Project financings in Türkiye are almost invariably implemented through a dedicated special purpose vehicle (SPV) incorporated in Türkiye. The SPV is established specifically for the project to ring-fence and minimise project-related risks and to allow all project contracts and security arrangements to be managed through a single entity.

The ownership chain typically consists of an investor or sponsor consortium holding the SPV either directly or through one or more intermediate holding companies. These holding companies may be Turkish or offshore, depending on the sponsor group’s tax, financing and regulatory considerations. In smaller projects, it is common for a single sponsor to hold 100% of the shares. In larger or more technically complex projects, multiple investors often participate, sharing ownership to combine financial capacity and technical expertise.

Ownership structures also vary by sector, project scale and investment type. In regulated sectors—such as energy, transportation and healthcare infrastructure—tender documentation and sector-specific regulation may impose requirements relating to technical qualifications, bidder eligibility and, in some cases, Turkish participation. In these projects, bankability and “credibility” are heavily influenced by (i) the transferability of licences/permits, (ii) the robustness of step-in and substitution mechanisms, and (iii) any regulatory restrictions on changes of control (including notification/approval requirements) under the applicable regime. By contrast, private or smaller-scale projects typically feature simpler structures, often with a single sponsor exercising full control over the SPV.

The Turkish Commercial Code (TCC) is the principal source of corporate governance rules for Turkish project companies, covering capital maintenance, shareholder and board authorities, related-party dealings, representation, financial statements and audit. Though less usual, where the project company is publicly held, additional Capital Markets Board (CMB) governance and disclosure rules apply.

On the reporting side, independent audit requirements apply to entities that meet the relevant thresholds or operate in regulated sectors. Sustainability reporting has also become a real compliance topic: Türkiye Sustainability Reporting Standards (“TSRS”) apply to entities that fall within the scope defined by the Public Oversight Authority (“KGK”), with application starting for accounting periods beginning on or after 1 January 2024 and the scope refined by KGK decisions published in December 2024.

In respect of accounting practices, Turkish companies typically prepare financial information under two parallel frameworks: (i) IFRS (International Financial Reporting Standards) and (ii) the Turkish tax-based accounting regime under the Tax Procedural Code (VUK), with the former being more commonly used in financing contexts. A further, immediately practical issue for financings signed in late 2025 is inflation accounting: legislation adopted on 24 December 2025 suspended inflation adjustments for the 2025–2027 fiscal years, which may affect covenant calibration, dividend tests and the comparability of historical financial information used in underwriting.

In Turkish project finance transactions, the type of credit support expected from sponsors depends largely on the scale of the investment and the risk allocation agreed with the lenders. For projects that involve significant construction or operational risks, sponsors may be required to commit additional equity, cover potential cost overruns or provide a completion undertaking to ensure the project reaches commercial operation. This is usually supplemented by EPC-related performance security (parent guarantees, performance bonds/LCs), undertakings to maintain key permits/licences, and—where relevant—funding and maintenance of reserve accounts. Sponsor support typically reduces materially once the project reaches completion and stabilized operations.

On the host-government/public-sector side, the instruments vary by sector and procurement model. In renewables, support is most often delivered through statutory support schemes and incentives (e.g., YEKDEM-type mechanisms and YEKA tender structures with long-term purchase features, plus certain fee/permit incentives). In transport PPP/BOT projects, the administration may provide demand/usage or availability-style payment mechanics, detailed tariff/indexation and termination compensation regimes; certain eligible projects may also benefit from Treasury “debt assumption”, subject to statutory conditions. In healthcare PPPs (notably city hospitals), the key credit enhancement is typically the availability/service payment structure from the Ministry of Health with defined adjustment/indexation mechanics, and debt assumption may again be relevant where eligibility criteria are met.

Across PPP models, additional public-side supports may also include land allocation and expropriation facilitation, permitting/interface coordination (utilities, access, relocations), and in some cases transactional tax relief (such as stamp duty exemptions) depending on the governing PPP/BOT framework.

The security package is tailored to the project’s asset base and cashflows and is usually complemented by direct agreements and a robust cash-control structure.

