Aviation Finance & Leasing Italy 2025

1.1       What are the typical structures available for financing the purchase of an aircraft?

The financing of Italian registered aircraft is usually structured either by way of finance leases or secured loan arrangements.

1.2       What are the key advantages/disadvantages and main issues arising in relation to these financing structures?

Aircraft finance leases have a dual function of fund-lending and asset-leasing, whereby the lessor purchases and holds the ownership of an aircraft (selected by the lessee) and leases the aircraft to the lessee who uses the asset in exchange of lease rents for a certain period.  At the expiry of the lease term, the lessee may have the option to renew the lease or to purchase the aircraft at a market or fixed price.

Under secured loan arrangements, a lender makes a loan available to a borrower (being an operator, a leasing company or a private client) to purchase an aircraft from a manufacturer (if new) or seller (if used).  The loaned amount is secured by a mortgage over the aircraft and the borrower holds the ownership of the aircraft.

1.3       What types of leasing are possible under the laws of your jurisdiction? What are their essential characteristics?

Pursuant to the laws of Italy, the following types of leasing are possible: (i) dry leases; (ii) finance leases; and (iii) wet leases (for airlines’ operational needs only and subject to limitations).

1.4       Are there any proposals for reform in the area of aviation finance?

There are no proposals for reform in the area of aviation finance for the time being.

1.5       Is it possible according to the laws in your jurisdiction to enter into non-binding or partially binding pre-contractual agreements (e.g. ‘letters of intent’) that will NOT take effect as fully enforceable agreements?

Yes, in principle it is possible to enter into non-binding or partially binding pre-contractual agreements with Italian parties.

1.6       Is there a doctrine of ‘good faith’ in your jurisdiction that applies to all pre-contractual agreement, financing and leasing transaction documents, and the conduct of parties connected to them?

Yes, in general terms where under the transaction documents any party is vested with a discretion or may determine a matter in its sole opinion, Italian law may require that such discretion is exercised in good faith and that such opinion is based on reasonable grounds.

2.1       Which government authority in your jurisdiction has primary responsibility for the accounting for and regulation of revenue control and taxes?

The government authority having primary responsibility in respect of revenue control and taxes is the Italian Tax Authority (Agenzia delle Entrate), which is supported by the oversight activity of the Italian Tax Police (Guardia di Finanza).

2.2       What are typically the taxes in your jurisdiction that may arise in relation to a sale, a lease or a financing of an aircraft or an engine?

The taxes that may typically arise in Italy in relation to aircraft and/or engine transactions are: (i) income taxes on the account of the seller; (ii) VAT charged on the aircraft sale; (iii) VAT and custom duties charged on the aircraft importation into the country; and (iv) withholdings applied on lease rents or interest repayments.

2.3       Is the provision of a current tax-residency certificate by a payee sufficient for a lessee or a borrower potentially subject to withholding taxes in your jurisdiction on rental or interest payments to avail itself of treaty access and the mitigation of tax liability?

Generally speaking, to benefit from a preferred tax treatment under a double taxation treaty between Italy and a foreign country, the relevant lessor/lender must satisfy the following requirements: (i) it must be tax-resident in its foreign jurisdiction of incorporation; (ii) it must not have a permanent establishment in Italy; and (iii) it must be the direct beneficiary of lease rents or loan repayment instalments (as applicable).

2.4       Has the advent of BEPS (the Base Erosion and Profit Shifting initiative of the OECD) had any effect as regards structures in aviation finance and leasing or their interpretation?

We have not seen any impact of BEPS with respect to the Italian jurisdiction so far.

2.5       What are the typical thresholds in your jurisdiction for which a permanent establishment may be triggered under the terms of any relevant double-tax treaty or similar?

There are no specific thresholds in that respect, provided that for tax purposes a permanent establishment is usually considered a fixed place of business in which the activities of the enterprise are wholly or partly carried on, such as a subsidiary, a place of management, a branch, an office, a factory or a workshop.

2.6       Is the authority at question 2.1 likely to establish a ‘look-through’ right or similar as regards a lender or a lessor that is a special-purpose vehicle involved for the purpose of tax treaty access?

