Learn how foreign currency clauses and payment obligations work in Turkish contracts, including Article 99 of the Turkish Code of Obligations, Decree No. 32 restrictions, the 2025 movable-sale amendment, resident-party rules, and drafting tips for enforceable FX clauses in Turkey.
Introduction
Foreign currency clauses and payment obligations in Turkish contracts are governed by two layers of law that must be read together. The first is private law, especially Article 99 of the Turkish Code of Obligations, which regulates how a foreign-currency debt may be paid. The second is the Turkish currency-protection regime under Decree No. 32 and the current Communiqué No. 2008-32/34, which determines whether certain resident-to-resident contracts may legally be denominated in foreign currency or indexed to foreign currency at all. A clause can therefore be perfectly clear commercially and still fail legally if it ignores the regulatory layer.
This distinction is essential in practice. Under Turkish law, the question is not only “Can the parties pay in euros or dollars?” It is also “Could they legally set the contract price and the related payment obligations in foreign currency in the first place?” and, even if they could, “Does the contract require exact payment in foreign currency, or may the debtor discharge the debt in Turkish lira at the legally relevant exchange rate?” Those questions are separate, and a reliable Turkish-law contract should answer both.
The issue became especially important again after the 6 March 2025 amendment to the Communiqué, which reopened foreign-currency pricing and payment for many movable sale contracts between Turkish residents, while leaving other major restrictions in place, especially in domestic real estate, most employment contracts, and most service contracts. As of 2026, any serious commercial drafting involving Turkey should be built on that updated framework rather than on older summaries of the 2018 regime alone.
This article explains foreign currency clauses and payment obligations in Turkish contracts in practical English. It focuses on the legal framework, the contracts that may and may not be denominated in foreign currency, the role of exact-payment clauses under Article 99, the effect of the 2025 amendment, and the drafting techniques that make these clauses more enforceable in Turkey.
1. The Two-Layer System: Regulatory Validity and Private-Law Payment Rules
A Turkish foreign-currency clause should always be analyzed in two steps. The first step is regulatory: does the current currency regime allow the relevant contract between the relevant parties to be denominated in foreign currency or indexed to foreign currency? That question is governed by the current text of Article 8 of Communiqué No. 2008-32/34. The second step is private-law performance: if the obligation is validly denominated in foreign currency, can the debtor still pay in Turkish lira instead, and if so at what rate? That question is governed mainly by Article 99 of the Turkish Code of Obligations.
This two-step approach is what many contracts get wrong. Some agreements assume that if the parties write “EUR” or “USD” in the contract, the matter is over. Under Turkish law, that is not enough. If the contract belongs to a restricted category under the currency-protection rules, the denomination itself may be legally problematic. Conversely, even where foreign-currency denomination is allowed, the debtor may still have a Turkish-lira discharge option under Article 99 unless the contract clearly requires payment in the foreign currency itself.
2. Who Counts as “Resident in Turkey”?
The restrictions in Article 8 of the Communiqué are aimed mainly at contracts made between persons resident in Turkey. The Ministry of Treasury and Finance’s 2025 FAQ, referring back to the definition in Decree No. 32, states that real and legal persons with a legal residence in Turkey are treated as resident in Turkey, including Turkish citizens abroad who are workers, self-employed, or independently engaged abroad. The same FAQ explains that legal residence in Turkey is the key criterion.
This definition matters because many businesses wrongly assume that foreign ownership alone automatically removes a Turkish company from the resident category. That is not generally correct. The Communiqué itself specifically says that certain foreign-controlled Turkish entities and certain free-zone companies are still treated as resident in Turkey for these purposes, although there is an important carve-out where the contract is performed abroad. So the residence analysis should never be reduced to “local company” versus “foreign shareholder.”
3. The Core Restriction: Domestic Real Estate Contracts
The clearest restrictions in the current regime concern domestic real estate contracts. Article 8(1) of the Communiqué states that persons resident in Turkey may not agree, among themselves, on foreign-currency or foreign-currency-indexed contract prices or other payment obligations in real estate sale contracts concerning immovables located in Turkey. Article 8(2) imposes the same rule for real estate lease contracts, including housing and roofed workplace leases.
That means that, as a rule, a Turkish-resident landlord and a Turkish-resident tenant cannot freely denominate a domestic real estate lease in euros or dollars, and Turkish-resident parties to a domestic real estate sale cannot freely do so either. This remains one of the strongest surviving restrictions in the regime. For commercial drafting, it means that the foreign-currency discussion in Turkish real estate is still exception-driven, not freedom-driven.
