Aviation Finance & Leasing 2025 Comparisons

Value Added Tax (VAT) Liability

Under Law No 3065, VAT generally arises when goods are sold within Türkiye. However, Article 13/a of the VAT Law provides an exemption for deliveries of air transport vehicles to taxpayers whose activities involve partially or wholly leasing or operating air transport vehicles. Accordingly, aircraft sales in Türkiye are exempt from VAT. In practice, the main engine, as an integral part of the aircraft’s functional unity, is also considered to be covered by this VAT exemption.

Special Consumption Tax (SCT) Liability

Under Law No 4760, SCT arises upon entry of goods into the Customs Territory of Türkiye through importation, and upon registration of aircraft with the Directorate General of Civil Aviation (DGCA) registry. If the aircraft has not previously been subject to SCT in Türkiye, SCT will be reflected in the sales price for the transaction. SCT is calculated according to the tariffs specified in the annex to the SCT Law.

Corporate Tax (CT) Liability

Under Law No 5520, income of legal entities is subject to CT, and no exemption is specifically provided for income arising from aircraft sales or purchases. However, where one party to the transaction is a foreign entity and a bilateral tax treaty exists between the relevant countries, CT exemptions may apply.

Customs Duty

The aircraft will be imported under either the free circulation or the temporary import regime, depending on its intended purpose and use. Under the free circulation regime, customs duty generally arises; however, Article 167 of Law No 4458 provides that aircraft sold to companies engaged in commercial air transport in Türkiye are exempt from customs duty.

Stamp Duty

Under Article 1 of Law No 488, written papers listed in the attached table are subject to stamp tax. Accordingly, an aircraft purchase agreement would be considered a “paper” subject to Law No 488. If the agreement is signed and executed in Türkiye, or if it is signed outside Türkiye but subsequently used, benefited from or presented to an authority in Türkiye, stamp duty will be imposed.

Under Article 66 of the Turkish Civil Aviation Code (TCAC), sale agreements must be in writing. In principle, if the aircraft will not be registered with the Turkish registry, no notarisation or translation is required. However, in case of a dispute, courts or enforcement offices will require submission of a notarised Turkish translation of the agreement. If the aircraft will operate in Türkiye, registration with the Turkish DGCA is mandatory and, whether the filing is made as a change of ownership or as an initial registration, notarisation and translation will be required.

Ownership of an aircraft transfers to the buyer upon execution of a valid sale agreement. Registration with the Turkish registry is declaratory. The bill of sale serves as evidence of the parties’ intention to transfer title. However, registration is required to provide notice to third parties and must be completed for both the aircraft and any separately registered engines. For equipment not recorded in the registry, such as certain engines, title may be evidenced through possession, and the possessor is presumed to be the owner unless proven otherwise.

Acquiring shares in a company that owns an aircraft does not itself constitute an acquisition of the aircraft, as title remains vested in the company.

Under Article 24 of the Turkish Private International Law and Procedural Law Act (IPPL), contractual obligations are governed by the law chosen by the parties. However, pursuant to Article 22 of the same code, rights in rem over air transport vehicles are governed by the law of the country where such rights are registered. Therefore, if the aircraft or engine whose ownership is being transferred is registered in the Turkish Civil Aircraft Registry, Turkish law will prevail even though the bill of sale is governed by English or New York law. In practice, where parties execute an aircraft sale and purchase agreement accompanied by a bill of sale subject to foreign law, the transfer of title to an aircraft, notwithstanding whether it is physically delivered in Türkiye, will be recognised according to Turkish law.

For the transfer of ownership and other rights therein, the bill of sale must be translated into Turkish, certified, notarised and legalised.

Aircraft are registered in the Turkish Civil Aircraft Registry pursuant to Article 50 of the TCAC. For registration of an aircraft, an application to the Ministry of Transportation with a petition is required. Contracts have no effect against third parties unless they are registered in the aircraft registry (Article 66). Additionally, the model of acquisition and details regarding the sale and transfer of ownership are registered. For the transfer of ownership and other rights in rem over the whole or a share of an aircraft, the execution of a written agreement and/or bill of sale is required. If such bill of sale is governed by foreign law, it must be translated into Turkish, notarised and legalised. However, for registration to be completed, all documents listed on the DGCA’s official website must be duly prepared and submitted. Depending on how quickly the documentation is finalised, the process generally takes between two and four weeks.

The same terms as those for an aircraft sales agreement would apply for the execution of a bill of sale, in terms of tax and duties.

There is no lease type that is explicitly prohibited; however, certain restrictions and specific authorisation or registration requirements do apply.

Under the IPPL, contractual obligations are governed by the law expressly chosen by the parties. This principle applies to lease agreements involving either a domestic party or an asset situated in Türkiye, allowing such leases to be governed by foreign law provided the choice is explicit and does not violate Turkish mandatory provisions or public policy.

Article 8/9 of Decree No 32 on the Protection of the Value of Turkish Currency permits movable sale agreements to be denominated in foreign currency or indexed thereto. Aircraft sale agreements fall within the scope of such movable sale agreements and may therefore be denominated in foreign currency.

There are no exchange control restrictions in Türkiye that would prevent the payment of rent under a lease or the repatriation of realisation proceeds.