See the answer to question 2.3 above on tax treaty access.

2.7       Will the import of an aircraft into your jurisdiction and/or the sale or leasing of the aircraft give rise to any VAT, sales or use taxes or any customs import or excise duties?

Aircraft transactions may give rise to VAT, taxes and custom duties in Italy on a case-by-case basis.  In general terms, Italian VAT applies on the sale of goods (including aircraft) and the supply of services (including leases) that are finalised in Italy between business entities, as well as on the importation of goods from a non-EU country to Italy.  The current VAT standard rate is equal to 22%.  The importation and leasing of aircraft is VAT exempt if the relevant lessee qualifies as an international commercial operator (i.e. it mainly operates flights for profit on international routes).

Sales of aircraft located in Italy normally attract VAT at the said rate of 22%.  VAT does not apply if the aircraft is exported by the buyer out of the European Union within 90 days upon completion of the sale.  Likewise, VAT does not apply if the buyer is an international commercial operator (see paragraph above).

2.8       Are there any documentary taxes (for example, stamp duty payable on the execution of documents)?

A stamp duty of Euro 16 is payable on every four pages of a contract to be filed with the Italian Tax Authority (including aircraft purchase agreements and aircraft lease agreements).

3.1       Which government authority in your jurisdiction has primary responsibility for the regulation of aviation and the registration of aircraft? Is it an owner registry or an operator registry? If the aircraft register is an operator register, is it possible to record the details of an owner or lessor and any financier with an aircraft mortgage?

The government authority having primary responsibility for aviation regulation and aircraft registration in Italy is the National Civil Aviation Authority (Ente Nazionale per l’Aviazione Civile, hereinafter “ENAC”).  Italy is a dual registry, meaning that aircraft may be registered either in the name of the owner or in the name of the operator depending on the specific transaction.  In particular:

1. pursuant to the first paragraph of article 756 of the Italian Navigation Code (hereinafter the “INC”), aircraft can be registered with ENAC in the name of the owner when the latter is an EU citizen or an EU company ultimately controlled by EU citizens; and
2. pursuant to the second paragraph of article 756 of the INC, if the owner is an extra-EU entity, aircraft can be registered in the name of an EU-licensed operator that must submit the legal title to operate the aircraft to ENAC (usually a lease agreement).  If the aircraft is registered in the name of the operator, the details of the owner and/or lessor and/or secured financier (as applicable) are also recorded over the aircraft and publicly available.

3.2       What is the effect of registration of the aircraft? Does registration on your national aircraft register confer proof of ownership of the aircraft and/or engine?

The registration of an aircraft with ENAC confers proof of ownership of the same aircraft.  As a general principle, engines are supposed to be property of the owner of the aircraft on which they are installed, unless a different ownership interest can be proven in accordance with Italian law.  In that respect, pursuant to article 247 of the INC, ownership interests in any aircraft part and equipment (including engines) are valid and can be enforced against the aircraft owner (and against any third party as well) if such interest is reflected either in a deed bearing undisputable date (such as a bill of sale or a recognition agreement) or in the aircraft certificate of registration (which is not common practice with ENAC).

3.3       Can foreign-owned aircraft be registered on your national aircraft register and are there limits or restrictions on the age of aircraft that may be registered or operated?

See the answer to question 3.1 above on aircraft nationality.  There are no limits on the age of aircraft that may be registered or operated in Italy; however, ENAC may assess the eligibility of historic aircraft to obtain/renew a certificate of airworthiness on a case-by-case basis.

3.4       Can aircraft leases be registered? If so, in what circumstances? Must the lease be in a particular form if it is to be valid and enforceable (for example, must it be in a particular language or be notarised, legalised or apostilled)?

Yes, aircraft leases can be registered with ENAC any time the owner decides to dispose of the aircraft by leasing out the same to a lessee (either by way of a finance lease, a dry lease or a wet lease).  For validity and enforceability purposes, an aircraft lease must be first filed with the Italian Tax Authority and then registered with ENAC.

