Purchasing a Business Jet in Türkiye: The Legal Structure of Private Aircraft Ownership

Aircraft Purchase Agreements, Turkish Aircraft Registration, Corporate Ownership, Financing, Taxation, Operations and Legal Risk

Introduction

Purchasing a business jet is legally far more complex than acquiring a luxury vehicle or another high-value movable asset. Acquiring a Gulfstream, Bombardier Global, Dassault Falcon, Cessna Citation or Embraer Praetor involves much more than negotiating the purchase price.

A business jet transaction may simultaneously involve international sale law, aviation regulation, property law, aircraft finance, taxation, customs, insurance and technical certification.

The principal Turkish legal framework includes Law No. 2920 on Turkish Civil Aviation, SHY-7 on nationality and registration markings, the General Aviation Regulation SHY-6B, continuing-airworthiness rules and the registration and certification procedures administered by the Directorate General of Civil Aviation (“SHGM”).

Turkish Civil Aviation Law expressly provides that, unless otherwise specified by the legislation, aircraft are subject to the legal rules applicable to movable property.

However, because aircraft are high-value registered assets capable of being mortgaged, leased and subjected to international security interests, their legal treatment is considerably more sophisticated than that applicable to ordinary movable property.

1. Who Should Own the Aircraft?

One of the first questions in any business jet acquisition is:

Should the aircraft be owned personally, by an existing Turkish company, or through a dedicated aircraft-owning company?

The answer has significant consequences for registration, taxation, financing, liability, succession and future disposal.

Article 49 of the Turkish Civil Aviation Law sets out the circumstances in which aircraft owned by Turkish legal entities may qualify as Turkish civil aircraft. For Turkish commercial companies, requirements concerning the nationality of persons authorised to manage and represent the company and Turkish voting control are relevant to this analysis.

Accordingly, where foreign investors, multinational groups or foreign holding structures are involved, the aircraft ownership structure should be designed before the Aircraft Purchase Agreement is executed.

Foreign ownership may also be combined with leasing or financing structures involving a qualifying Turkish operator. SHGM’s registration procedures expressly distinguish between acquisitions through purchase, operating lease and finance lease.

The question “Should I buy the aircraft personally or through a company?” should therefore never be answered from a tax perspective alone.

2. Owner, Registered Owner and Operator

Three concepts must be distinguished in business aviation.

The owner holds legal title to the aircraft.

The registered owner is the party identified as owner in the relevant aircraft registry.

The operator is the entity legally and operationally responsible for conducting the aircraft’s operations.

These positions may be held by the same party, but they do not have to be.

For example, an aircraft may legally belong to a financing company, be leased to a Turkish corporate group and have its operations managed by an authorised general aviation operator.

SHGM itself treats an aircraft ownership change and an operator change as distinct registry procedures.

The distinction has substantial consequences for liability, insurance, maintenance obligations, crew employment and finance documentation.

3. The Aircraft Purchase Agreement

A sophisticated international business jet transaction should not rely upon a short-form sale agreement.

A properly structured Aircraft Purchase Agreement should ordinarily address:

aircraft type and serial number;

engine and APU serial numbers;

purchase price;

deposit arrangements;

escrow;

pre-purchase inspection;

technical acceptance criteria;

delivery location;

delivery condition;

transfer of title and risk;

release of mortgages, liens and encumbrances;

representations and warranties;

aircraft and maintenance records;

damage history;

export certificate of airworthiness;

de-registration;

taxes;

governing law; and

dispute resolution.

For an aircraft to be registered for the first time in the Turkish Civil Aircraft Registry following a purchase, SHGM may require the Aircraft Purchase Agreement, the Bill of Sale, evidence of de-registration from the previous registry, translated and authenticated corporate documents and the relevant import and technical documentation.

The transaction documents must therefore be drafted not merely to create obligations between buyer and seller, but also to work effectively before SHGM, customs authorities, lenders and foreign registry authorities.