There are, however, important exceptions. Article 8(3) allows foreign-currency or indexed pricing where the buyer or tenant is a Turkey-resident person with no Turkish citizenship tie, or a person falling within the special category described in Article 8(19). The current FAQ also confirms that the wording is permissive, not mandatory: in those exception cases the parties may choose Turkish lira or foreign currency, provided they agree.
There are also specific real-estate-related exceptions for Culture and Tourism Ministry-certified accommodation facilities and for duty-free shop leases, both of which may be denominated in foreign currency or indexed to foreign currency under Article 8(4) and 8(5). The Ministry FAQ further indicates that certain subcategories inside certified accommodation facilities may also fall within the permissive approach.
4. Employment Contracts: Mostly Restricted, With Defined Exceptions
Employment contracts remain heavily regulated. Article 8(6) of the Communiqué states that Turkey-resident parties may not, among themselves, agree on foreign-currency or foreign-currency-indexed prices and related payment obligations in employment contracts, except for contracts to be performed abroad and contracts involving seafarers.
The Communiqué also creates a separate exception in Article 8(14): where the employment contract involves a Turkey-resident person who has no citizenship tie to the Republic of Türkiye, the contract price and the related payment obligations may be agreed in foreign currency or indexed to foreign currency. The Ministry FAQ uses footballers as an example and confirms that foreign-national employees may fall within this exception, while Turkish-citizen employees resident in Turkey do not automatically benefit from it.
There is a further corporate-structure exception in Article 8(19). Where the employer or service recipient is a Turkish entity in Turkey that is connected to persons resident abroad through branches, representative offices, offices, liaison offices, directly or indirectly 50% or more shareholding, or joint/collective control, and also for certain free-zone companies, the relevant employment and service contracts may be denominated in foreign currency or indexed to it. That exception is commercially significant for multinational groups operating in Turkey.
Article 8(21), added in 2024, also creates a narrower sectoral exception for Turkey-resident notified bodies operating under the Medical Device Regulation and the In Vitro Diagnostic Medical Device Regulation, allowing them to make certain service contracts with manufacturers and certain employment contracts in foreign currency or indexed to foreign currency.
5. Service Contracts: Broad Restriction, Specific Carve-Outs
For service contracts, the current regime is restrictive but highly exception-based. Article 8(7) states that Turkey-resident persons may not, among themselves, agree on foreign-currency or indexed prices and related payment obligations in service contracts, including consultancy, intermediary, and transport services, except for the categories specifically listed in subparagraphs (a) through (d).
Those exceptions are commercially important. They include: service contracts involving persons with no Turkish citizenship tie; services rendered within export, transit trade, export-counted sales and deliveries, or foreign-exchange-earning services and activities; services related to activities that Turkey-resident persons will perform abroad; and services that begin in Turkey and end abroad, begin abroad and end in Turkey, or begin and end abroad. The 2021 addition for accommodation services at certified accommodation facilities also remains in the text.
This means that service contracts in Turkey cannot be analyzed casually. A domestic consultancy agreement between two ordinary Turkish residents is not in the same category as a cross-border transport service or an export-linked service. The legal answer depends on the type of service, the parties’ status, and whether the service fits one of the enumerated exceptions.
6. Work Contracts and Cost-Based Exceptions
Article 8(8) creates an important exception for work contracts (eser sözleşmeleri). If the work contract includes foreign-currency-denominated cost components, the contract price and the related payment obligations may be agreed in foreign currency or indexed to foreign currency. This is one of the most practically useful carve-outs for construction, manufacturing, and project-based contracts involving imported or internationally priced inputs.
But this is not a blanket rule for every works contract. The wording is tied to foreign-currency cost content. In drafting terms, parties using this exception should document the cost structure and be prepared to show why the contract fits the exception rather than merely assuming that all project contracts are exempt.
7. The 2025 Turning Point: Movable Sale Contracts
One of the biggest recent developments came with the 6 March 2025 amendment. Article 8(9), as amended, now states that Turkey-resident persons may, among themselves, agree on foreign-currency or indexed prices and related payment obligations in movable sale contracts, except for vehicle sale contracts. This is a major change because, for a period, even where foreign-currency pricing in movable sales was permitted, the payment leg had been forced back into Turkish lira. The current text removed that payment-side restriction for movable sales other than vehicle sales.
The Ministry’s FAQ goes even further in practical guidance. It states that the 2025 amendment also covers movable sale contracts and invoices whose payments had not yet been made before 6 March 2025, and that in such cases payment may be made in Turkish lira or in foreign currency if the parties agree. The same FAQ also clarifies that if the parties prefer payment in Turkish lira even where foreign-currency denomination is lawful, the exchange rate to be used may be freely determined by the parties; the Ministry states that it imposes no specific exchange-rate method under exchange-control legislation for that situation.