Under Turkish law, the execution of lease agreements may trigger various tax obligations depending on the structure and parties involved. For financial lease agreements, Article 37 of the Financial Leasing Law provides exemptions from stamp duty and various other charges and duties, with only minor registration costs arising. However, cross-border aircraft leases may be subject to stamp duty if executed or notarised in Türkiye, calculated based on the contract value under the Stamp Tax Law. Additionally, VAT may apply to lease transactions depending on the nature of the arrangement and the status of the parties. CT or individual income tax obligations may also arise for the lessor, based on rental income. Where double taxation treaties exist between Türkiye and the relevant foreign jurisdiction, and the applicable conditions are satisfied, exemptions or reductions from withholding taxes may be available.

For lease transactions involving foreign operators, the lessor must be a commercial air carrier licensed in accordance with ICAO Annex 6 by the civil aviation authority of an ICAO member state and must hold a valid air operator certificate. In the case of financial leases, the lessor must be an entity duly authorised under the laws of its jurisdiction to conduct leasing activities and must hold legal title to the aircraft.

Under Turkish law, certain mandatory terms must be included in aircraft lease agreements regardless of whether the lease is governed by English or New York law. These requirements are primarily regulated under the Financial Leasing Law and the Directive on Aircraft Leasing Procedures and Principles (the “Directive”). The mandatory terms that must be included in lease agreements operating in or affecting Turkish jurisdiction include, but are not limited to, the following.

• For aircraft imported into Türkiye through financial leasing arrangements and registered with the Turkish Civil Aircraft Registry, the lease agreement must expressly permit subleasing by the lessee.
• For wet lease agreements, whether between two Turkish operators or between Turkish and foreign operators, the contract must specify:
1. the routes;
2. operation dates;
3. the aircraft to be leased; and
4. the allocation of technical, operational and insurance responsibilities.
• For wet leases from foreign operators to Turkish operators, the agreement must prohibit subleasing of the aircraft and confirm that technical and operational oversight remains with the Turkish operator. The agreement must also state that it will terminate if DGCA standards are not met and must provide that it becomes effective only upon approval by both the Turkish DGCA and the foreign operator’s aviation authority.
• In a dry lease agreement where a Turkish operator leases an aircraft to a foreign operator, the contract must clearly state that operational and maintenance responsibility rests with the foreign operator for the duration of the lease. It must also provide that maintenance will be carried out by an organisation approved under SHY-145, EASA Part-145, or an equivalent standard.

There is no explicit restriction on the use of gross-up clauses in leasing agreements. However, such clauses must comply with Turkish public policy and mandatory provisions.

Parties may stipulate that a lease covers parts installed or replaced on an aircraft or engine after execution. Turkish law permits such lease agreements to extend to parts installed or replaced after execution, including internal aircraft parts, provided the terms are clearly set out in writing, comply with regulatory requirements, and are supported by proper documentation and lessor oversight. To ensure certainty, lease agreements should expressly extend to integral parts, accessories, and attachments that become part of the aircraft or engine, as these are generally treated as belonging to the principal asset under TCO. In practice, additional parts should be duly recorded in the technical logbooks and included in the DGCA registration file to ensure the lessor’s interest is properly safeguarded.

Whether an aircraft engine becomes annexed to the airframe is assessed under Articles 684 et seq of the Turkish Civil Code, taking into account the distinct functions and commercial value of the airframe and engine. In practice, an engine is regarded as an accessory to the aircraft rather than an integral part of the airframe. Accordingly, pursuant to Article 686 of the Turkish Civil Code, dispositions relating to the aircraft will, unless otherwise agreed, also extend to its engines as accessories.

The concept of a trust as recognised in common law jurisdictions does not exist.

That said, there is no practical obstacle to structuring a lease through an owner trustee. The lessor under the lease is able to demonstrate valid title to the aircraft. As long as the lessor holds title and can evidence the same, the fact that such ownership is held within a trust relationship will not be questioned. In other words, Turkish law looks to the registered owner’s title, rather than the underlying trust arrangement.

The rights of the legal owner of an aircraft are recorded in the Turkish Civil Aircraft Registry. Under Article 66 of the TCAC, registration is not constitutive for the establishment of a right in rem: these arise from valid written agreements between the parties. However, under Article 66(2), the effect of such notation is to perfect the right vis-à-vis third parties, secure priority and protect the lessor’s interest against bona fide third-party purchasers.

An aircraft may be registered in the name of the operator even if the operator is not the legal owner, provided that there is a valid contractual basis such as a lease agreement between the owner and the operator. In practice, this is typically achieved through financial leasing or operating leasing arrangements.

In Turkey, aircraft leases must be annotated in the Turkish Civil Aircraft Registry to be effective against third parties. Where the lease qualifies as a financial lease under the Financial Leasing Law, the agreement must also be registered with the Financial Institutions Association (FIA).

Wet-lease and dry-lease operations involving Turkish operators and foreign operators require prior approval from the DGCA pursuant to Article 6 of the Directive. Without such DGCA approval, flight operations cannot be performed in Türkiye, rendering the lease agreement unenforceable in practice.

In addition, where the lease qualifies as a financial lease, the parties must also apply to the FIA for registration. The application must be made with the supporting documentation listed under the General Communiqué on the Registration of Financial Lease Agreements Concluded Abroad (the “Communiqué”) in order for the agreement to be valid and enforceable.

Pursuant to Article 119/1 of the TCAC, a lease agreement is not valid (and therefore not registrable) unless it is executed in written form.

The notarised original form of the agreement and a notarised and legalised translation are necessary for registration.

