Introduction

Tax can change the economics of an M&A transaction just as significantly as the negotiated purchase price.

A buyer may prefer an asset acquisition because it can select the assets being purchased and potentially obtain a new tax basis for acquired assets. A seller may strongly prefer a share sale because transferring company shares may produce a substantially more favourable tax result than selling the company’s underlying assets.

This creates one of the fundamental tensions in Turkish M&A:

the structure that is tax-efficient for the seller may not be the structure preferred by the buyer.

The issue becomes even more important in cross-border acquisitions. The parties may need to analyse corporate tax, individual capital gains taxation, VAT, dividend withholding, acquisition financing, transfer pricing, double-tax treaties and the taxation of a future exit.

The appropriate structure should therefore be determined before the share purchase agreement or asset purchase agreement becomes binding.

As of the 2025 and 2026 financial periods, the ordinary Turkish corporate income tax rate is generally 25%, while specified financial institutions and certain public-private partnership companies are subject to a 30% rate. Turkey also applies a domestic minimum corporate tax regime under which, subject to the detailed statutory rules, calculated corporate tax may not fall below 10% of the relevant pre-exemption base.

Tax structuring in Turkish M&A should therefore focus not merely on whether an exemption exists, but on the effective tax burden after the entire transaction structure is considered.

The First Tax Question: Share Deal or Asset Deal?

The first structural decision is usually whether the buyer will acquire:

the shares of the company, or

the business and assets owned by the company.

The commercial result may appear similar, but the tax consequences can be substantially different.

In a share deal, the legal entity continues to own its assets. The shareholder changes.

In an asset deal, the target company itself sells assets to the buyer.

This distinction determines who earns the taxable gain and which transaction taxes may apply.

Suppose a Turkish company owns a factory worth TRY 500 million.

If its shareholder sells the company shares, the tax analysis concerns the shareholder’s gain from selling shares.

If the company itself sells the factory, the company may realise taxable corporate income, and the transaction may also involve VAT, title deed charges and other costs depending on the asset.

If the shareholder subsequently wishes to extract the sale proceeds from the company, an additional dividend taxation layer may arise.

For this reason, a seller that appears indifferent commercially between a share sale and asset sale may have a very strong tax preference for the share transaction.

Taxation of a Corporate Seller of Shares

Where a Turkish corporate shareholder sells shares in another company, the gain forms part of corporate income unless an exemption applies.

An important exemption is contained in Article 5/1-e of the Corporate Tax Law.

Under the current framework, where qualifying participation shares have been held in the corporate seller’s assets for at least two full years, part of the resulting capital gain may be exempt from corporate tax.

The underlying legislation states a 75% exemption rate, but Presidential Decision No. 9160 reduced the applicable exemption rate to 50%. The Revenue Administration’s current guidance therefore confirms that 50% of qualifying gains from the sale of participation shares may benefit from the exemption, provided the statutory conditions are satisfied.

This can make the ownership history of the shares highly important when structuring an M&A exit.

The Two-Year Holding Requirement

The participation shares must generally have been held for at least two full years, meaning 730 days.

The acquisition date should therefore be verified carefully.

This can become complex where shares were obtained through capital increases, bonus shares, mergers, demergers or earlier restructurings.

The Revenue Administration confirms that, in qualifying mergers and demergers, the holding period in the predecessor entity may be taken into account when calculating the required period for transferred participation shares.

A seller should therefore reconstruct the complete historical ownership chain rather than merely looking at the date appearing in the latest accounting records.

Additional Conditions for the Participation Share Exemption

Holding the shares for two years does not by itself guarantee that the exemption applies.

The relevant conditions should be reviewed as a whole.

Among other matters, the exempt portion of the gain is subject to special accounting treatment, and the sale consideration must generally be collected within the statutory period.

The exemption is designed primarily to facilitate restructuring and strengthening of corporate balance sheets rather than ordinary securities trading.

Companies whose business involves trading such assets may therefore face restrictions in benefiting from the exemption for securities held as trading inventory.

The tax position should be confirmed before the purchase price is agreed because failure to satisfy one requirement can materially change the seller’s expected net proceeds.

Domestic Minimum Corporate Tax and M&A Exits

The introduction of the domestic minimum corporate tax regime has made exemption analysis more complicated.

The 10% minimum tax mechanism applies from the 2025 tax period onward, subject to specific exclusions.

Significantly for M&A sellers, the Revenue Administration’s 2026 guidance identifies the exemption for gains from the sale of participation shares under Corporate Tax Law Article 5/1-e among the exemptions that cannot be deducted when calculating the domestic minimum corporate tax base.

