Introduction: Does a Foreign Buyer Become Liable for the Turkish Company’s Old Tax and SGK Debts?

A foreign company considering the acquisition of a Turkish business should investigate one issue before almost everything else:

Who will ultimately bear the target company’s historical tax and Social Security Institution (SGK) liabilities after closing?

The answer depends primarily on how the acquisition is structured.

Buying the shares of a Turkish company is legally different from buying its business, workplace or assets.

The distinction becomes especially important when the target is a Turkish limited liability company — Limited Şirket (Ltd. Şti.) — because Turkish public receivables legislation contains a special rule that can expose a purchaser of limited-company shares directly to public debts relating to periods before the acquisition.

A foreign investor buying shares in a Turkish joint stock company — Anonim Şirket (A.Ş.) — is generally in a different position. A joint stock company remains responsible for its own debts, while shareholders are, as a corporate-law principle, liable only for their subscribed capital toward the company.

However, this does not mean that purchasing an A.Ş. with historical tax liabilities is economically safe. If a foreign investor acquires 100% of a company owing TRY 50 million to the tax administration, the debt continues to exist inside the company after the acquisition. The foreign buyer may not be personally liable merely because it acquired the shares, but it now owns the company whose assets and cash flow can be pursued for that debt.

For a limited company, the issue can be more serious.

Article 35 of Law No. 6183 on the Collection Procedure of Public Receivables provides that limited company shareholders may become directly responsible, in proportion to their capital shares, for public receivables that cannot be collected from the company or are considered uncollectible. Crucially for acquisitions, where a share is transferred, the transferor and transferee are jointly liable for public receivables relating to the period before the transfer, subject to the proportional liability rule.

Social security liabilities require a separate analysis.

Under Law No. 5510, unpaid SGK premiums and other SGK receivables are generally collected under Law No. 6183, subject to specific statutory exceptions. Article 89 of Law No. 5510 also contains a particularly strong successor-liability rule where an insured workplace is transferred together with its assets and liabilities: the former and new employer can be jointly and severally responsible for historical SGK premiums, late-payment penalties, interest and related debts.

Foreign investors should therefore never assume:

“The debt belongs to the previous owner because it arose before I purchased the company.”

In Turkish M&A transactions, that statement may be economically wrong and, in some structures, legally wrong as well.

This guide explains when a foreign company acquiring a Turkish company can become exposed to historical tax and SGK debts, the difference between an A.Ş. and Ltd. Şti., share deals and asset deals, and how buyers can protect themselves through due diligence, warranties, indemnities, escrow and closing conditions.

1. Foreign Investors Can Acquire Existing Turkish Companies

Turkey’s foreign direct investment framework generally places foreign investors on the same footing as Turkish investors.

The official Investment Office confirms that international investors have the same rights and liabilities as domestic investors and that the conditions governing establishment of companies and share transfers are generally the same for foreign and Turkish investors.

The Foreign Direct Investment Law similarly provides for freedom of investment and national treatment, subject to special legislation and international agreements.

Accordingly, a foreign corporation may generally acquire:

• 10%;
• 25%;
• 51%;
• 80%;
• or 100%

of an existing Turkish company.

The investor’s foreign status does not provide immunity from Turkish tax, social security or company-law liability rules.

A foreign legal entity purchasing 100% of a Turkish Ltd. Şti. is therefore subject to the same core public-debt rules applicable to a Turkish corporate purchaser.

2. The First Question: Share Deal or Asset Deal?

Every acquisition should begin by distinguishing between:

Share Deal

The purchaser acquires shares in the existing Turkish company.

The company itself continues to exist.

Its:

• tax number;
• legal personality;
• contracts;
• employees;
• assets;
• bank accounts;
• licences;
• liabilities;
• and litigation

generally remain with the same legal entity.

Asset or Business Deal

The purchaser acquires selected assets or, in some cases, an operating business or workplace from the seller.

Depending on the structure, this may include:

• machinery;
• inventory;
• customer contracts;
• trademarks;
• employees;
• real estate;
• receivables;
• licences;
• or the entire operating enterprise.

The liability analysis changes substantially.

A buyer should therefore never ask merely:

“Are we buying the company?”

The legally useful question is:

“Are we buying shares in the legal entity or acquiring its business/assets?”

3. What Happens to Historical Tax Debts in a Share Deal?

In a share deal, the Turkish target company remains the same taxpayer after closing.

Assume:

Before acquisition

German Holding GmbH owns 0%
Turkish Seller owns 100%
Turkish Target A.Ş. owes TRY 20 million in unpaid tax.

Then:

After acquisition

German Holding GmbH owns 100%
Turkish Seller owns 0%
Turkish Target A.Ş. still owes TRY 20 million.

The shareholder has changed.

The taxpayer has not.