Financial Leases

Pursuant to Article 37 of the Financial Leasing Law, financial leasing agreements (including their amendments, assignments and security documents) are exempt from stamp duty, registration charges and other duties. This exemption is applicable for both domestic and cross-border financial leases once duly registered with the FIA.

Operational Leases (Wet/Dry Leases)

Such leases are generally subject to stamp duty unless they qualify as financial leases under the Financial Leasing Law.

Customs and VAT

For aircraft leased from abroad, the transaction may fall under temporary importation rules. VAT may apply depending on the structure of the transaction and the parties involved. Customs duties may also arise, although exemptions and international treaties can mitigate these obligations.

In practice, most aircraft habitually based in Türkiye are registered with the Turkish DGCA, as registration is a legal requirement for operation in Türkiye. However, for commercial or financial reasons, some owners and lessors prefer alternative jurisdictions with more flexible regulatory regimes. The two most common alternatives are Malta and Ireland.

For standard aircraft registrations, the DGCA generally requires the bill of sale in original form together with its notarised Turkish translation. Other documents are usually accepted in copy form unless otherwise requested.

However, if the registration is made in connection with a financial lease, stricter requirements apply under the relevant Communiqué. In such cases:

• the notarised Turkish translation of the lease agreement must be submitted in original form; and
• the lessor must provide a certified document proving its authority to conduct leasing activities in its home jurisdiction, together with a legal opinion obtained within the three months prior to the application, both in original form and notarised Turkish translation.

Lease payments made to a foreign lessor are generally subject to withholding tax. The lessee is responsible for withholding and remitting such tax to the Turkish tax authority. If the lessee fails to comply with this obligation, the lessee bears primary liability towards the Turkish authorities.

However, in practice, the Turkish tax authority may still pursue recovery from the foreign lessor if withholding has not been properly made. Therefore, it is advisable for lease agreements to include clear provisions allocating this responsibility.

Where applicable, double taxation treaties may provide for reductions or exemptions.

A foreign lessor will not be deemed resident, domiciled or carrying on business in Türkiye merely by entering into or enforcing a lease agreement. However, a foreign corporation that does not have both its legal and business seat in Türkiye is considered a limited taxpayer and is subject to tax only on income sourced in Türkiye.

Liabilities regarding aircraft or engine maintenance and operations may be imposed on a foreign lessor in wet lease arrangements where the lessor retains operational control and responsibility for the aircraft.

The liability of an aircraft owner, lessor or financier in the event of damage or loss depends on the type of lease arrangement and the contractual provisions. While Turkish law recognises certain forms of strict liability under the TCO, there is no specific statutory provision that automatically imposes strict liability on aircraft owners, lessors or financiers merely by virtue of their status as such.

Creditors of a domestic lessee cannot attach or seize an aircraft leased to it if the aircraft is registered in the lessor’s name and the lease is properly documented and registered.

In enforcement proceedings, property found in the debtor’s possession is initially presumed to belong to the debtor. Therefore, a lessee’s creditor might attempt to attach an aircraft under the assumption that it forms part of the debtor’s estate. However, once the lessor asserts ownership – typically by submitting registration records – the attachment is lifted through a third-party ownership claim.

Under Article 119(2) of the TCAC, lease rights must be annotated in the aircraft register to be effective against bona fide third parties. Per Article 52, rights in rem acquired in good faith based on the registry are valid, so an unregistered lease may be overridden. Under Article 29 of the Cape Town Convention, registered international interests, including leases, take priority over later or unregistered rights, subject to the Convention’s terms.

As a rule, insurance for interests located in Türkiye must be placed with authorised domestic insurers. However, aviation-related exceptions apply: aircraft hull insurance may be placed abroad when the aircraft is financed through foreign credit or leasing, limited to the financing amount and term. Liability insurance arising from aircraft operations may also be placed abroad.

Under Articles 132 and 124 of the TCAC, carriers authorised for domestic or international passenger, cargo or mail transport must maintain liability insurance covering claims under carriage contracts, including the liability of their personnel. Additionally, Article 138 requires both Turkish and foreign aircraft operating in Turkish airspace to hold third-party liability insurance for potential damages to third parties.

Local insurers may cede risks to foreign reinsurers and transfer up to 100% of the risk abroad. In practice, unlicensed foreign reinsurers operate through fronting arrangements with Turkish insurers, who remain the policy issuers of record.

Cut-through clauses are generally unenforceable. Under Article 1403/2 of the TCC, reinsurance neither relieves the insurer of its obligations to the insured nor grants the insured a direct right of action against the reinsurer. The insured and insurer remain the only parties to the insurance contract, while the reinsurer is bound solely by the reinsurance agreement.

In Türkiye, the assignment of insurance policies or their proceeds is heavily restricted. Under the amendment to the Insurance Law (Additional Clause 6) effective 28 July 2020, insurance proceeds cannot be assigned or pledged as security to protect the insured’s rights. Reinsurance contracts are treated strictly as agreements between the insurer and reinsurer, granting no direct rights to the insured. Although reinsurance proceeds may be assigned under general contract law, such assignments are rare in practice, as they typically require the parties’ consent and lack explicit statutory support.

Restrictions on a lessor’s ability to terminate, re-export or sell an aircraft depend on the lease type and contractual terms. Early termination is permitted by mutual agreement or court decision. For financial leases, Article 5 of the Circular requires formal deregistration with the FIA. After valid termination, the lessor may repossess the aircraft once DGCA deregistration and customs clearance, including payment of charges, are completed. Re-export and sale are permitted subject to these procedures, and there is no requirement for the aircraft to be physically in Türkiye at the time. 