Accordingly, a seller should not simply calculate:

“50% of the gain is exempt, therefore only the remaining 50% matters.”

The domestic minimum corporate tax calculation must be performed separately.

This is a strong example of why headline exemption rates can be misleading when assessing actual M&A tax cost.

Corporate Sellers and Holding Companies

Many corporate groups hold operating subsidiaries through holding companies.

This can simplify future M&A transactions because the holding company may sell a subsidiary rather than having the operating business sell its underlying assets.

However, a holding-company structure does not automatically guarantee an exemption.

The Revenue Administration has emphasised that shares held as genuine long-term participations may be treated differently from securities acquired and held for trading purposes. (Gelir İdaresi Başkanlığı)

The accounting classification, commercial purpose and actual circumstances may therefore become relevant.

A holding structure should ideally be established for genuine corporate, financing and investment purposes rather than immediately before an anticipated sale solely to obtain a tax advantage.

Individual Sellers of Joint-Stock Company Shares

The position may be substantially different where the shareholder is an individual rather than a corporation.

Under the Turkish Income Tax Law, gains from certain securities are normally treated as capital gains.

However, gains arising from the disposal of share certificates of a fully liable Turkish company that have been held for more than two years are excluded from the relevant capital gains provision.

The Revenue Administration confirms this two-year rule for qualifying share certificates. (İnternet Vergi Dairesi)

This can make the physical or legal status of joint-stock company shares extremely important in founder and family-company exits.

A founder should not assume that merely having been a shareholder for fifteen years produces the same tax result as holding qualifying share certificates for the required period.

The exact acquisition date and legal nature of the securities must be established.

When Were the Share Certificates Actually Acquired?

This issue can become surprisingly important.

A company may have existed for twenty years but may only have issued physical share certificates relatively recently.

The Revenue Administration has issued rulings analysing when the two-year holding period begins where share certificates were issued after the shareholder originally acquired the underlying participation.

In one published interpretation, the Administration treated the date on which the shareholder obtained disposal rights over the actual share certificates as relevant to the holding period. (Gelir İdaresi Başkanlığı)

The tax result of a founder exit should therefore be reviewed well before marketing the business.

Waiting until the SPA is ready to check whether the company ever validly issued share certificates can create a costly surprise.

Limited Company Shares Are Different

A major distinction exists between joint-stock company share certificates and limited liability company participation interests.

The special two-year exclusion under the Income Tax Law refers to qualifying share certificates of fully liable corporations.

The Income Tax Law separately identifies the disposal of partnership rights or interests as transactions capable of producing taxable capital gains. (İnternet Vergi Dairesi)

Accordingly, an individual selling a limited company interest should not assume that holding the interest for two years produces the same result as selling qualifying joint-stock company share certificates.

This distinction can influence pre-sale corporate restructuring, although any conversion undertaken before a transaction must be examined independently for corporate, tax and anti-abuse consequences.

VAT on Share Transfers

Share sales may also receive favourable treatment from a VAT perspective.

The VAT Law exempts the transfer of share certificates under Article 17/4-g.

The Revenue Administration’s current published materials continue to confirm that share certificate transfers fall within this VAT exemption. (Gelir İdaresi Başkanlığı)

There is also a separate exemption framework under Article 17/4-r for qualifying participation interests held in corporate assets for at least two full years, subject to statutory conditions. (Gelir İdaresi Başkanlığı)

This distinction can be relevant where the interest being transferred is not represented by a share certificate.

VAT analysis should therefore begin with the legal nature of the transferred ownership interest.

Share Certificates and the Two-Year VAT Rule

Where actual share certificates exist, the Article 17/4-g exemption does not depend on the securities having been held for two full years.

The Revenue Administration has expressly stated that the VAT exemption applicable to share certificates can apply without satisfying a two-year holding requirement and that registered, unlisted share certificates may also fall within the exemption. (Gelir İdaresi Başkanlığı)

For other participation rights relying on Article 17/4-r, the two-year requirement becomes relevant.

This is another reason why transaction lawyers and tax advisers should verify the exact share structure before closing.

VAT and Asset Deals

The tax profile of an asset acquisition is usually very different.

An asset sale may involve taxable supplies of machinery, inventory, equipment, intangible rights and other business assets.

VAT treatment should therefore be assessed asset by asset.

A transaction described commercially as the “sale of the business” may include several distinct supplies for tax purposes.

