THE PERSONAL DATA PROTECTION BOARD’S PRINCIPLE DECISION REGARDING THE ACCOMMODATION SECTOR

Introduction

The Personal Data Protection Board (“Board”), as a result of its assessments regarding the customary practice in the hotel industry of obtaining photocopies of guests’ Turkish ID cards, has adopted a Principle Decision on the matter. With the decision published in the Official Gazette dated 06.11.2025 and numbered 2025/2120, it has been ruled that the said practice is unlawful under the Personal Data Protection Law No. 6698 (“Law”), and it has been decided that this practice must be discontinued.

This decision of the Board introduces significant changes both in terms of the protection of personal data and the legal obligations of accommodation facilities.

Practices Prior to the Decision

As is known, as a customary practice, many accommodation facilities obtain photocopies of identity documents such as Turkish ID cards or passports during guest check-in. Although businesses maintain this practice as a security measure regarding guests staying at their facilities and aim to protect their interests, particularly in matters such as payment tracking during reservations, lost property, theft, or legal disputes, there is no obligation or right granted to operators under the legislation in this regard. Moreover, as also emphasized by the Board in its principle decision, records kept in this manner constitute personal data processing. Therefore, such processing is subject to the criteria and conditions set forth in the Law.

Assessments Made Within the Scope of the Principle Decision

The Board began its examination by first reviewing the legal bases of the procedures currently applied in the accommodation sector. In this context, the provisions of the Identity Notification Law No. 1774 and the Regulation on the Implementation of the Identity Notification Law were examined.

Within this framework, it has been observed that the relevant law and regulation impose an obligation on businesses operating in the accommodation sector to record the identity information of their visitors. Articles 5 and 23 of the Regulation on the Implementation of the Identity Notification Law, which regulate the details of this obligation, require businesses both to record the identity information of guests staying at their facilities and to verify the recorded identity information with an official document.

In light of these regulations, the Board concluded that the personal data processing activities carried out by recording the name, surname, and Turkish ID number of guests receiving accommodation services are lawful pursuant to Article 5, paragraphs (a) and (c) of the Law, on the grounds that such processing is “explicitly prescribed by law” and “necessary for the data controller to fulfill its legal obligation.”

However, in practice, the obtaining of photocopies of guests’ identity documents by accommodation service providers goes beyond merely verifying and recording the data with official documents. Indeed, identity documents contain information beyond what is legally required. As stated in the Board’s decision, especially older identity documents may include special categories of personal data such as religious affiliation or blood type. Therefore, the Board has stated that obtaining photocopies of identity documents, going beyond the recording of the required information, cannot be based on the legal grounds set forth in the Law. In our opinion as well, while recording only the necessary information is sufficient, obtaining photocopies of identity documents is incompatible with the principle of proportionality under the Law.

For all these reasons, within the scope of the principle decision, the Board has decided that (i) the practice of accommodation facilities obtaining photocopies of guests’ identity documents is unlawful, (ii) such practice must be discontinued, and (iii) personal data that have already been unlawfully processed in this manner must be destroyed.

Impact of the Principle Decision on Accommodation Facilities

Although it may be argued by accommodation facilities that obtaining such documents is important for legal evidence and security, and that it serves to protect the interests of businesses in the event of potential disputes; as clearly set out by the Board in its principle decision, when the protected interests of businesses are weighed against the violated rights of individuals, it is beyond doubt that discontinuing such practices is more appropriate in terms of public interest.

In this context, with the principle decision, all accommodation service providers must immediately cease the practice of obtaining photocopies of official documents such as identity cards. In addition, if photocopies previously obtained in this manner are still being stored, they must be destroyed retrospectively.

Conclusion and Evaluation

With the Board’s Principle Decision in question, it has been clearly established that the long-standing customary practice in the accommodation sector of obtaining photocopies of identity documents is contrary to Law No. 6698; and it has been clarified that businesses should limit themselves to recording only the identity information required by legislation (name, surname, Turkish ID number, etc.). In this framework, it is of importance for accommodation facilities to align both their existing practices and their internal policies and procedures with the Law, secondary legislation, and Board decisions.

Practices to the contrary may give rise to various sanction risks, including administrative fines, before the Board. Therefore, it is of great importance for businesses to review their personal data processing activities by taking this Principle Decision into account and to promptly take the necessary compliance steps in order to mitigate legal risks.

Sincerely,

Atabay Law Office

LAW ON AMENDMENTS TO TAX LAWS AND CERTAIN OTHER LAWS AND

DECREE LAW NO. 631

Introduction

On 04.12.2025, the Draft Law on Amendments to Tax Laws and Certain Other Laws and Decree Law No. 631 was adopted by the Grand National Assembly of Türkiye and enacted into law.

A significant portion of the regulations introduced by this Law will apply to income and earnings for the year 2025, while another portion will apply to transactions as of 01.01.2026 and thereafter. The amendments are of a nature that will directly affect both tax and fee obligations as well as certain licensing/permit processes. In this article, the main amendments are summarized:

Interest Expenses in Real Estate Acquisitions

(For taxation periods starting as of 1 January 2025)

Until now, when a real estate property purchased using a loan was leased, the interest related to that loan could be deducted as an expense in the declaration of rental income. In contrast, taxpayers who purchased real estate without financing did not benefit from such an expense advantage. This situation led to differences in tax burden among taxpayers earning the same type of income.

With the new regulation, the aim is to reduce this disparity, direct savings toward productive investments, and limit the excessive reduction of the tax base through interest on loans used primarily for wealth acquisition.

Accordingly:

• A limitation is introduced on the deductibility of interest expenses related to debts for leased assets and rights, excluding residential properties.
• For one residential property leased as a dwelling, an amount equal to 5% of the acquisition cost may be deducted as an expense for a period of five years starting from the year of acquisition.

Restructuring of Provisional Tax Periods

(For taxation periods starting as of 1 January 2025)

The periods for determining the earnings of provisional tax taxpayers are being restructured. Under the new system:

• Earnings will be determined for 3, 6, 9, and 12-month periods,
• Accordingly, the fourth provisional tax period will be reintroduced into the system,
• A new provisional tax return covering the results of activities for the last quarter of the year will also be required.

New Regulations on Title Deed, Notary, and Licensing Fees

(To enter into force as of 1 January 2026)

Tax Loss Penalty for Understatement in Title Deed Transactions: In the purchase and sale of real estate, the title deed fee is currently calculated based on the declared transfer and acquisition value, which must not be lower than the property tax value. Following the transaction:

• If it is determined that the fee was paid based on a value lower than the property tax value, or
• If it is determined that the declared transfer and acquisition value does not reflect the actual situation,

the fee corresponding to the difference is collected from the taxpayer, and a tax loss penalty of 25% is imposed on this amount. With the new regulation:

• The penalty rate is set at “one-fold,”
• In other words, an additional penalty equal to the amount of the underpaid title deed fee is envisaged (effectively increasing the penalty rate to 100%).

On the other hand, significant increases are anticipated in the property tax bases for 2026 and the property tax values used in the calculation of title deed fees. This indicates an environment in which declarations at values closer to the actual transaction amount will become mandatory in practice, increasing transaction costs.

In addition, in the transfer of real estate in return for consideration, through contracts of care until death, or by exchange, the title deed fee will be applied separately for the transferor and transferee based on the transfer and acquisition values not lower than the property tax value; in cases of compulsory execution and dissolution of joint ownership, based on the sale price; and in expropriations, based on the appraised value.

Notary Fee for New and Used Vehicles: With the amendment to the Fees Law, a significant innovation is introduced regarding notary transactions:

• The initial registration of new vehicles carried out at notaries, and
• The sale and transfer transactions of registered (used) vehicles

will be subject to a proportional notary fee calculated over the sale/transfer price. This fee will be at least TRY 1,000.

The notary fee will not be charged for the sale and transfer of registered vehicles to entities holding a second-hand motor vehicle trade authorization certificate.

According to the amendment to the Highway Traffic Law, the exemption from fees for the sale and transfer of registered vehicles (used vehicles) conducted by notaries will be abolished.

Annual Fees for Licenses in Healthcare, Veterinary Services, Jewelry, Real Estate and Motor Vehicle Trade, Precious Metals, and Aviation: With the Law, an annual fee system is introduced for many licenses and authorization certificates that were previously subject only to an application/initial license fee or not subject to any fee at all. Accordingly, annual fees payable each year are envisaged for:

• Private healthcare institutions providing outpatient diagnosis and treatment (clinics, polyclinics, medical centers),
• Private healthcare institutions providing oral and dental health services,
• Private hospitals and laboratories (including private food control laboratories),
• Veterinary clinics, polyclinics, and animal hospitals,
• Authorization certificates issued for jewelry trade, second-hand motor vehicle trade, and real estate trade,
• Permits/activity certificates for precious metal refineries and intermediary institutions,
• Commercial airline and general aviation operating licenses,
• Tourism facility operating certificates.

These fees will be applied at double rates in metropolitan municipalities and in districts with a population exceeding 30,000 according to TURKSTAT data.

These regulations create a fixed annual licensing cost for businesses operating in the relevant sectors and require these new items to be taken into account in budgeting and cash flow planning.

