximum take-off mass (MTOM) and is calculated as a Special Drawing Right (SDR), as follows:
For passenger insurances, the minimum insurance coverage is SDR250,000 per passenger seat. For luggage and freight, the coverage must be at least SDR1,000 per piece of luggage and SDR17 per freight kilogram.
Reinsurances can be placed outside Danish jurisdiction up to 100% coverage. Certain jurisdictions may, however, be subject to international embargoes.
Cut-through clauses are generally considered enforceable under Danish law.
An insurance agreement may provide for assignment of the insurance proceeds to the lessor.
Subject to the terms of the lease agreement, a lessor is able to:
However, this would be subject to any enforceable third-party rights.
It is not possible for a lessor to take physical possession of an aircraft without either the lessee’s consent or a court order from the bailiff’s court.
There is no specific court that is competent to decide aviation disputes. All aviation disputes are, as a general rule, handled by the city courts.
Danish law provides for the possibility of obtaining summary judgments; however, if granted, a summary judgment must be followed by a regular civil lawsuit. A summary judgment may be obtained within a few days, depending on the actual circumstances. In passing the summary judgment, the court may decide that adequate security must be provided.
Danish courts will typically uphold foreign law as the governing law of an aircraft lease and will also typically uphold submission to a foreign jurisdiction.
Whether a waiver of immunity will be upheld by the courts depends on the wording of the waiver. Typically, national courts will not accept waivers unless they are covered by the waiver (see the Administration of Justice Act Sections 160–172). The rules in the Administration of Justice Act regulate cases of self-incrimination, certain confidential information and certain professions.
Foreign court decisions are enforceable in Denmark, provided the decision has been handed down by a court in a country in which Denmark recognises enforceability. Court decisions by EU member states are recognised in Denmark.
As for arbitral awards, Denmark is a party to the New York Convention. Therefore, arbitral awards issued under this convention are enforceable in Denmark.
In general, re-examination of a matter is only allowed to a very limited extent, in order to check whether a decision is contrary to the ordre public.
In Denmark, it is possible for a lessor under an aircraft lease to obtain a judgment in a foreign currency.
The only applicable limitations on a lessor's actions are the general prohibitions in the Danish Criminal Code and the Danish Interest Act.
Lessors under an aircraft lease are only required to pay a limited court fee in connection with the enforcement of a lease in Denmark. Part of the court fee is calculated based on the actual amount claimed.
Except for the notice periods set out in the Cape Town Convention and the general ten-day notice period stipulated in EU law, no mandatory notice period applies.
It is not possible for a lessee to claim sovereign immunity or other immunity from a suit in Denmark.
Denmark has adopted the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Therefore, as mentioned in 2.6.6 Domestic Courts' Recognition of Foreign Judgments/Awards, arbitral awards rendered under the New York Convention are enforceable in Denmark.
Lessors should be aware that timely notice must always be observed in order to avoid potential loss of rights.
Danish law recognises the concepts of novation and contractual assignment. In the case of contractual assignment, it is important for the assignee to ensure that the other party is properly notified. In the case of novation, the novation must be accepted by the creditor for it to be enforceable.
In the case of a lessor assigning or novating its rights under an aircraft lease to a new lessor pursuant to a New York or English law-governed assignment and assumption agreement or novation agreement (or deed), such an assignment or novation will normally be held valid by the Danish courts, provided proper and fulfilling evidence is submitted.
There are no mandatory or similar terms that must be included in the agreement/deed in this respect.
Although it is advisable for an aircraft and/or engine lease assignment and for an assumption/novation to be in writing and in Danish, it is not necessary for them to be translated, certified, notarised or legalised in Denmark in order for them to be enforceable against a domestic party.
It is possible to register an aircraft and/or engine lease assignment, and an assumption/novation in the Danish Rights Register, provided that such registration falls outside the scope of the Cape Town Convention.
In order to register a right, a form must be filled in and filed for registration in accordance with the guidelines issued by the Danish CAA, which must consent to registration.
The processing time will vary, but it is possible to apply for urgent processing.
It is a prerequisite for registration of an aircraft in the Danish Rights Registry that said aircraft is registered in the Register of Danish Aircraft.
No fees apply for the registration of an assumption/novation agreement, or as a consequence of an original or a copy of it being brought into Denmark.
In Denmark, the sale of ownership interest in a limited liability company does not constitute the sale of the entity’s assets. However, a sale of ownership interest may trigger any change-of-control clauses.
Deregistration of an aircraft is carried out by the owner of the aircraft in accordance with the guidelines issued by the Danish CAA. As a starting point, the official form concerning application for removal must be filled in.
Only the owner of an aircraft may apply for its deregistration. The owner must have the lessee or operator’s consent; otherwise, deregistration may be considered a breach of contract.
In order to apply for deregistration, an applicant must enclose the existing certificate of registration as well as the flight time and landing summary.
The processing time will vary, but it is possible to apply for urgent processing.
Only one procedure for deregistration is available.