A lessor cannot take physical possession of an aircraft without the lessee’s consent or a court order.

There are no specialised courts designated for aviation disputes in Türkiye.

Lessors may seek interim remedies such as preliminary injunctions, provisional attachment or preservation of evidence under the Code of Civil Procedure (CCP) and the Enforcement and Bankruptcy Code (EBC) pending the final resolution of judicial proceedings. The specific conditions differ depending on the type of remedy, but in general the applicant must demonstrate an imminent risk of harm or dissipation of rights and provide supporting evidence.

The enforceability of a preliminary injunction or attachment requires not only the court’s decision but also execution by the enforcement authorities. In most cases, the applicant will be required to post security.

The timeframe to obtain such interim relief is relatively short compared to ordinary proceedings; courts may issue a decision within days or weeks, depending on the court’s workload and the urgency of the matter.

Under Article 24 of the IPPL, contractual obligations are governed by the law chosen by the parties, and, per Article 2, courts apply foreign law ex officio. However, Article 5 excludes foreign provisions contrary to Turkish public policy, in which case Turkish law applies. Article 40 determines Turkish courts’ jurisdiction by domestic territorial rules, while Article 47 allows parties to agree in writing on a foreign court’s jurisdiction if a foreign element exists and no exclusive jurisdiction applies. Article 49 provides that foreign states cannot claim immunity in private law disputes; therefore, explicit waivers of immunity in lease agreements are recognised in Türkiye.

To enforce a foreign court judgment in Türkiye, a declaration of enforceability must be obtained from a Turkish court. The Turkish court shall deny enforcement if:

• the foreign court judgment was not rendered in a civil action concerning civil or commercial matters;
• the foreign court judgment is not final and enforceable according to the law of the country whose court rendered the judgment;
• there is no reciprocity in enforcement of court judgments (whether treaty-based or de facto) between the country of origin and Türkiye;
• Turkish courts have exclusive jurisdiction over the subject matter of the foreign court judgment according to Turkish law;
• the foreign court exercised exorbitant jurisdiction with no genuine connection to the dispute or the parties, and the party against whom enforcement is sought has objected to enforcement on this basis;
• the foreign court judgment is manifestly contrary to the public policy of Türkiye; or
• the party against whom enforcement is sought was not duly summoned to or represented at the foreign court in accordance with the law of the country of origin, or the foreign court judgment was rendered in its absence in violation of the law of the country of origin, and such party has objected to enforcement on any of these bases.

Recognition refers to granting a foreign judgment the effect of res judicata or conclusive evidence in Türkiye without enforcement measures. For recognition, the same requirements as for enforcement apply, except for the reciprocity condition.

Article 99 of the TCO provides that obligations expressed in money are, as a rule, payable in the national currency.

Where the obligation is denominated in a foreign currency, the debtor may discharge the debt in Turkish lira at the exchange rate on the date of payment, unless the contract expressly requires payment in kind (ie, strictly in the agreed foreign currency). In case of non-performance, the creditor has an election right to either:

• request payment in the agreed foreign currency; or
• request payment in Turkish lira, calculated at the exchange rate on either the due date or the actual payment date.

This election right is exclusively vested in the creditor, and the court is bound by the principle of disposition in civil proceedings. Therefore, if the creditor brings a claim for payment in a foreign currency, the court will, provided the claim complies with the law, render its judgment in that foreign currency.

If a debt is not paid on time, the creditor may claim default interest. Turkish law allows parties to agree on additional rent or liquidated damages after lease termination, but such clauses are limited by the prohibition on excessive penalties. Under Article 182 of the TCO, courts may reduce or invalidate amounts deemed punitive, as contractual penalties must reasonably reflect anticipated loss rather than serve as punishment.

Enforcing an aircraft lease in Türkiye generally does not incur significant taxes or fees for the lessor. Costs mainly consist of court fees, stamp duties and enforcement expenses related to judicial proceedings, subject to applicable exemptions.

Under the Directive, wet and dry leases between domestic and foreign operators require prior DGCA approval, and any early termination must be reported to the DGCA. For cross-border financial leases, the Communiqué mandates filing the termination with the FIA and completing deregistration procedures.

Foreign states or state-owned entities may invoke sovereign immunity; however, under Article 49 of the IPPL, immunity is not recognised in private law disputes. Parties may also expressly waive immunity in the lease agreement, and Turkish courts will uphold such written waivers where the dispute arises from a private law relationship.

Türkiye is a party to the New York Convention. Pursuant to Articles 60 and 63 of the IPPL, domestic courts recognise and enforce arbitral decisions.

It is important to note that Turkish courts may refuse to apply foreign law provisions or enforcement requests if they are deemed contrary to Turkish public policy.

The concepts of contractual assignment and novation are expressly recognised.

Assignments and novations governed by foreign law are generally recognised by Turkish courts, provided they do not conflict with Turkish public policy or mandatory rules. The lessee’s consent is required for the transfer of leasehold rights and obligations.

In practice, an assignment or novation of an aircraft or engine lease must be translated into Turkish and, where required, notarised for submission to the DGCA and/or the FIA.

An assignment or novation of an aircraft or engine lease must be registered with the Turkish Aircraft Registry to be effective against third parties. For financial leases, it must also be filed with the FIA. While non-registration does not affect validity between the parties, it prevents enforceability against bona fide third parties. No prior consent is required for execution, but regulatory filings are mandatory for effectiveness.