Property Tax Base and Real Estate Values

“Double Cap” for the 2026–2029 Period:

• The 2026 building and land tax values calculated based on the land and plot square meter unit values to be determined in 2025,
  • May not exceed twice the tax values applicable for 2025.
• In cases of revision of the tax value or change of the taxpayer, the minimum square meter unit values determined in 2025 will be taken into account for 2026; these also may not exceed twice the 2025 values.
• For the years 2027, 2028, and 2029, building and land tax bases and minimum square meter unit values will also be calculated within the framework of the same cap system.

This limitation appears to be introduced to control potential sharp increases in property tax and related financial obligations, such as title deed fees, particularly in 2026.

Change in the Property Tax Increase System: With the new regulation, the method for determining the annual increase rate of property tax values is permanently redefined:

• Starting from the year following the commencement of tax liability, for each year, the previous year’s tax value
• Will be increased by the revaluation rate determined for the relevant year.

Taxes, fees, and other financial obligations applied based on property tax values or minimum square meter unit values will also be calculated based on these new values.

Social Security Premiums and Changes to the Upper Limit

(Gradual entry into force as of the beginning of 2026)

With the Law, amendments are also made to the Social Insurance and General Health Insurance Law and the Pension Fund Law of the Republic of Türkiye. The main highlights are as follows:

• Increase in long-term insurance premium rates: Premium rates for disability, old-age, and survivors’ insurance are increased, redefining the premium burden for certain insured groups.
• Revision of premium rates for specific insured groups:
  • Voluntary insured persons,
  • Those working intermittently in agriculture and forestry,
  • Certain part-time employees,
  • Domestic workers and apartment caretakers

  are subject to changes in applicable premium rates.

• Increase in the upper limit of earnings subject to premiums: The upper limit of earnings subject to premiums, currently applied as 7.5 times the minimum wage, will be increased to 9 times the minimum wage.
• Increase in borrowing and reinstatement costs:
  • The premium rate applied for the reinstatement of suspended insurance periods is increased;
  • For Pension Fund and Turkish Armed Forces personnel, a rate of 45% will be applied in borrowing, aiming to ensure equality among insured persons.
• Deductions from income/pensions: Premiums and premium debts arising from the insured persons themselves or due to entitlement of beneficiaries may be collected by deduction from income/pensions received from the Social Security Institution, up to a maximum of 25%.

All these regulations will have impacts on premium costs, payroll planning, and cash flow for employers and employees alike. Implementation will enter into force gradually as of the beginning of 2026.

Regulation on Check Law

With the amendment to the Check Law, the duration of a provision closely affecting commercial life is extended. Accordingly, the regulation rendering invalid the presentation of a check to the drawee bank before the issue date written on it is extended until 31 December 2028.

Regulation on Withholding Tax Exemption for Equity-Heavy Funds

Changes are also made to the withholding tax regime for funds whose portfolios consist of at least 51% of shares traded on Borsa Istanbul on a continuous basis. For funds whose participation units are sold only to qualified investors, not traded on the Turkey Electronic Fund Trading Platform (TEFAS), and not subject to any proportional limitation regarding assets and transactions eligible for inclusion in the fund portfolio, it is envisaged that the withholding tax exemption conditional upon holding the participation units for one year will not apply. On the other hand, it is envisaged that participation unit holders of other funds meeting the same portfolio ratio condition but not possessing these characteristics will continue to benefit from the existing withholding tax exemption.

Conclusion and Evaluation

The regulations introduced envisage structural changes across a wide range of areas, from the taxation of real estate income to title deed and fee practices, from the withholding tax regime on capital market instruments to fees related to licenses and authorization certificates, and to social security premium rates. In particular, the aggravation of sanctions regarding title deed fees and tax loss penalties, the determination of property tax bases under the new system, and the changes in the withholding tax regime for equity-heavy funds bring to the fore the need for taxpayers to reassess their current and future positions. In this context, considering the effective dates and scope of the relevant provisions, it would be beneficial to review potential impacts on a taxpayer-by-taxpayer basis and, if necessary, adapt tax and investment planning accordingly.

Sincerely,

Atabay Law Office

11th JUDICIAL REFORM PACKAGE

(Draft Law on Amendments to the Turkish Penal Code and Certain Other Laws)

The Draft Law on Amendments to the Turkish Penal Code and Certain Other Laws, publicly referred to as the “11th Judicial Reform Package,” was submitted to the Presidency of the Turkish Grand National Assembly on 27.11.2025.

This bulletin has been prepared to summarize the main proposed regulations under the Draft Law, particularly in the fields of criminal law, criminal procedure, and electronic communications. It should be noted that the draft has not yet been enacted into law and may be subject to amendments during the commission and General Assembly stages.

SIGNIFICANT AMENDMENTS PROPOSED IN THE TURKISH PENAL CODE NO. 5237

Offenders with partial mental illness

Within the scope of the proposed amendments, the provisions of the Turkish Penal Code regarding “Mental illness” are being restructured.

Accordingly, for offenders with partial mental illness whose criminal responsibility is not entirely eliminated:

• Both the execution of the imposed sentence, and
• The application of security measures specific to mentally ill offenders

are intended to be applied together.

It is explicitly regulated that security measures specific to mentally ill offenders shall also be imposed on such persons. The minimum periods to be spent in healthcare institutions for treatment and protection purposes are as follows:

• At least 1 year for offenses requiring aggravated life imprisonment or life imprisonment,
• At least 6 months for offenses punishable by imprisonment with an upper limit exceeding 10 years.

Insult offense: advance payment and mediation

Another matter proposed to be amended under the Turkish Penal Code concerns the offense of insult. In line with a decision of the Constitutional Court, significant changes are envisaged with respect to the offense of insult.

In light of the proposed amendments, insult offenses committed through audio, written, or visual communication directed at the victim are brought within the scope of “advance payment.” This change also covers insults committed via social media.

However, the offense of insult committed against a public official due to the performance of their duty is planned to be excluded from the scope of advance payment; in such cases, the possibility of initiating public prosecution under general provisions will continue.

Another proposed regulation regarding the offense of insult has been introduced within the scope of the Criminal Procedure Code. Accordingly, the complaint-based offense of insult is removed from the scope of mediation.

Increase in penalties for negligent injury

With the Draft Law, it is aimed to increase the lower and upper limits of imprisonment penalties for the offense of negligent injury. Accordingly:

• For simple negligent injury, the currently applicable imprisonment penalty of 3 months to 1 year is proposed to be increased to 4 months to 2 years,
• For negligent injury causing injury to more than one person, the existing penalty range of 6 months to 3 years is proposed to be increased to 9 months to 5 years of imprisonment.

Motor vehicles in the offense of breach of trust

The Draft Law proposes that cases where the subject matter of the offense of “breach of trust” is a motor vehicle be regulated as a qualified form of the offense. Accordingly, if the subject of the offense is a motor land, sea, or air vehicle, the penalty to be imposed shall be increased by one fold. This regulation is particularly important in combating abuses carried out through rental vehicles in practice.

Deliberately endangering public safety

In parallel with the proposed amendments, penalties for the offense of “deliberately endangering public safety” are also increased and its scope expanded. Accordingly, the imprisonment penalties for a person who, in a manner dangerous to the life, health, or property of others, (i) causes a fire, (ii) causes the collapse of a building, landslide, avalanche, flood, or overflow, or (iii) fires a weapon or uses explosive material, are increased, with the lower limit raised from 6 months to 1 year and the upper limit from 3 years to 5 years.

Furthermore, if the offense is committed using weapons capable of firing sound and gas cartridges, commonly referred to as “blank-firing” guns, an imprisonment penalty of 6 months to 3 years is envisaged. If the offense is committed in places where people are collectively present (such as weddings, matches, or mass events), the penalty shall be increased by half. In addition, it is explicitly regulated in the Criminal Procedure Code that this qualified form shall be excluded from the scope of the summary procedure.

Establishing an organization for the purpose of committing a crime and the use of children as instruments

For the offense of establishing an organization for the purpose of committing a crime, it is proposed both to increase the basic penalty amounts and to regulate the use of children as instruments as an aggravating circumstance. Accordingly, the lower limit of imprisonment for those who establish or manage an organization is increased from 4 years to 5 years, and the upper limit from 8 years to 10 years; for organization members, the upper limit of imprisonment is increased from 4 years to 5 years. If the organization is armed, the increase rate to be applied is clarified as “by half,” replacing the current wording of “from one quarter to one half.” Moreover, if children are used as instruments in crimes committed within the scope of the organization’s activities, the penalty imposed on organization leaders shall be increased by from one half up to one fold.

Obstructing, hijacking, or detaining the movement of transportation vehicles

The scope of the offense related to transportation vehicles is significantly expanded. While the current regulation only criminalizes the “hijacking or detaining of transportation vehicles,” the draft explicitly includes “obstructing the movement of transportation vehicles” within the scope of the offense. Accordingly, with respect to land transportation vehicles, a person who unlawfully obstructs the movement of a vehicle or stops a moving vehicle shall be punished with imprisonment from 1 year to 3 years, while a person who takes the vehicle to a place other than its intended destination shall be punished with imprisonment from 2 years to 5 years. If the subject of the offense is a sea or railway transportation vehicle, the penalty shall be 3 to 7 years; for air transportation vehicles, imprisonment from 5 to 10 years for obstructing movement and from 7 to 12 years for taking the vehicle elsewhere shall apply. Additionally, if another offense is committed while committing this offense, a separate penalty shall also be imposed for that offense.

