FAQ 2017-06-05T02:33:49+00:00

Questions & Answers

We know that there are many questions that every investor would like to know the answer to when it comes to certain issues. We hope that you will find some of your answers here.

Employment contracts

The Employment Contracts (“The Contract”) are regulated by the Labour Code Nr.4857. This is considerably a new Labour Code that came into force in June 2003. The new Code contains several new provisions in conformity with the international and supranational regulations of the International Labour Organization and the European Union. The new Code can be considered as reformist and it has changed the old labour system radically. Through this new Code, the relations between employers and employees are based on a different legal conception which is more protective towards employees.
No legal form is obligatory for employment contracts but the contracts that are signed for a definite period for one year or longer must be in written form. The employment contracts are exempt from stamp duty, other duties and fees.
The employment contracts can be categorized mainly in three topics:

  • Temporary/Permanent Work
  • Definite/Indefinite Period
  • Part-time/Work upon Call
It is possible to put a condition of probationary period which can last up to 2 months, not longer, in an employment contract. This period of two months can be extended up to four months in a collective labour agreement. During the probationary period, the employment contract can be terminated without any notification or indemnity.

Employment contracts concluded for a definite period of time terminate on the date determined in the contract. The employer also has the right to terminate definite period employment contracts under specific conditions indicated under relevant provisions of Labor Law (referred to as “Termination based on Justifiable Grounds”). Such specific conditions are classified under reasons of health, immoral, dishonorable or malicious conduct or other similar behavior actions of employee (e.g. theft, excessive damage to company property,  persistence in disobedience, sexual harassment, use of drugs, assault, absence, etc.), force majeure and compelling circumstances (e.g. the employee is sentenced to imprisonment).

The employer, who terminates the contract of an employee engaged for an indefinite period, who is employed in an establishment with thirty or more workers and who meets a minimum seniority of six months, must depend on a valid reason for such termination connected with the capacity or conduct of the employee or based on the operational requirements of the establishment or service. Before terminating a continual employment contract made for an indefinite period with a valid reason, a notice to the other party must be served by the terminating party.

Both employee and employer should respect the period of notification. If this period is not respected, compensation has to be paid. The duration of the period of notification depends on the length of the service of the employee. The Labour Code regulates the duration of the notification period as the following:

  • 2 weeks of notification period for employment of 0-6 months
  • 4 weeks of notification period for employment of 6-18 months
  • 6 weeks of notification period for employment of 18-36 months
  • 8 weeks of notification period for employment of more than 36 months

Also, it is possible not to respect these periods by paying an amount equal to the pay that the employee would receive during the notification period. Please also be informed the above mentioned notification periods could be extended in favour of the employee by the employment contract.

Real estate purchases

Turkish economy has shown a remarkable growth with an average annual real GDP growth rate of 4.7 percent over the period of 2002 to 2014. According to the OECD, Turkey is expected to be one of the fastest growing economies of the OECD members by 2017 with a GDP growth rate above 4%. This steady growth and positive future expectations have attracted significant volume of foreign direct investments including investments into real estate in Turkey. According to New House Price Index of Central Bank of Turkey between 2014 and 2015 the prices of new houses in Istanbul have increased by 15.58% (in USD).

With its young population and investment friendly environment, the real estate prices in Turkey and specifically within Istanbul, are expected to increase significantly in the near future. Istanbul has been touted by PWC and Deloitte Consulting to be the most attractive city for real estate investment in Europe while Turkey overall is ranked 3rd most lucrative country for investment in real estate globally.

In accordance with the Article 35 of the Land Registry Law No. 2644, amended by Law No. 6302, which entered into force on 18 May 2012, the reciprocity rule in foreigners’ real estate purchases has been abolished.

Foreign country citizens can buy any kind of property (house, business place, land, field) within the legal restrictions.

According to the Turkish laws and regulations in force, transfer of ownership of a property is only possible with an official deed and registry which is signed at the Land Registry Directorates.

It is possible to sign a “promise to sell agreement” before a notary. Such an agreement entitles the buyer to force the owner to transfer of title of deed when the conditions in the agreement are met.

  • Foreign country citizens can buy maximum 30 hectares of property in Turkey in total and can acquire limited in rem right.
  • Foreign country citizens cannot acquire or rent property within military forbidden zones and security zones.
  • Foreign country citizens can acquire property or limited in rem right in a district/town up to 10 % of the total area of the said district/town.
  • Legal restrictions do not apply in setting mortgage for real persons and commercial companies having legal personality which are established in foreign countries.
The buyer of the property or his/her authorized representative should make a preliminary application to the Land Registry Directorate with the necessary documents. If the preliminary application is incomplete, the file will be kept waiting.