Core security typically includes share pledges (including usufruct) over the project company (and, where relevant, pledges over intermediate holding companies); mortgages over project real estate (land, buildings and, where available, mortgageable rights registered at the land registry); pledges over movable assets and equipment (implemented under the registry-based movable pledge regime TARES); assignments/pledges of receivables under key project documents (offtake, EPC, O&M, insurance proceeds and other material receivables); and security/controls over bank accounts, including pledged bank accounts and waterfall mechanics.

It is also common to require guarantees or sureties from the sponsors, group companies or, in certain cases involving public entities, undertakings provided by the host government.

Security in Turkish project financings is typically structured on an “asset-by-asset” basis, because Turkish law does not generally recognise a single floating charge covering all present and future assets in the manner seen in some common-law jurisdictions.

The perfection steps for security interests in Turkish project financings depend on the type of asset or right being secured. Share pledges over joint stock companies are completed by signing the pledge agreement, endorsing the share certificates and delivering them to the lenders, followed by recording the pledge in the company’s share ledger. For limited liability companies, the pledge agreement must also be executed before a notary public.

Account pledges become effective once the pledge agreement is signed and the relevant account banks acknowledge the pledge. The bank then records the pledge in its internal systems to confirm the lenders’ priority.

Pledges over movable assets are perfected through registration in the TARES system, which is the official electronic registry for movable pledges. On the other hand, certain assets such as motor vehicles, aircraft, ships and mining rights require registration with their own specialised registries as well.

Mortgages over immovable property or usufruct rights are perfected through execution before the land registry and the corresponding registration in the land registry records.

Assignments of receivables require a written assignment agreement. While notification of the debtor is not mandatory under the Turkish Code of Obligations, in practice it is standard to notify the debtor to prevent a good-faith payment to the assignor, which could otherwise release the debtor from its obligations. Assignments of subordinated receivables follow the same formalities and are executed by the subordinated creditors in favour of the lenders.

Guarantees and sureties must be made in writing. If the guarantor is an individual, the guaranteed amount, date and type must be handwritten and the spouse’s written consent is required unless an exemption applies, such as where the guarantor is a shareholder or director of the debtor company. For evidentiary purposes and to avoid disputes on timing, assignment agreements and certain security documents are often executed before a notary public.

(i) Pre-insolvency enforcement

As a general rule, enforcement of mortgages and pledges is conducted through the competent execution office, which initiates a public auction for the sale of the mortgaged/pledged assets. While a public auction is a transparent method, it may be challenged by the debtor or third parties and, in practice, can be disadvantageous due to its procedural complexity and relatively lengthy timeline.

For movable pledges, the Movable Pledge Law No. 6750 also allows the pledgee, upon non-performance, to (a) request transfer of ownership of the pledged movable to itself, or (b) assign/transfer its receivable under the pledge agreement to a licensed asset management company. In addition, the Capital Markets Law No. 6362 grants a similar right to request ownership transfer for pledges over dematerialised capital markets instruments (e.g., dematerialised shares of public companies), provided that the right of transfer is expressly stipulated.

Some security documents provide for the possibility of a private sale. While a contractual private sale mechanism is not expressly regulated under Turkish law and may face enforceability hurdles, a legislatively recognised “private sale with court approval” mechanism was added to the Enforcement and Bankruptcy Law No. 2004. Under this route, following notification of the valuation, the debtor may seek court authorisation to sell the pledged asset within a short period, offering an alternative to a public auction.

(ii) Post-insolvency enforcement

In the case that the project company is declared bankrupt by the courts and the liquidation process is commenced against the company via official bankruptcy offices, the secured party may not proceed with an individual debt collection proceeding but would have to apply to the bankruptcy offices to be registered and recorded during the liquidation process. The secured assets are sold as part of the sale of the bankruptcy estate, and distribution of proceeds to the secured creditor may be delayed where there are challenges regarding ranking or the underlying receivable.

According to the Execution and Bankruptcy Law No. 2004, the receivables of secured creditors have a right to preference over the sale proceeds of the secured assets. Public receivables arising from real property and assets such as customs duties, building and land tax will come after the pledged receivables in ranking for collection from the sale proceeds of such secured assets. The distribution of the sale proceeds of the bankruptcy estate to the creditors, which do not have secured receivables, will be ranked as follows:

First rank:

(i) Receivables of the employees, including notice and severance pay accrued within a year prior to the bankruptcy, and notice and severance pay that accrues due to the termination of the employment following the bankruptcy of the company.