4. Why the Pre-Purchase Inspection Has Legal Importance

The pre-purchase inspection is not merely a technical exercise.

Its contractual consequences may determine who bears millions of dollars in future maintenance or repair expenses.

An inspection can reveal previously undisclosed structural damage, incomplete records, approaching engine overhaul events, mandatory airworthiness issues, life-limited component problems or other material discrepancies.

The Aircraft Purchase Agreement should therefore determine whether such discoveries entitle the purchaser to:

require rectification;

receive a purchase-price adjustment;

require the seller to pay the cost; or

terminate the transaction.

SHGM’s continuing-airworthiness framework for imported aircraft itself contemplates examination of maintenance records, accident history, flight hours, maintenance status and airworthiness-related documentation.

A well-drafted transaction should accordingly make technical acceptance a genuine condition precedent to closing where appropriate.

5. Registration in the Turkish Civil Aircraft Registry

Where the aircraft is intended to operate under a Turkish “TC” registration, registration procedures must be completed before ordinary operations commence.

SHGM permits reservation of an aircraft registration mark prior to first registration. For purchased aircraft entering the Turkish registry, the registration package may include the purchase agreement, Bill of Sale, previous de-registration certificate, export documentation, technical approvals and other required records.

An aircraft cannot simultaneously remain validly registered in two different national aircraft registries. SHGM therefore requires evidence that a previously foreign-registered aircraft has been de-registered, or evidence that no foreign registration exists, before Turkish registration is completed.

Closing mechanics must consequently coordinate the timing of payment, execution of the Bill of Sale, de-registration and new registration.

6. Title Transfer and Registry Due Diligence

Payment of the purchase price does not in itself resolve every title issue.

SHGM maintains a specific ownership-change procedure for Turkish-registered aircraft. Documents may include a notarised sale agreement, registration documents, tax-clearance documentation, insurance evidence and the existing registration certificate.

Before closing a second-hand business jet acquisition, counsel should therefore investigate whether the aircraft is affected by:

aircraft mortgages;

attachments or seizures;

finance leases;

international interests;

IDERA; or

other third-party rights.

A sophisticated acquisition should not close merely because the seller physically possesses the aircraft.

7. Aircraft Mortgages and Financing

A business jet may itself constitute security for its acquisition financing.

Articles 69 and following of the Turkish Civil Aviation Law recognise aircraft mortgages. A mortgage may secure an existing, future or conditional debt. A contractual aircraft mortgage requires agreement between the owner and creditor together with registration in the relevant registry; Turkish law also contains formal requirements for the mortgage agreement.

A lender financing a USD 25 million business jet may therefore seek a broader security package consisting of instruments such as:

an Aircraft Mortgage;

Assignment of Insurances;

Assignment of Requisition Proceeds;

Share Pledge; and

Account Pledge.

Aircraft finance is consequently not simply a loan transaction. It usually involves a coordinated security structure around the aircraft and the aircraft-owning entity.

8. Cape Town Convention and International Interests

Cross-border aircraft financing also requires consideration of the Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Protocol.

Türkiye is a Contracting State to the Aircraft Protocol and has made declarations relevant to the operation of the international regime.

Where the Convention applies, qualifying security interests in aircraft objects may be registered through the International Registry. Priority searches may therefore become a fundamental part of aircraft-finance and acquisition due diligence.

Türkiye also implements the IDERA — Irrevocable De-registration and Export Request Authorisation — mechanism. SHGM has specific procedures for recording an IDERA in the Turkish Civil Aircraft Registry.

Accordingly, a financed business jet acquisition may require both a Turkish registry investigation and an appropriate Cape Town / International Registry search.

9. Private Corporate Use Is Not the Same as Commercial Charter

Ownership of a business jet does not automatically entitle the owner to transport passengers for remuneration.

This distinction is fundamental.

SHY-6B governs general aviation activities falling outside commercial air transportation. It categorises non-commercial operations involving complex motor-powered aircraft as B4 / NCC operations. Turbojet aeroplanes fall within the regulation’s concept of complex motor-powered aircraft.