Buyer should be from the country whose citizens can acquire property or limited in rem right in Turkey and meet the necessary conditions.

  • Both seller and buyer have to pay the title deed fee, calculated according to the selling price which cannot be less than the “Property Statement Value” to be issued by the relevant municipality. (According to the Charges Law No:492, the title deed fee percentage for each side of the transaction until September 30th, 2017 is 1,5% [3 % in total]. Following such date, the title deed fee percentage for each side of the transaction will be 2% [4 % in total].
  • Circulating capital fee which is determined locally has to be paid.
  • At the stage when the Land Registry Directorate inquires with the relevant military authorities whether the property is located within a military or special zone, circulating capital fee for the map prepared by the Cadastre Directorate has to be paid.

We strongly recommend that a basic due diligence of the property be performed before the transfer of title of deed where such due diligence shall cover the crosscheck of the following:

  • Ownership of the property,
  • Limitations on property (attachments, mortgages and etc.)
  • In conformity with zoning laws,
  • Property taxes,
  • Licenses.
Being the owner of a real estate in Turkey as a real person can be used as an instrument for obtaining a resident permit valid within the Republic of Turkey.

Establishing a company

There are two main forms of companies according to Turkish Law. They are Joint Stock Company and Limited Company.
The company’s stock capital is divided into shares and the liability of the shareholders is restricted with the capital subscribed by the shareholder. Sole shareholder (real person or legal entity) is possible and minimum capital of 50.000 TL is mandatory.

According to current Turkish Trade Law, banks, private finance institutions, insurance companies, financial leasing companies, factoring companies, holding companies, companies operating as foreign currency exchange offices, companies dealing with public warehousing, publicly held companies subject to the Capital Markets Law, companies that are founders and operators of free zones should be established as JSCs and these companies are still subject to permit from Ministry of Industry and Trade for their foundations.

It is the company established with participation of minimum 1 and maximum 50 real person or legal entities. The liability of the shareholders is restricted only to the capital subscribed by the shareholder however representatives and shareholders could be held liable personally concerning uncollected public debts (e.g. social security premiums, taxes and etc.) of the company. Minimum capital of 10.000 TL is mandatory. Unlike JSCs, no stock certificate is issued.
The shareholders can be foreign real persons and/or legal entities and they do not have to reside in Turkey.

Notarization of the articles of association, payment of the 1/4th of the capital, registry to the Trade Registry, and application to the Tax Office is requisite for establishing a JSC or Limited Company. 1/4th of the capital in cash has to be transferred prior to registration.

The company should have a valid address where it is going to be mentioned in the articles of association. This address can be through a lease agreement or purchase of a property.

JSCs are managed by board of directors with at least 1 director; Limited Companies are managed by at least 1 manager. Board of directors members and managers can be real persons and/or legal entities, however if a legal entity is a member of the board of directors or a manager, a real person should be assigned as the representative of the legal entity. In Limited Companies, one of the shareholders has to be appointed as the manager.
Manager(s) or director(s) could be foreigners since there is no obligation that managers or directors should be Turkish citizens however please note that if the managers/directors shall be foreigners not residing in Turkey, it is highly recommended that management team should consist of Turkish residents for the management of daily business of the company.
There are two alternative forms of doing business in Turkey with companies established in accordance with the laws of foreign countries; establishing a liaison office or a branch office in Turkey.

General Directorate of Foreign Investment Undersecreteriat of Treasury is authorized to grant permit to foreign companies to establish liaison offices for the period of 3 years. Note that an extension is also possible. In order for the liaison offices to operate in Turkey, the expenditures of the liaison office shall entirely be met by the legal person resident abroad and the foreign currency shall be brought from abroad. The liaison office is not allowed to engage in any commercial activity or in any field out of the permission subject. Moreover, these offices should not apply for transfer of profits and alike, except for the liquidation procedures.

Ministry of Industry and Commerce is authorized to grant permit to foreign companies to establish branch offices in Turkey. Assignment of a fully authorized representative residing in Turkey and registration to the Trade Registry are required for successfully establishing a branch office of a foreign company in Turkey.

Please feel free contacting us should you have any questions or need more information. Your enquiry shall be replied within two business days by a competent lawyer.

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