3.5       How is deregistration affected and what steps can a lessor take to deregister the aircraft on termination of the lease?

If the aircraft is registered in the name of the owner (please refer to question 3.1, point (i) above), the de-registration process can be conducted by the same owner without the lessee’s interference, provided that to complete the de-registration, ENAC requires the return of the original certificate of registration and certificate of airworthiness (which must be mandatorily placed on board the aircraft at all times). 

If otherwise the aircraft is registered in the name of the EU operator (please refer to question 3.1, point (ii) above), the de-registration can be achieved: (i) upon redelivery or repossession of the aircraft; or (ii) if the lessee does not cooperate in the de-registration process and it is in default under the lease, ENAC may require satisfactory evidence of such lessee’s default and that the aircraft leasing has been terminated accordingly.  At its exclusive discretion, ENAC may require that such evidence be constituted by a judicial decision from the Italian or foreign competent courts.

4.1       Is it possible to create a mortgage over an aircraft or engine in your jurisdiction? If so, what are the types of aircraft mortgage and engine mortgage available and what formalities are required in order to perfect it?

A mortgage is the sole security interest that can be voluntarily created over an aircraft and its engines.  Pursuant to article 1030 of the INC, a mortgage perfection is made by filing the same with ENAC.  A mortgage must be in the Italian language, executed before an Italian notary public and contain at least the following data: name and legal seat of the mortgagor and the mortgagee; type, model, marks and manufacturer’s serial number of the aircraft over which the security is recorded; and the maximum secured amount.

4.2       Can spare parts, including future parts, be subject to the aircraft mortgage or engine mortgage (as the case may be)? If not, are there any other forms of security that can be taken over spare parts?

Under Italian law, engines are considered part of an aircraft, even if materially separate.  Pursuant to article 1029 of the INC, a mortgage recorded over an aircraft extends also to its equipment and parts (including engines), irrespective of whether they are installed on the airframe or not.  The sole exception to the mentioned rule is when an engine is owned by a third party and such ownership interest is proven by a deed having undisputable date (such as a bill of sale and/or a title recognition agreement).  Future parts of an aircraft can be subjected to a previous mortgage by way of a specific accession agreement executed by the mortgagor.

4.3       Is there a register of mortgages or rights over aircraft and/or engine?

No there is not.  Mortgages are recorded in the aircraft registry held by ENAC.

4.4       What other forms of security can be taken over an aircraft and/or engine and can these other forms be registered?

There are no other forms of security that can be voluntarily taken over an aircraft and/or engine.

4.5       What claims and rights would take priority in your jurisdiction over a registered mortgage?

Pursuant to article 1023 of the INC, the following statutory liens take priority over a registered mortgage: judicial costs due to the state; expenses incurred in the common interest of creditors for enforcement measures against the aircraft; unpaid salaries of the captain and the crew; airport duties and similar charges and taxes; indemnities to assist and rescue the aircraft; and compensations for death or bodily injury of passengers or for loss of (or damage to) the cargo.

4.6       What other forms of security can be granted over an aircraft and/or engine lease?

Please refer to question 4.4 above.

5.1       What are the circumstances in which a mortgagee or owner can take possession of the aircraft and/or sell the aircraft? What requirements must the mortgagee or owner comply with?

A mortgagee or lessor/owner can enforce their rights upon the occurrence of an event of default under the relevant contract (a loan agreement or a lease agreement).  Any default remedy provided thereunder shall be enforced by way of a court-supervised procedure, as Italy has not ratified the Cape Town Convention and so self-help remedies are not available against the debtor.

5.2       What is the procedure for repossession of the aircraft?

As mentioned, self-help remedies are not permitted to enforce a security interest, and likewise in the event of a lease termination.  Therefore, any action carried out by the secured parties against the aircraft (and/or against its owner) must be taken by way of a court-supervised procedure.  In particular, a mortgagee could start an enforcement action in compliance with the Italian Civil Procedure Code, asking the competent court to order the sale of the aircraft by public auction and then satisfy the mortgagee’s credit through the allocation of the relevant sale proceeds (or a quota thereof).