AMENDMENTS PROPOSED IN THE CRIMINAL PROCEDURE CODE NO. 5271

Regulation regarding accounts containing benefits obtained through cybercrimes

A new regulation is introduced into the Criminal Procedure Code regarding property crimes committed through information systems. Accordingly:

• In cases where there is reasonable suspicion that the offenses of qualified theft, qualified fraud, or misuse of bank or credit cards regulated under the Turkish Penal Code have been committed:
  • Any account used in the commission of the offense at banks, payment service providers, or crypto asset service providers, or through them, may be suspended for up to 48 hours by decision of the relevant institution.
• The suspension and account transactions shall be immediately reported to the Chief Public Prosecutor’s Office; the account holder may apply to the prosecutor for the lifting of the measure. The public prosecutor shall decide on the application within 24 hours.
• If the benefit subject to the offense is transferred to another financial institution, this shall be promptly notified to the relevant financial institution and the account there may also be suspended by the same procedure.
• The benefit contained in the suspended account may be seized by a judge’s decision or, in cases of urgency, by the written order of the public prosecutor. If the judge does not decide on the seizure within 48 hours following submission for approval within 24 hours, the seizure measure shall automatically be lifted.

Insult offense, advance payment, and mediation

The procedural dimension of the amendments regarding the offense of insult summarized above in Section 1.2 can be briefly set out as follows:

In line with the Constitutional Court’s decision, the complaint-based offense of insult is removed from the scope of mediation. In cases where conflicts arise between advance payment and mediation, if both an offense subject to advance payment and an offense subject to mediation are committed against the same victim, mediation provisions shall apply with respect to the offense subject to mediation.

Furthermore, insult files in which mediation has already been achieved cannot later be brought within the scope of advance payment solely due to this new regulation; such files shall continue to be concluded under the existing mediation provisions.

Deliberately endangering public safety and the summary procedure

The offense of “deliberately endangering public safety,” which is regulated as a qualified form in the Turkish Penal Code and committed in places where people are collectively present, is excluded from the scope of the summary procedure.

AMENDMENTS PROPOSED IN THE ELECTRONIC COMMUNICATIONS LAW NO. 5809

Within the scope of the Draft Law, significant regulations are introduced regarding the use of mobile lines in crimes and the updating of subscription records.

Disconnection of mobile lines used in crimes

In cases where it is determined that a mobile communication line has been used in the commission of the offenses of qualified theft, fraud, or misuse of bank or credit cards regulated under the Turkish Penal Code, the connection of the mobile line shall be disconnected by the operator upon a judge’s decision or, in cases of urgency, upon the written order of the public prosecutor within the scope of the ongoing investigation. A prosecutor’s order issued without a judge’s decision shall be submitted for judicial approval within 24 hours; if the judge does not decide within 48 hours from the disconnection of the line, the measure shall automatically be lifted.

An administrative fine ranging from TRY 50,000 to TRY 300,000 may be imposed on operators who fail to disconnect the line despite such decision or order.

Updating subscription records and foreign subscribers

A new provision titled “Updating of subscription records” is added to the Electronic Communications Law, making it mandatory to update mobile line subscription records, particularly for foreign natural persons. From the date the provision enters into force, foreign subscribers will be required to apply to the operator to update their records within 6 months, and the Information and Communication Technologies Authority (ICTA) may extend this period by an additional 6 months. The mobile lines of foreign subscribers who fail to apply within the specified period or whose identity cannot be verified shall be disconnected within one month following the expiration of the granted period.

In addition, similar obligations are envisaged for persons who have more mobile lines than the number to be determined by the ICTA, requiring them to close or transfer excess lines. Administrative fines per line may be imposed on those who fail to fulfill these obligations and on operators who do not carry out the necessary procedures in this context.

CONCLUSION AND EVALUATION

In summary, as submitted to the Turkish Grand National Assembly, the 11th Judicial Reform Package constitutes a comprehensive set of amendments focusing particularly on criminal law, criminal procedure, and electronic communications. In the field of criminal law, provisions concerning offenders with partial mental illness, negligent injury, breach of trust, deliberately endangering public safety, organization crimes, obstruction/hijacking of transportation vehicles, as well as the offense of insult and the balance between advance payment and mediation stand out. In the field of criminal procedure, regulations regarding the suspension of accounts containing benefits obtained through cybercrimes and the seizure of such benefits, the scope of summary procedure and mediation, and amendments concerning the appellate courts’ reversal authority attract attention. In the field of electronic communications, procedures for disconnecting mobile lines used in crimes, updating subscription records—particularly obligations concerning foreign subscribers—and limitations on the number of lines are regulated.

It should be borne in mind that the Draft Law has not yet been enacted and that amendments may be made during the deliberations in the General Assembly of the Turkish Grand National Assembly. Our office closely follows the legislative process and will share detailed analyses and application notes within the framework of the updated legislation following the publication of the law in the Official Gazette.

SHORT-TERM RESIDENTIAL RENTALS

Introduction

With the Law No. 7464 on the Rental of Residences for Tourism Purposes and Amendments to Certain Laws (“Law”), which entered into force on 2 November 2023, the issue of renting residences for short periods for tourism purposes has been brought under legal regulation. Within the scope of the Law, it is observed that the conditions for obtaining a permit certificate for residences, the leasing process, the obligations of lessors, and the administrative sanctions to be applied in case of non-compliance with the legislation are regulated in general terms. Following the Law, the Regulation on the Regulation of Tourism-Oriented Residential Rental Activities (“Regulation”), issued by the Ministry of Culture and Tourism and published in the Official Gazette on 28 December 2023, has clarified the subject and provided a roadmap for homeowners.

It is understood that the regulations introduced primarily aim to register unrecorded and non-taxable incomes arising from the rental of residences for tourism purposes, especially in touristic regions, and to make the tourism sector safer in this respect; from this perspective, it is also understood that the regulations progress in parallel with the Ministry of Treasury and Finance’s “Action Plan to Combat the Informal Economy” envisaged for the years 2023–2025.

Obligations to Be Fulfilled by Homeowners in Order to Rent Residences for Tourism Purposes

Within the scope of Article 3 of the Law, it is stipulated that a permit must be obtained from the Ministry in order for a residence to be rented. Although the term “tourism-oriented rental” is used in the legislation, regardless of the purpose, obtaining this permit certificate has been made mandatory for rentals under 100 days.

All applications regarding the permit certificate are made via the Ministry of Culture and Tourism system through e-Government. A single application is made for residences located in the same building and for which a permit certificate is requested in the name of the same person, and if the applicant already has residences in the same building for which a permit certificate has been obtained, it is mandatory to provide information on this matter in the application.

In buildings (a single block) with more than three independent units (residences), a permit certificate may be issued in the name of the same person for a maximum of twenty-five percent of the residences in that building. In other words, it is not possible for a single person to obtain permit certificates for all apartments in a residential building and operate the building as a hotel. In addition, in order to apply for more than five residences in a building, it is also necessary to submit a business opening and operating license.

The documents and information required in permit certificate applications vary depending on the nature of the residence. Residence groups are classified as detached villas; buildings consisting of more than one independent unit; and high-quality residences. However, it is possible to state that, in general, the submission of the information and documents listed below is mandatory.

• For real persons, identity card + signature declaration if there is no signature sample on the identity document
• For legal entities, tax identification number and trade registry number (for legal entities not registered in the registry, TIN + signature circular/sample)
• In case the residence is subject to shared ownership, the above-mentioned documents regarding the owners approving the application in a manner that ensures the majority of shares and shareholders, together with their written declarations of approval
• In case of joint ownership, the above-mentioned documents regarding all owners, together with their written declarations of approval
• In joint ownership, lastly, the written declaration of all owners specifying the lessor authorized to represent and bind before the Ministry and responsible to the Ministry
• A notarized copy of the unanimous decision taken by all condominium owners of residential independent units in the building, stating that it is deemed appropriate to carry out tourism-oriented rental activity in the residence located in the building
• If the number of residences in the same building for which a permit certificate is requested in the name of the same lessor exceeds five, a business opening and operating license; additionally, if the building subject to the application is located within residential sites consisting of buildings with multiple independent units, a notarized copy of the unanimous decision taken by all condominium owners
• Power of attorney, if the application is made by proxy

Following the submission of the documents required according to the type of residence to the Provincial Directorate or the Ministry (in case it is a residence complex) and the issuance of the permit certificate upon approval, the Directorate conducts an inspection at the relevant address within 30 days.

The Ministry examines issues such as the posting of the obtained permit certificate at the entrance of the relevant residence; whether the residence complies with the declarations made in the application; whether the residence meets the minimum qualifications; whether the residence is properly marketed and promoted through intermediary service providers; whether double leasing is carried out; and whether cleaning, maintenance, pest control activities, etc. are conducted during the rental processes.