Therefore, a sale of shares does not cleanse the company of:

• corporate income tax liabilities;
• VAT;
• withholding tax;
• stamp tax;
• tax penalties;
• late-payment interest;
• or assessments concerning historical periods.

The company remains liable.

This is the fundamental M&A principle foreign investors should understand.

4. The Economic Exposure Can Be as Serious as Direct Legal Liability

Some foreign buyers focus excessively on whether the parent company can be directly pursued.

That is only part of the analysis.

Assume a foreign investor purchases a Turkish company for EUR 10 million.

After closing, the Turkish tax administration issues a TRY 100 million historical tax assessment against the target.

Even if the foreign parent itself is not directly liable as shareholder, the target may have to pay:

TRY 100 million + tax penalties + interest.

That reduces:

• cash reserves;
• distributable profits;
• enterprise value;
• dividend capacity;
• debt repayment capacity;
• and ultimately the value of the foreign investor’s shares.

From the purchaser’s commercial perspective, the damage is real.

This is why historical liabilities must be allocated in the acquisition agreement even where company law technically places the debt on the target rather than the shareholder.

5. A.Ş. Shareholders Are Generally Not Personally Liable for Company Debts Merely Because They Own Shares

For a Turkish A.Ş., the corporate-law starting point is relatively straightforward.

The Ministry of Trade explains that a joint stock company is liable for its obligations with its own assets and that shareholders are liable only for the capital they have subscribed, toward the company.

Accordingly, a foreign company purchasing ordinary shares in a Turkish A.Ş. does not normally become personally liable for every historical corporate debt merely because it becomes the shareholder.

Example

Foreign Buyer Ltd. acquires 100% of Target A.Ş.

Target A.Ş. owes:

• TRY 5 million VAT;
• TRY 3 million withholding tax;
• TRY 4 million SGK premiums.

Those liabilities remain liabilities of Target A.Ş.

The buyer’s investment value is exposed, but ordinary share ownership itself does not operate like a guarantee of all company debts.

There are, however, important exceptions and qualifications.

6. Becoming a Director or Legal Representative Creates a Separate Liability Analysis

A foreign purchaser frequently changes management immediately after the acquisition.

The buyer may appoint:

• its own board members;
• general manager;
• company representatives;
• or other executives.

This creates a separate public-liability issue.

Under Article 10 of the Turkish Tax Procedure Law, legal representatives have responsibility for carrying out the tax obligations of legal entities. Where those duties are not performed and taxes cannot consequently be collected from the taxpayer’s assets, the relevant amounts may be pursued against the responsible legal representatives under the statutory framework.

Law No. 6183 also contains a legal-representative liability rule in its repeated Article 35, allowing specified public receivables that cannot be collected from the legal entity to be pursued against legal representatives.

However, a newly appointed director should not automatically be assumed liable for every historical debt regardless of when it arose.

Responsibility requires analysis of:

• when the tax obligation arose;
• when it became payable;
• who was the legal representative;
• which statutory rule applies;
• and whether the failure giving rise to responsibility occurred during that person’s tenure.

Accordingly, post-acquisition management appointments should also form part of the tax due diligence.

7. Limited Companies Present a Much More Serious Shareholder-Level Public Debt Risk

The position of a Turkish Ltd. Şti. is materially different.

Article 35 of Law No. 6183 states that shareholders of a limited company are directly responsible, in proportion to their capital shares, for public receivables that cannot be fully or partially collected from the company or are considered uncollectible.

The official Collection General Communiqué likewise confirms that limited company shareholders — including legal-person shareholders — fall within this public debtor framework where the statutory conditions are satisfied.

This liability is not simply limited to the nominal amount originally invested.

It operates according to the shareholder’s shareholding ratio in the relevant public receivable.

Example

Target Ltd. Şti. has an uncollectible public debt of:

TRY 10,000,000

Foreign Buyer acquires:

60%

Subject to the requirements of Article 35, the shareholder-level public receivable exposure may reach:

TRY 6,000,000

The buyer therefore cannot safely argue:

“My risk is only the TRY 300,000 capital that I contributed.”

That is not how Article 35 works.

8. The Most Important Rule: The Buyer of Ltd. Şti. Shares Can Be Liable for Pre-Acquisition Public Debts

This is perhaps the most important provision for foreign buyers.

Article 35 expressly states that where a limited company shareholder transfers its capital share:

the transferor and transferee can be jointly responsible for public receivables relating to the period before the transfer, according to the proportional liability rule.

The official GİB text and General Communiqué confirm this structure.

Therefore, a foreign company purchasing shares in a Turkish Ltd. Şti. may acquire more than ownership.

It may also acquire direct statutory exposure to historical public debts.

Example

Turkish Seller owned 100% of Target Ltd. Şti. until:

1 September 2026

Foreign Buyer acquires 100% on that date.

In 2027, tax authorities establish that Target Ltd. Şti. had unpaid public receivables relating to a period before the acquisition.