In Türkiye, no specific taxes apply solely to executing or introducing an aircraft or engine lease assignment, assumption or novation agreement. However, if notarised in Türkiye, stamp duty may be charged based on the contract’s value, subject to the financial leasing exemption.

Under Turkish law, a transfer of ownership interests in an aircraft-owning entity is treated as a share transfer, not a direct transfer of the aircraft. The aircraft remains the property of the same legal entity, and no registry update is required since the registered owner does not change. Thus, only the shareholder structure is altered, while, for regulatory and enforcement purposes, the registered owner continues to be the relevant party regardless of beneficial ownership changes.

Under Articles 61 and 62 of the TCAC, deregistration of a Turkish civil aircraft is carried out by the DGCA. Two types of deregistration exist:

• ex officio deregistration, where the DGCA removes the aircraft from the registry without application if it loses its Turkish nationality, is registered abroad or falls into the hands of an unqualified person (Article 49); or
• deregistration upon request, where the owner applies for deregistration if the aircraft is destroyed or lost.

Pursuant to Article 5 of the Communiqué, deregistration from the FIA is only possible:

• at the end of the lease term upon joint application of the parties; or
• before expiry, if the lease has been terminated by mutual agreement, by court decision or if supported by documentation from the DGCA.

Under Turkish law, the registered owner or the person entitled to registration may apply for deregistration. For financial leases, the lessor must be the legal owner, and deregistering without the lessee’s consent during the lease term would generally constitute a default and potential liability. Thus, while the owner has standing to request deregistration, the DGCA and FIA typically require proof that the lease has been duly terminated or consent obtained to protect the lessee’s rights.

To deregister an aircraft from the Turkish Civil Aircraft Register, the DGCA requires a registration application form, notarised lease or operating agreement termination (if applicable), the original tax deduction certificate, and the applicant’s notarised signature circular. The original Registration and Airworthiness Certificates, the sales contract with a notarised Turkish translation (if in another language), and proof of payment for all taxes and fees must also be submitted. For early lease terminations, a consent letter from the FIA, an apostilled authorisation, and the notarised termination agreement are required. In case of accidents, an SHY-13 accident report and technical investigation report must be provided. The DGCA service fee, as published in its tariff, must also be paid.

The process usually takes few weeks to complete, but this can vary significantly depending on the nature of the transaction, the completeness of the required documents, the workload of the relevant institutions and, in particular, whether there are any encumbrances on the aircraft.

The authority does not provide any advance assurance as to the prompt deregistration of the aircraft.

Under Turkish law, no specific taxes apply to aircraft deregistration, but financial leasing legislation imposes certain fees. Before any registration, amendment or deregistration, the relevant fee must be paid and proof submitted; paid fees are non-refundable if the process is withdrawn or not completed. Under the SHT-IDERA Directive, the DGCA also charges annual tariff-based service fees for processing deregistration requests.

For a power of attorney (POA) to be valid before the DGCA, it must be notarised and, if executed abroad, apostilled or legalised, with a sworn Turkish translation notarised in Türkiye. Although not mandatory, lodging the deregistration POA with the DGCA in advance avoids later delays over formality or authenticity. Under SHT-IDERA, parties may also execute and file an Irrevocable Deregistration and Export Request Authorization (IDERA) under the Cape Town Convention, allowing the authorised party to request deregistration and export without further lessee consent. Thus, while a properly executed POA is valid, the IDERA mechanism offers stronger and more efficient enforceability in Türkiye.

In practice, to enforce a deregistration power of attorney, supporting corporate documentation must also be submitted. This typically includes the notarised signature circulars confirming that the signatories are duly authorised to represent the company, as well as the relevant board of directors’ resolution approving the issuance of such power of attorney.

A deregistration power of attorney need not be governed by Turkish law; foreign law powers are accepted if notarised, apostilled or consularly certified, and accompanied by a sworn Turkish translation and the original. However, under SHT-IDERA and the Cape Town Convention, an IDERA must be filed with the DGCA to be effective in Türkiye. In practice, Turkish law provisions are often preferred to ensure compliance with local formalities and procedures.

In Turkey, if the deregistration power of attorney is irrevocable, it cannot be revoked by the debtor alone. Article XIII of the Cape Town Convention and the Additional Aircraft Protocol clearly stipulate that such authorisation can only be revoked with the written consent of the authorised party.

Under Turkish law, an aircraft owner, mortgagee or lessor cannot export an aircraft without the lessee’s consent unless a duly executed and filed IDERA exists. To ensure enforceability, parties usually execute and submit the IDERA at the start of the lease or mortgage. The IDERA must be notarised, apostilled or legalised, translated into Turkish and lodged with the DGCA. For practical enforcement, the aircraft must be physically in Türkiye, as deregistration and export are only effected by the DGCA and customs when the asset is within their jurisdiction.

In Türkiye, aircraft export permits are required under the TCAC and related regulations. Deregistration and export must be approved by the DGCA and co-ordinated with customs. The process begins with a deregistration request (supported by an IDERA, if applicable), after which the DGCA issues clearance for deregistration and export. Required documents include:

• the application form;
• original registration and airworthiness certificates;
• notarised termination or transfer agreements (with Turkish translations if needed);
• proof of DGCA fee payment; and
• tax clearance.

For financial leases, the FIA may request additional documents. Export permits are typically obtained within one to three weeks, depending on documentation and customs co-ordination. Although advance permits are not available, timing risks can be reduced by submitting all authorisations, including a valid IDERA, at the outset.