(ii) Debts of the employer to institutions and funds that are legal entities incorporated to establish aid funds for employees.

(iii) Any and all alimony receivables arising from family law accrued within a year prior to the bankruptcy.

Second rank:

Receivables of persons whose assets have been left to the administration of the bankrupt as a guardian/ administrator.

Third rank:

Receivables that are privileged pursuant to the provisions of special laws.

Fourth rank:

All other receivables of the creditors which do not enjoy a privilege.

Three themes are significant to consider in Turkish security practice: formalism/perfection, operational control, and enforcement practicalities. First, perfection is highly sensitive to form and timing—registrations, notarisation, translations and debtor/bank notifications are not “nice to have” items; they are often determinative of enforceability and priority. Secondly, because formal enforcement can be time-consuming, lenders place significant weight on contractual and operational control mechanisms, in particular cashflow control, account bank acknowledgements and direct agreements that provide notice, cure and substitution/step-in pathways before value is lost. In this context, Turkish-law structures sometimes also include governance levers such as a usufruct over shares (which, unless otherwise agreed, may allow the usufructuary to exercise voting rights), to support an orderly cure or change of control in a stress scenario.

As a further practical consideration, although “security agent” and parallel debt structures are widely used in foreign law-governed syndicated financings with Turkish-law security, these concepts are not expressly regulated under Turkish legislation and there is, to date, to the best of our knowledge, no settled Turkish Supreme Court precedent squarely confirming their effectiveness as a matter of Turkish law in all scenarios. Market practice therefore relies on careful drafting and on doctrinal/analogous concepts recognised by Turkish law, including fiduciary arrangements (inançlı işlemler) and indirect representation (dolaylı temsil), while also recognising that court enforcement mechanics may still require creditor-by-creditor action depending on the structure adopted.

Subordination rules and clawback exposure may be viewed as potential concerns for a foreign lender. With respect to contractual subordination, (i) obtaining specific performance through the execution offices may not be feasible, as contractual subordination is neither expressly recognised nor well tested under Turkish law, and (ii) if the debtor is declared bankrupt, creditor ranking will be determined in accordance with the Execution and Bankruptcy Law No. 2004 (see Question 6 for the order of priorities), regardless of any contractual arrangements. In addition, lenders may face clawback (avoidance) risk in relation to other creditors of an insolvent Turkish debtor, as such creditors may apply to the courts to set aside certain transactions entered into prior to insolvency. Voidable transactions typically include: (a) transactions carried out within one year prior to the commencement of insolvency proceedings, such as granting security for an existing debt (other than security that the debtor had previously undertaken to provide); and (b) transactions entered into within two years prior to the commencement of insolvency proceedings, such as transfers for no consideration (including donations), transactions for a consideration materially below fair value, or transactions undertaken with the intention of prejudicing creditors.

In addition to the above, guarantees and suretyships are key credit support options for lenders and equity investors:

(i) Guarantee: A guarantee obligation is independent from the underlying agreement it supports. Accordingly, issues affecting the validity of the underlying contractual relationship generally do not impair the enforceability of the guarantee. As a rule, a guarantee is not subject to formal establishment requirements (e.g., a written form or a fixed cap), except in the case of a personal guarantee. Under the Turkish Code of Obligations, the formal requirements applicable to suretyship also apply to the creation of a personal guarantee.

(ii) Surety: The surety’s obligation is dependent on the existence and validity of the principal debt; if the principal debt is invalidated for any reason, the surety is released from its obligations (unlike a guarantee). The surety’s liability is therefore ancillary in nature. Suretyship must be executed in writing and must include the surety’s handwritten statement of the agreed maximum liability amount. In addition, for individual sureties, the agreement must specify the suretyship term and the type of suretyship (e.g., ordinary or joint and several). Where a married individual acts as surety, the spouse’s consent must be obtained on or before the date of the suretyship agreement, subject to certain statutory exceptions.

Most of the standard project finance risk categories are relevant in Türkiye, and the market has developed well-understood contractual and structural tools to address them. In practice, lender focus tends to concentrate on a small number of themes that have a direct bearing on cashflow robustness and bankability.