If the statutory conditions under Article 35 are satisfied, both:

former shareholder

and

new foreign shareholder

may face liability for the pre-transfer public receivable.

This is why acquiring an existing Ltd. Şti. without tax due diligence can be significantly riskier than merely creating a new Turkish company.

9. A Private SPA Cannot Eliminate the Tax Administration’s Statutory Rights

Suppose the share purchase agreement says:

“Seller shall be exclusively responsible for all tax debts relating to periods before closing.”

This is extremely useful contractually.

But it does not necessarily bind the Turkish public authority.

Article 8 of the Tax Procedure Law expressly states that private agreements concerning tax liability do not bind the tax authority except where tax legislation provides otherwise.

Therefore, the buyer could face the following scenario:

1. Tax authority pursues the buyer under Article 35.
2. Buyer pays the public debt.
3. Buyer then seeks reimbursement from the seller under the SPA tax indemnity.

That is why a tax indemnity is a recovery mechanism, not an immunity from public-law enforcement.

This distinction should be clearly understood by foreign acquirers.

10. Does Article 35 Apply Where the Buyer Is a Foreign Company Rather Than an Individual?

Yes, the rule is not limited conceptually to natural-person shareholders.

The GİB’s Collection General Communiqué expressly describes limited company shareholders responsible under Article 35 as real or legal persons.

Accordingly, if:

UK Parent Ltd.

acquires 80% of:

Turkish Target Ltd. Şti.,

its status as a foreign legal entity does not in itself prevent shareholder liability under Turkish public receivables law.

The practical cross-border enforcement mechanics may raise separate questions, particularly where the foreign company has no Turkish assets.

But the substantive Turkish-law liability should not be ignored on that basis.

11. SGK Premium Debts Also Require Due Diligence

Foreign investors frequently conduct detailed tax due diligence while treating SGK as an employment issue.

That is a mistake.

Historical SGK exposure can include:

• unpaid insurance premiums;
• unemployment insurance premiums;
• administrative fines;
• late-payment penalties;
• unregistered employment;
• underreported wages;
• incorrect occupational codes;
• minimum labour assessments;
• incorrect incentive claims;
• and employment that should have been insured but was not reported.

The financial effect can be substantial.

SGK also has its own statutory collection powers.

12. Unpaid SGK Receivables Are Collected Under Law No. 6183

Article 88 of Law No. 5510 provides that SGK’s unpaid premium and other receivables are collected pursuant to Law No. 6183, except for specified provisions that are excluded.

This means the broad public receivables enforcement system applies to SGK debt as well.

This is particularly significant for Ltd. Şti. acquisitions because Article 35 of Law No. 6183 remains relevant within this structure.

A 2025 publication hosted by SGK specifically discusses the application of Article 35 to limited company shareholders in the context of SGK premium debts and notes the distinction between shareholder liability and upper-manager liability.

Foreign purchasers should therefore analyse tax and SGK exposure together, not in separate silos.

13. SGK Upper Managers Can Face Joint and Several Liability

Article 88 of Law No. 5510 contains another important rule.

Where SGK premiums and other receivables are not paid within the statutory periods without a justified reason, upper-level managers or authorised persons of legal-person employers can be jointly and severally responsible with the employer under the applicable conditions.

SGK’s own guidance also explains that an employer’s representative responsible for managing the whole business can be jointly and severally responsible with the employer for obligations such as documents, declarations and premium payments.

This has a practical acquisition consequence.

If the foreign purchaser appoints one of its executives to run the Turkish business after closing, the executive’s personal exposure to SGK obligations should be understood.

Again, however, liability must be analysed according to the relevant periods and role. Appointment after closing should not simply be equated with unconditional personal liability for all historical SGK debts.

14. A Share Deal and a Workplace Transfer Are Not the Same Thing for SGK

This distinction is critical.

Share Deal

The shareholder changes.

The Turkish company remains the employer.

For example:

Target Ltd. Şti. employed 100 people before the acquisition.

After a 100% share transfer, Target Ltd. Şti. still employs the same 100 people.

The employer legal entity has not changed.

Historical SGK debts remain with Target Ltd. Şti., and any additional shareholder or management liability is analysed under the relevant public-law rules.

Workplace or Business Transfer

The actual workplace or business is transferred from one employer to another.

This triggers an additional successor-liability rule.

15. Article 89 of Law No. 5510 Creates Strong Liability in Workplace Transfers

Article 89 provides that where the workplace in which insured employees work is transferred, merged or passes to another employer together with its active and passive elements, the new employer is jointly and severally responsible for the former employer’s SGK:

• insurance premiums;
• late-payment penalties;
• late-payment increases;
• interest;
• and related debts.

Most importantly:

A contractual provision seeking to exclude this liability is ineffective against SGK.

The statutory rule is explicit.

Therefore, a foreign company purchasing an operating workplace rather than shares may face direct SGK successor liability.

