Tax Treaty Case Law around the Globe 2014
1. Aufl. 2015
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S. 161Chapter 17 Turkey: Leasing of Aircraft - Characterization of Leasing Payments as Royalties
Billur Yalti
17.1. Introduction
Turkey has 80 double tax conventions (DTCs) in force. Turkey's tax treaties generally follow the provisions of the OECD Model Tax Convention on Income and on Capital 2010 (hereinafter OECD Model). Deviations concern in particular withholding taxes, professional income and capital gains. Although there is a significant treaty network, the jurisprudence on these treaties is considerably rare. One of the exceptional cases that concerns the characterization of income as "royalties" will be explained and analysed in this report. The decision, which was given by the Supreme Administrative Court (SAC), is related to the definition of industrial, commercial and scientific equipment (ICSE) provided in article 12 of the DTCs.
17.2. Facts of the case
The SAC gave its decision on . In K.2013/1281, a Turkish resident airlines company (providing passenger air transportation services) leased aircrafts from US resident financial leasing companies. Although the content of the contracts between the parties was not clear from the decision, these contracts were characteriz...