From a legal and regulatory perspective, the foreign exchange and currency framework is an important structuring consideration. Recent years have seen a number of refinements to the applicable rules, which can be relevant for payment mechanics, the use of foreign currency in certain domestic arrangements and, where applicable, offshore payment flows. In addition, the Turkish Constitutional Court decision published in the Official Gazette on 15 October 2025 annulled (on constitutional grounds) certain provisions of Law No. 1567 (the Law on the Protection of the Value of Turkish Currency, which forms a key statutory basis of Türkiye’s foreign exchange and capital movements regime), with the annulment of the core enabling provision taking effect on a deferred basis on 15 July 2026 (thereby allowing time for legislative and regulatory amendments before the annulment becomes effective).

Construction and completion risk also remains central, particularly for capital-intensive projects, and lenders therefore place strong emphasis on EPC risk allocation, performance security and contractor capability. For supply/feedstock-dependent projects, the robustness of long-term supply arrangements, logistics resilience and force majeure treatment is closely reviewed.

Permitting and development timelines are also a key diligence area, especially in energy and natural resources projects where approvals (including environmental, zoning and sector licences) can be sequential and multi-layered. Finally, where revenues rely on regulated tariffs or public-sector payment mechanisms, lenders pay close attention to tariff/indexation provisions, termination compensation and the overall stability of the contractual framework over the life of the financing.

On a separate note, it should be noted that Türkiye has signed bilateral investment treaties (BITs) with 98 countries and 76 of them are currently in force. BITs are a valuable tool to promote and protect foreign investment. Other than the foreign investments protected within the context of BITs, there have been none that we are aware of which call for political risk protections.

In order to ensure the enforceability or admissibility in evidence of a financing/project documents in Türkiye, it is not necessary that the financing/project documents or any other document be filed or recorded or that any Turkish tax be paid, other than:

a. a translation thereof into Turkish certified by a notary or a Consul General of the Republic of Türkiye is necessary in respect of the foreign language documents

b. to the extent applicable, stamp taxes imposed by Stamp Tax Law of the Republic of Türkiye (Law No. 488) dated July 1, 1964 (as amended) in the amount of the Turkish Lira equivalent (prevailing on the date of introduction into evidence of the agreement) to 0.948% of the amount of the financing/project documents as at the date of signature;

c. court fees imposed pursuant to the Law on Court Charges of the Republic of Türkiye (Law No. 492) dated July 17, 1964 in the amount of 6.831% of the Turkish Lira equivalent to the amount in dispute (one quarter of which is payable at the commencement of any suit or action and the remainder of which is payable upon the entry of judgment);

d. court fees payable in connection with the making of an appeal either at the first (istinaf) and/or second level (temyiz) from an adverse judgment;

e. the deposit, at the court’s discretion, of security for costs;

f. fees payable in connection with execution and attachment proceedings; and

g. lawyer’s fees payable in accordance with the most recent tariff in force at the time of judgment as published in the Official Gazette of the Republic of Türkiye together with other court expenses.

Türkiye’s general approach is liberal for foreign direct investment: foreign investors may establish and own Turkish companies and are broadly subject to national treatment, subject to sectoral licensing and, in limited cases, security-sensitive restrictions.

FX restrictions: Certain restrictions apply to foreign exchange transactions and foreign-currency borrowing under Decree No. 32 on the Protection of the Value of Turkish Currency, the Capital Movements Circular and the related secondary legislation. Following the significant 2018 amendments, Turkish residents that do not generate foreign-currency income have been subject to tightened rules—most notably in relation to foreign-currency borrowings and the ability to denominate/settle certain domestic contracts in foreign currency—albeit with a number of important exceptions, including carve-outs commonly relied on in large-scale infrastructure/PPP structures. In addition, loans used in connection with an investment incentive certificate may also be denominated in foreign currency even if the borrower does not generate FX income, provided that the financing is used to acquire eligible machinery and equipment.
A key operational restriction is that Turkish residents must generally utilise loans obtained from abroad through a bank in Türkiye, and the earlier exceptions to bank intermediation were removed as of January 2025.

Natural resources: In natural resources and extractive sectors, royalties/state shares, licence fees and other fiscal burdens are determined by the applicable sector legislation and the terms of the relevant licences and permits; lender diligence typically focuses on the predictability of these payments, compliance/enforcement powers and the stability/transferability of licences.