16. Example: Asset Deal Involving a Factory

Assume:

Foreign Manufacturing Turkey A.Ş. purchases an operating factory from Seller A.Ş.

The transaction includes:

• factory equipment;
• inventory;
• workplace;
• workforce;
• ongoing business;
• and relevant operating elements.

Seller A.Ş. has TRY 15 million of historical SGK premium and related debt.

If the transaction constitutes the type of workplace transfer contemplated by Article 89, the buyer can become jointly and severally liable with the former employer for those historical SGK obligations.

The parties cannot defeat SGK by writing:

“All pre-closing SGK debts remain exclusively with Seller.”

That clause may create a reimbursement right between buyer and seller.

It does not remove SGK’s statutory claim against the purchaser.

17. Workplace Transfer Must Also Be Notified to SGK

SGK’s current employer guidance states that when an insured workplace is transferred, the new employer must submit the workplace notification to SGK within 10 days following the date of transfer.

This should therefore appear in the post-closing checklist of a Turkish business acquisition structured as a workplace transfer.

Failure to coordinate SGK registration can create additional compliance issues beyond the historical debt itself.

18. Business or Asset Transfers Can Also Carry Private-Law Debts

Historical debt exposure in an asset deal is not limited to SGK.

Article 202 of the Turkish Code of Obligations provides a general legal framework where an asset pool or business is acquired together with its assets and liabilities.

Under that structure, once the acquisition is notified to creditors or announced in the prescribed manner, the transferee becomes liable for the debts of the transferred business, while the former debtor remains jointly liable with the acquirer for a statutory two-year period. The wording of Article 202 is reproduced in an official Ministry of Justice publication discussing the rule.

Accordingly, calling a transaction an “asset deal” does not automatically mean:

“We can take everything useful and leave every liability behind.”

The exact assets, liabilities and continuity of the business must be examined.

19. Statutory Mergers and Corporate Transfers Create Another Public-Law Succession Rule

Law No. 6183 also separately addresses:

• mergers;
• transfers;
• divisions;
• and changes of legal form.

Article 36 provides that, for purposes of public receivables law, the successor legal entity takes the place of the merged, transferred, divided or former entity in the circumstances specified in the statute.

A foreign investor using:

• merger;
• demerger;
• corporate reorganisation;
• or statutory takeover

should therefore not analyse liability in the same way as an ordinary share purchase.

The legal form of the transaction matters.

20. Why a “Tax Debt Clearance Certificate” Is Not Enough

Foreign buyers often request:

“No Tax Debt Certificate – Vergi Borcu Yoktur Yazısı.”

This is useful.

It is not comprehensive tax due diligence.

A document showing no currently assessed and overdue tax debt does not necessarily prove that:

• past VAT returns were correct;
• deductible expenses were legitimate;
• transfer pricing was arm’s length;
• withholding was properly applied;
• payroll was correctly reported;
• all invoices were genuine;
• or no future assessment can arise.

The difference is between:

assessed debt

and

latent tax liability.

Example

Closing date:

1 September 2026

Target’s tax debt certificate:

TRY 0

In 2027, the tax administration audits the company’s 2024 transactions and assesses:

TRY 25 million tax + penalties + interest.

The tax exposure existed economically before the acquisition even though it had not yet been assessed when the “no debt” certificate was obtained.

21. Tax Assessment Periods Make Historical Due Diligence Essential

Article 114 of the Tax Procedure Law provides, as a general rule, a five-year tax assessment limitation period, calculated from the beginning of the year following the calendar year in which the tax receivable arose, subject to statutory rules that can affect the limitation period.

Accordingly, a target may have several historical periods still exposed to tax examination.

A buyer should therefore normally examine multiple prior fiscal years rather than merely the current year.

Typical review areas include:

• corporate income tax returns;
• VAT returns;
• withholding returns;
• provisional tax;
• payroll;
• stamp tax;
• related-party transactions;
• expense deductions;
• incentives;
• loss carryforwards;
• and ongoing tax inspections.

22. SGK Exposure Can Reach Even Further Back

SGK risk can have an even longer horizon.

Article 93 of Law No. 5510 generally subjects SGK premium and other receivables to a 10-year limitation period, calculated under the statutory rules.

Different commencement rules can apply where receivables arise from:

• court decisions;
• service determination;
• minimum labour assessments;
• audits;
• or documents received from other public authorities.

Therefore, a buyer acquiring a labour-intensive company should not assume:

“Anything more than five years old is irrelevant.”

Tax and SGK have different limitation frameworks.

23. What Should Tax Due Diligence Cover?

A foreign purchaser should usually investigate at least:

Corporate Income Tax

• filed returns;
• taxable profit;
• exemptions;
• deductions;
• carried-forward losses;
• related-party expenses.

VAT

• output VAT;
• input VAT;
• refunds;
• reverse-charge VAT;
• questionable invoices;
• exemptions.