Sanctions to Be Applied in Case of Non-Compliance with the Legislation

Administrative sanctions to be applied within the scope of Article 4 of the Law are centered on unauthorized rentals and the failure of permitted rentals to comply with the legislation. Within the scope of the first paragraph of the article:

• In case residences rented for tourism purposes are leased without a permit certificate, an administrative fine of TRY 100,000 for each residence (with an additional 15-day period granted to obtain the permit certificate)
• An administrative fine of TRY 500,000 for those who continue tourism-oriented rental activities without obtaining a permit certificate within the granted period (in this case, another 15-day period is granted)
• An administrative fine of TRY 1,000,000 for those who still continue renting without a permit certificate despite subparagraphs (a) and (b)
• An administrative fine of TRY 100,000 for each rental imposed on those who lease tourism-oriented residences rented from the permit certificate holder to third parties in their own name and account
• An administrative fine of TRY 100,000 for each rental in case the tenant rents out the residence for tourism purposes in their own name and account
• An administrative fine of TRY 100,000 for each rental imposed on those who mediate the tourism-oriented rental of residences without a permit certificate
• An administrative fine of TRY 100,000 for each residence imposed on intermediary service providers who do not act in compliance with the legislation
• An administrative fine of TRY 1,000,000 imposed on those who, despite concluding lease agreements exceeding one hundred days each time, rent the same residence more than four times within one year from the date of the first agreement

In the second paragraph of the same article, with regard to permitted lessors:

• An administrative fine of TRY 50,000 in case the information and documents requested by the Ministry are not submitted within thirty days, are submitted incompletely, or misleading information or documents are provided
• An administrative fine of TRY 50,000 in case the change of the lessor through a legal transaction other than inheritance is not notified within thirty days from the date of registration in the land registry
• An administrative fine of TRY 50,000 in case the document regarding the payment of the tourism share is not submitted within the period determined by the Ministry or during inspections
• An administrative fine of TRY 100,000 in cases where the residence rented for tourism purposes is misleadingly promoted to users through texts, advertisements, posters, brochures, social media, websites, and similar tools regarding its location, nature, and physical characteristics, or where the committed conditions are not met, or where the residence rented for tourism purposes is allocated to the user for a period shorter than that specified in the contract
• An administrative fine of TRY 100,000 in case the residence rented for tourism purposes is not delivered to the user in accordance with the contract
• An administrative fine of TRY 200,000 in case the payment received is not refunded within the fifteen-day period granted following the application of subparagraph (d)
• An administrative fine of TRY 100,000 in case the plaque issued by the Ministry is not posted at the entrance of the residence rented for tourism purposes (a 15-day period is granted)
• An administrative fine of TRY 500,000 in case the plaque is still not posted at the entrance of the residence rented for tourism purposes within 15 days despite the application of subparagraph (f)
• An administrative fine of TRY 100,000 in case it is determined during inspection that the residence does not meet the qualifications forming the basis for the issuance of the permit certificate (a 15-day period is granted to remedy the non-compliance)

Conclusion and Evaluation

With the Law and Regulation that have entered into force, rentals under one hundred days have been characterized as “tourism-oriented,” and these short-term rentals have been subjected to detailed regulations, aiming in particular to place both tourism and the informal economy on a legal footing in touristic regions; incomes that could not be included in the tax system have been identified and made taxable, and both lessors and tenants have been brought under protection.

Sincerely,

Atabay Law Office

INDIVIDUALIZATION IN HOUSING COOPERATIVES

Introduction

The individualization process in housing cooperatives refers to the acquisition of individual ownership rights by cooperative members over the independent units allocated to them, and the receipt of title deeds in their own names, following the completion of construction and infrastructure works carried out on the basis of collective ownership.

Under Turkish law, this process is regulated within the framework of the Cooperatives Law No. 1163, the Condominium Law No. 634, and related legislation, and includes legal, administrative, and technical stages. The legal infrastructure of the individualization process, implementation steps, problems encountered and solution methods, as well as the rights granted to members upon completion of the process, are comprehensively addressed in this article.

Definition and Legal Basis of Individualization

Individualization constitutes the most critical stage in a housing cooperative’s achievement of its establishment purpose. Individualization means that the completed housing units are removed from the ownership registered in the name of the cooperative’s legal entity and are registered in the land registry in the name of each member individually. Article 81/2 of the Cooperatives Law No. 1163 accepts this process as one of the reasons for the dissolution of the cooperative. Accordingly, upon the registration of the dwellings in the names of the members, the cooperative is deemed to have achieved its purpose and generally enters into liquidation.

The purpose of housing cooperatives was stated in the decision of the Court of Cassation Civil Chamber dated 20.06.1995 and numbered 3161/5492 as follows:

“It consists of meeting the specific economic interests of members through mutual assistance, solidarity, and good faith rules, and constructing a dwelling for members who do not own a house”

Therefore, the ultimate goal of a housing cooperative is to conclude its activities by granting individual ownership rights to its members. With this explanation, individualization can be defined as the final stage aimed at by housing cooperatives. At this stage, the completed residences or workplaces are separated from the cooperative’s legal entity and transferred into the individual ownership of each member, and this status is formalized in the land registry.

Stages of the Individualization Process

The individualization process consists of successive steps that are carried out through the fulfillment of certain legal procedures following the completion of construction. Considering the legal regulations and practices, this process is generally completed in the following five main stages:

• Determination of Housing Costs: The first stage of individualization is the calculation of the total cost of the constructed residences or workplaces. Article 61 of the Model Articles of Association for Housing Construction Cooperatives stipulates that this cost is first calculated through a provisional cost assessment, after which “benefit value” (premium) amounts are calculated in order to eliminate value differences arising from features such as location, view, and floor of the residences.
• Allocation of Residences to Members: After the costs of the residences are finalized, it is determined which residence will be allocated to which member. According to the Model Articles of Association, this allocation is made either by drawing lots or based on the preferences of the members. The drawing of lots, generally carried out in the presence of a notary public, finalizes which independent unit each member will own. According to the decisions of the Court of Cassation, the allocation of a residence to a member as a result of the draw gives rise to a personal right against the cooperative for that member; however, this does not yet constitute an ownership right.
• Change of the Property’s Status in the Land Registry: For individualization, the status of the immovable property registered as land must be changed to “building” or “residence” in accordance with the completed construction. This transaction is carried out by applying to the relevant Cadastre Directorate after obtaining the occupancy permit (building use permit).
• Establishment of Condominium Ownership in Buildings: Article 81 of the Cooperatives Law requires that, after obtaining the building use permit, transition to individual ownership in accordance with the Condominium Law must be completed within one year. Condominium ownership refers to the ownership right over independent units (apartment, shop, etc.) located within a main immovable property. This process is completed through an application to the Land Registry Directorate by the authorized representatives of the cooperative.
• Transfer of Independent Units to Members: At this final stage, the title deeds of the independent units over which condominium ownership has been established are transferred by the cooperative’s legal entity to each member. With this transfer, each member legally acquires ownership of the residence allocated to them and ensures its registration in their own name in the land registry.

Status of the Cooperative Following the Establishment of Individual Ownership

With the establishment of individual ownership, the fundamental activity undertaken by the housing cooperative in line with its establishment purpose is completed. Accordingly, the realization of individualization indicates that the cooperative has achieved its establishment purpose; however, it does not result in the automatic termination of the cooperative. After this stage, the decision regarding the future of the cooperative is determined by the will of the members. At this point, the most commonly preferred method is liquidation, whereby, upon a general assembly resolution, all debt and receivable relationships, assets, and transactions with third parties are concluded through liquidators; accounts are closed, and the cooperative is removed from the trade registry.

Nevertheless, it is also possible for the cooperative to continue its existence without liquidation. In this context, through an amendment to the articles of association by a general assembly resolution, the cooperative may be directed to a new field of activity after completing its establishment purpose. This amendment is subject to the approval of the relevant Ministry and registration in the trade registry; moreover, the new purpose of the cooperative must be compatible with cooperative principles and structure. Another alternative, more rarely applied, is conversion of type. Within the framework of the Turkish Commercial Code No. 6102, the cooperative may be converted into a capital company, provided that strict quorum requirements are met and conversion conditions are fulfilled. In the case of conversion, the legal entity does not terminate; debts, receivables, and partnership relationships continue uninterrupted. However, due to the variable capital structure of cooperatives, their large membership base, and intensive public supervision, conversion of type is considered a difficult and costly process in practice.

Conclusion and Evaluation

Individualization represents the final legal turning point where the opportunity for members to acquire housing at lower costs through solidarity becomes concrete, particularly in today’s economic conditions where housing prices have reached high levels and individual home ownership has become increasingly difficult. Acting transparently and in compliance with the legislation during this process secures both the ownership rights of members and the opportunity to acquire housing at lower costs through solidarity, thereby positioning housing cooperatives as a still strong and up-to-date alternative for access to housing under current economic conditions.

Sincerely,

Atabay Law Office

TRANSFER OF THE LEASE RELATIONSHIP

Introduction

Today, the dynamic nature of commercial activities and the increasing value of workplaces have made the transfer of lease relationships important for both tenants and lessors. Especially in workplace leases, the protection of elements such as customer base, location, and investments made renders the transfer of the lease agreement a practical and economic necessity.

