Use of GATS in Brazilian aircraft transactions


On 1 June 2020 the Global Aircraft Trading System (GATS) was launched to facilitate aircraft trading and financing by reducing the burden on industry participants – in particular, airlines. The GATS was developed by the Aviation Working Group (AWG) and is a fully electronic system which allows for:

  • e-signatures;
  • the e-delivery of documents; and
  • the use of a secure e-ledger to record aircraft transactions worldwide.


To use the GATS, title to an aircraft must be held in a trust established in the United States (Delaware or Utah), Ireland or Singapore. Through the GATS, the beneficial interest in the trust can be transferred from the seller to the buyer. The AWG website lists the following pre-cleared trust companies for GATS purposes:

  • the Bank of Utah;
  • TVPX Aircraft Solutions Inc;
  • Intertrust Trustee (Ireland) Limited;
  • UMB Bank, NA;
  • the Wilmington Saving Fund Society;
  • Intertrust (Singapore) Ltd;
  • Wilmington Trust Company; and
  • Wilmington Trust SP Services (Dublin) Limited.

The Brazilian Aeronautical Register (RAB) is an owner aircraft register, which means that a title-transfer document must be registered with the RAB to effectively transfer title. The GATS encourages the sale and trade of aircraft interests by enabling the simple transfer of the beneficial interest in registered aircraft owner trusts rather than the transfer of a title by a bill of sale. For aircraft on lease, there is no need to:

  • assign or novate any ongoing lease or other set of operational documents;
  • draft new trust agreements, bills of sale or registration applications;
  • obtain new irrevocable deregistration and export authorisations; or
  • register a sale on the International Registry.

The AWG has produced standardised template documents with New York or English law as the governing law to facilitate the process relating to such transfers in the GATS. A GATS user provides information such as details of the transferor and transferee. At closing, the information will be automatically inserted into the final GATS document so that the parties can electronically execute the documents and the transfer itself can occur electronically. Ownership and security interests in a piece of equipment are stored in an e-ledger, which is updated following a new transfer or the creation of a security interest in the GATS.

The use of trusts to hold legal title to aircraft has been a common practice in the aviation industry (more specifically, for aircraft registered with the Federal Aviation Administration) to meet US nationality requirements for registration. Brazil has no similar nationality requirements and any person, Brazilian or not, can be registered as an aircraft owner. Since the GATS relies on the use of trusts, a traditional common law concept, a question arises as to whether the GATS can be used in jurisdictions such as Brazil that are not based on common law.

Use of GATS in Brazilian transactions

Although Brazilian law does not recognise trusts per se, the GATS can nonetheless be used and will be an effective system to facilitate aircraft transactions for aircraft registered on the RAB. Well before the advent of the GATS, the RAB registered aircraft owned by owner trusts. The RAB does not register beneficial ownership of aircraft. The RAB’s registration is limited to holders of legal title and of registered liens.

The RAB did not require the registration or submission of trust agreements until late 2013. When submitted to the RAB, trust agreements must be:

  • accompanied by a Portuguese translation prepared by a certified Brazilian translator (a so-called ‘public translator’);
  • notarised;
  • apostilled, if signed abroad; and
  • legalised by a Brazilian consulate if signed in a jurisdiction other than a Hague Convention jurisdiction.

The submission of trust agreements to the RAB differs from the registration of documents. A registered document becomes part of the public domain. Documents that are merely submitted are delivered to the RAB for its internal record-keeping purposes but are not made public. The requirement to submit a trust agreement applies regardless of whether the owner is also the lessor to the Brazilian airline. Thus, most aircraft under head lease (a sublease structure where the owner trust holds title but the sublessor to the Brazilian airline is not a trust) must still be submitted to the RAB.

Although the RAB’s regulation is not express, it is generally assumed that amendments to trust agreements should be filed with the RAB. Thus, GATS transfers should be reported to the RAB as trust amendments. However, as noted above, no public record of the transaction will exist in Brazil.

The use of a trust is also important in order to determine factors such as withholding tax treatment and the implications for transfers. The Federal Revenue Office (RFB) looks to the jurisdiction of the lessor to make determinations relating to certain withholding taxes (for further details please see “Withholding tax on aircraft lease rentals – new rules finalised“). At present, the RFB considers the domicile of the owner trust, and not necessarily the domicile of the beneficial owner, for withholding tax treatment. The RFB classifies both Ireland and Singapore as tax havens, which could affect the tax treatment of trusts established in these jurisdictions if they are lessors.


In the coming years, aircraft trading transactions with aircraft on the Brazilian register will likely transition to the GATS. The GATS will thus bring welcome relief to Brazilian operators that have inadequate time to deal with trading transactions that do not benefit them directly. Aircraft owners should consider registering title to their aircraft in GATS trusts to increase liquidity in the future.

Leave a Reply

Your email address will not be published. Required fields are marked *