Withholding

• employee withholding;
• rental withholding;
• professional service withholding;
• dividends;
• cross-border payments.

Transfer Pricing

• parent-company management fees;
• royalties;
• shareholder loans;
• intercompany services;
• procurement;
• group financing.

Tax Inspections

• current audits;
• previous assessments;
• settlement;
• litigation.

Tax Incentives

• investment incentives;
• R&D;
• technopark;
• export incentives;
• reduced corporate tax.

The buyer should determine not only whether incentives were claimed but whether the company actually satisfied the statutory conditions.

24. What Should SGK Due Diligence Cover?

SGK due diligence should ordinarily review:

• current SGK debt;
• historical premium payments;
• employee declarations;
• payroll;
• actual salary versus declared salary;
• unregistered employees;
• occupational codes;
• SGK incentives;
• administrative fines;
• subcontractors;
• workplace registrations;
• minimum labour examinations;
• inspection reports;
• occupational accidents;
• work permit/foreign worker compliance.

A company with 500 employees can have substantially greater latent SGK exposure than a software business with 10 employees.

The scope should therefore reflect the target’s workforce.

25. Incorrect SGK Incentives Can Become a Buyer Problem

A target may appear to have excellent payroll costs because it has benefited from SGK premium incentives.

The buyer should ask:

• Was the company legally eligible?
• Were employees genuinely entitled to the incentive?
• Was there unregistered employment?
• Were employees falsely shown as working?
• Were filings timely?
• Is there any ongoing inspection?

SGK currently confirms that employers found to have unregistered workers or fictitiously declared employees can be excluded from various premium incentives for statutory periods.

An acquisition valuation based on incentives that later disappear may be materially inaccurate.

26. Check Whether the Target Has Been Using Undocumented Employees

One of the highest-risk SGK findings is unregistered employment.

Suppose a manufacturer officially reports:

120 employees

but due diligence identifies:

25 additional workers paid in cash.

Potential exposure may involve:

• retrospective premiums;
• late-payment charges;
• administrative fines;
• employment claims;
• incentive disqualification;
• occupational accident exposure.

A simple SGK debt statement may not reveal the full issue because the liability may not yet have been assessed.

Therefore, payroll due diligence should compare:

SGK records + accounting + bank payments + employee lists + actual workforce.

27. Review Related-Party Payroll and Management Arrangements

Foreign-owned targets may use unusual executive structures.

For example:

• foreign executives may be paid from abroad;
• Turkish employees may receive part of their salary from another group company;
• management charges may include staff costs;
• directors may invoice the company personally;
• expatriates may have split payroll.

These structures can create overlapping:

• payroll tax;
• SGK;
• work permit;
• permanent establishment;
• and deductibility

issues.

A buyer should not accept the explanation:

“This is how the international group has always paid them.”

The arrangement should be tested against Turkish law.

28. Share Deal vs Asset Deal: Liability Comparison

A useful high-level comparison is:

This table is only a framework.

Every transaction must be classified according to its actual legal mechanics.

29. SPA Tax Warranties Are Essential

The Share Purchase Agreement should contain detailed tax warranties.

Typical seller statements may address whether:

• all required returns were filed;
• taxes were paid when due;
• no undisclosed audits exist;
• withholding was properly made;
• VAT was correctly reported;
• related-party transactions comply with tax rules;
• no undisclosed tax settlement exists;
• tax records have been maintained;
• no improper incentive was claimed.

The buyer should avoid relying on vague wording such as:

“The company has complied with applicable law.”

Tax deserves a dedicated warranty package.

30. A Separate Tax Indemnity Is Often Better Than Warranties Alone

A warranty and indemnity perform different functions.

A warranty is generally a statement about the state of affairs.

A tax indemnity can provide a more direct contractual allocation of liability.

For example:

Seller shall reimburse Buyer or Target for taxes, SGK premiums, penalties and related interest attributable to any period ending on or before Closing.

The precise drafting should address:

• pre-closing periods;
• straddle periods;
• penalties;
• interest;
• SGK;
• tax investigations;
• procedural control;
• settlement decisions;
• limitation periods;
• payment mechanics.

In a Turkish Ltd. Şti. acquisition, a robust indemnity is particularly important because the purchaser itself may face statutory shareholder-level exposure.

31. Escrow Can Be More Valuable Than a Strong Indemnity

A contractual indemnity is only as valuable as the seller’s ability to pay.

Suppose the seller receives:

EUR 20 million

and moves abroad.

Two years later, a TRY 80 million historical tax liability emerges.

The buyer has an excellent indemnity.

But the seller has no reachable assets.

The buyer has won the contractual drafting battle and lost the commercial war.

For material risks, the purchaser can therefore consider:

• escrow;
• retention;
• holdback;
• deferred consideration;
• bank guarantee;
• parent guarantee;
• or other security.

