Financial Leasing Regulation in Turkey

December 13, 2018 / By

Financial Leasing in Turkey is regulated through the main piece of Law on Financial Leasing, Factoring and Financing Companies Nr. 6361 published in the Official Gazette dated 13th December 2012 and numbered 28496.

Overview of the Turkish regulations in finance leasing:

Under Turkish Law, the main governing pieces of legislation in finance leasing is Law No. 6361 on Financial Leasing, Factoring, and Financing Companies(hereinafter referred as to Law’); Regulation No. 28627 on Principles for Establishment and Operations of Financial Leasing Factoring and Financing Companies (hereinafter referred as to Regulation’); Circular on Registration of Financial Lease Contracts Covering Financial Leases of Persons Residing Abroad to Persons Residing in Turkey (hereinafter referred as toCircular on Registration from Abroad’) and Circularon Rules and Procedures Regarding the Registration of Financial Leasing Contracts to the Special Registry (hereinafter referred as toCircular on Special Registry’).

The Law regulates the establishment and operating principles of financial leasing companies (both local and foreign companies) operating as financial institutions as well as the principles and procedures relating to financial leasing contracts in Turkey.

On the other hand, the Regulation set forth the details in relation to the principles and procedures concerning the establishment and running of financial leasing companies in Turkey. In addition, the Circular on Special Registry has been enacted to provide the rules and procedures respecting the registration of financial leasing contracts in Turkey and to ensure the publicity of registry records within the perspective of relevant legislation; whereas the Circular on Registration from Abroad specifically regulates the procedures regarding the registration of financial leasing contracts covering financial leases of persons residing abroad to persons residing in Turkey.

Financial Leasing in Turkey

Under Law Nr. 6361, Financial Leasing in Turkey is defined as a leasing transaction enabling one of the following aspects on condition to be based on a financial leasing contract; transferring the possession of an asset by the lessor authorized pursuant to the Law or related legislation to the lessee at the end of the lease giving the lessee the right to purchase the asset at a sum less than its current market value at the end of the lease period, lease period shall cover more than eighty percent of the asset’s economic life, or the sum of current value of lease payments to be made pursuant to the financial leasing contract shall constitute more than ninety percent of the current market value of the asset.

Operating Leasing in Turkey

In addition, according to Article 2/3 of the Law; the provisions regulated for the finance lease transactions under this Law shall not be applied for the operating lease transactions performed by finance lease companies. In this respect, the operating lease transactions which are performed by the finance lease companies will not be considered as a finance lease transaction and the provisions of Law No.6361 will not be applicable for the operating lease transactions. Therefore, the operating lease transactions in Turkey will be subject to the general leasing provisions of the Turkish Law of Obligations(Law No.6098) (published in the Official Gazette dated January 11, 2011 and No.27836).

Subject matter of the financial leasing contract in Turkey

According to Article 19 of the Law; movables and immovables may be subject to a financial leasing contract in Turkey. Intellectual and industrial rights such as patents cannot be subject to this contract, except for duplicated copies of computer software. Furthermore; par. 2 of Article 19 indicates that all kind of good preserving its essential nature may be solely subject to a financial leasing contract, regardless of its integral parts or attachment qualifications.


Cross-border financial leasing in Turkey

Turkish Law also allows a cross-border financial leasing contract on a condition that it is registered at the special registry of Union of Financial Leasing, Factoring and Financing Companies (hereinafter referred as to ‘Union’ or ‘FKB’). The cross-border financial leasing contract registration process must be done before the subject matter products enters into Turkey. There are also some limits on the cross-border contract in terms of its features. Circular on Registration from Abroad clearly defines the nature of cross border contract that can be registered. Article 4 of the Circular states that ‘’contracts for air transport vehicles, vessels, medical devices and high technology products that were certified such features by the relevant authority and whose annual average lease payment is more than USD 100,000 will be registered.’’

Therefore; foreign licensed financial leasing companies can be party to a financial leasing contract in Turkey without being authorised before Turkish Banking Regulation and Supervision Agency provided that the aforesaid conditions are met.



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