For example, a single asset purchase agreement might transfer machinery, inventory, a trademark, vehicles and consultancy or transitional services.

Different tax consequences may apply to each component.

The purchase price allocation should therefore not be left undefined.

Real Estate Has Become Particularly Important

The treatment of real estate in Turkish corporate taxation has changed materially in recent years.

The former general corporate tax exemption for gains from qualifying real estate sales was abolished for property entering corporate assets after the legislative change in July 2023.

For real estate already held in corporate assets before 15 July 2023, a transitional exemption remains, but the applicable exemption rate has been reduced to 25%. (Gelir İdaresi Başkanlığı)

A similar change occurred in VAT.

The general Article 17/4-r VAT exemption for the sale of real estate held for two years was removed for property acquired into corporate assets after 15 July 2023, while transitional rules continue for certain property already on the balance sheet before that date. (Gelir İdaresi Başkanlığı)

This materially affects asset deal modelling where valuable real estate forms part of the target business.

Why Buyers May Still Prefer Asset Deals

Despite potentially higher transaction taxes, buyers sometimes prefer asset acquisitions.

A share buyer acquires the company together with historical tax, employment, regulatory and contractual exposure.

An asset buyer may be able to select the business assets it wants and leave some historical liabilities with the seller, subject to mandatory successor-liability rules.

There may also be accounting and depreciation advantages associated with acquiring assets at an agreed acquisition value rather than acquiring shares in a company whose assets retain historic tax bases.

The buyer’s tax advisers should therefore compare the future tax benefits of the asset structure against the seller’s additional current tax cost.

This difference may ultimately be reflected in the purchase price.

Double Taxation Effect of an Asset Sale

A seller should pay particular attention to the possibility of two levels of taxation.

Suppose a Turkish company sells its business assets and realises a significant taxable gain.

The company may first pay corporate income tax.

The remaining cash belongs to the company, not automatically to the shareholders.

If the company subsequently distributes the proceeds as a dividend, withholding tax may apply.

The standard withholding rate on qualifying dividend distributions to certain shareholders was increased to 15% effective 22 December 2024, although tax treaties may affect the rate applicable to foreign shareholders. (Gelir İdaresi Başkanlığı)

This two-stage taxation can make an asset sale considerably less attractive to sellers than a direct sale of shares.

Dividend Withholding in Acquisition Structures

Dividend taxation also matters after a buyer acquires the target.

A foreign investor may expect to recover its investment partly through future dividends.

The standard domestic withholding rate is not necessarily the final answer.

Where the shareholder is resident in a country with which Turkey has a double taxation treaty, treaty provisions may reduce the applicable withholding rate if the relevant conditions are satisfied.

The investor should therefore examine not only the tax cost of entering Turkey but also:

how profits will be distributed during ownership and how the eventual exit will be taxed.

A structure that is efficient on acquisition but inefficient for five years of dividend distributions may not be optimal overall.

Stamp Tax on Share Purchase Agreements

Stamp tax can be material in high-value Turkish commercial agreements because it is generally calculated by reference to the monetary amount stated in qualifying documents.

Share transfer documentation benefits from an important exemption.

The Revenue Administration confirms that documents relating to the establishment, share transfer, capital increase and extension of joint-stock, limited and certain other companies fall within the exemption in Table (2) IV/16 of the Stamp Tax Law. A published ruling specifically accepted that a share transfer agreement for shares in a Turkish joint-stock company qualified for the exemption. (Gelir İdaresi Başkanlığı)

However, the exemption should not be interpreted as covering every provision placed inside a document associated with the transaction.

Be Careful With SPA Side Arrangements

A useful 2025 Revenue Administration ruling demonstrates this risk.

In that case, an additional protocol to a limited company share transfer arrangement did more than modify the share transfer price. It also contained a separate assignment of a shareholder receivable.

The Administration concluded that the addendum could not simply benefit from the share-transfer exemption as a whole and treated the additional monetary transactions separately for stamp tax purposes. (Gelir İdaresi Başkanlığı)

This has practical importance in M&A drafting.

An SPA may contain or be accompanied by agreements concerning shareholder loans, receivable assignments, leases, guarantees or transitional services.

The tax treatment of each additional transaction should be analysed separately.

Putting every transaction into a document called “Share Purchase Agreement” does not automatically convert all provisions into tax-exempt share transfer documentation.

Shareholder Loans

Many Turkish target companies owe substantial sums to their shareholders.

At closing, these amounts may be repaid, assigned to the buyer or capitalised.

