Introduction: Can a Turkish Company Transfer Its Profits to a Foreign Shareholder?

Yes.

A Turkish company may lawfully distribute profits to a shareholder located abroad and transfer the resulting dividend through the Turkish banking system.

Turkey’s foreign direct investment legislation expressly protects this right. Article 3 of the Foreign Direct Investment Law provides that foreign investors may freely transfer abroad net profits, dividends, proceeds from the sale or liquidation of an investment, compensation payments, payments arising from licence and management agreements, and principal and interest arising from foreign loans through banks or financial institutions.

Therefore, a foreign investor does not normally have to leave profits permanently inside its Turkish subsidiary merely because the shareholder is resident in Germany, the United Kingdom, the Netherlands, the United States, the United Arab Emirates or another jurisdiction.

However, there is an important distinction between:

the company having money in its bank account

and

the company having legally distributable profit.

A Turkish company cannot simply transfer cash to its foreign shareholder and describe the payment as “profit” without considering Turkish corporate and tax law.

A lawful dividend distribution generally requires the company first to determine its financial profit, account for applicable corporate taxes and losses, allocate the statutory and contractual reserves required under Turkish law, obtain the necessary corporate approval and apply the appropriate dividend withholding tax before transferring the net amount abroad.

The practical process can therefore be summarised as:

profit earned in Turkey → corporate tax → distributable profit calculation → statutory reserves → general assembly dividend resolution → dividend withholding → banking transfer to foreign shareholder.

Each stage matters.

This guide explains how a Turkish A.Ş. or Ltd. Şti. can transfer profits to a foreign shareholder in 2026, how much Turkish tax may apply, how double taxation treaties can reduce withholding, what corporate approvals are necessary and which common profit-repatriation mistakes foreign investors should avoid.

1. Foreign Investors Have a Statutory Right to Repatriate Profits From Turkey

Turkey’s investment regime is based on freedom to invest and equal treatment between foreign and domestic investors.

The Foreign Direct Investment Law states not only that foreign investors are free to make investments in Turkey but also that international investors are generally treated equally with domestic investors. More importantly for profit repatriation, it expressly guarantees the ability to transfer net profits and dividends abroad through banks or financial institutions.

This means that there is generally no separate foreign-investment permission that must be obtained every time a Turkish subsidiary distributes a lawful dividend to its foreign parent company.

The Turkish company must instead comply with ordinary Turkish:

corporate law, tax law, accounting rules, banking requirements and foreign-investment reporting obligations.

For multinational investors, this is important because the Turkish subsidiary can function as a normal operating company from which post-tax profits are periodically distributed to the foreign parent.

2. Cash in the Bank Is Not Automatically Distributable Profit

One of the most important corporate-law principles is that dividends are paid from distributable profits, not simply from available cash.

A Turkish company may have TRY 50 million in its bank account but still be unable to distribute TRY 50 million.

For example, some of that money may represent:

share capital, shareholder loans, customer advances, bank financing, provisions or cash required to cover accumulated losses.

Article 509 of the Turkish Commercial Code provides that dividends may be distributed only from net profit for the period and free reserves. Article 508 states that annual profit is determined according to the annual balance sheet.

Accordingly, the first legal question is not:

“How much money does the company have?”

It is:

“How much profit is legally available for distribution after tax, losses and mandatory reserves?”

3. Corporate Income Tax Is Paid Before the Profit Is Distributed

For ordinary Turkish companies, the standard corporate income tax rate is currently 25%.

The Turkish Revenue Administration confirms that corporate income is generally taxed at 25%, while specified sectors—including banks, financial leasing and financing companies, payment institutions, authorised FX institutions, asset management companies, capital-market institutions, insurers and certain major public-private partnership structures—are subject to a 30% corporate income tax rate under the current framework.

Therefore, dividends are generally distributed from after-corporate-tax profit.

Example

Assume an ordinary Turkish operating company has:

Taxable corporate profit: TRY 100,000,000

Ignoring deductions, exemptions and minimum corporate tax complications for illustration:

Corporate tax at 25%: TRY 25,000,000

The company therefore begins with approximately:

TRY 75,000,000 after corporate tax

before considering statutory reserves, previous-year losses and other corporate-law deductions.