A corporation transporting its own executives on its own business jet is therefore legally different from operating the same aircraft for paying passengers on an Istanbul–Paris charter flight.

Commercial carriage of passengers or cargo for remuneration triggers the separate commercial air transport regime, including licensing rules under SHY-6A.

An owner wishing to offset operating costs by “chartering out” unused aircraft hours must therefore obtain specific aviation-law advice rather than treat the arrangement as a simple lease.

10. General Aviation Operational Structure

Depending on the aircraft and intended operation, SHY-6B general aviation requirements must also be considered.

The Regulation governs the licensing and standards applicable to persons conducting general aviation operations and requires SHGM authorisation for the relevant B1–B5 activity categories.

A business jet owner may establish an appropriate internal operating structure or engage a professional aircraft-management/general-aviation operator.

Whichever approach is chosen, the contracts should clearly identify the party possessing operational control and the allocation of responsibility for flight operations.

11. Airworthiness

Legal ownership does not itself make an aircraft legally flyable.

Aircraft registered or to be registered in Türkiye must satisfy the applicable airworthiness certification requirements. SHGM issues Airworthiness Certificates and, where applicable, Airworthiness Review Certificates. The authority also recognises certain type certificates issued by authorities including EASA, FAA, Transport Canada and ANAC Brazil, subject to its applicable requirements.

Imported aircraft may require technical review of maintenance status, records, export airworthiness documentation and maintenance programmes.

The delivery condition under the Aircraft Purchase Agreement should therefore correspond with the conditions necessary to obtain Turkish airworthiness documentation.

12. Continuing Airworthiness and Maintenance

The cost of aircraft ownership does not end at closing.

The operator must ensure continuing airworthiness and compliance with maintenance requirements. Turkish rules require an appropriate continuing-airworthiness and maintenance framework, including proper records and maintenance programmes.

Due diligence should therefore look not only at whether the aircraft is airworthy today, but also at major maintenance events expected during the next several years.

An aircraft offered at an attractive purchase price may ultimately be economically expensive if major engine, structural or component maintenance is imminent.

13. Insurance

Third-party liability insurance is a core part of lawful aircraft operations.

SHGM operational rules require relevant insurance documentation to be carried or maintained, and loss of required insurance coverage may have direct consequences for an aircraft’s ability to operate.

Business aircraft are commonly protected through a wider insurance structure that may also address hull risk, passenger liability, crew exposures, war risk and other aviation-specific exposures.

Where the acquisition is financed, the lender will normally require its security interest to be appropriately protected through the insurance arrangements.

14. VAT on the Acquisition or Importation of a Business Jet

Tax treatment can materially alter the economics of an aircraft transaction.

As a general rule, imports of goods are subject to Turkish VAT. However, Article 13(a) of the Turkish VAT Law provides an exemption framework for certain transportation assets.

According to the current VAT General Application Communiqué, supplies of qualifying aircraft to VAT taxpayers whose activities consist partly or wholly of leasing or otherwise operating air transportation vehicles, where the aircraft is acquired for that qualifying purpose, may fall within the exemption.

There is, however, a crucial limitation.

Simply owning the aircraft through a company does not automatically produce VAT exemption.

The current Revenue Administration guidance expressly states that the exemption does not apply where the acquirer’s business does not fall within the qualifying leasing/operation activity. Even a qualifying taxpayer cannot rely on the exemption for an aircraft acquired for its own private use.

The ownership and operating model should therefore be reviewed for VAT purposes before the purchase is completed.

15. Corporate Aircraft Expenses and Tax Deductibility

Holding the aircraft through a company raises another tax issue: deductibility of aircraft expenses and depreciation.

The current Turkish Corporate Tax General Communiqué states that expenses and depreciation relating to aircraft and helicopters which are not connected with the taxpayer’s principal business activities are not deductible in determining corporate taxable income.

This is particularly significant for industrial groups, real-estate companies and similar businesses acquiring a jet principally for shareholders or executives.