32. Known Risks Should Receive Specific Indemnities

If due diligence already identifies a problem, relying only on general warranties may be insufficient.

Examples include:

Known tax inspection

→ specific tax audit indemnity.

Unregistered employees

→ specific SGK and employment indemnity.

Questionable VAT refunds

→ specific VAT indemnity.

Disputed R&D incentive

→ specific incentive indemnity.

Unpaid SGK premiums

→ repayment as a condition precedent or escrow.

Known risks should be priced and allocated directly.

33. Consider Requiring Tax and SGK Debts to Be Paid Before Closing

One of the simplest protections is:

Do not buy the problem if it can be paid before closing.

The SPA can require the seller or target to:

• pay assessed tax debts;
• pay SGK premiums;
• obtain updated debt statements;
• terminate payment-order proceedings;
• resolve liens;
• and deliver evidence of payment

as conditions precedent.

This does not remove latent historical exposure, but it reduces known debt.

34. Purchase Price Adjustments Should Include Public Debt

A company with:

EUR 10 million EBITDA

but:

EUR 5 million undisclosed tax/SGK debt

should not necessarily have the same equity value as a debt-free company.

The acquisition agreement should define whether public liabilities count as:

• debt;
• debt-like items;
• working capital items;
• or specific purchase price deductions.

Failure to define this clearly can create a post-closing purchase price dispute.

35. Example: Foreign Buyer Acquires 100% of a Turkish A.Ş.

Assume a Dutch company purchases all shares of a Turkish manufacturing A.Ş.

Due diligence identifies:

• TRY 8 million assessed tax debt;
• TRY 2 million unpaid SGK debt;
• ongoing VAT audit;
• possible TRY 10 million exposure from related-party transactions.

The buyer should understand:

1. Target A.Ş. remains responsible for its old tax and SGK debts after the share transfer.
2. The Dutch shareholder is not generally personally liable merely because it owns A.Ş. shares.
3. The liabilities nonetheless reduce the value of the target.
4. Incoming board/management liability must be separately analysed for periods after appointment.
5. The SPA should address known and unknown historical exposure.

A rational transaction structure might therefore include:

• assessed debt paid before closing;
• specific VAT audit indemnity;
• transfer pricing indemnity;
• escrow;
• and tax warranties.

36. Example: Foreign Buyer Acquires 100% of a Turkish Ltd. Şti.

Now assume the same facts, but the target is an Ltd. Şti.

The analysis becomes more serious.

The foreign buyer becomes the 100% shareholder.

Under Article 35 of Law No. 6183, the transferee of a limited company interest can be jointly liable with the transferor for public receivables relating to the period before transfer, subject to the statutory conditions.

Therefore, the buyer cannot simply say:

“Those taxes arose when the Turkish seller owned the company.”

That is precisely the type of pre-transfer exposure Article 35 addresses.

The buyer should consider:

tax due diligence + SGK due diligence + specific indemnity + escrow + pre-closing payment + seller security.

37. Example: Foreign Buyer Acquires a Workplace Instead of Shares

Assume a foreign-invested Turkish company buys another company’s factory business.

Employees continue at the workplace.

The transaction constitutes a workplace transfer involving the business’s active and passive elements.

Seller owes:

TRY 12 million historical SGK premiums and related charges.

Article 89 of Law No. 5510 can make the new employer jointly and severally responsible with the former employer for those SGK obligations.

A clause in the business transfer agreement saying:

“Seller shall remain responsible for all historical SGK debt”

does not bind SGK.

The purchaser must therefore structure security and recourse, not assume statutory successor liability can be contracted away.

38. Foreign Buyers Should Investigate Enforcement Proceedings

Due diligence should not stop at tax returns.

The buyer should investigate whether public authorities have already initiated collection action involving:

• payment orders;
• bank account attachments;
• vehicle attachments;
• real estate liens;
• e-haciz;
• receivables attachment;
• instalment arrangements;
• or restructuring agreements.

The GİB updated its public guidance on payment orders under Law No. 6183 in March 2026, reflecting the ongoing significance of this enforcement mechanism for unpaid public receivables.

A target already subject to public enforcement requires heightened closing protection.

39. Existing Instalment Arrangements Must Be Reviewed

A company may say:

“We have no overdue debt because everything is restructured.”

The buyer should inspect the restructuring terms.

Issues include:

• remaining balance;
• collateral;
• instalment schedule;
• default conditions;
• interest;
• whether one missed instalment causes the arrangement to collapse.

For SGK, current guidance continues to provide mechanisms for deferral and instalment arrangements subject to financial difficulty, collateral and applicable interest requirements.

Debt being paid in instalments is still debt.

It should be reflected in valuation and closing mechanics.