This is not yet necessarily the final amount that may be transferred to the foreign shareholder.

4. Previous-Year Losses Must Be Considered Before Profit Distribution

A company should not calculate dividends only by looking at the current year’s income statement.

Accumulated losses from earlier years can reduce the amount available for distribution.

This becomes particularly relevant for startups and growth companies.

Suppose the Turkish subsidiary incurred:

TRY 40 million accumulated losses

during its first three years.

In year four, it earns:

TRY 50 million profit.

The shareholder cannot automatically assume that the entire TRY 50 million is freely distributable.

The financial statements, tax position and corporate-law balance-sheet position must first be examined.

This is also one reason a company showing a strong current-year EBITDA figure may still have little or no legally distributable dividend.

5. Turkish Companies Must Allocate Statutory Legal Reserves

The Turkish Commercial Code requires the establishment of a general statutory reserve — genel kanuni yedek akçe.

Article 519 provides that 5% of annual profit must be allocated to the general statutory reserve until that reserve reaches 20% of paid-in capital.

The statute then requires an additional allocation in certain circumstances after the first-stage reserve threshold has been reached. In particular, after a 5% dividend has been paid to shareholders, 10% of the amount to be distributed to persons entitled to participate in profit is added to the general statutory reserve, subject to statutory exceptions such as the relevant holding-company rule.

Article 523 is equally important: dividends to shareholders cannot be determined until the statutory reserves and reserves required by the articles of association have been allocated.

Therefore, foreign investors should not calculate repatriable profit simply as:

accounting profit – corporate tax = dividend.

The legal-reserve calculation must also be performed.

6. The Articles of Association May Require Additional Reserves

The Turkish Commercial Code also permits a company’s articles of association to require reserves beyond the statutory minimum.

Article 521 allows the articles to provide that more than 5% of annual profit will be allocated to reserves or that reserves may exceed 20% of paid-in capital. The articles may also establish other reserves and define their purpose and use.

Accordingly, two Turkish companies with identical profits and capital may have different amounts legally available for distribution because their articles contain different reserve provisions.

Foreign investors acquiring an existing Turkish company should therefore review the articles before modelling expected annual dividends.

This can be particularly important in acquisition valuation.

A foreign buyer paying a high purchase price on the assumption that 100% of annual profit will be distributed may later discover that the company’s constitutional documents require significant retained reserves.

7. Who Decides Whether Profit Will Be Distributed?

Profit distribution is fundamentally a shareholder-level corporate decision.

For an A.Ş., Article 408 of the Turkish Commercial Code identifies decisions concerning financial statements, use of annual profit, determination of dividends and use of reserves as non-transferable powers of the general assembly. The ordinary annual general assembly also considers the financial statements and decides how profits will be used and what dividend will be distributed.

The same basic principle applies to an Ltd. Şti.

Article 616 expressly provides that approval of year-end financial statements, the annual activity report and the decision concerning dividends are among the non-transferable powers of the limited company’s general assembly.

Therefore, the company’s manager, accountant, CFO or board cannot ordinarily decide independently:

“We have sufficient cash, so we will send EUR 1 million to the foreign shareholder tomorrow.”

The proper corporate resolution must exist.

8. What Should the Dividend Resolution Cover?

The general assembly resolution should clearly determine the use of the relevant year’s profit.

Depending on the company’s financial position and corporate documents, the resolution will generally address matters such as:

approval of the financial statements, covering previous-year losses, allocation of statutory and contractual reserves, the amount of dividend to be distributed, the shareholders entitled to receive it and potentially the timing of payment.

For a wholly foreign-owned Turkish subsidiary, the procedure can be relatively straightforward from a shareholder-consent perspective because the foreign parent may be the sole shareholder.

But even in a one-shareholder company, formal corporate requirements still matter.

A sole foreign shareholder should therefore adopt the required written corporate decision rather than treating the Turkish subsidiary’s money as though it were simply another bank account belonging to the parent.

