JOL & JOLCO Guide Request access

How Japanese operating leases actually work

A practitioner's guide to JOL and JOLCO for aircraft, ships and containers: the structure, the tax rules behind it, what makes a deal work, and what to check. Written by an arranger, shared on request.

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Japanese investors equity via TK Bank non-recourse loan Lessor (SPC) owns the asset Airline or ship operator equity loan lease rent purchase option
The basic JOLCO structure. The guide walks through each flow and the rules that apply to it.

What the guide covers

  • Structure and partiesInvestors, the TK lessor, lender and lessee, and how JOL differs from JOLCO.
  • Why it works for each sideWhere the lessee's cost saving and the investor's tax deferral come from.
  • Depreciation rulesJapanese useful lives and 200% declining balance, plus used assets and the simplified method.
  • Lease classificationThe Japanese tax tests, the new lease accounting standard and the lender's full-payout requirement.
  • Term and purchase optionHow the lender, tax and investor conditions fit together.
  • Ships and containersFlag and ship type, special depreciation and the 2023 and 2026 changes for TK structures, and container sale-leasebacks.
  • Case law and reform historyThe 2005 aircraft lease cases, the 2015 Supreme Court ruling and the main tax reforms.
  • Risks and checklistThe points investors, lessees and arrangers should confirm on each deal.

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