5.3       Will local courts recognise a choice of foreign law in an aircraft mortgage? Are there any mandatory local rules that apply, despite a choice of foreign law?

No, aircraft mortgages must be governed by Italian law.

5.4       Will local courts recognise and enforce a foreign court judgment in favour of a mortgagee or lessor? Are any interim relief measures available?

This is not applicable in respect of mortgages (please refer to question 5.3 above). 

A foreign court judgment in respect of a lease would be recognised in Italy without re-assessment on the merits, subject to the following requirements: (i) the judgment must be final and no longer subject to appeal; (ii) both opposite parties have appeared in the proceeding, or if the defendant has not appeared it must have been properly called in accordance with the applicable procedural rules; (iii) the final judgment has been duly notified to the losing party; (iv) the judgment is issued by the competent court in the relevant jurisdiction; (v) the judgment must not be contrary to the Italian public policy rules; (vi) the judgment must not be contrary to another judgment issued by an Italian court; and (vii) no Italian dispute (that has started before the foreign judgment became final) must be pending with the same object and parties. 

5.5       Are powers of attorney from a local airline in favour of a lessor or mortgagee likely to be effective to allow the lessor or mortgagee to deregister the aircraft? Can such powers be irrevocable, be governed by a foreign law and/or do they need to be in any particular form for local recognition?

As a general note, a power of attorney enables the relevant attorneys to freely deregister and export the aircraft from Italy to the extent that the operator or grantor cooperates in the process (as no self-help remedies are available in Italy).

In addition, a power of attorney expressed to be irrevocable may nevertheless be revoked under certain circumstances for “cause” in accordance with article 1723 of the Italian Civil Code.  Furthermore, a power of attorney would not survive the grantor’s insolvency and may also be limited in circumstances of conflict of interest.

5.6       If recovery of the aircraft is contested by the lessee and a court judgment is obtained in favour of the lessor, how long is it likely to take to gain possession of the aircraft?

If the court judgment is not challenged by the losing party (i.e. the defaulted lessee), generally speaking the lessor may enforce such judgment and gain the aircraft possession in a timeframe of between one and three months.

5.7       To what extent is there a risk from the perspective of an owner or financier that a lessee of aircraft or other aviation assets in your jurisdiction may acquire an economic interest in the aircraft merely by payment of rent and thereby potentially frustrate any rights to possession or legal ownership or security?

The Italian legal system ensures full protection to ownership rights and security rights against any such risk.

5.8       Are there any restrictions on the ability of the lessor to export the aircraft from your jurisdiction on termination of the leasing?

No, there are not.

5.9       Are exchange controls prevailing in your jurisdiction as regards payments in foreign currency? Will any consents be required for the remittance of the sale proceeds abroad?

There are no exchange controls in Italy with respect to payments in foreign currencies, and likewise no consents are required to remit sale proceeds abroad.

5.10     If the lease is governed by English law and a judgment is obtained by the lessor in the English courts, can that judgment be automatically enforced in your jurisdiction or will the case have to be re-examined on its merits?

Please refer to question 5.4 above.

5.11     What is the applicable procedure for repossession of an aircraft under other forms of security interests?

Please refer to question 5.2 above.

6.1       Has your jurisdiction ratified any of the following: (a) The Chicago Convention of 1944 on International Civil Aviation (the Chicago Convention); (b) The 1948 Convention on the International Recognition of Rights in Aircraft (the Geneva Convention); (c) The 1933 Convention for the Unification of Certain Rules Relating to the Precautionary Arrest of Aircraft (the 1933 Rome Convention); and (d) The Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment (the Cape Town Convention) and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment?

Italy has ratified the 1944 Chicago Convention, the 1948 Geneva Convention and the 1933 Rome Convention, but it has not yet ratified the 2001 Cape Town Convention.

6.2       Has ratification of the Cape Town Convention caused any conflicts or issues with local laws?

This is not applicable.

6.3       What is the legal position regarding non-consensual rights and interests under Article 39 of the Cape Town Convention?

This is not applicable.