9. How Are Dividends Divided Among Shareholders?

Article 507 of the Turkish Commercial Code provides the basic principle that shareholders participate in net distributable profit according to their shares, subject to the law and articles of association.

Article 508 further provides that, unless the articles state otherwise, the dividend is calculated proportionally to the amount paid by the shareholder for its capital interest. Privileged rights and different share classes can change the result.

Example

Foreign Parent: 80%

Turkish Partner: 20%

Distributable dividend:

TRY 50 million

Under an ordinary proportionate structure:

Foreign Parent receives:

TRY 40 million gross dividend

Turkish Partner receives:

TRY 10 million gross dividend

However, if particular shares have dividend privileges, the articles must be examined before applying a simple ownership percentage.

10. What Is the Current Turkish Dividend Withholding Tax for a Foreign Corporate Shareholder?

This is the key tax issue in cross-border profit repatriation.

Under the current domestic Turkish tax framework, dividends distributed by a fully taxable Turkish company to a non-resident corporate shareholder are generally subject to 15% Turkish withholding tax, unless an applicable double taxation treaty provides a lower rate.

The Turkish Revenue Administration’s 2026 corporate tax rate guidance expressly confirms that dividends distributed by fully taxable companies to non-resident corporations are subject to a 15% withholding rate under Article 30 of the Corporate Tax Law, subject to applicable rules.

Therefore, the shareholder does not ordinarily receive the entire gross dividend.

The Turkish company acts as withholding agent, deducts the relevant Turkish tax and remits the net dividend abroad.

11. Dividend Withholding Applies After Corporate Income Tax

Foreign investors should distinguish two levels of taxation.

The Turkish company first pays corporate income tax on its taxable profit.

Then, when post-tax distributable profit is paid to the foreign shareholder, dividend withholding may apply.

Simplified Example

Assume:

Taxable profit: TRY 100 million

Corporate tax at 25%:

TRY 25 million

Assume, only for illustration, that after relevant reserves and other adjustments:

TRY 70 million is approved for distribution to a foreign corporate shareholder.

Domestic dividend withholding at 15%:

TRY 10.5 million

Net amount transferred abroad:

TRY 59.5 million

This simplified example illustrates why foreign investors should distinguish:

company-level tax

from

shareholder-level dividend withholding.

A double taxation treaty may materially reduce the second layer.

12. Double Taxation Treaties Can Reduce the 15% Dividend Withholding Rate

Turkey has a broad network of double taxation treaties.

The applicable treaty between Turkey and the foreign shareholder’s country of residence may limit the Turkish withholding tax on dividends to a lower percentage, particularly where the foreign corporate shareholder holds a specified minimum shareholding in the Turkish company and qualifies as the beneficial owner of the dividend.

Treaty rates vary by jurisdiction and by shareholding conditions.

For example, official Turkish Revenue Administration guidance concerning the Turkey–Spain treaty illustrates a treaty structure under which qualifying corporate ownership can reduce the Turkish tax on dividends from the domestic rate to 5%, while other cases remain subject to a higher treaty ceiling.

The Spain example should not be treated as a universal rate.

Germany, the Netherlands, the United Kingdom, the United States, the UAE and other jurisdictions must each be checked under the relevant treaty text.

Therefore, before a significant dividend is declared, the tax adviser should ask:

Who is the shareholder, where is it tax resident, how much of the Turkish company does it own, and what does the applicable treaty’s dividend article provide?

13. A Residence Certificate Is Important for Treaty Relief

Foreign shareholders should not assume that merely having a registered office abroad automatically allows the Turkish company to apply a reduced treaty rate.

Where treaty treatment differs from domestic law, Turkish tax practice generally requires the foreign recipient to establish treaty residence through an appropriate certificate of residence — mukimlik belgesi.

Official GİB guidance states that where treaty benefits are sought, the foreign enterprise should document its tax residency with a certificate issued by the competent authority of its country, together with the required certified Turkish translation. If the necessary residence documentation is not provided, Turkish domestic tax rules may apply instead.