General Explanations

Article 323 of the Turkish Code of Obligations regulates the principles regarding the transfer of the lease relationship. This provision finds significant application particularly in workplace leases. Although Article 323 of the TCO is in the nature of an assignment of contract, there is no doubt that it constitutes a special provision in relation to Article 205 of the Turkish Code of Obligations titled “Assignment of Contract.”

With the transfer of the lease agreement, the aim is for all rights and obligations of the tenant under the agreement to pass to the transferee. However, with respect to workplace leases, the consent of the lessor is subject to certain conditions, and the liability of the transferring tenant is also separately regulated.

Pursuant to Article 323 of the TCO, the tenant may not transfer the lease relationship without the written consent of the lessor; therefore, it can be stated that the transfer transaction remains suspended until written consent is obtained. In workplace leases, however, the lessor may not refrain from giving such consent without a justified reason. Again, in workplace leases, while the transferee tenant joins the lease agreement as the tenant, the transferring tenant continues to be jointly and severally liable for a maximum period of two years.

Article 323 of the TCO constitutes the general rule for the transfer of the lease relationship; however, in certain cases this rule does not apply. In particular, in cases such as the transfer of commercial companies through merger or division, contracts (for example, lease agreements) are deemed to have been transferred automatically without the consent of the lessor. This is because such transfers involve universal succession, meaning that all rights and obligations pass automatically to the new party. Therefore, the consent requirement and the two-year liability regulated under Article 323 of the TCO do not apply in such cases.

Conditions for the Transfer of the Lease Relationship

Although the transfer of the lease agreement is subject to the existence of three conditions, if the subject matter concerns a family residence, an additional condition is required, and in the event that the leased property is a family residence, a total of four conditions are sought:

• First of all, in order for the lease agreement to be transferred pursuant to this article, there must be a valid lease agreement between the parties. The establishment of a lease agreement is not subject to any form requirement and may be concluded either in writing or verbally. In addition, the lease agreement may be concluded for a definite or indefinite term. Whether the lease agreement is for a definite or indefinite term makes no difference for the purpose of transfer.

• Secondly, the transferring and transferee tenants must agree on the transfer of the lease agreement. This agreement may be in the form of a contract concluded between the transferring and transferee tenants, or in the form of a tripartite agreement including the lessor. If an agreement is concluded only between the tenants, then the lessor must additionally give written consent. However, if the agreement is tripartite, separate written consent of the lessor is not required, as the lessor will have already given consent by signing the agreement.

• The lessor must give written consent to the transfer of the agreement. As long as written consent is not given, the lease relationship cannot be transferred. Nevertheless, in workplace leases, consent must be given unless there is a justified reason. Indeed, if consent is not given, the tenant who alleges the absence of a justified reason may apply to the court for approval of the transfer of the agreement. Through an action for performance to substitute the declaration of intent of the lessor, the lease agreement may be transferred. The lessor may reject the transfer request only in the presence of objectively reasonable and justifiable reasons. Examples of justified reasons include:

• Breach of contract or excessive use,
• Lack of economic security,
• Absence of sufficient experience and competence,
• Reasons personal to the tenant,
• Bad-faith transfer attempts, etc.

Apart from those listed above, it is observed in practice that failure of the tenant to introduce the new candidate to the landlord in a timely manner and with sufficient information may also cause issues. If, despite the lessor’s reasonable request for information, the tenant fails to provide information such as the financial status and references of the transferee, the lessor may refrain from giving consent due to uncertainty. In such a case, refusal to give consent may be deemed a justified reason.

In summary, when the case law of the Court of Cassation and Article 323 of the TCO are evaluated together, the transfer of workplace lease agreements has become the rule, while refraining from consent has become the exception. The lessor may refrain from giving consent only if there are concrete and provable justified reasons; otherwise, the lessor is obliged to give consent.

• If the lease agreement to be transferred relates to a family residence, the consent of the spouse of the transferring tenant must also be obtained. This requirement is regulated under Article 194 of the Turkish Civil Code and Article 349 of the Turkish Code of Obligations. According to these provisions, in immovable properties leased for use as a family residence, the tenant may not terminate the lease agreement without the explicit consent of the spouse. The transfer of the lease agreement produces the same result as termination of the lease agreement for the transferring tenant. It should be particularly noted that although the spouse’s consent is not subject to any form requirement, obtaining such consent in writing facilitates proof in the event of a potential dispute.

Consequences of the Transfer of the Lease Relationship

If the necessary conditions for the transfer of the lease agreement are fulfilled, the agreement passes to the transferee with the consent of the lessor, and two main consequences arise as a result of this transfer. The first is the change of the tenant under the agreement, and the second is the continuation of the liability of the transferring tenant for a certain period.

Change of Parties

With the transfer transaction, the lease agreement continues under the same conditions; however, one of the parties, namely the tenant, changes. With this change, the transferring tenant transfers all rights and obligations arising from the agreement to the transferee tenant. The transferring tenant is no longer liable for obligations arising after the date of transfer (without prejudice to the regulations regarding workplace leases) and also loses the right to use the leased property.

The lease agreement may also be established in the form of a new agreement with the participation of all three parties (lessor, transferring tenant, and transferee tenant). In this case, the parties may redefine the lease conditions by mutual consent.

Liability of the Transferee Tenant

The transferee tenant replaces the former tenant in the lease agreement, and the lease relationship continues with retroactive effect. Within this scope, the transferee is also liable for obligations that arose prior to the date of transfer. All obligations such as use of the leased property, duty of care, and payment of the rental fee are assumed by the transferee tenant.

In addition, in order for the lessor to impose liability on the transferee tenant pursuant to Article 335 of the TCO, the lessor must conduct a condition assessment when taking back the leased property. Otherwise, it may not be possible to assert claims against the transferee tenant regarding deficiencies or damages relating to the period prior to the transfer.

Joint and Several Liability / Continuing Obligation of the Transferring Tenant

In workplace leases, pursuant to Article 323/III of the TCO, the transferring tenant remains jointly and severally liable together with the transferee tenant until the termination of the lease agreement and for a maximum period of two years. The purpose of this regulation is to protect the lessor who consents to the agreement and to provide a certain level of security.

Status of the Lease Relationship in Case of Transfer of a Commercial Enterprise

In the event of the transfer of a commercial enterprise, Article 11/3 of the Turkish Commercial Code (“TCC”) must also be considered in addition to Article 323 of the Turkish Code of Obligations. Pursuant to Article 11/3 of the TCC, when a commercial enterprise is transferred as a whole, unless otherwise stipulated, the tenancy right is also deemed to have been transferred together with the enterprise. In this case, the lease agreement is deemed to have been transferred without the consent of the lessor.

This provision gives rise to two different views in practice: According to the first view, Article 323 of the TCO should also apply in the transfer of a commercial enterprise, and therefore the consent of the lessor should be sought. According to the second and prevailing view, Article 11/3 of the TCC constitutes a special provision, and the lease relationship is deemed to have been transferred automatically. This approach has been predominantly adopted in judicial precedents as well.

With regard to the transfer of a commercial enterprise, pursuant to the second paragraph of Article 202 of the TCO, the transferring party remains jointly and severally liable together with the transferee for the debts of the enterprise for an additional two years.

Conclusion and Evaluation

While the transfer of the lease relationship enables the transfer of the tenant’s contractual rights and obligations to a third party, it also directly affects the balance of interests of the lessor. In practice, supporting the processes related to the transfer of the lease relationship with written agreements, notifications, and approval mechanisms will serve to prevent potential disputes and ensure the legal security of the parties.

Sincerely,

Atabay Law Office

WITHIN THE SCOPE OF THE ACTION PLAN FOR COMBATING THE INFORMAL ECONOMY

CURRENT DEVELOPMENTS REGARDING LEASE AGREEMENTS

Introduction

Within the scope of the Action Plan for Combating the Informal Economy (“Plan”), the Risk Analysis Directorate General of the Ministry of Treasury and Finance (“Ministry”) has developed numerous projects planned to be implemented in order to ensure the monitoring of informal income and cash flows, including the integration of lease agreements into the e-government system.

In the introduction section of this Plan, the term “informality” is defined as “the entirety of activities that are concealed from public authorities, not partially or fully recorded in official records or cannot be recorded, and therefore cannot be audited.” Although informal practices regarding lease agreements are not explicitly defined in the Plan, it is understood that the objective is to register lease relationships carried out either through dual contracts or without any written agreement at all. In the statement made by the Ministry of Treasury and Finance, it was expressed that the main purposes of executing lease agreements via e-government are to ensure the monitoring of lease agreements, to increase the reliability of lease agreements, to facilitate access to agreements in processes related to lease agreements and relationships before state authorities and judicial bodies, and to create Türkiye’s real estate value map. Although the projects mentioned in the Plan are planned to be implemented within 2025, the execution of lease agreements via e-government has been urgently put into practice, and on 04.11.2024, lease agreement preparation services were made available to citizens through the “E-Government Gateway” application.

In this article, the general terms and conditions regarding the preparation of lease agreements via e-government, the legal binding force, nature, and benefits of agreements executed through e-government are discussed.

