Introduction
With globalization, both Turkish citizens and foreign investors aiming to invest in Turkey increasingly need to transfer funds held abroad into the country. However, such transfers must be conducted in strict compliance with foreign exchange regulations, AML (Anti-Money Laundering) obligations, and tax laws. Any mistake or omission can lead to significant administrative fines or even criminal investigations.
This article explains the process of bringing funds from abroad to Turkey through legal means, the legal risks, and the applicable tax obligations.
1. Legal Methods of Fund Transfer
1.1 Bank Transfer (SWIFT)
- Funds can be transferred from your foreign bank account to your bank account in Turkey using a SWIFT code.
- The bank may request documents showing the source of the funds (salary slips, sales agreements, inheritance certificates, etc.).
- This is both a secure method and ensures an official record of the transaction.
1.2 Carrying Cash into Turkey (Customs Declaration)
- Cash exceeding €10,000 (or its foreign currency equivalent) must be declared at customs.
- Failure to declare may trigger consequences under Law No. 5549 on the Prevention of Laundering Proceeds of Crime and Article 282 of the Turkish Penal Code.
- Depositing declared cash into your bank account ensures the source is officially documented.
1.3 Foreign Currency Exchange (Foreign Exchange Regulations)
- Once the currency is brought into Turkey, it can be exchanged through a bank or an authorized currency exchange office.
- Transactions above USD 5,000 require proof of identity.
1.4 Bringing Funds as Company Capital
- Funds from abroad can be brought in as capital for a newly established company or as a capital increase for an existing company.
- With registration at the Trade Registry, investment incentives and tax advantages may apply.
2. Tax and Regulatory Aspects
2.1 Asset Peace (Varlık Barışı)
- Although the last “Asset Peace” program expired at the end of 2023, if reintroduced, foreign assets could be brought into Turkey tax-free.
- Declaring the transfer to the bank under the Asset Peace program can provide tax benefits.
2.2 Proof of Funds
- Under MASAK (Financial Crimes Investigation Board) monitoring, undeclared or unverified funds may be reported as “suspicious transactions.”
- Acceptable proof includes salary slips, inheritance documents, sales contracts, or investment income.
2.3 Taxation
- Income already taxed abroad is generally not taxed again in Turkey if there is a Double Taxation Avoidance Agreement between the two countries.
- Untaxed foreign income must be declared in Turkey under the Income Tax Law.
3. Legal Risks
- Failure to Declare: Bringing in cash over €10,000 without declaration may lead to administrative fines and criminal investigation.
- Unverified Source: Funds without documented proof of origin may be blocked during MASAK reviews.
- Tax Evasion: Bringing in undeclared income may constitute an offense under Article 359 of the Tax Procedure Law (VUK).
4. Practical Legal Recommendations
- Use bank transfers whenever possible.
- Keep all documentation related to the origin of funds.
- Declare large cash amounts to customs.
- If bringing funds for business purposes, register them as company capital for potential incentives.
Conclusion
Bringing funds from abroad into Turkey is legally permissible and, when done correctly, can even offer tax advantages. However, the process must be managed carefully in light of AML requirements and tax legislation. Seeking legal counsel will minimize risks and ensure compliance.
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