The transaction documents should distinguish clearly between:

payment for shares and payment for shareholder debt.

The distinction is legally, financially and tax relevant.

For example, a EUR 20 million transaction may consist of EUR 15 million share consideration and EUR 5 million repayment or assignment of shareholder loans.

Describing the entire amount as “share purchase price” does not necessarily determine the correct tax treatment.

The funds flow and accounting entries should reflect the actual legal transaction.

Debt-to-Equity Conversion Before Sale

A seller may consider converting shareholder loans into share capital before the transaction.

This may simplify the target’s balance sheet and eliminate related-party debt at closing.

However, the transaction should be reviewed for capital increase requirements, tax consequences and effect on the seller’s tax basis in the shares.

An action that improves the accounting appearance of the company may unintentionally change the tax result on exit.

Pre-sale balance-sheet restructuring should therefore be completed only after modelling the final transaction.

Acquisition Financing and Tax

The buyer may finance an acquisition with equity, acquisition loans or shareholder debt.

The choice can affect future tax deductions and cash repatriation.

Interest paid by Turkish entities may be subject to rules concerning deductibility, thin capitalisation, transfer pricing, withholding and financial expense restrictions.

Cross-border shareholder loans require particular care because interest rates should be commercially supportable.

An investor should not assume that financing a Turkish subsidiary almost entirely with related-party debt automatically permits all interest to be deducted for Turkish tax purposes.

Financing and tax structuring should therefore be developed simultaneously.

Acquisition Debt and the Target

Where the acquisition concerns a Turkish joint-stock company, financing also raises corporate-law issues.

The target cannot simply finance or secure the acquisition of its own shares without analysis of the financial assistance prohibition under TCC Article 380.

Accordingly, an economically attractive tax structure may still be legally impossible.

Tax advisers, finance counsel and corporate lawyers should coordinate the location of debt, guarantees and post-closing refinancing.

Transfer Pricing After Closing

Once the target becomes part of the buyer’s group, related-party transactions may increase dramatically.

The Turkish company may begin paying or receiving amounts for management services, technology, financing, procurement, distribution or trademarks.

These arrangements should be documented on an arm’s-length basis.

A buyer that focuses exclusively on acquisition tax and ignores post-closing transfer pricing may create substantial future exposure.

Post-acquisition tax integration should therefore include review of all expected intercompany relationships.

Tax Losses of the Target

A distressed or rapidly growing target may have accumulated tax losses.

These can appear valuable because they may potentially reduce future taxable income.

A buyer should not automatically include their full nominal amount in valuation.

The ability to use tax losses depends on statutory conditions, the continued availability of the losses and the circumstances of the company.

Tax due diligence should verify the years in which losses arose, whether tax returns were validly filed, whether inspections are pending and whether the losses remain available.

A tax-loss balance appearing in management accounts is not equivalent to cash.

Tax Due Diligence

Tax due diligence is essential in share acquisitions because historical tax liabilities remain within the same legal entity after closing.

The review should cover corporate tax, VAT, withholding obligations, payroll taxes, social security, stamp tax, customs, transfer pricing, related-party transactions, incentives and previous restructuring.

Particular attention should be paid to unusual arrangements that have reduced taxable income substantially.

These may include shareholder expenses paid by the company, undocumented consultancy fees, related-party financing, tax exemptions and restructuring transactions.

The buyer should understand not only whether tax has been paid, but why management believed a particular tax position was lawful.

Tax Audits After Closing

A tax inspection relating to a period before closing may begin years after the acquisition.

The company remains the taxpayer even though the shareholder has changed.

This is why an SPA normally includes a tax warranty and often a separate tax indemnity.

The seller may agree to bear the economic cost of tax attributable to pre-closing periods.

The tax covenant should regulate the buyer’s obligation to notify the seller of assessments, who controls objections and litigation, when settlements can be reached and how penalties and interest are treated.

A general statement that “the seller is responsible for historical taxes” is rarely sufficient for a significant transaction.

Tax Indemnity Versus Purchase Price Reduction

Not every identified tax risk should be handled through an indemnity.

Suppose due diligence identifies a confirmed TRY 50 million tax liability that will be payable shortly after closing.

The buyer may prefer to reduce the purchase price by TRY 50 million rather than pay the full price and later seek reimbursement.

An indemnity is generally more useful where liability remains contingent or uncertain.

Known and quantified liabilities are often better reflected directly in the purchase price or paid before closing.

This approach can also reduce enforcement risk.

