San Marino has relaunched its aircraft registry by taking steps to make it more attractive to foreign owners and has signed a partnership agreement with U.S.-based Aviation Registry Group (ARG), which already administers Aruba’s offshore registry. The landlocked microstate, which has no airport and is surrounded by Italy, will be outsourcing all technical tasks to ARG, which is promising to ensure high safety standards as well as competitive pricing and flexible service that will be competitive with the Isle of Man’s highly successful offshore registry, and others in places such as Bermuda.
ARG and the government of San Marino, which has had its own register since 2001, have signed a 10-year exclusive agreement. Guidelines for the new-look registry, which is designated by tail numbers beginning with T7, have been agreed to that will see ARG’s network of inspectors “recommend” aircraft as suitable for registration by the San Marino authorities. The San Marino registry (Stand 425) is currently home to some 40 light jets, which must be maintained to ICAO standards. In line with other offshore registries (due to expense), compliance with European Aviation Safety Agency (EASA) requirements is not mandatory.
Miami-based ARG will use the same Aircraft Registration Management System that it has developed to run the Aruban registry, which it has done since 1995. The system allows it to track all necessary aircraft and pilot approvals, as well as details such as insurance. ARG president and CEO Jorge Colindres explained that the Aruba and San Marino registers will be run by separate divisions of the group.
Colindres told AIN that the registry is effectively getting a fresh start because previously “it was not attractive to foreign owners, since to qualify for registration you had to be a San Marino citizen or corporate body, and there was a two-percent import duty. Now it has become attractive to foreign owners, banks and leasing houses…as long as they simply claim domicile with a local agent, and if the aircraft is above 5,700 kg (12,540 pounds) there is zero percent duty.” He added that the San Marino government had passed “certain laws to make aircraft registration attractive and beneficial to foreign owners.”
One significant exception to registration is that the aircraft cannot be based in Italy, which recently introduced a controversial luxury tax on private aircraft. Aircraft can be “imported” into the European Union but not be subject to VAT as long as they don’t spend more than 180 days per year in the EU (so-called temporary admission). San Marino itself, like Monaco, is not part of the EU although both use the euro currency (note that the Isle of Man is also outside the EU but does not use the euro, it in effect uses the pound sterling but with its own notes).
San Marino recently passed specific new legislation to allow aircraft to be registered in its jurisdiction under the name of the owner–a move that it argues ensures complete transparency. However, the registry also promises to keep aircraft owner details confidential and they are not available as public records.
Colindres told AIN that the administration of the registry operates on a 24/7 basis with a high degree of responsiveness. ARG is targeting aircraft owners from Asia, and especially from China and India, who may seek an alternative to restrictive bureaucracy and tax issues in their own countries.
ARG and San Marino have yet to disclose the fee structure for the revamped registry, but Colindres indicated that charges are likely to start at around 5 percent less than those on the Isle of Man, which has registered more than 500 aircraft since the registry was established in 2007. “Aruba, Bermuda and the Cayman [Islands] were blown away by the Isle of Man,” said Colindres. “We want to bring aircraft to the San Marino registry and provide very a high quality jurisdiction and safety standards in order to retain the residual values of aircraft,” he said.
There is no need to establish a company in San Marino to join the country’s aircraft registry. The state is on the so-called “whitelist” drawn up by the Organization for Economic Cooperation and Development to control the use of offshore tax shelters.
ARG has a network of 45 aircraft inspectors located around the world, with many of them being former officials with well-respected aviation agencies, such as the UK CAA and ICAO. The company says it can get an inspector to a client’s home base very quickly and will aim to be able to complete a registration within one or two days.
Like the Isle of Man, San Marino accepts only privately operated aircraft, although it does want to expand the register to commercially operated aircraft when it is ready to provide the higher degree of responsibility and oversight that this would require. “We are very mindful of illegal charter,” said Colindres. “In Aruba, we have already shut down some private operators doing charter. We do audits on operators and sometimes you can just tell from the logbooks that they are flying charter.”
One possible market niche for the San Marino registry could be to offer aircraft operators restricted by blacklists such as that imposed by the European Union on states not meeting ICAO safety standards. In countries such as Kazakhstan, ARG believes its inspectors can work with operators and local officials to help them to find a way to comply with the required standards by registering aircraft outside their own country.