For instance, in respect of mining projects, it is generally relevant that, under the Constitution and the Mining Law regime, minerals are deemed to be under the ownership and dominion of the State and are not treated as part of the landowner’s property merely because they are located on or beneath the relevant land; accordingly, the State may carry out exploration and extraction itself or grant such rights to eligible private parties for a defined term, subject to compliance with the licensing framework and the payment of applicable royalty/state-right type charges. In addition, mining licences are granted to Turkish citizens and Turkish legal entities, such that foreign individuals and foreign legal entities cannot typically hold mining rights directly; however, foreign investors commonly participate by incorporating a Turkish company (or investing into an existing licence-holder) and holding shares in that Turkish entity, subject to the usual permitting and compliance requirements. As a general rule, Turkish law does not require a governmental body to hold an equity interest or impose a mandatory “free carry” in mining investments; however, limited carve-outs exist, including the Central Bank’s statutory pre-emption (priority purchase) right over domestically produced gold derived from ore (typically exercised via a Turkish intermediary bank and paid in Turkish Lira by reference to relevant LBMA pricing) and, for coccolith, sapropel and hydrogen sulfide extracted from seas, a specific Mining Law mechanism requiring the licence-holder company to include TPAO (or an affiliate) as a shareholder with at least a 10% free-carry interest. Finally, royalties/state charges can be subject to adjustment from time to time; by way of recent example, a Presidential Decision published in the Official Gazette dated 04.10.2025 provides that state right rates for Table (3) Group IV minerals and chrome are applied on a 25% increased basis as of 1 January 2025, which is typically reflected in financial models and reserve account/covenant calibrations for mining project financings.

Export restrictions: Export and customs requirements can also be material depending on the commodity and route to market and should be analysed on a product-specific basis. For exporters, the Central Bank’s Export Circular requires export proceeds to be repatriated and documented (via an Export Proceeds Acceptance Certificate (İBKB)) generally within 180 days of the actual export date. The same framework also includes mandatory sale/conversion mechanisms for a portion of export proceeds: while the circular contains a standing minimum sale rule.

Environmental compliance is one of the fundamental conditions for financing and long-term operability requirement for project financings in Türkiye. Most large projects will interact with environmental permitting, including the Environmental Impact Assessment (“EIA”) regime, as well as sector-specific environmental licences and ongoing monitoring obligations. The EIA framework has also been actively updated in recent years, including amendments in 2025 that revised the scope of projects subject to the EIA process, which can affect permitting timelines and diligence focus.

Türkiye’s domestic ESG framework has also accelerated. A major recent development is Climate Law No. 7552, adopted on 2 July 2025 and published in the Official Gazette on 9 July 2025, which constitutes Türkiye’s first comprehensive climate law and provides a basis for climate governance tools (including emissions management and market-based instruments to be detailed in secondary legislation).

Project companies must further comply with occupational health and safety requirements under Law No. 6331 on Occupational Health and Safety.

On the corporate reporting side, TSRS applies to in-scope entities with effect from accounting periods beginning on or after 1 January 2024, and the KGK materially narrowed the scope through its decision published in December 2024. (Please refer to Question 2 above for more details)

Türkiye has an active PPP market, but it is governed by a combination of model-specific and sector-specific statutes rather than a single, unified PPP code. The legal basis for a PPP transaction therefore depends on the sector and procurement route used for the project.

For many large infrastructure transactions, Build-Operate-Transfer structures are implemented under Law No. 3996 and its secondary regulations. Certain energy projects have historically relied on Build-Operate legislation such as Law No. 4283. Social infrastructure—most notably city hospitals—has been developed under Law No. 6428 and related implementing rules. Each framework has its own rules on tendering, contract terms, duration, dispute resolution and, importantly for lenders, step-in and assignment/transferability mechanics.

Foreign court judgements: In respect of foreign court judgements, a judgment of a court established in a country other than the Republic of Türkiye may not be enforced in Turkish courts unless (i) there is in effect a treaty between such country and the Republic of Türkiye providing for the reciprocal enforcement of judgments or (ii) there is de facto reciprocity in the field of enforcement of judgments between such country and the Republic of Türkiye or (iii) there is a provision in the laws of such country which provides for the enforcement of judgments of the Turkish courts.

