TÜRKIYE Law and Practice Contributed by: Serkan Gül, Nazım Kurt and Türkay Avanaş, Hergüner Bilgen Üçer Attorney Partnership
Title Registration Fees Title registration fees of 4% of the value of the asset are assessed on sales of real estate by asset sale. These fees are generally split equally between the buyer and seller (ie, assuming only one buyer, and thus half each). VAT If the seller is a legal entity, VAT is assessed on the transferred property at 20% for office space and com - mercial property and at 1%, 10% or 20% for residen - tial property, depending on the total square metres and/or the value per square metre. Capital Gains Tax Income tax is assessed on the selling asset-holder. For individuals, the applicable rate is between 15% and 40%, but capital gains tax is not assessed for individuals who are not professionally engaged in the trade of real estate and who held the sold property for five years or longer. For corporations, the capital gains tax rate is 25%. Exemptions In share sale transactions, VAT and capital gains tax exemptions apply as long as the transferred shares were held by the selling entity for two years or more. Share purchase agreements are exempt from stamp tax. 2.11 Legal Restrictions on Foreign Investors Foreign legal entities may not acquire real property in Türkiye unless they are allowed to do so under special laws, such as the Petroleum Law, the Tourism Law or the Industrial Zones Law. To overcome this legal barrier, investors often choose to establish Turkish special purpose vehicles (SPVs). Turkish-incorporated companies with 50% or more foreign share ownership and/or management control are subject to approv - al by the governorship before they can acquire real property in Türkiye. Turkish-incorporated companies in which foreign ownership is under 50% and where management is not under foreign control can acquire real property just like domestic concerns where all shareholders are Turkish nationals. The governorship approval procedure involves an investigation of whether the real property is in a mili -
plan notes for the plot concerned, and zoning leg - islation. The zoning plans concerning each locality contain specific instructions on how each parcel may be developed or used; these instructions both reveal the general plan for the use of land in the locality and indicate how each parcel fits into the whole. It is generally not possible to alter zoning restrictions for particular parcels on a project basis through agree - ments with local zoning authorities, especially after an amendment introduced to the Zoning Law in 2020 which specifically prohibits zoning plan amendments for particular parcels that increase the population, building density, number of storeys or building height. 2.9 Condemnation, Expropriation or Compulsory Purchase Turkish law permits the government to take land if there is a public need. The transfer can take place voluntarily, or the government can file suit to condemn a piece of private property and, in due course, assume ownership. Voluntary transfers can be in exchange for cash or for another piece of government-held prop - erty. If the parties cannot come to an agreement on the consideration for a voluntary exchange, the govern - ment can file suit to establish the value of the land to be condemned. In a condemnation suit, the court appoints an expert to establish the value of the land to be condemned, and the parties can contest the expert’s valuation in open court. The court then estab - lishes the value of the land and, upon payment of this sum, orders the registration of the land in the name of the condemning agency. The condemnation com - pensation may be split into instalments, and, if this is ordered, registration may begin after the payment of the first instalment. In practice, developed land is rarely condemned. 2.10 Taxes Applicable to a Transaction Transfers of real estate through asset deals are sub - ject to title deed registration fees, VAT and income/ corporate income tax. Share sales are subject to VAT and capital gains tax. However, VAT, income tax and capital gains tax are subject to exemptions that are relatively easy to satisfy.
648 CHAMBERS.COM
Powered by FlippingBook