40. A Tax Due Diligence Red-Flag List for Foreign Buyers

Particular caution is warranted where the target:

• regularly receives large VAT refunds;
• reports unusually low payroll relative to workforce;
• purchases significant services from shareholders;
• makes large cash transactions;
• uses related-party loans heavily;
• claims repeated tax incentives;
• has substantial carried-forward tax losses;
• has changed accountants frequently;
• has undergone repeated tax inspections;
• operates through subcontractors extensively;
• has unpaid public debts;
• or cannot produce complete statutory records.

None of these factors proves wrongdoing.

They justify deeper investigation.

41. Pre-Closing Checklist for Tax and SGK Liabilities

Before completing the acquisition, the foreign investor should ideally obtain and review:

1. Current tax debt information.
2. Current SGK debt information.
3. Tax returns for relevant historical periods.
4. Corporate tax reconciliation.
5. VAT returns.
6. Withholding tax filings.
7. Payroll records.
8. SGK premium declarations.
9. Tax audit reports.
10. SGK inspection reports.
11. Pending tax cases.
12. Pending SGK litigation.
13. Payment orders.
14. Public attachments.
15. Tax settlements.
16. SGK restructuring agreements.
17. Tax incentive documentation.
18. SGK incentive documentation.
19. Related-party transaction list.
20. Transfer pricing documentation.
21. Employee headcount reconciliation.
22. Foreign worker/work permit records.
23. Seller tax warranties.
24. Tax and SGK indemnity.
25. Escrow or other seller security where necessary.

For an Ltd. Şti., Article 35 exposure should be specifically addressed in the due diligence report.

Frequently Asked Questions

Does a foreign buyer automatically inherit the target company’s tax debts?

In a share acquisition, the target company remains the same taxpayer, so its historical tax debts remain with it after closing. Whether the foreign shareholder itself is directly liable depends on the company type and other statutory rules.

Is a foreign shareholder personally liable for an A.Ş.’s tax debts?

Ordinary share ownership does not generally make an A.Ş. shareholder personally liable for corporate debts merely because of its shareholder status. The A.Ş. is liable with its own assets, while shareholders’ basic corporate liability is limited to subscribed capital toward the company.

What about a Turkish Ltd. Şti.?

The risk is materially higher. Article 35 of Law No. 6183 allows shareholders to be pursued proportionally for qualifying public receivables that cannot be collected from the limited company.

Can the purchaser of Ltd. Şti. shares be responsible for debts arising before acquisition?

Yes. Article 35 expressly provides joint responsibility between the transferor and transferee for pre-transfer public receivables according to the statutory proportional rule.

Does this apply if the new shareholder is a foreign corporation?

The official collection guidance applies Article 35 to real and legal-person limited company shareholders. Foreign status does not itself eliminate the Turkish-law rule.

Are SGK premiums considered public receivables?

Unpaid SGK premiums and other SGK receivables are generally collected under Law No. 6183 pursuant to Article 88 of Law No. 5510, subject to specified statutory exclusions.

Can managers be personally liable for SGK premium debts?

Under Article 88, upper-level managers or authorised persons can face joint and several liability with the legal-person employer in the circumstances specified by law.

Does a workplace buyer become liable for old SGK premiums?

Where the transaction constitutes a transfer, merger or succession of the insured workplace together with the relevant active and passive elements, Article 89 can make the new employer jointly and severally responsible with the former employer.

Can the parties contract out of the SGK workplace-transfer rule?

No as against SGK. Article 89 expressly states that contractual provisions contrary to this rule are ineffective against the Institution.

Is a “no tax debt” certificate sufficient due diligence?

No. It may identify currently assessed debts but cannot necessarily eliminate latent tax exposure from historical periods that have not yet been audited or assessed.

How far back can Turkish tax exposure remain relevant?

The general tax assessment limitation period under Article 114 of the Tax Procedure Law is five years from the beginning of the year following the year in which the tax receivable arose, subject to statutory exceptions and suspension rules.

What is the general SGK limitation period?

Law No. 5510 generally provides a 10-year limitation period for SGK premiums and other receivables, with special commencement rules applying in certain audit and determination situations.

Can an SPA state that the seller is responsible for all historical tax debts?

Yes, and such clauses are strongly advisable. However, a private agreement does not necessarily prevent Turkish authorities from exercising statutory collection rights against a person whom the law makes responsible.

What happens if the buyer pays an old tax debt under statutory liability?

The buyer may seek reimbursement from the seller where the SPA provides an enforceable tax indemnity or another recourse right. The usefulness of that right depends on the wording and seller’s financial capacity.

Conclusion: How Can a Foreign Company Safely Acquire a Turkish Company With Tax and SGK Risk?

Foreign investors can acquire Turkish businesses under Turkey’s national-treatment foreign investment framework, but purchasing an existing company means buying into an existing legal and financial history.

The most important distinction is between a share deal and a business/workplace transfer.

In a share deal, the Turkish target company remains the same legal person.