For this reason, the residency certificate should be organised before dividend payment, rather than after the Turkish company has already withheld 15%.

14. Beneficial Ownership Can Matter

International dividend provisions generally operate on the basis that the recipient benefiting from the reduced treaty rate is the relevant treaty resident and beneficial owner of the income.

This becomes important where the shareholder structure contains:

• intermediate holding companies;
• nominee entities;
• conduit structures;
• or entities with little economic substance.

For example:

US Operating Parent → Luxembourg HoldCo → Turkish Subsidiary.

The Turkish company should not automatically assume that the Luxembourg treaty rate applies merely because the immediate shareholder is registered in Luxembourg.

Treaty entitlement, beneficial ownership, substance and anti-abuse provisions should be reviewed.

For significant cross-border dividend streams, holding-company structure should therefore be assessed before the Turkish investment is established rather than only when the first dividend becomes payable.

15. What If the Foreign Shareholder Is an Individual Rather Than a Company?

Foreign individual shareholders require a different tax analysis.

The current Turkish dividend withholding rate at the distribution stage is generally 15%, following the rate change effective from 22 December 2024. GİB’s current 2026 guidance confirms the 15% withholding applied at the dividend-distribution stage.

For a non-resident individual shareholder, the applicable double taxation treaty should again be reviewed to determine whether Turkey’s taxation is limited or whether additional reporting consequences arise in the shareholder’s residence country.

The distinction between:

foreign corporate shareholder

and

foreign individual shareholder

should therefore be established before calculating the tax result.

16. Can a Turkish Company Pay an Interim Dividend Before Year-End?

Potentially, yes, through Turkey’s dividend advance — kâr payı avansı framework.

The Ministry of Trade confirms that non-public A.Ş.s, Ltd. Şti.s and capital-divided limited partnerships may distribute interim dividend advances if the statutory and regulatory requirements are satisfied.

A general assembly resolution approving the advance is required, and the company must show a profit in its three-, six- or nine-month interim financial statements.

The distributable advance is calculated after deducting matters including previous-year losses, taxes, funds, provisions, legally and contractually required reserves and certain amounts due to privileged shareholders or other profit participants.

The dividend advance may not exceed half of the amount calculated under the applicable formula.

This can be useful for foreign parent companies that want periodic profit repatriation instead of waiting until the annual dividend cycle.

But it should not be confused with an unrestricted cash transfer to the parent.

17. Is Capitalisation of Profit the Same as Dividend Distribution?

No.

Turkish tax legislation expressly provides that adding profit to the company’s capital is not treated as dividend distribution for the relevant withholding rule.

This gives shareholders an important strategic choice.

The general assembly may decide to:

distribute profit, retain it in reserves, or capitalise it where the corporate-law conditions are satisfied.

Capitalising the profit strengthens registered equity but does not provide immediate cash to the foreign shareholder.

Foreign investors should therefore distinguish between:

profit earned

and

cash repatriated.

A Turkish subsidiary can be extremely profitable while distributing no cash because shareholders decide to reinvest its earnings.

18. Can the Foreign Shareholder Simply Invoice the Turkish Company Instead of Receiving Dividends?

This is where significant tax risk can arise.

A foreign parent may prefer payments labelled as:

• management fees;
• consulting fees;
• royalties;
• licence fees;
• interest;
• cost sharing;
• or service charges

because such payments may reduce the Turkish company’s taxable income or allow cash to leave Turkey before formal dividend distribution.

These payments are legally possible where they correspond to real, properly documented, arm’s-length transactions.

They cannot lawfully be used merely as disguised dividends.

Turkish transfer-pricing rules provide that transactions with related parties that are priced contrary to the arm’s-length principle can constitute hidden profit distribution through transfer pricing. GİB’s guidance specifically stresses that merely describing an amount as a management or group-service fee does not establish that a real service was provided.

19. Management Fees Are Not a Substitute for Dividends

Consider a foreign parent that owns 100% of a Turkish company.

The Turkish company earns TRY 40 million.