Under Turkish law, no specific taxes apply to aircraft export. However, standard DGCA and customs fees must be paid during deregistration and export, including DGCA service fees for deregistration and export certificates (updated annually), along with any outstanding airport, navigation or customs charges, if applicable.

The necessary documents for deregistration are specified on the website of DGCA. Proof of removal of registration marks from the aircraft is not required as part of the deregistration process.

In Türkiye, insolvency, restructuring and liquidation are mainly regulated by the EBC, which governs both liquidation and reorganisation. Bankruptcy proceedings liquidate a debtor’s assets for creditors, while mechanisms like concordat allow debt restructuring and continued operations. Turkish law distinguishes between Direct Bankruptcy and Bankruptcy Proceedings, with the former enabling quicker liquidation. Though less common, restructuring tools protect business continuity through court-ordered suspension of enforcement. The TCC regulates reorganisations, mergers, spin-offs and voluntary liquidations, while listed companies are also subject to Capital Markets Law. Türkiye has adopted the Cape Town Convention under Article 68/A of the TCAC, and the Financial Leasing Law safeguards lessors in lessee insolvency by allowing termination and excluding leased assets from the lessee’s estate.

In Türkiye, the EBC governs the main restructuring and bankruptcy regimes for lessee debtors. Voluntary restructuring involves Financial Restructuring Framework Agreements with banks or financial creditors, allowing solutions such as maturity extensions, interest reductions or new loans. Concordat is a court-supervised restructuring process enabling the lessee to propose a payment plan to avoid bankruptcy, during which enforcement actions are suspended. Bankruptcy, by contrast, is a court-ordered liquidation when merchant lessees cannot pay their debts, resulting in a bankruptcy estate. Although Turkish law lacks an Anglo-Saxon style “receivership”, similar supervisory roles are carried out by the bankruptcy administration or concordat commissioner.

Turkish law imposes no statutory duty to co-operate with foreign insolvency proceedings and relies on general recognition and enforcement rules rather than special cross-border insolvency regimes. While parties may follow international co-ordination guidelines, these have no official status in Türkiye. Foreign insolvency decisions, such as bankruptcy or restructuring orders, are effective only if recognised under the IPPL, as Türkiye has not adopted the UNCITRAL Model Law and instead applies its general private international law principles.

Under Turkish law, and specifically SHT-IDERA, a deregistration power of attorney granted to an owner, lessor or mortgagee is not terminated by the lessee’s liquidation. Article 9 of SHT-IDERA provides that, once issued, the form cannot be revoked by the debtor. The DGCA cancels it only upon a revocation request from the authorised party. Thus, the lessee’s insolvency or liquidation does not affect the validity of the IDERA, which remains enforceable until formally revoked before the DGCA.

Under Turkish law, a lessee’s insolvency or liquidation does not automatically terminate an aircraft lease. The aircraft remains the lessor’s property and is excluded from the lessee’s estate, though repossession may be delayed by insolvency proceedings. Lessee’s creditors cannot attach the aircraft but may claim its contractual rights. Proper registration and use of an IDERA under the Cape Town Convention enhance the lessor’s right to deregister and export the aircraft without the lessee’s consent, even in insolvency.

Under the EBC, claims are satisfied by statutory priority, with unsecured creditors paid last. Secured creditors may still incur losses if collateral is insufficient, as the shortfall ranks with unsecured claims. Insolvency proceedings are often lengthy, and assets may sell below value. Guarantees or collateral can lose enforceability if the provider is bankrupt, and certain transactions may be voided under Articles 277 et seq. In concordat or restructuring, creditors recover only per the approved plan, usually at a discount, while enforcement actions remain suspended.

In Türkiye, under the EBC, once bankruptcy is declared, individual enforcement actions against the debtor’s assets stop and all attachments are lifted. An automatic moratorium takes effect, and creditors can claim receivables only through the bankruptcy estate. During a concordat, a moratorium may last up to 21 months (three months temporary, one year final, plus a six-month extension). In bankruptcy, it continues until liquidation is completed.

If the lessee is a merchant registered in the trade registry or a debtor subject to bankruptcy, the creditors or the debtor may apply for bankruptcy. Once declared, liquidation begins; the debtor’s assets are transferred to the bankruptcy estate and managed by the bankruptcy administration. In Türkiye, there is no separate “administration” or “receivership” as in Anglo-Saxon law. Instead, a concordat mechanism exists: the debtor may request it from the court, which grants a respite and appoints a concordat commissioner to supervise operations and prepare a payment plan with creditors. During this process, the debtor may continue business under court supervision, and enforcement actions are suspended. Thus, liquidation occurs through bankruptcy, while trustee-like supervision arises under the concordat process.

An ipso facto clause is not considered sufficient for bankruptcy to automatically confer a right of repossession and the creditor needs a notice of termination. However, in registered leases and guarantees under the Cape Town Convention, terms that expressly make bankruptcy a default event are considered valid and enforceable.

If a domestic lessee enters into winding-up or administration proceedings, the aircraft itself will generally not be considered part of the lessee’s estate, as ownership remains with the lessor. Lease rentals due before insolvency become unsecured claims in the liquidation, while rentals accruing after may be impacted by the administrator’s decision whether to continue or terminate the lease. Security deposits and maintenance reserves held by the lessor are typically treated as collateral and can be applied in accordance with the lease terms, though their treatment may be scrutinised in insolvency.