Escrow for Tax Exposure

Where a tax investigation is ongoing, part of the purchase price may be placed in escrow.

For example, the parties may retain TRY 30 million pending completion of an inspection relating to the pre-closing period.

The escrow agreement should identify which taxes are secured and when funds are released.

The release date should take account of realistic assessment and litigation periods rather than an arbitrary short period.

A tax indemnity without practical security may have limited value where the seller distributes all acquisition proceeds immediately after closing.

Cross-Border Sellers

A foreign corporate shareholder selling shares in a Turkish company requires a separate analysis.

The transaction may involve Turkish domestic tax rules as well as the applicable double taxation treaty.

Relevant questions include the seller’s residence, whether the shares are attributable to a Turkish permanent establishment, the nature and value of the target’s assets and the wording of the relevant treaty.

Some treaties allocate share-sale taxing rights differently depending on ownership levels, holding periods or the extent to which company value is derived from real estate.

The residence jurisdiction’s tax rules must also be considered.

A Turkish-law conclusion that no Turkish tax is payable does not mean that the foreign seller has no tax liability elsewhere.

Treaty Residence and Beneficial Ownership

Treaty benefits should not be assumed solely because the selling entity is incorporated in a treaty country.

The relevant residence documentation, substance and treaty conditions should be reviewed.

Artificially inserting a foreign holding company shortly before a sale may create substantial tax risk.

Cross-border M&A structures should have genuine commercial substance and should be designed before a transaction becomes imminent.

Tax planning is strongest when it supports a real investment and governance structure rather than merely attempting to recharacterise a sale at the last moment.

Reorganising Before the Sale

A company may need restructuring before M&A.

This may involve moving subsidiaries under a holding company, separating a business division, completing a partial demerger or transferring participation shares.

The Corporate Tax Law contains special rules for qualifying mergers, demergers and share exchanges.

However, a corporate-law restructuring is not automatically tax neutral.

Each requirement under the Corporate Tax Law must be independently satisfied.

For example, the Revenue Administration’s 2026 guidance confirms specific conditions for tax-neutral mergers, full and partial demergers and share exchanges. (Gelir İdaresi Başkanlığı)

A reorganisation carried out immediately before sale without complying with the tax rules can generate tax before the M&A transaction has even begun.

Purchase Price Allocation in an Asset Deal

An asset acquisition should allocate the purchase price among transferred assets.

A buyer and seller might agree on a global price of TRY 500 million, but tax and accounting treatment may depend on how much value is attributed to real estate, machinery, inventory, trademarks and other rights.

An unrealistic allocation may be challenged where it does not reflect economic reality.

The allocation can also affect future depreciation and capital gains.

The buyer may want more value allocated to depreciable assets.

The seller may have different objectives.

The SPA should therefore coordinate purchase price allocation with financial and tax advice.

Earn-Outs

Earn-outs create another tax timing issue.

Part of the purchase price may be paid several years after closing depending on future performance.

The parties should determine how contingent consideration will be treated for tax and accounting purposes.

Questions may include when the gain is considered realised, how subsequent payments alter the purchase price and how foreign currency movements are treated.

An earn-out provision should therefore be reviewed not only by M&A lawyers but also by tax advisers before signing.

Escrow and Deferred Consideration

Similarly, placing part of the purchase price in escrow does not necessarily mean the amount is ignored for tax purposes until released.

The tax position depends on the legal entitlement to the consideration and the structure of the arrangement.

Deferred purchase price, seller financing and contingent consideration should each be analysed separately.

Commercial payment timing and tax recognition timing do not necessarily coincide.

Transaction Costs

M&A transactions produce significant advisory expenses.

These may include legal fees, financial advisory fees, investment banking fees, tax advice, due diligence expenses, financing costs and W&I insurance premiums.

The tax treatment may depend on who incurs the expense and why.

A buyer should distinguish costs incurred by the acquisition vehicle from costs incurred by the target.

Similarly, a seller should determine whether transaction fees are deductible in calculating taxable sale proceeds.

The target company should not automatically pay expenses incurred exclusively for the benefit of its shareholders.

This can create corporate as well as tax issues.

Tax Warranties in the SPA

A Turkish SPA typically includes tax warranties confirming matters such as filing of returns, payment of taxes, tax residence, absence of undisclosed investigations and proper withholding.

The scope should reflect tax due diligence findings.

A broad warranty is not necessarily a substitute for a specific tax indemnity.

If due diligence has already identified an ongoing VAT investigation, that matter should normally be addressed expressly rather than hidden inside generic warranty wording.