No significant costs, fees or taxes are chargeable in respect of the deregistration of an aircraft.
The owner of an aircraft may give another person power of attorney to sign the various documents required in connection with the deregistration of the aircraft. It must be clearly stated in the power of attorney that the person specified may sign the document in question. The power of attorney must be signed by the owner of the aircraft. If the owner is a company, the document must be signed by the person or persons who, according to the company's provisions regulating the power to bind the company, can make arrangements on behalf of the company. The original power of attorney must be shown to the Danish CAA upon request.
Documentation of the powers of the signatories which shows they may make arrangements on behalf of the company must be enclosed in the form of an extract from the Danish Business Authority (which should be no more than one year old). If the company is not registered with the Danish Business Authority, the articles and signed minutes from the latest general meeting or certification by a notary public must be enclosed.
There is no requirement for a deregistration power of attorney to be governed by the laws of Denmark; however, it is advisable that the power of attorney is issued in writing.
A power of attorney can normally be made irrevocable, but Danish courts may set an irrevocability clause aside under the general terms applicable for unfair contracts.
Export of an aircraft requires consent from the lessee and other parties with properly protected third-party rights; otherwise, the export may incur claims for damages. During negotiations it is advisable to obtain a properly signed IDERA according to the Cape Town Convention. There is no specific requirement as to the physical location of the aircraft at the time of deregistration and/or export.
Export licences may be required, depending on the exported product. An aircraft or parts thereof may be subject to export control. An application may be filed in advance and will be processed within a reasonable time.
No significant costs or fees are charged in respect of exported aircraft. Export in connection with a sale may, however, be subject to taxation.
Deregistration of aircraft is subject to the standard procedures followed by the Danish CAA. The deregistration presupposes proper registration in the Register of Danish Aircraft.
A bankruptcy estate is bound by a deregistration power of attorney or irrevocable deregistration and export request authorisation (IDERA) to a lessor, owner or mortgagee, provided that the lessor, owner or mortgagee is not in breach of contract.
Under Danish law, a bankruptcy estate is entitled to decide whether to accede to any agreements which the debtor entered into before the bankruptcy and exercise the same rights as would have applied without the agreement. As long as the bankruptcy estate complies with the terms of the leasing agreement, the lessor must accept the bankruptcy estate as the new lessee. The bankruptcy estate will not gain title to the aircraft. The bankruptcy estate must respect any other creditor with higher priority than the lessor; however, the costs in connection with the bankruptcy have top priority.
If a borrower, a guarantor or an entity providing security becomes insolvent, this may constitute a breach of the obligations of the lender under the loan agreement.
It is possible to apply for a moratorium as an alternative to insolvency proceedings. This will typically last for around seven months and no longer than a year.
A domestic lessee can be liquidated or placed in administration or receivership through an application filed with the relevant district court. A fee may be incurred. The application may be filed by the lessee or by the lessee’s creditors.
Ipso facto default clauses are not binding for the bankruptcy estate under Danish law. Provided that the bankruptcy estate complies with the terms of the lease agreement, repossession may not take place.
If a domestic lessee is wound up by a court or administration proceeding, the bankruptcy estate adopts all rights and obligations applicable to the lessee, unless the receiver in bankruptcy decides not to accede to the pre-bankruptcy agreement.
Denmark has ratified the Convention on International Interests in Mobile Equipment (the Convention) and the related Protocol on Matters Specific to Aircraft Equipment (the Protocol). No "authorised entry point" (AEP) regime applies.
Denmark has made the following declarations under the Convention:
Denmark has made the following declarations under the Protocol:
Article XIII of the Protocol applies in Denmark. The IDERA must be in the form specified in the Cape Town Convention and must be signed by the registered owner of the aircraft. After receiving an IDERA, the Danish CAA will record the IDERA accordingly in the Register of Danish Aircraft.
So far, the Danish courts have had limited experience of the Convention and the Protocol. No leading court decisions have yet been handed down.
Denmark is a party to the 1948 Geneva Convention on the International Recognition of Rights in Aircraft. Denmark is not a party to the 1933 Rome Convention on the Unification of Certain Rules relating to the Precautionary Attachment of Aircraft.
All transactions in connection with the financing of an aircraft must comply with Danish law, particularly the Act on Measures to Prevent Money Laundering and Financing of Terrorism.
There are no exchange controls or equivalent controls in Denmark – except for those restricting money laundering – which could prevent rental payments under a lease or any realisation and repatriation of proceeds. Nevertheless, payments to foreign companies which are currently the subject of UN or EU sanctions may be subject to exchange control or currency restrictions.
Borrowers are permitted to grant security to foreign lenders; however, the security may be subject to UN or EU sanctions.
Downstream and cross-stream guarantees are generally permitted. Upstream guarantees may constitute a violation of Danish corporate law. In order to be valid, any guarantees should be issued in accordance with the articles of association of the guarantor.
It is advisable for a lender to take share security over a domestic special purpose vehicle which owns a financed aircraft. Pledge of shares should be noted in the shareholders' ledger.