The Convention and the Protocol have been in force in Türkiye since 1 December 2011. DGCA acts as the Competent Authority for Cape Town registrations and assigns AEP codes. 

Türkiye has made declarations under the Convention, as listed below:

• Form No 1 (Specific declaration Under Article 39 (1)(a));
• Form No 4 (General declaration under Article 39 (1)(b));
• Form No 6 (Declaration under Article 40));
• Form No 8 (General declaration under Article 50); and
• Form No 13-A (Mandatory declaration under Article 54(2) applicable to all relevant remedies).

Article XIII of the Protocol is applied in Türkiye. Under SHY-IDERA, the IDERA must be submitted in the prescribed form (Annex-1 of the Directive), duly executed, notarised and apostilled, together with its notarised Turkish translation. Once submitted, the DGCA records the IDERA in the Turkish Civil Aircraft Register.

The actual practical experience of Turkish courts in adjudicating complex disputes directly under the Convention’s provisions is generally considered to be limited.

Türkiye has ratified neither the 1948 Geneva Convention on the International Recognition of Rights in Aircraft nor the 1933 Rome Convention on the Unification of Certain Rules relating to the Precautionary Arrest of Aircraft.

Under the most recent Amendment Communiqué No 2025-32/71, persons residing in Türkiye are now required to utilise foreign loans exclusively through banks established in Türkiye. The transfer and use of such loans must comply with procedures and principles set out by the Ministry of Treasury and Finance. Previous exemptions that allowed bypassing Turkish banks have been repealed.

Capital movements are free and there are no serious exchange controls or government approval mechanisms for the repatriation of financing proceeds.

There is no general legal restriction that prohibits Turkish from granting collateral to foreign creditors.

Under the TCC, a guarantee must serve the guarantor’s corporate purpose and benefit; otherwise, directors may breach their fiduciary duties, rendering the guarantee open to challenge. Financial assistance rules also prohibit a company from granting loans or guarantees for the acquisition of its own shares.

Corporate approvals – by the board and, if required, the general assembly – must be obtained. While the guarantee itself does not require registration, any related security interest must be registered in the relevant registry.

Taking share security over a domestic SPV that owns the aircraft is a common, effective and recognised form of lender security in Turkey.

Negative pledge is legitimate and recognised in the scope of freedom of contract.

In the context of property rights, the priority of a pledge is determined by the date of registration of the pledge agreement; the pledge registered earlier holds priority over others. Although parties may agree on a different priority order, such an agreement is only valid against third parties if it is properly registered. The priority of pledges is governed by registration dates. According to Article 66 of the TCAC, a written contract constitutes a sufficient requirement.

A representative such as a facility agent is permitted to act on behalf of the lenders in a syndicated loan. If the agent has clear authority, the actions they take are legally valid for all lenders.

Under Turkish Law, debt subordination is permitted and recognised through contractual arrangements between parties, based on the principle of freedom of contract under the TCO.

Under the Cape Town Convention, parties may register international interests and determine their priority through recorded agreements. Such arrangements are valid and enforceable under Turkish Law.

The validity of the assignment is assessed under the governing foreign law of the agreement. However, the assignment must not violate Turkish public order or mandatory provisions.

Turkish law does not impose specific usury rules for commercial aircraft finance. Under Article 88 of the TCO, if the interest rate is not expressly agreed, the statutory rate applies. Courts may reduce excessive interest pursuant to Article 27 TCO.

In commercial transactions, parties are generally free to set interest rates (Article 8/1 TCC), provided they are not abusive or exploitative.

Typical forms of security in a domestic aviation finance transaction are as follows:

• aircraft mortgage;
• retention of ownership by the lessor or financier;
• bank guarantees;
• corporate guarantees;
• insurance assignments in favour of the creditors; and
• IDERA filings.

Creditors may enforce their rights through mortgage enforcement proceedings under the EBC, or by terminating the lease and repossessing the aircraft.

However, rights such as guarantees, maintenance contracts, and insurance proceeds cannot be subject to in rem security. These may only be secured through contractual methods subject to the applicable limitations or a security transfer of rights.

The concept of “trust” and the related role of a “security trustee” are not recognised under Turkish law. Therefore, the establishment of rights in favour of a third party based on a fiduciary relationship, or the transfer of ownership of an asset on a trust basis, is not valid under Turkish law. The most common alternative method is the “parallel debt” structure. Directly creating security jointly in favour of all lenders, or contractual arrangements made with an agent acting as a “security representative” on behalf of secured creditors, are also commonly used in practice.

Turkish law does not recognise the concepts of trust or security trustee.

Obligations cannot be transferred without the counterparty’s consent. A full transfer of the lease position as lessor therefore requires either a novation under Article 133 TCO or the lessee’s express approval.

See 1.2.2 Sales Governed by English or New York Law, 2.1.2 Application of Foreign Laws,2.6.5 Domestic Courts’ Approach to Foreign Law and Judgments, 2.6.11 Lessees' Entitlement to Claim Immunity, 2.6.12 Enforcement of Foreign Arbitral Decisions and2.9.3 Co-Ordination, Recognition or Relief in Connection With Overseas Proceedings for explanations as to relevant articles of IPPL regarding jurisdiction and governing law issues.

According to Article 32 of the Cape Town Convention, a security agreement must:

• be in written form;
• identify the object;
• specify the secured obligations; and
• enable those obligations to be determined.

Failure to comply with these formal requirements renders the security assignment void. Registration of the assignment in the International Registry is sufficient for enforcement against a domestic party.