Instead of declaring a dividend, the foreign parent issues a TRY 35 million invoice labelled:

“Group Management Services.”

If the foreign parent cannot prove substantial services worth TRY 35 million were genuinely provided to and benefited the Turkish company, Turkish tax authorities may challenge the payment.

Depending on the structure, the amount can be treated as:

non-deductible expenditure, hidden profit distribution, dividend-equivalent income, or another taxable payment.

An official GİB ruling concerning related-party group charges confirms that where the Turkish company does not genuinely benefit from the services charged to it, the amounts may be treated as hidden profit distributions rather than deductible group services.

Foreign groups should therefore maintain:

service agreements, evidence of actual work, allocation methods, time records where appropriate and arm’s-length pricing support.

20. Royalties and Licence Fees Must Also Be Genuine

The same principle applies where the foreign shareholder owns:

• software;
• trademark;
• patent;
• technology;
• or know-how

licensed to the Turkish subsidiary.

The Turkish company can generally make genuine royalty payments under an arm’s-length licence agreement.

But the payment should not be artificially inflated merely to extract Turkish profit before dividend taxation.

Royalty payments may themselves attract:

• Turkish withholding tax;
• VAT through reverse charge;
• transfer-pricing review;
• and treaty analysis.

Therefore, foreign investors should not ask simply:

“Is it cheaper to call this a royalty than a dividend?”

The correct question is:

“What is the legal and commercial reason for the payment?”

21. Shareholder Loans Provide Another Cash Repatriation Route—but They Are Not Dividends

Where a foreign parent previously lent money to the Turkish subsidiary, principal repayment and interest are different from dividend distribution.

The Foreign Direct Investment Law expressly protects transfers abroad of principal repayments and interest arising from foreign loans.

However, shareholder loans have their own Turkish tax and regulatory rules involving:

• FX borrowing restrictions;
• arm’s-length interest;
• withholding;
• reverse-charge VAT;
• thin capitalisation;
• financing expense limitation;
• and KKDF.

Therefore, repaying a genuine shareholder loan is valid.

Creating a fake shareholder loan after profits have accumulated merely to avoid dividend taxation is a very different matter.

Corporate funding should be structured from the beginning.

22. The Bank Transfer Should Match the Corporate and Tax Documentation

Once the dividend has been lawfully approved and the withholding position determined, the Turkish company can transfer the net dividend through the banking system.

Turkey’s FDI legislation specifically contemplates transfers through banks or financial institutions.

For a material cross-border payment, the bank may request transaction-supporting documentation as part of its compliance and source-of-payment checks.

The practical file should therefore be capable of showing the legal basis of the payment, for example through:

the shareholder structure, general assembly decision, dividend calculation, tax/withholding documents and shareholder banking information.

The SWIFT explanation should clearly identify the transfer as a dividend or profit distribution where that is its true legal character.

A vague reference such as:

“company transfer”

is less desirable for a multi-million-euro dividend.

23. Is There a Currency Restriction on Receiving the Dividend?

The legal right protected by the FDI regime is to transfer dividends abroad through the financial system.

The practical payment mechanics—TRY, EUR, USD or another currency—should be coordinated with the Turkish bank, foreign-exchange rules and shareholder banking arrangements.

A Turkish company’s profit is generally calculated and recorded within its Turkish accounting framework.

The fact that the foreign shareholder ultimately wants to receive EUR or USD does not change the underlying legal nature of the distribution.

Foreign exchange conversion may take place as part of the banking process.

For large dividends, the investor should therefore consider:

exchange-rate exposure, conversion timing, bank spreads and treasury execution

in addition to tax.

24. E-TUYS Should Still Be Kept Up to Date

Foreign-invested companies in Turkey have foreign-investment information obligations through E-TUYS.

The Ministry of Industry and Technology confirms that foreign-invested companies make their required notifications through E-TUYS, and current guidance requires annual activity information regarding the preceding calendar year to be entered by the end of May.

The standard E-TUYS framework includes FDI activity, capital and share-transfer information.