Therefore:

historical corporate tax debts remain corporate tax debts;

historical SGK debts remain SGK debts of the target;

tax audits concerning pre-closing years can continue after closing.

The new shareholder does not reset the company’s compliance history.

For an A.Ş., ordinary shareholders are generally not personally responsible for corporate debts merely because they hold shares.

This limits direct shareholder exposure but does not eliminate the economic risk.

A historical tax assessment paid by the target after closing reduces the buyer’s investment value.

For a Turkish Ltd. Şti., the position is significantly more sensitive.

Article 35 of Law No. 6183 provides shareholder-level responsibility for qualifying public receivables that cannot be collected from the company.

Even more importantly for M&A transactions, the provision expressly makes the share transferor and transferee jointly responsible for pre-transfer public receivables, in accordance with the proportional liability framework.

This means a foreign corporation purchasing 100% of a Turkish Ltd. Şti. cannot safely assume:

“Any tax or SGK debt from before closing belongs only to the seller.”

That assumption may be legally incorrect.

SGK exposure must also be examined separately.

Article 88 of Law No. 5510 makes Law No. 6183 broadly applicable to unpaid SGK receivables and creates additional responsibility for specified upper-level managers and authorised persons.

Where the foreign investor buys an operating workplace rather than the shares of the employer, Article 89 creates another powerful rule.

If the workplace is transferred together with its relevant active and passive elements, the new employer can become jointly and severally responsible with the former employer for historical SGK premiums, penalties, increases, interest and related obligations. The parties cannot eliminate SGK’s statutory right merely through a private contract.

Accordingly, transaction structure should be selected with liability consequences in mind.

The practical risk profile can be summarised as:

A.Ş. share deal: historical liabilities remain within the target; shareholder-level exposure is generally limited, but economic exposure remains substantial.

Ltd. Şti. share deal: historical liabilities remain within the target and the new shareholder may additionally face direct public-receivable liability under Article 35.

Workplace/business transfer: direct statutory successor liability may arise, particularly for SGK premiums under Article 89.

Statutory merger/devir: public-law succession rules can cause the successor entity to take the place of the former entity under Article 36 of Law No. 6183.

Foreign buyers should therefore conduct tax and SGK due diligence before signing an unconditional acquisition agreement and certainly before paying the full purchase price.

The investigation should not be limited to whether currently overdue debt is visible.

A zero-balance tax or SGK certificate can be useful but does not answer the more important question:

“Could a public liability relating to the period before closing be assessed after we buy the business?”

For tax, the general assessment period can extend across several historical years. Article 114 of the Tax Procedure Law provides the general five-year assessment limitation rule.

For SGK, the ordinary limitation period for premium and other receivables is generally 10 years, subject to the specific statutory rules.

Therefore, due diligence should look behind current debt statements and examine:

returns + payroll + invoices + SGK declarations + employee headcount + audits + incentives + litigation + public enforcement + related-party transactions.

Once risks are identified, they should be translated into transaction protection.

A strong acquisition agreement may use:

• pre-closing repayment;
• tax warranties;
• SGK warranties;
• tax indemnity;
• specific indemnities;
• escrow;
• holdback;
• deferred purchase price;
• price adjustment;
• seller or parent guarantee;
• and conditions precedent.

A contractual clause stating that the seller remains responsible for historical liabilities is still useful, but its function must be understood.

It gives the buyer a contractual recourse right.

It does not automatically take away the Turkish tax administration’s or SGK’s statutory rights against persons whom the law makes responsible.

For that reason, the buyer should think in two layers:

Layer 1 – Can Turkish authorities pursue us or the target?

Layer 2 – If they do, can we recover that money effectively from the seller?

A professionally structured transaction addresses both.

The safest acquisition roadmap is therefore:

determine share deal vs asset/workplace deal → identify A.Ş. or Ltd. Şti. → conduct tax due diligence → conduct SGK/payroll due diligence → identify public-debt successor liability → analyse incoming director/manager exposure → quantify known liabilities → negotiate price → require pre-closing payments → draft warranties and indemnities → obtain escrow/security → close → monitor post-closing tax and SGK audits.

Foreign investors should ultimately avoid one of the most expensive mistakes in Turkish M&A:

buying an apparently profitable company at a full valuation and only afterwards discovering that part of the purchase price should have been reserved for its historical public debts.

The correct legal question is therefore not merely:

“Does the company currently owe tax or SGK premiums?”

It is:

“What historical tax and SGK liabilities can still arise after closing, who can Turkish authorities legally pursue for them, and who will ultimately bear the economic cost under our acquisition agreement?”

That analysis should be completed before the foreign investor becomes the owner.

This article reflects Turkish corporate, tax, public receivables and social security 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, social security or accounting advice. Liability in a particular acquisition depends on the target’s legal form, transaction structure, historical periods, shareholder and management status, tax and SGK records, and the exact terms of the acquisition documents.