6.4       Has your jurisdiction adopted the remedies on insolvency provided under Article XI of the Protocol to the Cape Town Convention?

This is not applicable.

6.5       What is the procedure to file an irrevocable deregistration and export request authorisation under the Cape Town Convention (IDERA)?

This is not applicable.

7.1       Can the owner be strictly liable – liable without a requirement to prove fault or negligence – for any damage or loss caused by the aircraft assuming the owner is an innocent owner with no operational control of the aircraft?

The owner cannot be strictly liable for damages or losses caused by the aircraft, as long as the operational control of the aircraft is assigned to another entity under a specific contract (e.g. a lease agreement) that must be submitted to ENAC together with a so-called “statement of operator” (dichiarazione di esercenza).

7.2       Does the EU Emissions Trading System (EU ETS), or ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), apply to aircraft and aircraft operators in your jurisdiction? Will charges levied according to the EU ETS, or its equivalent, give rise to any in rem rights in relevant aircraft that are part of the fleet of the operator concerned and, if so, will such rights rank in priority ahead of any mortgage interests properly registered in the relevant aircraft and/or engine?

Yes, the EU ETS and CORSIA apply to aircraft and aircraft operators in Italy.  Charges levied according to the EU ETS do not give rise to rights in rem over relevant aircraft that are part of the fleet of the operator concerned.

7.3       What liabilities (actual or potential) could an owner, lessor or financier of an aircraft incur in your jurisdiction because of a failure to comply with local environmental law and/or regulations on the part of an operator of aircraft leased or financed by it?

Please refer to question 7.1 above.

8.1       Are there any public registers in your jurisdiction where a search can be carried out to determine whether an order or resolution for any bankruptcy, bankruptcy protection or similar insolvency proceedings has been registered in relation to an operator or lessee?

Generally speaking, the good standing of an Italian company can be searched through the public database of the Registry of Companies (subject to a search fee to be paid by the applicant).

8.2       In the event that an operator or lessee were to become insolvent either on a balance sheet basis (assets less than liabilities) or is unable to pay debts as they fall due, would an operator or lessee be required to file for insolvency protection?

Under Italian law, a commercial enterprise continuously unable to fulfil its obligations (i.e. insolvency status) can apply for/be subject to the following insolvency procedures:

• bankruptcy, which usually causes the disruption of the business activity, although the competent court may decide on the temporary continuation of the business to the sole benefit of the creditors;
• extraordinary administration, provided for large insolvent companies and having as its main purpose the protection of the employment levels and production assets through the implementation of a business plan aiming at the continuation, reestablishment, conversion or sale of the business; and
• arrangement with creditors, either with or without the continuation of the business.  This procedure is established for companies affected by crisis or insolvency, which, however, maintain restructuring capabilities and are therefore allowed to avoid any disruption by seeking a global arrangement with creditors in respect of the accrued indebtedness.  In case of failure of this procedure, the company can be declared bankrupt and fall under one of the procedures listed above, depending on its dimension.

8.3       Do the available forms of insolvency protection in your jurisdiction involve the appointment of either an officer of the court or a specifically court-appointed official to take control of the operator or lessee (an ‘Insolvency Official’) while in insolvency protection?

Yes, the available forms of insolvency protection involve the appointment of a court-appointed official to take control of the assets of the Italian insolvent company.

8.4       Does the commencement of insolvency protection involving the appointment of an Insolvency Official in your jurisdiction have the effect of prohibiting the owner from taking the following actions to enforce the lease after commencement of such protection: (a) applying any security deposit held by the owner against any unpaid amounts due under the lease; (b) accepting payment of rent or other lease payments from the lessee, a guarantor or a shareholder; (c) giving notice of default under the lease; (d) obtaining a judgment or arbitral award for unpaid lease payments; (e) giving notice to terminate the leasing of the aircraft and/or engine; or (f) exercising rights to repossess the aircraft and/or engine?