General Conditions Regarding the Execution of Lease Agreements via E-Government

With respect to lease agreements regulated under Articles 299 et seq. of the Turkish Code of Obligations No. 6098, the legislation does not impose a form requirement. Accordingly, the parties to a lease agreement may execute the agreement verbally, in writing, or in official written form as they wish. However, with the new regulation, it is observed that the motivation is to develop an application encouraging lease agreements to be prepared via e-government.

This service is provided under the “Lease Agreement Transactions” section through the E-Government Gateway infrastructure in cooperation with the Ministry of Treasury and Finance. Through this section, lease agreements can be created step by step, and a stamped “Barcoded Document” version of the agreement can be generated through the system, enabling document verification.

It is necessary to open a small parenthesis regarding transactions to be conducted via e-government for jointly owned immovable properties. Namely, in jointly owned properties, an agreement prepared by one of the shareholders must first be approved by the other shareholders (If there is joint ownership, all shareholders; if there is shared ownership, shareholders representing the majority of shares and co-owners must approve the agreement.). After obtaining the approvals of all shareholders, the approval period of the tenant and the guarantor begins. However, it should also be noted that for lease agreements to be executed via e-government for jointly owned properties, there must be a maximum of ten shareholders. Therefore, for properties with more than ten shareholders, physical lease agreements must still be prepared and signed.

Legal Consequences and Benefits of Executing Lease Agreements via the E-Government System

The responsibility regarding all annotations and declarations on the immovable properties subject to agreements executed through this service belongs to the parties pursuant to Article 1020 of the Turkish Civil Code. The said article regulates the principle of publicity of land registry records. Accordingly, if there is any annotation or declaration on the leased immovable property, the tenant cannot claim that they were unaware of it due to the lease agreement having been prepared and approved via e-government. As stated above, the agreement executed through this service shall, upon approval by the parties, give rise to all legal consequences set forth under Articles 299 et seq. of the Turkish Code of Obligations No. 6098. All responsibility regarding the agreement belongs to the parties.

The section regarding responsibility also appears before the lessor, tenant, and guarantor during the preparation and approval stages of the lease agreement, and in order to proceed with the process, the system requires approval of the information form and the clarification text on the processing of personal data. Accordingly, in agreements executed via the platform, the tenant and the lessor undertake the accuracy of the information processed. With this application, it can be stated that issues such as forging signatures on lease agreements or eviction undertakings, or alleging the falsity of signatures, are eliminated. This is because no wet signature is affixed to the prepared agreement. If lease agreements come before a judicial authority, such authority may request the submission of the lease agreement prepared within the e-government system from the Ministry of Treasury and Finance.

In addition, while it is possible to add a guarantor to lease agreements executed via e-government, pursuant to the Turkish Code of Obligations No. 6098, surety agreements must be executed with a wet signature. Therefore, considering that guarantors are frequently included in general lease agreement practices in Türkiye, although it is possible to create a lease agreement via e-government, the surety agreement to be signed between the tenant and the person who will approve as a guarantor must be physically prepared and signed.

Finally, it is important to take into consideration that special and general terms to be included in the lease agreement; personal data of the parties; and, if the immovable property is leased as a workplace for the purpose of carrying out commercial activities, potentially commercial secrets; may, within the scope of Article 3 of the Clarification Text on the Processing of Personal Data approved at the outset by the tenant, lessor, or guarantor during the preparation of the lease agreement, be shared—where deemed necessary—within the scope of relevant legislation or signed protocols, with authorized public institutions and organizations, law enforcement authorities, courts and enforcement offices, legally authorized private law entities, related third-party natural and legal persons, service provider companies and their officials, project partners, suppliers, and support service providers.

Conclusion and Evaluation

Although no regulation has yet been made regarding the compatibility of the Plan published by the Ministry with the existing legislation, it is possible that efforts will be made in the future to integrate this application into the legislation. However, at the current stage, it is observed that necessary steps have been taken regarding the monitoring of lease agreements through the application initiated via the e-Government platform.

Sincerely,

Atabay Law Office

BRINGING EXPORT PROCEEDS INTO THE COUNTRY

Introduction

As of 2018, fluctuations in foreign exchange rates made it necessary to implement certain economic measures in order to ensure the sustainability of the trade and production sectors. One of the measures adopted within this scope is the practice of bringing export proceeds into the country and documenting them through banks.

With the Communiqué on the Decree No. 32 on the Protection of the Value of Turkish Currency (Regarding Export Proceeds) (Communiqué No: 2018-32/48) published in the Official Gazette dated 4 September 2018, the obligation to bring export proceeds into the country was reintroduced. This Communiqué was amended by Communiqués No. 2019-32/53, 2019-32/55, 2019-32/56, 2020-32/58, and 2021-32/61, while the procedures and principles regarding the implementation were determined by the “Export Circular” of the Central Bank of the Republic of Türkiye.

Period for Bringing Export Proceeds into the Country and Exceptions

As a rule, the proceeds of export transactions carried out by persons and companies resident in Türkiye must be brought into the country immediately and without delay following payment by the importer. Pursuant to the Communiqué and the Circular, with respect to transactions where the actual export was carried out after 4 September 2018:

• The period for bringing export proceeds into the country is a maximum of 180 days from the date of actual export.
• This 180-day period is the maximum duration; export proceeds are expected to be brought into the country without unreasonable delay after being collected.
• If export contracts stipulate a maturity longer than 180 days from the date of actual export for the collection of proceeds, the period for bringing the proceeds into the country is a maximum of 90 days from the end of the maturity period. In this case, the contract, proforma invoice, or bill of exchange evidencing the stipulated maturity must be submitted to the intermediary bank together with the exporter’s written declaration.

Exports made to free zones are also explicitly included within the scope of the Communiqué. Paragraph five of Article 4 of the Circular states that exports to free zones are also subject to the provisions of Communiqué No. 2018-32/48.

On the other hand, for export transactions made to the countries listed in Annex:2 of the Circular, the first paragraph of Article 3 of the Communiqué is not applied; thus, the obligation to bring export proceeds into the country is exempted for exports to these countries.

Relevant Legislation and Time Periods

According to Article 4 of the Export Circular:

“Without prejudice to the export dates and periods specified in Article 7 for special types of exports, it is mandatory that the amount recorded in the customs declaration (CD) of the exported goods be brought into the country within 180 days from the date of actual export and documented under an Export Proceeds Acceptance Certificate (EPAC).”

Exports Against Advance Foreign Currency Payments

For exports against advance payments, pursuant to Article 6 of the Circular:

• Exports against advance payments must, as a rule, be completed within 24 months.
• If there is a force majeure or a justified reason and the exporter proves this with documentation, the bank may grant an additional period of up to 1 year beyond the 24-month period for exports against advance payments.
• If, after receiving advance foreign currency, neither the export is carried out nor the advance foreign currency is refunded within 24 months (and any additional period granted by the bank), the portion of this amount exceeding a certain threshold is deemed a pre-financing loan under the legislation and this situation is reported to the relevant Ministry.

Within this framework, since advance foreign currency has already been brought into the country in advance, the main objective is to fulfill the export commitment corresponding to the advance payment within 24 months.

Concept of Actual Export and Commencement of the Period

Article 151 of the Customs Law No. 4458 defines actual export as follows:

• The exported goods must retain the same condition and characteristics they had at the time of registration of the customs declaration when they exit customs control, and
• The goods must leave the Turkish Customs Territory in this condition, in which case they are deemed to have been actually exported.
• After this stage, customs control over the exported goods ends.

Article 416 of the Customs Regulation defines the date of actual export as:

• For road and rail exits, the date on which exit procedures are completed by the customs authority and the goods physically exit the land border or physically enter a free zone,
• For exits by sea and air, the date on which the vehicle carrying the goods departs,
• For deliveries made to vehicles departing on international voyages, the date on which the goods are delivered.

In parallel, the Circular defines the date of actual export, for foreign exchange monitoring purposes, as the “date of closure of the export declaration” and takes this date as the basis for calculating the 180-day period prescribed for bringing export proceeds into the country.

Bringing Foreign Currency into the Country and Sale to Banks

In order to bring export proceeds into the country, it is not mandatory to immediately convert the proceeds into Turkish lira or sell them to a bank at the moment they are collected.

• At the level of the Communiqué, the former obligation to sell at least 80% of export proceeds to banks and document them under a Foreign Exchange Purchase Certificate (FPC) was abolished by Communiqué No. 2019-32/56.
• However, pursuant to the provisions added to the Circular, it is still mandatory to sell a certain portion of the export proceeds documented under an EPAC or FPC to the Central Bank.

Sanctions to Be Applied in Case of Failure to Bring Export Proceeds into the Country on Time

Sanctions to be applied in case export proceeds are not brought into the country are regulated under Article 3 of Law No. 1567 on the Protection of the Value of Turkish Currency. Accordingly, those who act in violation of the obligations stipulated in the general and regulatory acts issued by the President pursuant to this Law, and those who import or export goods, valuables, services, or capital (or act as intermediaries in such transactions) and fail to bring into the country, within the periods specified in the relevant regulations, the receivables arising from these transactions, shall be subject to an administrative fine equal to 5% of the market value of the asset required to be brought into the country.

In addition, more severe administrative fines are envisaged for cases such as conducting sham transactions with the intent to bring foreign currency or Turkish currency into the country or to smuggle it out in foreign exchange transactions. In the event of repetition of the act, the amount of the fines may be increased, and administrative fines may also be imposed on legal entities.