This 2025 change is one of the most important current facts for Turkish commercial practice. It means that many ordinary B2B sales of movables may once again be structured in foreign currency not only on paper but also in the actual payment obligation, so long as the contract is not a vehicle sale and no other rule disqualifies the transaction.
8. Movable Lease, Software, Leasing, and Other Sectoral Exceptions
The current Communiqué also allows foreign-currency or indexed denomination for several other contract types that matter in practice. Article 8(10) allows it for movable lease contracts other than vehicle lease contracts. Article 8(11) allows it in contracts concerning the sale of software produced abroad and license and service contracts relating to hardware and software produced abroad.
Financial leasing is also covered. Article 8(12) and 8(13) allow foreign-currency or indexed structures for leasing contracts involving ships defined under the Turkish International Ship Registry legislation and for financial leasing transactions under Articles 17 and 17/A of Decree No. 32. Beyond that, Article 8 contains further exceptions for certain public projects, capital-markets instruments, aviation-sector contracts, and the medical-device notified-body regime mentioned above.
The presence of these sectoral carve-outs shows that the Turkish regime is not a simple “allowed versus prohibited” system. It is a structured list of restrictions plus detailed exceptions. For drafting, this means that parties should resist relying on outdated generalizations like “foreign-currency contracts are banned in Turkey.” That statement is no longer accurate enough to guide serious transactions.
9. Promissory Notes and Indexed Clauses
The Communiqué also addresses the instruments and formulae that sit around the main contract. Article 8(22) states that where a contract is one in which the contract price and related payment obligations may not be denominated in foreign currency or indexed to it, the amounts written into negotiable instruments issued under that contract also may not be denominated in foreign currency or indexed to it, subject to the legacy exception for certain instruments already in circulation before the transitional regime. In practice, that means parties cannot usually “solve” a restricted contract by moving the foreign-currency figure into a promissory note.
Article 8(23) adds another important point: contracts indexed to precious metals or commodities priced in foreign currency, or otherwise indirectly indexed to foreign currency, are treated as foreign-currency-indexed contracts for purposes of the restriction regime. The Communiqué then creates a specific exception allowing fuel-price indexation in transportation service contracts. So parties should not assume they can avoid the regulation simply by replacing an FX clause with a commodity-index clause if the economic function is still foreign-currency indexing.
10. Article 99 of the Turkish Code of Obligations: How Payment Actually Works
Even when foreign-currency denomination is valid under the currency regime, Article 99 of the Turkish Code of Obligations remains decisive for payment mechanics. Article 99 first states that a money debt is paid in the national currency. It then provides that where payment in a currency other than the national currency was agreed, the debtor may still discharge the debt in Turkish lira at the current rate on the payment date, unless the contract contains an exact-payment clause or wording with the same meaning.
That means there is a second drafting question after regulatory validity: is the clause merely denominated in foreign currency, or does it require payment in that foreign currency itself? If the contract says only that the debt is “EUR 100,000,” without an exact-payment formulation, Article 99 ordinarily gives the debtor a Turkish-lira discharge option at the payment-date rate. If the parties want to block that option, they need wording that clearly requires payment in the foreign currency itself.
Article 99 also regulates default. If the debt is denominated in foreign currency and the contract does not require exact payment, then when the debtor fails to pay on time, the creditor may ask either for payment in the foreign currency itself or for the Turkish-lira equivalent calculated at the exchange rate on the maturity date or the actual payment date. This is a powerful creditor-side election in default cases, but it arises only within the Article 99 framework.
This is one of the most important practical insights in Turkish contract law: the currency-control rules tell you whether you may lawfully denominate the contract in foreign currency, but Article 99 tells you how the debt may be discharged unless you draft around its default mechanism. Serious FX drafting in Turkey must therefore address both layers explicitly.
11. Drafting Exact-Payment Clauses in Turkey
If the contract falls into a category where foreign-currency denomination is lawful and the parties want real foreign-currency performance, the contract should use a clear exact-payment formula. Turkish law does not prescribe one magic phrase, but Article 99 requires “exact payment” or wording with the same meaning. In practical drafting, that means the clause should state that payment must be made in the foreign currency itself, that payment in Turkish lira will not discharge the debt, and that Article 99’s Turkish-lira discharge option is contractually excluded by exact-payment wording.