A dividend payment does not ordinarily transform into a share transfer merely because cash leaves Turkey.

Nevertheless, foreign-invested companies should ensure that E-TUYS records remain accurate as part of their overall foreign-investment compliance, particularly where profit distribution occurs alongside capital changes or ownership restructuring.

25. Practical Example: 100% Foreign-Owned Turkish Subsidiary

Assume:

Dutch Parent B.V.

owns:

100% of Turkish Manufacturing A.Ş.

The Turkish company earns a strong annual profit.

A compliant profit-repatriation process would generally involve:

finalising the annual financial statements, calculating Turkish corporate tax, reviewing accumulated losses, allocating statutory and articles-based reserves, having the board prepare the appropriate proposal, adopting the required general assembly resolution, determining the gross dividend, checking the Turkey–Netherlands treaty and Dutch parent’s residence documentation, calculating Turkish dividend withholding, paying the withholding to the Turkish tax authority and transferring the net dividend to the Netherlands through the Turkish banking system.

The transfer is therefore not restricted simply because the shareholder is foreign.

The issue is proper corporate and tax execution.

26. Practical Example: Turkish Company Has TRY 100 Million Profit

Consider a simplified illustration.

Turkish company’s taxable profit:

TRY 100,000,000

Ordinary corporate income tax at 25%:

TRY 25,000,000

Post-tax amount:

TRY 75,000,000

Assume statutory reserves and other required deductions total:

TRY 5,000,000

General assembly approves:

TRY 70,000,000 gross dividend

Foreign shareholder qualifies only for the domestic 15% withholding rate:

Dividend withholding:

TRY 10,500,000

Net dividend transferred abroad:

TRY 59,500,000

If an applicable double taxation treaty lawfully reduced the withholding to, for example, 5%, the withholding on the same gross dividend would instead be TRY 3.5 million and the net payment TRY 66.5 million.

This illustrates why treaty analysis can materially change the foreign investor’s return.

The actual calculation should always be made using the target company’s real financial statements and the relevant treaty.

27. Practical Example: Foreign Parent Charges Management Fees Instead

Now assume the same Turkish subsidiary wants to transfer TRY 70 million abroad.

Instead of declaring a dividend, the foreign parent sends a TRY 70 million “management fee” invoice.

This should immediately trigger questions.

What services were performed?

Who performed them?

When?

How did the Turkish subsidiary benefit?

Would an independent company pay TRY 70 million for the same services?

How was the fee allocated?

Does documentation exist?

What Turkish withholding and VAT rules apply?

A payment without persuasive commercial justification can create substantially more tax risk than a straightforward dividend.

Profit repatriation planning should reduce lawful tax costs—not disguise dividends as fictional expenses.

28. Practical Example: Dividend Advance During the Year

Assume the Turkish company is highly profitable during 2026 and the foreign parent does not want to wait until the 2027 annual general assembly.

The company may consider a dividend advance.

The Ministry of Trade’s current explanation provides that the company must have profit according to its three-, six- or nine-month interim financial statements and obtain a general assembly resolution. The calculation deducts prior losses, taxes, reserves and other relevant amounts, and the dividend advance cannot exceed half of the resulting amount.

This can provide earlier liquidity to a foreign shareholder while remaining within the Turkish corporate framework.

Common Mistakes in Transferring Turkish Company Profits Abroad

Foreign investors should be particularly cautious about transferring money before a valid dividend resolution exists; distributing more than the legally distributable profit; ignoring previous-year losses; failing to allocate mandatory reserves; applying the domestic 15% withholding automatically without checking treaty relief; applying a reduced treaty rate without first obtaining adequate residence documentation; sending the shareholder money as an unexplained “intercompany transfer”; disguising dividends as unsupported management fees or royalties; treating shareholder-loan repayments and dividends as interchangeable; and assuming that a wholly owned subsidiary’s money can be withdrawn by the foreign parent whenever it wishes.

The central principle is:

The Turkish subsidiary is a separate legal entity. Its money does not legally become the foreign parent’s money until a proper legal basis for payment exists.