Danish law recognises negative pledges.
Intercreditor arrangements are valid and enforceable in Denmark.
Danish law recognises the concept of agency and the role of an agent under a syndicated loan.
The widely recognised methods of debt subordination are also applicable in Denmark.
Outstanding debt under foreign law may be transferred, subject to prior approval from the creditor(s).
The only applicable limitations are the general prohibitions in the Danish Criminal Code on usury and the interest limits in the Danish Interest Act.
All generally accepted forms of security and recourse are accepted under Danish law, such as bank guarantees or similar security arrangements.
All generally accepted types of security are available under Danish law.
The concept of a security trustee is recognised under Danish law.
A borrower may assign its rights to an aircraft or under an aircraft lease to a security trustee pursuant to a security assignment or a mortgage, unless it is otherwise specified in the lease agreement.
Assignment of the rights and benefits of a lessee requires consent from the lessor and will normally also incur assignment of the obligations.
A security assignment or a guarantee may be governed by English or New York law.
If security assignments are in any language other than Swedish, Norwegian, Danish or English, a certified translation into one of these languages must be provided.
The security arrangements generally recognised by English or New York law are acceptable and sufficient for use in Denmark. Certain fees may apply, but these are not excessive (see 2.3.6 Taxes/Duties Payable for Registering a Lease).
An English or New York law-governed security assignment, or a domestic law security instrument, may be registered in Denmark.
Security interests regarding an aircraft and/or engines may be transferred, subject to the general rules of Danish law.
Provided that a security interest has been properly perfected, it will not be jeopardised if the identity of the secured parties changes.
It is generally not necessary to consider parallel debt structures under Danish law.
As a general rule, a secured party under a security assignment is not considered to be resident, domiciled or carrying out business and will not therefore be tax-liable in Denmark, unless it is subject to Danish tax for other reasons.
A domestic law mortgage over an aircraft or engine is perfected by registration in the Danish Rights Registry.
There is no difference between the form of security (or perfection) taken over an aircraft and that taken over spare engines.
A security over a bank account (such as a lease receivables account) will normally be granted through a written agreement and is perfected by notification to the relevant bank.
A lien over an aircraft or an engine for all generally accepted debts and claims may be registered by third parties.
Repair costs and similar liens only cover the work done on the actual secured asset for the value of the work which has been done, unless otherwise agreed.
The concept of a fleet lien as such is not recognised in Denmark.
Discharge of a lien or mortgage may vary but is generally not subject to excessive timeframes.
There is no specific register covering only mortgages and charges. Mortgages and charges may be registered in the Danish Rights Register. The effect of notation in the registry is perfection.
The concept of fleet lien as such is not recognised in Denmark.
A potential purchaser of an aircraft should verify that an aircraft is free of encumbrances by searching the Danish Rights Register and the International Register of Mobile Assets.
The enforcement of security assignments, as well as loans and guarantees, requires the assistance of the bailiffs' court. The same rules apply regardless of the form of security.
Where security is granted to a security trustee by a lessor in respect of its rights under an aircraft lease, the security trustee can enforce its rights under the security assignment pursuant only to a notice and acknowledgement executed by that lessor and the relevant lessee.
Danish courts will typically uphold foreign law as the governing law of a finance and/or security document and will also typically uphold the submission to a foreign jurisdiction.
Foreign court decisions are enforceable in Denmark, provided that the decision has been handed down by a court in a country in which Denmark recognises enforceability. Court decisions by EU member states are recognised in Denmark.
As for arbitral awards, Denmark is a party to the New York Convention. Therefore, arbitral awards issued under the New York Convention are enforceable in Denmark.
In general, re-examination of a matter is only allowed to a very limited extent in order to check whether the decision is contrary to the ordre public.
It is not possible for a secured party to take physical possession of an aircraft without either the lessee’s consent or a court order from the bailiffs' court.
The enforcement of security assignments and aircraft mortgages requires the assistance of the bailiffs' court.
Danish law provides for summary judgments; however, if a summary judgment is granted, it must be followed by a regular civil lawsuit. A summary judgment may be obtained within a few days, depending on the circumstances. With regard to a summary judgment, the court may decide that adequate security must be provided.
In Denmark, it is possible for a secured party under a security agreement/aircraft mortgage to obtain a judgment in a foreign currency.
Lessors under an aircraft lease are only required to pay a limited court fee in connection with the enforcement of a lease in Denmark. Part of the court fee depends on the actual amount claimed.
Timely notice must always be given in order to avoid potential loss of rights.
On 19 June 2015, the Danish High Court of Western Denmark ruled that a lessor, in the event of the lessee’s bankruptcy, could demand to be given possession not only of the leased aircraft, but also an installed engine. The judgment concerns the Geneva regime, but is nonetheless also relevant for leasing agreements that cannot be registered in the International Registry of Mobile Assets.
There are no current legislative proposals relating to any of the issues discussed here.