Arbitral Awards: Türkiye has been a party to the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards (NY Convention) since 1992 and enforces arbitral awards of other contracting states without re-examination of the merits, subject to the conditions set forth under the NY Convention.

Foreign arbitration or arbitral awards are not recognised in cases where (i) there is an absence of an arbitration agreement or clause in written form (which is recommended to also be written in the Turkish language), (ii) the subject matter of the dispute is not capable of being settled by arbitration under Turkish law, (iii) the recognition or enforcement of the award is evidently contrary to public policy in Türkiye, (iv) the judgment given on the matter falls within the exclusive jurisdiction of the Turkish courts, or (v) the award is not final.

In addition, such an award is not recognised if one of the parties claims that (i) such party was not properly represented before the arbitral tribunal in accordance with the due process and thus, such party does not accept the tribunal’s award, (ii) such party was not given notice as to the appointment of the arbitrator or arbitration proceedings or was otherwise unable to present his/her case, (iii) the arbitration clause/agreement is invalid under the applicable law, (iv) the appointment of arbitrators or procedural rules applied by the arbitrators is contrary to the parties’ agreement, (v) the arbitral award relates to a matter that was not in the arbitration agreement/clause or it exceeds its scope, or (vi) the arbitral award has not become final or enforceable or binding under the applicable law or the procedural rules to which it was subject or the arbitral award was annulled by the competent body of the place where it was made.

Parties may agree to submit disputes arising under an agreement with a foreign element to the courts of a foreign jurisdiction, provided that the dispute is not subject to the exclusive jurisdiction of the Turkish courts. The jurisdiction clause should further designate a specific competent court (e.g., the High Court of Justice in London, rather than “the English Courts” generally).

As a general principle, states and state entities benefit from sovereign immunity in respect of both proceedings and enforcement measures (including attachment/seizure). This immunity does not apply where the state or state entity acts in a private or commercial capacity. In addition, in line with the Vienna Convention on Diplomatic Relations, any waiver of immunity intended to be effective and binding must be given by the relevant state itself.

Key current issues:

A principal focus in Turkish project finance remains regulatory compliance and structuring under the foreign exchange and capital movements framework. Parties continue to devote significant attention to the permissibility of FX-indexed cashflows, the mechanics of offshore disbursement and repayment, and ongoing compliance expectations. In that context, recent amendments removing exemptions to the rule of utilisation of offshore loans through Turkish intermediary banks will become another practical structuring driver for cross-border transactions.

Market participants are further closely monitoring the Constitutional Court decision published on 15 October 2025 annulling certain provisions of Law No. 1567, as explained in Question 8 above. While the market expects legislative and regulatory responses well ahead of the effective date, long-tenor financings are increasingly drafted with explicit mechanisms for regulatory change, compliance disruption and, where applicable, economic rebalancing.

On the other hand, ESG-related compliance and disclosure has moved materially up the agenda. Türkiye’s Climate Law No. 7552 (published 9 July 2025) establishes a statutory framework for climate governance tools (including market-based instruments), and TSRS sustainability reporting applies to in-scope entities for periods beginning on 1 January 2024, with KGK decisions in December 2024 clarifying and materially narrowing scope. (Please refer to Question 2 above for more details.)

Finally, development timetable certainty continues to be a key consideration, particularly in energy and natural resources projects where permits and approvals are multi-layered and sequential. Legislative amendments introduced by Law No. 7554 (the Law Amending Certain Laws) (published in the Official Gazette on 24 July 2025) are relevant to transaction planning, as they introduce a number of measures aimed at facilitating and expediting certain permitting and land-access processes; however, lenders continue to require disciplined CP design, longstop structuring and robust interface risk allocation in EPC and concession documentation.

Most significant emerging trends

One of Türkiye’s most significant emerging trends is the continued broadening of financeable energy-transition asset classes and business models, in particular storage-integrated generation and hybrid configurations (for example, renewables combined with storage or multi-source/hybrid generation structures). This is being supported by the continuing maturation of the relevant secondary regulatory framework, notably the rules under the Electricity Market Licence Regulation (including the licensing/permitting framework for storage-integrated projects) and the Regulation on Storage Activities in the Electricity Market, as well as the wider market infrastructure under the Grid Connection and System Use and Balancing and Settlement regimes.