Frequently Asked Questions About Profit Transfers From Turkey

Can a Turkish company transfer profits to a foreign shareholder?

Yes. Turkish foreign investment law expressly permits foreign investors to transfer net profits and dividends abroad through banks or financial institutions.

Is there a general restriction on repatriating dividends from Turkey?

There is no general FDI prohibition on lawful dividend repatriation. The company must comply with Turkish corporate, tax and banking rules.

Can all cash in the company’s bank account be distributed?

No. Article 509 provides that dividends may be distributed only from net-period profit and free reserves.

Who decides whether an A.Ş. distributes profit?

The general assembly. Article 408 expressly places annual-profit use and dividend determination within the general assembly’s non-transferable powers.

Who decides profit distribution in an Ltd. Şti.?

The limited-company general assembly. Article 616 identifies the dividend decision as one of its non-transferable powers.

What is the Turkish corporate tax rate in 2026?

The general rate for ordinary corporate taxpayers is 25%. Certain financial and specified regulated businesses are subject to a 30% rate.

What is the dividend withholding rate for a foreign corporate shareholder?

The current domestic rate is generally 15% for dividends distributed to non-resident corporate shareholders, subject to treaty relief.

Can a tax treaty reduce the 15%?

Yes. Applicable double taxation treaties may impose a lower maximum withholding rate depending on the shareholder’s jurisdiction, ownership percentage and other treaty requirements.

Is a residence certificate required?

It is generally important where the shareholder wants to rely on treaty treatment. GİB guidance requires treaty residence to be documented through the relevant residence certificate and certified translation framework.

Must statutory reserves be deducted first?

Yes. Article 519 requires the general statutory reserve, and Article 523 provides that dividends cannot be determined before statutory and articles-based reserves are allocated.

Can a Turkish company distribute an interim dividend?

Potentially yes through the dividend-advance framework, subject to interim profit, general assembly approval and the calculation limits established by the relevant rules.

Is adding profit to capital treated as a dividend?

No for the relevant withholding rule. Turkish corporate tax legislation expressly states that adding profit to capital is not regarded as dividend distribution.

Can the foreign parent invoice management fees instead of receiving dividends?

Only where genuine services are actually provided and the amount satisfies the arm’s-length principle. Unsupported related-party charges may be treated as hidden profit distributions.

Can the foreign shareholder receive EUR or USD?

Profit can be transferred abroad through the banking system. Currency conversion and payment mechanics should be coordinated with the Turkish bank.

Can shareholder-loan principal also be transferred abroad?

Yes. Foreign investment legislation separately protects transfers of principal repayments and interest arising from foreign loans.

Does E-TUYS prevent profit distribution?

No. E-TUYS is a foreign-investment information and reporting system. Foreign-invested companies should nevertheless maintain current and accurate reporting.

Conclusion: What Is the Safest Way to Transfer Turkish Company Profits to a Foreign Shareholder?

Turkey generally allows foreign investors to repatriate their investment returns.

The Foreign Direct Investment Law expressly protects the transfer abroad of:

net profits + dividends + sale proceeds + liquidation proceeds + licence and management payments + foreign-loan principal and interest, provided the relevant payments have a lawful basis and are processed through banks or financial institutions.

Therefore, the fundamental problem is generally not whether a foreign shareholder is allowed to take dividends out of Turkey.

The problem is determining:

how much is legally distributable and how much Turkish tax must be withheld before the money leaves.

The first stage is the company’s corporate income tax.

For ordinary Turkish corporate taxpayers, the current general corporate income tax rate is 25%.

The second stage is determining actual distributable profit.

Article 509 provides that dividends can be distributed only from net-period profit and free reserves.

Previous-year losses must be considered.

The statutory general reserve must be allocated.

Article 519 requires 5% of annual profit to be allocated until the reserve reaches 20% of paid-in capital and also contains additional reserve rules relating to distributions.

Articles-based reserves must also be considered.

Article 523 makes clear that a shareholder dividend cannot be determined before mandatory and articles-based reserves are allocated.