Pursuant to the aforementioned article, the authority to decide on administrative fines to be imposed within this scope belongs to the public prosecutor.

Legal Remedies Against Administrative Fines

The procedure for applying against administrative fines imposed pursuant to Law No. 1567 due to failure to bring export proceeds into the country is subject to the Misdemeanors Law No. 5326. An application may be filed with the competent criminal court of peace within 15 days from the date of notification against the administrative fine decision rendered by the public prosecutor; this period is a forfeiture period.

Conclusion and Evaluation

The current regulations establish a strict yet foreseeable framework regarding the bringing of export proceeds into the country. Within this framework, transactions must be planned and carried out in compliance with the legislation in force.

Sincerely,

Atabay Law Office

NON-COMPETE AGREEMENTS

Introduction

The rapid increase in competition in today’s business life has brought about the necessity for companies to protect their trade secrets, customer portfolios, and production strategies. In this context, the legal system has envisaged various mechanisms in order to prevent the knowledge and experience acquired by employees from being used against their former employers. One of these mechanisms is the non-compete agreement, which is added to employment contracts and imposes on the employee an obligation not to compete for a certain period after the termination of the employment relationship.

In Turkish law, the non-compete obligation is essentially regarded as an extension of the employee’s duty of loyalty; however, the non-compete obligation for the period following the termination of the employment contract is specifically regulated under Articles 444 to 447 of the Turkish Code of Obligations. In addition, Article 396 of the TCO explains the employee’s duty of loyalty and non-compete obligation toward the employer during the continuation of the employment relationship. On the other hand, in the event that the employee violates the non-compete obligation, the employer acquires the right to terminate the employment contract for just cause pursuant to Article 25/2 of the Labor Law.

However, non-compete agreements are important not only in the context of the employee–employer relationship, but also in terms of preventing unfair competition among employers. Such agreements serve to balance labor mobility while limiting information leaks, customer losses, and unethical conduct within the sector.

Legal Nature and Validity Conditions of the Non-Compete Obligation

A non-compete agreement is a binding agreement that restricts the employee from engaging in activities similar to the employer’s field of activity for a certain period after the termination of the employment relationship and is supported by legal sanctions. The purpose of such agreements is to protect the employer’s trade secrets, customer information, and marketing strategies that have been transferred to the employee. However, since this restriction limits the constitutional freedom to work, it is subject to strict validity conditions.

According to Article 444 of the Turkish Code of Obligations, the following conditions must be met for a non-compete agreement to be valid:

• Written Form Requirement: A non-compete agreement is valid only if it is concluded in writing. This rule aims to facilitate proof and to prevent arbitrary restriction of the employee’s fundamental rights.
• The Employee Must Have Had Access to the Employer’s Customer Portfolio or Production Secrets: The law accepts the employee’s access to the employer’s customer base, production methods, or business activities as the basis for the non-compete obligation.
• The Use of Such Information Must Be Likely to Cause Damage to the Employer: The restriction must protect a legitimate interest. For example, there must be a possibility that the employee may gain unfair advantage by using such information in their own business or transferring it to another employer.

Moreover, for a non-compete agreement to be enforceable, it must be limited in terms of place, duration, and subject matter. If any of these three elements is not explicitly determined, the judge may determine these limits ex officio (TCO Art. 445). In practice, excessive restrictions such as “nationwide applicability, a duration of five years, and covering all sectors” are deemed invalid by the Court of Cassation.

In this respect, the non-compete agreement has a mixed structure that aims to balance both the employer’s economic interests and the employee’s professional freedom of movement. Exceeding the limits of the agreement may lead to legal sanctions and may also constitute a violation of the employee’s constitutional rights.

Non-Compete Agreements Between Employers

Conceptual Framework

In Turkish law, there is no directly regulated concept of a “non-compete agreement” between employers. However, agreements between employers that restrict competition are evaluated primarily within the framework of Law No. 4054 on the Protection of Competition, as well as unfair competition, protection of trade secrets, the duty of loyalty, and the principle of good faith, and they give rise to significant legal consequences in practice.

Such restrictions are mostly encountered within the scope of franchise agreements, dealership relationships, partnership agreements, or know-how and consultancy relationships between companies.

Areas of Application

Non-compete arrangements between employers often arise in the following situations:

• Including a non-compete clause in an agreement to prevent one of the parties from operating in the same sector after the termination of a partnership.
• Provisions in dealership or distributorship agreements that require one party not to engage in similar activities in the same sector for a certain period after the termination of the agreement.
• Restrictions imposed in franchise systems to ensure that the franchisee does not act independently in a manner that would compete within the same sector.

Such agreements are evaluated within the framework of Article 4 of the Competition Law and the general provisions of the TCO, particularly freedom of contract (Art. 26), the principle of good faith (Art. 2), and the prohibition of abuse of rights (Art. 2/2).

Validity Conditions

The validity of non-compete agreements between employers depends on compliance with the principle of proportionality in terms of:

• Duration,
• Geographical area,
• Subject matter,
• Sectoral scope

Unfair Competition and Protection of Trade Secrets (TCC Art. 54 et seq.)

Although non-compete obligations are not directly regulated between employers, the provisions on unfair competition under Article 54 et seq. of the Turkish Commercial Code come into play. In particular, the transfer or use of a former employer’s trade secrets by a person who has left the employment relationship, either for a new employer or in a newly established company, constitutes unfair competition.

Pursuant to TCC Art. 55/1-c, the unauthorized use of trade secrets may give rise to separate tort liability even if it does not constitute a violation of a non-compete obligation. In such cases, the injured employer may claim compensation, cessation and prevention of the act, and even publication of the judgment.

Competition Authority and the Prohibition of Restricting Competition

In some cases, non-compete arrangements between employers are subject not only to private law scrutiny but also to public law oversight. Pursuant to Law No. 4054 on the Protection of Competition, agreements between two companies that restrict competition may be reviewed by the Competition Authority. If such agreements involve objectives such as restricting free competition, abuse of dominant position, cartel formation, or price fixing, significant administrative sanctions may be imposed.

For example, in mergers and acquisitions, non-compete obligations imposed between the parties are valid only if they are limited to a “reasonable duration and area.” Otherwise, they may be subject to proceedings under Law No. 4054.

Legal Grounds of the Non-Compete Obligation Within the Framework of the Turkish Code of Obligations and the Labor Law

TCO Art. 396: Duty of Loyalty and Non-Compete During the Term of Employment

Article 396 of the Turkish Code of Obligations regulates the employee’s duty of loyalty toward the employer and the non-compete obligation as a reflection of this duty during the term of the employment relationship. The relevant provisions are as follows:

• TCO Art. 396/1: The employee may not act contrary to the obligations arising from the employment contract and is obliged to show loyalty to the employer.
• TCO Art. 396/2: Without the employer’s consent, the employee may not provide services to a third party and, in particular, may not engage in competition with the employer.

Pursuant to this article, the employee may not directly or indirectly compete with the employer in the same field during the term of employment. In the event of a breach of the non-compete obligation, the employer may have the right to claim compensation, and in some cases, the act may constitute a just cause for termination under the Labor Law (Labor Law Art. 25/II).

TCO Arts. 444–447: Conditions of the Post-Termination Non-Compete Obligation

The non-compete obligation that continues after the termination of the employment contract is regulated under Articles 444 to 447 of the TCO.

TCO Art. 444: Conditions:

A non-compete obligation is deemed valid only if the following conditions are met:

• The employee has obtained information regarding the employer’s customer portfolio, production secrets, or business relations.
• Such information is of a nature that may cause damage to the employer.
• The agreement is concluded in writing.
• The duration, geographical area, and scope of activity are determined in a proportionate manner.

According to the Court of Cassation, a non-compete obligation imposed on an employee who has acquired only general information is not valid. Access to specific and employer-specific information is required.

TCO Art. 445: Limitation and Judicial Intervention:

This provision regulates that the non-compete obligation must include reasonable limitations. In particular, the limits regarding duration, area, and scope of activity must be specific and proportionate. The judge has the authority to narrow down restrictions deemed excessive.

TCO Art. 446: Termination of the Non-Compete Obligation:

Pursuant to this article, the non-compete obligation automatically terminates if the employer waives it in writing or if the employment contract is terminated due to the employer’s fault. In addition, the employer has the right to withdraw from such waiver within three months from the date of waiver.

TCO Art. 447: Sanctions:

An employee who violates the non-compete obligation becomes obliged to pay the contractual penalty and may also be required to compensate the employer’s actual damages. If a contractual penalty is stipulated in the agreement, there is no need to prove damages for that amount. However, the employer must prove the existence of the violation.

Labor Law Art. 25/II: Immediate Termination and Non-Compete Obligation

Article 25/II of the Labor Law regulates cases granting the employer the right to terminate the employment contract for just cause and with immediate effect. Certain subparagraphs of this provision are directly related to violations of the non-compete obligation:

• 25/II-e: Acts such as abuse of the employer’s trust, theft, or disclosure of the employer’s trade secrets.
• 25/II-ı: Unauthorized use of the employer’s documents or engagement in activities that may cause damage to the employer.