Tax Covenants and Control of Tax Proceedings

The seller may remain economically responsible for a pre-closing tax period while the buyer controls the target after closing.

This creates a conflict.

The seller may want to contest an assessment aggressively because it will ultimately pay the liability.

The buyer may prefer a settlement to preserve its relationship with the tax authorities or reduce management time.

The tax covenant should therefore allocate decision-making authority.

Possible approaches include consultation rights, seller control subject to buyer protection or buyer control subject to seller consent for material settlements.

Tax Structuring Should Consider the Exit at Entry

An investor acquiring a Turkish company should ask:

How will we eventually sell this investment?

The ownership structure affects not only current acquisition financing and dividends but also the tax treatment of the future exit.

A private equity investor planning to sell after five years should model both the entry and exit.

The analysis may influence whether the investment is held directly, through a Turkish holding company or through a foreign holding structure with genuine commercial substance.

Restructuring shortly before exit may not produce the same result as establishing an appropriate investment structure from the beginning.

Practical Turkish M&A Tax Checklist

Before signing an M&A transaction involving a Turkish company, the parties should generally:

1. Compare share and asset acquisition structures.
2. Identify whether the seller is an individual, Turkish corporation or foreign entity.
3. Determine the seller’s acquisition date and tax basis in the shares.
4. Confirm whether joint-stock company share certificates have validly been issued.
5. Analyse the two-year holding requirements where relevant.
6. Calculate the corporate participation-share exemption under the current 50% rate.
7. Model the effect of the domestic minimum corporate tax.
8. Review VAT treatment of the share or asset transfer.
9. Analyse real estate separately under the post-2023 rules.
10. Confirm stamp tax exemptions and identify separate taxable side transactions.
11. Separate share price from shareholder loan repayment or assignment.
12. Review dividend withholding and treaty rates.
13. Analyse acquisition debt, interest deductibility and transfer pricing.
14. Review historical tax losses.
15. Conduct comprehensive tax due diligence.
16. Identify known tax liabilities requiring price adjustment or specific indemnities.
17. Prepare tax warranties and a detailed tax covenant.
18. Consider escrow for material unresolved tax investigations.
19. Review cross-border treaty and holding-company consequences.
20. Model the tax consequences of the investor’s eventual exit.

Conclusion

Tax structuring can fundamentally determine whether a Turkish M&A transaction creates the economic result expected by the buyer and seller.

The most important starting point is often the distinction between a share transaction and an asset transaction.

A share sale may allow the seller to transfer the business without first realising gains on each underlying asset and may benefit from specific corporate or individual tax rules. An asset acquisition may provide the buyer with greater control over the assets and liabilities it acquires but can produce additional corporate tax, VAT and subsequent dividend-tax consequences for the seller.

For corporate sellers, the current participation-share regime remains particularly important. The Revenue Administration confirms that the applicable exemption rate for qualifying gains under Corporate Tax Law Article 5/1-e is presently 50%, subject to the statutory conditions and the two-full-year holding requirement. (Gelir İdaresi Başkanlığı) The introduction of domestic minimum corporate tax means that this exemption must now also be examined together with the separate 10% minimum tax calculation, because the participation-share sale exemption is among the exemptions not deducted from the minimum-tax base.

For individual founders, the legal form of the target and the existence of qualifying share certificates can be decisive. Turkish income tax rules distinguish qualifying share certificates of fully liable companies held for more than two years from other partnership rights. (İnternet Vergi Dairesi)

VAT and stamp tax also require transaction-specific analysis. Share certificates continue to benefit from the VAT exemption under Article 17/4-g, while qualifying participation interests may fall within the separate Article 17/4-r framework. (Gelir İdaresi Başkanlığı) Share transfer documents may benefit from the Stamp Tax Law exemption, but separate transactions inserted into the same document—such as assignments of shareholder receivables—should be examined independently. (Gelir İdaresi Başkanlığı)

The most effective Turkish M&A tax strategy is therefore not simply the structure producing the lowest tax number on the signing date.

It is the structure that coordinates purchase price, seller taxation, buyer tax basis, financing, dividend repatriation, liability allocation and the future exit while remaining consistent with Turkish corporate and tax law.

This article provides general information on Turkish law and taxation and does not constitute legal, tax, accounting or financial advice. Turkish tax legislation is subject to frequent amendment, and each M&A transaction should be analysed according to the seller, buyer, target company, ownership period, asset structure, financing model and applicable double taxation treaties.