Introduction
Financial leasing (leasing) has become an important financing tool in Turkey, particularly for companies seeking asset acquisition without immediate capital expenditure. Leasing is widely used in sectors such as construction, manufacturing, transportation, healthcare, aviation, and energy.
The Financial Leasing Law in Turkey provides a regulated framework for leasing transactions, ensuring legal certainty for lessors and lessees while supporting credit expansion and investment growth.
Unlike traditional sale or loan structures, financial leasing involves a tripartite commercial relationship and offers advantages in terms of tax optimization, balance sheet management, and collateral efficiency.
This article explains the legal framework governing financial leasing in Turkey, formation requirements, registration procedures, tax treatment, enforcement mechanisms, and practical considerations for domestic and foreign investors.
1. Legal Framework
Financial leasing in Turkey is regulated under:
- Law No. 6361 on Financial Leasing, Factoring and Financing Companies
- Turkish Code of Obligations
- Turkish Commercial Code
- Relevant tax legislation
Leasing activities may only be conducted by:
- Licensed financial leasing companies
These companies are supervised by:
- Banking Regulation and Supervision Agency (BRSA)
2. Definition of Financial Leasing
Under Turkish law, financial leasing is defined as:
A contract whereby the lessor acquires ownership of an asset and grants the lessee the right to use it for a specified period in exchange for periodic lease payments, with an option to transfer ownership at the end of the term.
Key elements:
- Asset acquisition by lessor
- Long-term lease
- Periodic payments
- Purchase option
3. Parties to the Leasing Transaction
There are typically three parties:
1️⃣ Lessor (Financial Leasing Company)
2️⃣ Lessee (User of asset)
3️⃣ Supplier (Seller of asset)
Structure:
- Lessee selects asset and supplier
- Lessor purchases asset
- Asset delivered to lessee
- Lessee makes lease payments
Ownership remains with lessor until transfer.
4. Types of Assets Subject to Leasing
Financial leasing may cover:
- Machinery
- Equipment
- Vehicles
- Aircraft
- Medical devices
- Industrial plants
- Real estate (subject to conditions)
Both movable and certain immovable properties may be leased.
5. Formation Requirements
Financial leasing contracts must:
- Be in writing
- Include essential terms
- Be registered in the Financial Leasing Registry
Registration ensures:
- Publicity
- Third-party protection
- Enforcement priority
Failure to register may affect enforceability.
6. Ownership Structure
Under Financial Leasing Law in Turkey:
- Lessor retains legal ownership during lease term.
- Lessee holds possession and use rights.
This structure protects lessor against lessee’s insolvency.
In bankruptcy of lessee:
- Asset does not become part of bankruptcy estate.
7. Lease Term and Payment Structure
Leasing agreements typically include:
- Fixed term
- Defined installment schedule
- Interest component
- Residual value clause
Lease payments may be structured in:
- Turkish Lira
- Foreign currency
Currency structuring must comply with foreign exchange regulations.
8. Purchase Option at End of Lease
At end of lease term:
- Lessee may purchase asset at agreed price.
Purchase option is usually symbolic (low residual value).
If lessee declines:
- Lessor may repossess asset.
9. Tax Treatment
Leasing provides tax advantages.
VAT Treatment
- VAT applied to lease payments.
- Certain asset categories may benefit from reduced VAT rates.
Corporate Tax
Lease payments are generally deductible as expense.
Stamp Tax
Leasing agreements are subject to stamp tax.
Tax structuring plays significant role in leasing popularity.
10. Advantages of Financial Leasing
For lessees:
- Preserves working capital
- Avoids large upfront cost
- May offer tax advantages
- Flexible financing structure
For lessors:
- Strong asset security
- Predictable revenue stream
- Ownership protection
11. Enforcement Mechanisms
If lessee defaults:
- Lessor may terminate contract
- Repossess asset
- Claim unpaid installments
Since lessor owns asset:
- Repossession is legally facilitated.
However, enforcement may still require court assistance in certain disputes.
12. Insolvency Considerations
One of the strongest aspects of Financial Leasing Law in Turkey is asset protection.
If lessee becomes bankrupt:
- Asset remains property of lessor
- Creditors cannot claim it
This reduces lender risk significantly.
13. Cross-Border Leasing
International leasing transactions are possible.
Foreign lessors may:
- Structure cross-border leases
- Finance Turkish projects
However, regulatory compliance and registration requirements must be satisfied.
Foreign currency leases must comply with currency legislation.
14. Financial Leasing Companies Regulation
Leasing companies must:
- Obtain BRSA license
- Meet capital adequacy requirements
- Maintain accounting standards
- Submit regulatory reports
They operate under prudential supervision similar to banks.
15. Comparison with Traditional Loan
| Feature | Financial Leasing | Bank Loan |
|---|---|---|
| Ownership | Lessor | Borrower |
| Collateral | Asset itself | Additional collateral often required |
| Balance Sheet Impact | Off-balance sheet in some cases | Debt recorded |
| Tax Deduction | Lease payments deductible | Interest deductible |
Leasing may provide structural advantages depending on accounting treatment.
16. Risks and Practical Challenges
Investors must consider:
- Residual value risk
- Currency volatility
- Regulatory compliance
- Early termination penalties
- Asset depreciation
Careful contract drafting is essential.
17. Real Estate Leasing
Under specific conditions, immovable property may be subject to financial leasing.
Real estate leasing is often used in:
- Large industrial investments
- Commercial real estate financing
Registration in land registry required.
Conclusion
Financial Leasing Law in Turkey provides a structured and well-regulated financing model that supports asset acquisition while minimizing risk for financing institutions. By retaining ownership of the leased asset, lessors enjoy strong legal protection, particularly in insolvency scenarios.
For businesses operating in capital-intensive industries, leasing offers flexible financing, tax efficiency, and asset protection advantages. However, compliance with registration, tax, and currency regulations is essential for legal validity and enforceability.
With proper structuring and professional legal guidance, financial leasing remains one of the most efficient financing tools in the Turkish commercial landscape.
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