Such acts are evaluated as both a breach of the duty of loyalty and a violation of the non-compete obligation. In this case, the employer may terminate the contract immediately and claim compensation.

In the decisions of the Court of Cassation, for terminations based on these grounds to be deemed valid, the violation must be of a serious nature and must undermine trust.

Legal Consequences of Breach of the Non-Compete Obligation

General Overview

A breach of the non-compete obligation refers to liability arising when the employee or employer acts contrary to the provisions of the restriction. In the event of a breach, sanctions may arise both from contractual non-performance and from acts constituting tortious conduct.

In general, the consequences that may arise in the event of a breach include:

• Application of the contractual penalty clause,
• Compensation for damages incurred,
• Requests for interim injunctions to stop the violation,
• Termination and immediate termination of the employment contract for just cause,
• Filing an unfair competition lawsuit.

Contractual Penalty (TCO Art. 447)

Article 447 of the Turkish Code of Obligations regulates the contractual penalty in the event of a breach of the non-compete obligation:

“An employee who violates the non-compete obligation is obliged to pay the agreed contractual penalty. The contractual penalty may be applied even if no damage has occurred.”

Pursuant to this provision, if a contractual penalty included in the employment contract is clear, specific, and reasonable in amount, it may be claimed directly in the event of a violation. There is no need for the employer to prove damages; however, if the employee denies the violation, the burden of proof lies with the employer.

According to the case law of the Court of Cassation, the contractual penalty must not be excessive. The judge may reduce an excessive penalty ex officio pursuant to TCO Art. 182.

Compensation Liability

In addition to the contractual penalty, the employer may also claim compensation for damages incurred. Such damages may consist of material or moral losses, such as loss of customers, decrease in profit margins, or damage to reputation due to the employee’s breach of the non-compete obligation.

However, if a contractual penalty has been agreed upon and the agreement stipulates that it “does not prevent compensation for damages,” the employer may claim both the contractual penalty and additional damages. In this case, proof of damage is required.

Termination and Immediate Termination for Just Cause

An employee’s breach of the non-compete obligation may constitute a just cause for termination under Article 25/II of the Labor Law in an ongoing employment relationship. In this case, the employer may:

• Terminate without observing the notice period,
• Terminate without paying severance pay,

and immediately terminate the employment contract. In addition, if the employee’s breach involves intent to cause damage to the employer, such conduct may also give rise to criminal sanctions such as abuse of trust or disclosure of trade secrets.

Interim Injunction and Action for Prohibition

Upon learning of the employee’s breach of the non-compete obligation, the employer may immediately request an interim injunction from the court. Through such injunction, the employee may be prevented from starting a new job or the current activity may be suspended. In addition, pursuant to Articles 117 et seq. of the TCO, the employer may file an action for prohibition to stop, prevent, and restore the previous state due to the breach of the non-compete obligation. Such actions are frequently used, particularly in cases involving the use of trade secrets, acquisition of customer portfolios, and claims of unfair competition.

Unfair Competition Lawsuit (TCC Art. 54 et seq.)

If the employee’s breach of the non-compete obligation also constitutes unfair competition within the meaning of Article 54 et seq. of the Turkish Commercial Code, the employer additionally has the right to file a lawsuit on this basis. Pursuant to TCC Art. 56, the following actions may be filed:

• Determination of unfair competition,
• Prevention of unfair competition,
• Elimination of the consequences of unfair competition,
• Material/moral compensation,
• Publication of the unfair competition.

In this context, the Court of Cassation explicitly considers the transfer of customer lists to a new employer, removal of internal company data, or leakage of sectoral information as unfair competition.

Conclusion and Evaluation

The non-compete obligation is a sensitive and multidimensional legal institution that seeks to establish a balance between economic freedom and the protection of trade secrets for both employees and employers. Proper understanding and application of this institution are of great importance for the balanced protection of the parties’ interests in employment relationships.

An employee’s engagement in competition with the employer constitutes a clear violation of the duty of loyalty and the principle of good faith. For this reason, a non-compete obligation has been imposed during the term of employment under Article 396 of the TCO, and the employee’s obligations toward the employer have been shaped on the basis of a relationship of trust. In certain cases, the employee’s ability to compete with the employer is restricted even after the termination of the employment contract. In regulating these cases under Articles 444–447 of the TCO, a delicate balance has been sought between the employer’s legitimate interests and the employee’s economic future.

In particular, where the employee has had access to the employer’s customer portfolio, production secrets, or commercial information, it is possible to impose a non-compete obligation toward the employer. However, for such a restriction to be valid, it must be limited to reasonable measures in terms of duration, location, and subject matter. Otherwise, the non-compete obligation becomes an excessive restriction of the employee’s right to work and is deemed invalid.

Between employers, although there are no direct provisions similar to TCO Arts. 444 et seq., it is possible to restrict competition within the framework of freedom of contract and the principle of good faith. However, it should be remembered that such arrangements may result in unfair competition, market monopolization, and significant administrative fines imposed by the Competition Authority.

The sanctions applicable in the event of a breach of the non-compete obligation cover a wide range. Pursuant to TCO Art. 447, various remedies are available, including claiming the contractual penalty, compensation liability, termination of the employment contract for just cause, interim injunctions, and unfair competition lawsuits. However, for these sanctions to be applied, the violation must be clear, provable, and based on the contractual provisions.

In conclusion, when drafting non-compete agreements, both labor law and obligations law provisions must be taken into account, and a fair balance between the parties must be observed. In line with the case law of the Court of Cassation and doctrinal opinions, the validity and enforceability of such agreements can only be ensured through compliance with the principle of proportionality, the written form requirement, and objective assessment criteria.

Sincerely,

Atabay Law Office

RENT DETERMINATION LAWSUIT

Introduction

A rent determination lawsuit is a type of lawsuit filed by the tenant or the landlord in order to re-determine the rental fee in accordance with current market conditions.

Scope

Article 344 of the Turkish Code of Obligations provides that if the rental fee remains low compared to similar properties located in the same area, taking into account the purpose of use, characteristics, and location of the leased property, a rent determination lawsuit may be filed on the condition that the lease agreement has completed five years.

Although the Law limits rent increases to the rate of change in the CPI, since increases in residential rents often occur above general consumer inflation, rental fees in old lease agreements may fall behind market conditions over time. Taking this situation into account, the legislator, while observing the principle of protecting the tenant, has also granted the landlord the right to request that the rental fee be brought closer to comparable values at certain intervals. If the parties fail to reach an agreement on this matter, the new rental fee is determined by the judge as a fair rental fee by taking into account the condition of the leased property and comparable rental values, without being bound by the CPI rate, as a result of the rent determination lawsuit. In this context, the judge is not bound by the rate of increase in the consumer price index as an upper limit.

General Conditions of the Rent Determination Lawsuit

In order to file a rent determination lawsuit, certain conditions must be met. Accordingly:

• There must be a valid lease agreement: There must be a lease agreement between the parties regarding the leasing of a residence or workplace. This agreement may be written or verbal; no form requirement is stipulated by law.
• The lease agreement must have completed five years: Pursuant to the Turkish Code of Obligations, the determination of the rental fee according to market conditions depends on the continuation of the agreement for five years.
• The claimant must have a legal interest: The party filing the lawsuit must have a concrete legal interest in doing so; this issue will be evaluated by the judge in each specific case.
• A notice (written notification) may be required: Although a notice is not mandatory as a general rule, in order for the rental fee to be determined to be valid for the new rental period, a written notification to the tenant at least 30 days before the beginning of the period is required in most cases. If there is a provision regarding rent increase in the agreement, this requirement may be eliminated.

Retroactive Effect of the Rent Determination Lawsuit

According to the first paragraph of Article 345 of the Turkish Code of Obligations, a rent determination lawsuit may be filed at any time. As a rule, the decision has prospective effect and is applied for the rental period following the date of the lawsuit. However, in order for the determined rental fee to be valid as of the beginning of the current new rental period, certain conditions must be met. In this framework, two different situations arise depending on the existence of an increase provision in the agreement:

• If there is a provision in the lease agreement stating that the rental fee will be increased in the new rental period; in this case, the rental fee determined by the court in the lawsuit will be valid as of the beginning of the current rental period.

• If there is no provision in the lease agreement stating that the rental fee will be increased in the new rental period; in order for the rental fee to be determined by the court to be considered valid as of the current period, the landlord must have filed the lawsuit at least 30 days before the beginning of the new rental period or sent a written notification (notice) to the tenant within the same period. If one of these conditions is met, the determined rental fee will be applied as of the beginning of the new period.

Conclusion and Evaluation

A rent determination lawsuit is an important legal mechanism that ensures that the rental fee between the parties is brought into line with current market conditions and is applied within the framework of Articles 344 and 345 of the Turkish Code of Obligations. This lawsuit aims to balance the interests of both the tenant and the landlord in resolving rental fee disputes. Filing the lawsuit at the right time and meticulously evaluating the provisions of the agreement are of great importance in preventing loss of rights for the parties; therefore, in cases where the rental fee needs to be adapted to current conditions, a rent determination lawsuit must be filed by observing the procedures and time limits set forth in Articles 344-345 of the TCO.

Sincerely,

Atabay Law Office