Setting up a real estate company in Turkey offers lucrative opportunities, but the process is not without legal complexity. Investors must consider a range of legal obligations, restrictions, and strategic decisions prior to incorporation. This article provides a detailed breakdown of the most critical legal issues one must evaluate before launching a real estate business in Turkey.
1. Identifying the Business Scope and Activity Code (NACE)
Under Turkish law, companies must specify their business purpose precisely in their Articles of Association. In the real estate sector, the activity scope can include:
- Property acquisition, sale, or leasing
- Real estate development and construction
- Property management services
- Brokerage and consultancy
Each of these falls under a specific NACE code (statistical classification of economic activities). Examples:
- 68.10.02 – Real estate agency activities
- 41.10.01 – Residential building construction
- 68.20.02 – Letting of owned real estate
Failure to define the correct NACE code may result in regulatory conflicts or license denials.
2. Legal Form and Governance Structure
Investors must choose a corporate form—typically a Limited Liability Company (Ltd. Şti.) or a Joint Stock Company (A.Ş.). Legal consequences of this choice include:
- Minimum capital requirement
- Corporate governance rules (e.g., manager vs. board of directors)
- Liability limits for founders and shareholders
- Public disclosure obligations
Note: Only A.Ş. entities may go public or issue shares for investment.
For family-owned or small investment firms, Ltd. Şti. is often preferred due to flexibility and lower compliance costs.
3. Location and Office Requirements
To register a company, a commercial lease agreement or title deed for an office is required. Key legal points:
- The registered address must be commercially zoned
- Real estate offices must meet physical requirements under Real Estate Trade Regulation
- Tax inspections will occur at this address for residency confirmation of the business
Avoid registering the business at a residential unit unless it is zoned for mixed use.
4. Foreign Shareholder Restrictions
Although Turkey is open to foreign investment, some legal limitations apply:
a) Restricted Zones
Foreign shareholders in Turkish companies cannot acquire property in military, security, or strategic zones unless permitted by the Ministry of Defense.
b) Capital Reporting Obligations
Companies with foreign ownership must notify:
- Ministry of Trade – General Directorate of Foreign Investments
- Central Bank via annual FDI forms
Failure to comply may result in penalties or revocation of title deeds.
5. Real Property Ownership and Development Licensing
Establishing a real estate company does not automatically grant the right to:
- Purchase agricultural land
- Conduct construction
- Obtain occupancy permits
Instead, companies must:
- Apply for zoning permits from municipalities
- Obtain construction licenses under the Zoning Law
- Work with licensed architects and engineers
Unlicensed development can result in heavy administrative fines and demolition orders.
6. Construction Contractor Registration
Companies intending to build or renovate property must register as a “müteahhit” (contractor) via the Ministry of Environment, Urbanization and Climate Change. Requirements include:
- Technical staff or responsible engineer
- Compliance with the Building Inspection Law (No. 4708)
- Possession of a valid contractor license code
Construction without this registration is illegal, and any resulting title deeds may be annulled.
7. Drafting the Articles of Association Carefully
The Articles of Association (AoA) are binding and define the operational limits of the company. Errors or vague wording can result in:
- License denials (e.g., for real estate brokerage)
- Tax classification disputes
- Civil liability if the company exceeds its stated business purpose
Lawyers should draft the AoA to include all relevant activities, e.g.:
“…The company may purchase, lease, rent, sell, develop, and manage immovable property; engage in construction and real estate consulting activities…”
8. Contractual and Liability Frameworks
Before starting operations, companies must establish:
- Standard contract templates for sale, lease, and construction
- Legal disclaimers and terms of service
- Internal signing authority regulations (who may bind the company)
- Clarity on liability clauses in third-party agreements
Failing to do so can result in personal liability, tax assessments, or unenforceable agreements.
9. Compliance with KVKK and Data Privacy Laws
Real estate firms often process personal data (e.g., buyer IDs, addresses, financial info). Under the Turkish Personal Data Protection Law (KVKK), this requires:
- Data controller registration with VERBIS
- Obtaining explicit consent from clients
- Drafting privacy policies and data retention schedules
Breaches can result in administrative fines from TRY 50,000 to 2,000,000+.
10. Tax Registration and Bookkeeping Obligations
Once the company is formed:
- Tax Office assigns a Tax ID
- Legal books (inventory, shareholder ledger, etc.) must be notarized
- A certified accountant (SMMM) must be appointed
- Monthly VAT returns, payroll declarations, and withholding taxes must be submitted
Failing to keep compliant records may result in tax penalties, closure orders, or blacklisting.
Conclusion
Establishing a real estate company in Turkey involves far more than filling out paperwork and leasing an office. The process requires careful legal planning, regulatory compliance, and operational foresight. Especially for foreign investors, a single mistake—such as choosing the wrong location or failing to register with relevant authorities—can jeopardize the entire investment.
Consulting a Turkish attorney, accountant, and urban planning consultant before incorporation is not just advisable—it is essential.
INTERN LAW FACULTY STUDENT
YAĞMUR YORULMAZ
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