The third stage is corporate approval.

For an A.Ş., the general assembly has the non-transferable authority to decide how annual profit will be used and what dividend will be distributed.

For an Ltd. Şti., the dividend decision likewise belongs to the general assembly.

The fourth stage is withholding tax.

Where the recipient is a non-resident corporate shareholder, the current Turkish domestic rate is generally 15%.

But this 15% should not be assumed to be the final rate.

The applicable double taxation treaty must be reviewed.

Depending on the foreign shareholder’s residence and ownership level, the treaty can materially reduce the Turkish withholding rate. Official Turkish tax guidance demonstrates that treaty structures can reduce dividend withholding for qualifying substantial corporate shareholdings.

Treaty documentation also matters.

A foreign shareholder seeking treaty relief should normally provide the necessary certificate of residence before payment so that the Turkish company can substantiate application of the reduced rate.

The fifth stage is banking execution.

The net dividend may then be transferred abroad through the banking system.

The company’s corporate resolution, tax calculation and payment records should all support the transfer.

This is preferable to unexplained transfers between the subsidiary and parent.

Foreign investors should also distinguish dividends from other legitimate forms of cross-border payments.

A shareholder loan repayment is not a dividend.

A genuine royalty is not a dividend.

A genuine management fee is not a dividend.

But each payment must correspond to its real legal and economic substance.

Turkey’s transfer-pricing rules make this distinction particularly important.

A foreign parent cannot safely extract Turkish profit merely by issuing artificial invoices for management services, IP or consulting that were not genuinely provided or were priced above arm’s-length value.

For groups that want regular cash distributions during the financial year, dividend advances can also be considered. Turkish corporate rules permit qualifying non-public A.Ş.s and Ltd. Şti.s to distribute advances where interim financial statements show profit, the general assembly approves the distribution and the statutory calculation limits are satisfied.

Accordingly, a well-managed foreign-owned Turkish subsidiary should establish an annual profit-repatriation process rather than transferring money ad hoc.

The practical sequence should be:

finalise financial statements → calculate corporate tax → offset previous-year losses → allocate statutory and articles-based reserves → determine distributable profit → review articles/SHA dividend provisions → obtain general assembly approval → determine foreign shareholder status → review applicable DTA → obtain residence certificate → calculate withholding → pay Turkish withholding → transfer net dividend through bank → maintain tax, corporate and E-TUYS records.

For multinational groups, tax planning should begin even earlier.

The group should consider the future dividend route when selecting the country through which the Turkish investment will be held.

A foreign holding company should not be selected only because it produces an attractive treaty withholding percentage.

The group should also consider:

• beneficial ownership;
• substance;
• anti-abuse rules;
• tax treatment in the shareholder’s jurisdiction;
• participation exemptions;
• foreign tax credits;
• exit taxation;
• and operational reasons for the holding structure.

The strongest investment structure is therefore not necessarily the one that produces the lowest nominal Turkish withholding rate.

It is the one that is legally sustainable in both Turkey and the shareholder’s home jurisdiction.

Ultimately, the most important principle is straightforward:

Profits earned by a Turkish company may be transferred to a foreign shareholder, but the transfer should be made as a properly approved, correctly taxed and documented distribution—not as an informal withdrawal from the company’s bank account.

For a foreign investor, the essential questions should be:

How much distributable profit exists?

What reserves must remain in the Turkish company?

What corporate decision is required?

Does the domestic 15% withholding apply, or does a tax treaty reduce it?

What documentation does the bank and Turkish tax administration require?

Once these issues are resolved, Turkey provides a clear legal framework through which foreign shareholders can repatriate the profits generated by their Turkish investments.

This article reflects Turkish corporate, foreign investment and tax legislation and publicly available official guidance as of August 2026. It is intended for general informational purposes only and does not constitute transaction-specific legal, tax, accounting or financial advice. The actual withholding and net dividend amount depend on the Turkish company’s financial statements, statutory reserves, shareholder type, residence jurisdiction, ownership percentage, applicable double taxation treaty, beneficial ownership status and supporting documentation.