Corporate ownership therefore does not mean that every flight, maintenance invoice or depreciation charge automatically produces a corporate tax deduction.

A documented corporate aircraft use policy may become important in distinguishing genuine business use from personal benefit.

16. Offshore Aircraft Ownership Structures

Business aircraft are frequently placed in dedicated foreign special-purpose entities.

Such structures can be legitimate and useful, but the assumption that an offshore aircraft-owning company automatically eliminates Turkish tax, customs or aviation obligations is incorrect.

Where the aircraft is based or substantially operated in Türkiye, Turkish rules concerning customs status, importation, VAT, operational authorisation and corporate taxation may still become relevant.

Furthermore, Turkish registration must remain compatible with the nationality and registration conditions contained in the Turkish Civil Aviation Law. Loss of the qualifications required for Turkish registration can lead to removal of the aircraft from the Turkish registry.

Any SPV structure should therefore be analysed simultaneously from aviation, corporate, tax and customs perspectives.

17. Finance Leasing

Finance leasing may provide an alternative to outright acquisition.

SHGM’s registry procedures recognise finance leasing as a distinct acquisition structure and require specific finance-lease documentation for aircraft brought into the Turkish system under such arrangements.

The finance lessor may retain legal ownership while the lessee receives the economic use of the aircraft.

The transaction documents should carefully address matters such as events of default, maintenance obligations, insurance, permitted use, subleasing, Cape Town registrations, IDERA and redelivery condition.

18. Future Sale and Export

The exit strategy should be considered at the acquisition stage.

Where a Turkish-registered business jet is later sold to a foreign purchaser, the process may require release of existing mortgages and other encumbrances, lender consent, export documentation and de-registration from the Turkish Civil Aircraft Registry.

SHGM’s de-registration procedures require different combinations of sale, tax, registration and airworthiness documentation depending upon the transaction. An aircraft moving to a foreign registry must first be released from the Turkish registry.

Where IDERA has been registered, the financing structure may also affect the de-registration and export process.

19. Legal Due Diligence Checklist for a Business Jet Acquisition

Before completing a high-value aircraft transaction, counsel should ordinarily investigate:

1. Current legal ownership and chain of title;
2. National aircraft registry records;
3. Existing aircraft mortgages and attachments;
4. Cape Town International Registry records;
5. IDERA;
6. Finance-lease interests;
7. Engine and APU title;
8. Maintenance records;
9. Accident and damage history;
10. Airworthiness status;
11. Mandatory airworthiness directives;
12. Upcoming major maintenance events;
13. Insurance;
14. Customs and tax status;
15. Export and de-registration documentation;
16. Eligibility of the acquiring structure for Turkish registration;
17. Operator and aircraft-management arrangements;
18. Escrow and closing mechanics;
19. Governing law; and
20. Arbitration or court jurisdiction.

Given the economic value of modern business jets, legal and technical due diligence should ideally begin before the Aircraft Purchase Agreement becomes unconditional and before a non-refundable deposit is released.

Conclusion

The acquisition of a business jet in Türkiye is not simply the purchase of an expensive movable asset.

A single transaction may involve:

the Aircraft Purchase Agreement, Bill of Sale, Turkish Civil Aircraft Registry, airworthiness certification, general aviation licensing, insurance, VAT and customs, aircraft mortgages and the Cape Town Convention.

One of the most important decisions therefore arises before the aircraft is purchased:

Should the jet be owned personally, by an operating company, through a dedicated SPV, or under a leasing structure — and who should legally operate it?

Incorrect structuring may create registration problems, unexpected VAT exposure, non-deductible corporate expenses, financing difficulties or regulatory issues arising from the distinction between private and commercial operations.

A properly structured acquisition separates ownership, registration, financing and operational control from the outset.

For that reason, major business jet acquisitions should combine aviation legal due diligence, tax structuring, title searches, aircraft-finance review and technical pre-purchase inspection before closing.