Another trend is the mainstreaming of sustainability-linked and transition finance features beyond DFI/ECA-led transactions. Commercial bank syndications increasingly incorporate ESG-linked covenants and reporting undertakings, and sponsors are expected to demonstrate credible governance, E&S management systems and data capability at financing stage, consistent with evolving Turkish reporting requirements and global lender expectations.

Türkiye’s energy transition is underpinned principally by the Electricity Market Law No. 6446 and its extensive body of secondary legislation, which together regulate the core architecture of the electricity market, including licensing, market operation, grid connection and sector supervision. The development of renewable generation is further framed by the Renewable Energy Law No. 5346 and its implementing regulations, including the statutory mechanisms governing renewable support schemes and incentive structures that have historically facilitated renewable deployment.

In parallel, the regulatory treatment of energy storage and hybrid configurations has evolved materially through secondary regulation in recent years, enabling storage-integrated generation models and additional market participation concepts that are increasingly relevant to both sponsors and lenders. Competitive tender programmes (including renewable resource area-style procurements) and localisation requirements, where applicable, continue to influence procurement strategy and bankability, particularly for large-scale projects.

In addition to sector-specific regulation, Climate Law No. 7552 constitutes a significant cross-cutting legislative development. It establishes the statutory basis for climate governance instruments and market-based mechanisms to be further detailed through secondary legislation, and is expected to have increasing practical relevance for emissions management, reporting expectations and compliance costs across energy and industrial projects over time.

Tax structuring is a material workstream in Turkish project financings, as it can directly affect net debt service, pricing and upfront transaction costs. In practice, the focus is typically on (i) withholding on cross-border payments, (ii) transaction taxes applicable to lending by Turkish financial institutions, (iii) KKDF/RUSF on certain offshore borrowings, and (iv) stamp tax exposure on transaction documentation.

Withholding tax on interest

As a general rule, interest and interest-like amounts paid by a Turkish borrower to a non-resident lender may be subject to Turkish withholding tax. 10% withholding rate is commonly relevant for non-resident lenders that do not fall within the “bank/qualified financial institution” type categories, whereas a 0% rate is available for certain qualifying lenders (typically including foreign banks and other qualifying institutions). Applicable double tax treaties may further reduce withholding, depending on the lender’s residence, status and satisfaction of treaty formalities (including beneficial ownership and documentation).

BSMV (Banking and Insurance Transactions Tax)

Where the lender is a Turkish bank or a Turkish branch of a foreign bank (i.e., a BSMV taxpayer), BSMV at 5% may apply to interest and certain fee/commission items. By contrast, in a typical “foreign credit” structure where the loan is provided from abroad and is not booked by a Turkish bank/branch as the lender, BSMV is generally not expected to apply (subject to confirmation on the specific structure and flows). Fee characterization should be handled carefully, as some payments may be treated as interest-like for tax purposes.

KKDF/RUSF (Resource Utilisation Support Fund)

Offshore borrowings can trigger KKDF/RUSF depending on the borrower category, currency and maturity. Under the current regime, foreign-currency and gold loans obtained from abroad by Turkish resident borrowers (with banks and financing institutions generally exempt) are subject to regressive rates depending on maturity—3% for maturities below one year, 1% for 1–2 years, 0.5% for 2–3 years and 0% for three years and above. For Turkish-lira loans obtained from abroad, the rate is generally 1% for maturities below one year and 0% for one year and above. The tax base may also differ by currency/type (FX loans commonly calculated on principal; TRY loans commonly calculated on interest).

Stamp tax and other documentary taxes. Stamp tax may be triggered under the Turkish Stamp Tax Law (Law No. 488) on documents evidencing a monetary commitment, and is calculated on the Turkish Lira equivalent of the relevant amount (using the exchange rate applicable at the time the document is submitted into evidence), at a rate that is commonly up to 0.948% of the relevant amount (subject to the annual per-document cap). However, certain financing documents may benefit from exemptions; in particular, pursuant to Table No. 2, Section IV, item 23 of the Stamp Tax Law, the relevant document may be exempt from stamp tax on the basis that the lender(s) qualify (and remain) as a bank or financial institution, provided the statutory conditions for the exemption are satisfied.