A foreign law security assignment cannot be registered in Türkiye and will not create an in rem right unless supported by a Turkish law-governed security instrument. Cape Town filings may be made independently, but to ensure local enforceability and compliance with Turkish law, it is standard practice to execute and register a domestic security instrument. The average cost ranges from USD1,500 to 3,000 per aircraft, depending on the structure and aircraft value.

A foreign law-governed security assignment or mortgage cannot be directly registered in Türkiye. Such an agreement may be valid contractually between the parties. However, it shall not create an in rem right unless executed and registered in accordance with Turkish law.

The assignment of security interests over aircraft or engines is valid provided it complies with the formal requirements set forth in Article 32 of the Cape Town Convention.

According to Article 31 of the Cape Town Convention, the assignment of associated rights related to international interests also transfers those rights to the assignee, provided that the assignment complies with the formal requirements set forth in Article 32 of the Convention. This means that a change in the identity of the secured parties does not jeopardise the security interests, unless the parties have expressly agreed otherwise.

Parallel debt structures are commonly used domestically in syndicated financing transactions to give the security trustee or agent an independent right to secured debt.

A foreign secured party will not be considered resident, domiciled or carrying on business in Türkiye merely by entering into or enforcing a security assignment or mortgage governed by Turkish law.

A domestic law mortgage over an aircraft is perfected by registering the mortgage in the Turkish Civil Aircraft Registry.

Aircraft security requires registration, while engine security relies on contractual or possessory perfection.

Security over a bank account is typically created by way of a pledge over receivables.

Perfection of such security requires (i) a written pledge agreement, and (ii) notification to and acknowledgement by the account bank, since the bank is the debtor of the pledged receivable. Without such notification/acknowledgement, the pledge will not be enforceable against the bank or third parties.

The appropriate form of security to obtain a lien over a bank account is a preliminary attachment. This security measure must be perfected through an application to the Civil Court of First Instance, which, upon satisfaction of the legal conditions, may grant the injunction order.

A third party can take or register a lien over an aircraft or engine in relation to:

• unpaid airport fees;
• navigation charges;
• customs duties;
• repairers’ costs; or
• crew salaries.

Fleet liens are not recognised under Turkish law. Detention rights are typically limited to the particular aircraft in respect of which the relevant charges or services arose.

A third party exercising a lien or right of retention may continue to withhold possession of the aircraft until payment is made. If the debt remains unpaid, creditors must apply to the courts or enforcement offices to initiate judicial enforcement proceedings.

The discharge of a lien or mortgage over an aircraft primarily depends on the completion of repayment or satisfaction of the secured obligation.

The Turkish Civil Aircraft Registry records mortgages and other encumbrances.

In particular, contracts and rights in rem cannot be asserted against third parties unless they are recorded in the aircraft registry, in accordance with Article 119/2 of the TCAC. Moreover, Article 52 of the TCAC provides that the acquisition of a right in rem by a person relying in good faith on an entry in the aircraft register shall be valid.

A “fleet-wide” right of retention does not arise automatically. However, each aircraft may be seized individually or, if a fleet-wide security is contractually established, such security may be enforced.

A potential purchaser of an aircraft in Türkiye would need to conduct a search at the aircraft registry maintained by the DGCA.

For financial leases, it is also advisable to review the FIA records. A search of the International Registry under the Cape Town Convention should be conducted.

Unlike a standard loan or guarantee, a security assignment does not create a personal obligation to pay but rather grants the creditor a proprietary right over specific assets or receivables to secure repayment.

Once properly perfected, a security assignment gives the creditor priority over the assigned asset and allows direct enforcement upon the debtor’s default, typically by collecting receivables or selling the asset, though Turkish enforcement procedures still apply.

A notice and acknowledgement executed by the lessor and lessee is a necessary step to perfect the assignment against the lessee, but is not sufficient on its own to allow a security trustee to enforce rights under a security assignment.

Turkish courts generally recognise and uphold the parties’ choice of a foreign governing law and submission to a foreign jurisdiction in finance or security documents. However, such recognition is subject to the overriding effect of Turkish public policy and mandatory provisions of Turkish law.

Turkish courts may recognise and enforce final foreign court judgments and arbitral awards without re-examining the merits, provided that certain conditions are met.

A secured party cannot take possession of an aircraft without the debtor’s or operator’s consent and must enforce its rights through court proceedings or by obtaining a repossession order.

If an IDERA is registered, the creditor may request deregistration and export via the DGCA, but physical repossession still requires official co-ordination with local authorities.

Enforcement actions under a security agreement or aircraft mortgage fall within the jurisdiction of the Turkish civil courts and enforcement offices, depending on the nature of the proceeding.

Under Turkish law, a secured party can request injunctive or other equitable relief pending the final resolution of judicial proceedings to enforce a security agreement or aircraft mortgage. A secured party may seek interim relief such as injunctive measures if there is a risk of serious harm to their rights. In granting such relief, courts commonly require the applicant to provide security, such as a bond or bank guarantee.

A creditor holding security under a security agreement or aircraft mortgage may obtain a court judgment denominated in a foreign currency, provided the underlying obligation has been lawfully expressed in that currency.

The enforcement of a security agreement or aircraft mortgage in Türkiye does not give rise to any significant taxes or fees payable by the secured party. Only nominal court and enforcement fees apply.

The key relevant issues have been covered above, and there are no additional matters warranting further comment.