After the commencement of insolvency protection, the relevant court-appointed official is empowered to decide if the company should resolve or continue the lease for the benefit of the insolvency process and the satisfaction of lessee’s creditors generally.  In the case of lease termination, the unpaid lease rents (and other sums owed to the owner/lessor under the lease) will be treated as unsecured credits within the overall insolvency liability.  In the event of lease continuation: (i) the contractual rights and obligations of the parties will remain effective; (ii) the lessor’s credits arising after the insolvency declaration will have priority over any other unsecured claims arisen before then; and (iii) the lessor’s credits arising before the insolvency declaration will be treated as unsecured credits within the overall insolvency liability.

8.5       Can the commencement of insolvency proceedings have retrospective effect in relation to any such actions taken before commencement? If so, for what period can there be a look back?

The court-appointed official may claw-back payments, sales, transfers and any other disposal of assets, whether or not for consideration, made by the insolvent company: (i) during the last six months prior to the insolvency declaration, provided that the court-appointed official gives evidence that the creditor was aware of the insolvency status of the debtor; and (ii) in the last 12 months prior to the insolvency declaration outside the ordinary course of business (or otherwise not at arm’s length), except where the creditor can prove that it was not aware of the insolvency status of the debtor, but excluding, among others, payments of goods and/or services functional to carry out the ordinary business activity.

8.6       Is there, either under law or as a matter of practice in your jurisdiction, a period of time within which the Insolvency Official will either ‘adopt’ the lease and pay rent and other lease payments as an expense of the insolvency or ‘reject’ the lease and permit the owner to enforce such rights as it may have under the lease? (a) If the lease is ‘adopted’, will the Insolvency Official also pay any unpaid lease payments due as at commencement of the insolvency protection? (b) If not or if the lease is ‘rejected’, would the owner’s claim for any outstanding sums rank equally with other ordinary unsecured creditors of the lessee?

See the answer to question 8.4 above.

8.7       Are there certain types of preferred creditors whose claims will rank above claims of the owner?

Pecuniary obligations owed by the lessee to the lessor under a lease agreement (including lease rents) are usually treated as unsecured credits and therefore they are subordinated to the satisfaction of secured creditors, such as mortgagees and/or holders of statutory liens arising by operation of law (like taxes and airport charges).

8.8       If the aircraft is in the possession of a person other than the operator or lessee at the commencement of insolvency protection of the operator or lessee, for example, an independent maintenance facility, will such person be entitled, under the laws of your jurisdiction, to assert a lien arising under law or contract over the aircraft in respect of amounts then due and unpaid to such person by the operator or lessee?

Yes, pursuant to article 2756 of the Italian Civil Code, credits arising from services and expenses for the conservation and improvement (including maintenance) of movable assets (including aircraft) are secured by a right of retention in favour of the service supplier (including maintenance, repair and overhauls – “MROs”).

9.1       Other than insolvency laws (see section 8), are there any laws that may have the effect of defeating the owner’s right in the aircraft – for example, government requisition? Do the laws of your jurisdiction provide for any compensation in such circumstances?

Generally speaking, aircraft can be detained in case of breach of the Italian criminal laws, always provided that such laws recognise ownership rights over aircraft when the criminal activity is carried out by a person other than the owner.  In any event, the laws of Italy guarantee the protection of property from expropriation without fair compensation.

9.2       Are there any rights in relation to third parties to detain or sell the aircraft pursuant to illegal activities, tax or any other laws if the operator or lessee fails to pay when due? If so, can the aircraft be forfeited and sold without the owner being made aware?

Generally speaking, aircraft can be seized when the owner was not aware of the relevant illegal activity, but cannot be forfeited/sold if the owner was not aware of such criminal activity.

10.1     With the global commitment of IATA to zero-emissions by 2050, are there any particular developments regarding the associated new aircraft and engine technology which might be foreseeable as regards aviation finance in your jurisdiction, e.g. as regards taking security (battery powertrain equipment) or enforcement (different airport infrastructure environments)?

There are no particular developments on new aircraft and engine technology that might be relevant for the aviation finance sector, either in terms of taking securities or enforcement options.  So far, any such new technology would still fall within the scope of application of general legal rules when it comes to ownership, leasing, securities and enforcement.