Senior secured bank debt remains the principal funding source for Turkish project financings. Such facilities are generally structured on a limited-recourse, cashflow-based basis, with repayment primarily supported by the project’s revenues, complemented by a comprehensive security package and disciplined cash management mechanisms (including controlled accounts, payment waterfalls and reserve accounts such as a debt service reserve).

ECA-backed financing is often attractive for projects with significant imported equipment.

On the equity side, sponsor contributions are generally provided through paid-in equity and, where appropriate, structurally subordinated shareholder instruments (including shareholder loans). Alternative structures—such as tailored offtake-linked financings, leasing and participation (Islamic) finance—are utilised in certain sectors, but typically on a case-specific basis rather than as the standard approach for large greenfield project financings.

Türkiye has been an active market for multilateral and regional development finance. Institutions such as the EBRD and IFC participate in Turkish financings, and their involvement support longer tenors, anchor lender groups and enhance environmental and social governance frameworks.

Export credit agencies (ECAs) play a significant role in transactions involving meaningful imported equipment and cross-border procurement, and ECA cover is used across a range of sectors (including power/renewables, transport and industrial projects) and, in certain structures, may also be seen at the level of financial intermediaries such as leasing companies—primarily driven by the procurement profile and ECA-country content.

Domestic institutions—most notably Türk Eximbank—also contribute through export-linked lending, guarantees and insurance products, supporting Turkish exporters and overseas contractors and complementing commercial bank funding in relevant structures.

Insurance is a core workstream in Turkish project financings and is treated by lenders as an integral part of the risk allocation and security package. The focus is typically on (i) ensuring that the required insurance programme is in place throughout construction and operations, (ii) making the policies “financeable” through lender protections and controlled proceeds mechanics, and (iii) addressing local-law placement rules and market capacity constraints.

From a legal standpoint, Insurance Law No. 5684 contains an important baseline principle for structuring: as a general rule, insurable interests of Turkish residents located in Türkiye must be insured with insurers operating in Türkiye, subject to limited statutory exceptions (for example, certain international transport and hull covers linked to foreign financing, and certain personal lines). In large project financings this is typically managed through local placement with appropriate reinsurance to the international market where capacity is needed, rather than through direct non-admitted insurance. The Turkish Commercial Code permits reinsurance on terms the insurer deems appropriate.

On the documentation side, lenders typically require a bankable insurance package and corresponding undertakings in the finance documents. This usually includes construction-phase cover (commonly CAR/EAR, often with DSU/ALOP where relevant) and operations-phase cover (typically property damage and business interruption), together with liability lines (employers’ liability/third-party liability) and project-specific policies (for example environmental liability or political violence/war risks depending on the asset and location). Large transactions frequently involve an insurance adviser retained for the lenders or the sponsor group to review scope, exclusions, deductibles, reinstatement values and claims procedures.

Creditor protections are generally implemented through a combination of policy endorsements and ancillary documentation. Market-standard protections include recording the lenders/security agent as loss payee (and, where appropriate, additional insured/co-insured), restrictions on cancellation or material amendment without prior notice to lenders, and an assignment/pledge of insurance proceeds coupled with account control so that material claim proceeds are paid into controlled accounts and applied through the agreed cash waterfall. Turkish practice also permits proceeds to be payable to, and security to be created for the benefit of, foreign secured creditors, which is particularly relevant in cross-border financings.

Hedging arrangements (most commonly interest rate and foreign exchange derivatives) are routinely used in Turkish project financings and are, in principle, permissible.

From a regulatory standpoint, transactions with a Turkish project company are generally structured through Turkish banks and/or Capital Markets Board (CMB)-authorised investment institutions, and cross-border execution requires particular attention under the Decree No. 32 regime. Following the March 2025 amendments, derivative transactions to be conducted abroad are, as a general rule, required to be executed through banks and CMB-authorised intermediary institutions in Türkiye, with a limited carve-out where the transaction is undertaken solely at the initiative of the Turkish resident without marketing/solicitation into Türkiye (and with related fund transfers made through banks).

Documentation is typically based on standard market forms (often ISDA-style for cross-border hedging), aligned with the project’s security and cashflow control package (including control of hedge payments, collateral mechanics where applicable, and coordination with events of default/termination and enforcement).