If, by contrast, the parties are comfortable with Turkish-lira payment even though the contract is denominated in foreign currency, they should say how the TL amount will be determined. The Ministry’s 2025 FAQ confirms that where the contract may lawfully be denominated in foreign currency and the parties agree on TL payment, the exchange rate can be freely chosen by the parties; the Ministry does not impose a single required rate methodology for that situation under exchange-control rules. That makes it commercially sensible to specify the source, date, and timing of the conversion rate in the contract itself.
12. Disputes, Enforcement, and Mediation
Payment disputes arising from foreign-currency clauses are often commercial monetary claims. Under Article 5/A of the Turkish Commercial Code, for the commercial cases listed in Article 4 and in other laws, lawsuits whose subject is a monetary receivable, compensation, annulment of objection, negative declaratory relief, or restitution require pre-suit mediation as a condition of action. Commercial cases are, unless otherwise provided, heard by the commercial court of first instance under Article 5 of the same Code.
That matters because a party may have a strong foreign-currency payment claim on the merits but still lose time procedurally if it files directly in court without first completing mandatory mediation where required. In practice, any Turkish-law contract involving substantial currency exposure should be drafted with both the payment clause and the dispute path in mind.
Conclusion
Foreign currency clauses and payment obligations in Turkish contracts should always be read through a two-layer system. The first layer is the Turkish currency-protection regime under Decree No. 32 and the current Communiqué, which decides whether the relevant contract between resident parties may legally be denominated in foreign currency or indexed to it. The second layer is Article 99 of the Turkish Code of Obligations, which decides whether the debtor may still discharge that debt in Turkish lira unless the contract clearly requires exact payment in foreign currency.
As of 2026, the current position is more nuanced than many summaries suggest. Domestic real estate sale and lease contracts remain heavily restricted. Employment and most service contracts are still controlled, but with enumerated exceptions. Work contracts with foreign-currency cost content can qualify. Movable sales other than vehicle sales are again broadly open to foreign-currency pricing and payment after the 6 March 2025 amendment. Negotiable instruments and indirect indexing rules also matter.
The practical takeaway is simple: in Turkey, a sound FX clause is not just a number written in euros or dollars. It is a clause that first fits the regulatory permission regime and then correctly addresses payment mechanics, especially whether Turkish-lira discharge remains possible under Article 99. Contracts that handle both layers explicitly are far more likely to work in practice when payment day or litigation day arrives.
FAQ
Can Turkish residents freely make contracts in foreign currency?
Not always. The answer depends on the contract type and the exceptions listed in Article 8 of Communiqué No. 2008-32/34. Domestic real estate sales and leases are still generally restricted, while many movable sales are now permitted in foreign currency after the 2025 amendment.
Are domestic real estate lease contracts in Turkey still restricted?
Yes. As a rule, Turkey-resident parties may not, among themselves, set the contract price and related payment obligations in foreign currency or indexed to foreign currency for domestic real estate lease contracts, including housing and roofed workplace leases, subject to listed exceptions.
Can employment contracts be denominated in foreign currency?
Generally no for resident-to-resident employment contracts, except for contracts to be performed abroad, contracts involving seafarers, contracts with Turkey-resident persons who have no Turkish citizenship tie, and certain special corporate and sectoral exceptions in the Communiqué.
Are service contracts in Turkey generally restricted?
Yes, most resident-to-resident service contracts are restricted, but the Communiqué lists important exceptions for export-linked services, foreign-performance services, cross-border transport-related routes, non-citizen parties, and certain tourism-related services.
What changed in 2025 for movable sale contracts?
Since the 6 March 2025 amendment, Turkey-resident parties may generally denominate movable sale contracts other than vehicle sale contracts in foreign currency or index them to foreign currency, and this applies to the contract price and related payment obligations. The Ministry FAQ also says the change reaches unpaid pre-amendment movable-sale invoices and contracts if the parties agree.
If a contract is validly denominated in foreign currency, can the debtor still pay in Turkish lira?
Usually yes, unless the contract clearly requires exact payment in the foreign currency itself. Article 99 of the Turkish Code of Obligations allows payment in Turkish lira at the rate on the payment date unless the contract excludes that by exact-payment wording.
What happens if the debtor defaults on a foreign-currency debt?
If the debt is denominated in foreign currency and there is no exact-payment clause, Article 99 gives the creditor a choice after default: the creditor may ask for payment in the foreign currency itself or for the Turkish-lira equivalent calculated at the rate on the maturity date or the actual payment date.
Can promissory notes or other negotiable instruments be used to bypass a restricted contract?
Generally no. Where the underlying contract is one in which foreign-currency or indexed pricing is not permitted, Article 8(22) of the Communiqué also prohibits those amounts from being written into negotiable instruments issued under that contract, subject to narrow legacy exceptions.
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