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–– a clause which imposes the tenant to increase the rental
in foreign currency annually is prohibited, thus the
landlord may only increase the annual rentals only after
the expiration of the 5th year of the lease term. However
this rule will also come in force in July 1st, 2020.
• In case the parties agree, the lease agreement can be
annotated to the relevant land registry and thus the terms and
conditions of the lease agreement continues even if the owner
of the leased property is changed.
• The new owner of a property, in case there exists a tenant in
the property, may force the tenant to evacuate the property
by informing the tenant in one month commencing from the
acquisition date and must file a lawsuit for evacuation in six
months’ time, provided that he is able to prove that he or his
close relatives (the persons are numerous clauses as stated in
the law) need the property.
TAX
Direct acquisition of a property
• The acquisition of a property gives rise to real estate transfer
tax (RETT-tapu harcı), stamp duty, notary fee and value added
tax (VAT).
• Real estate acquisitions in Turkey are subject to RETT, a
charge of 4 per cent (2 per cent for the transferee and 2
per cent for the transferor) would be applied either on the
purchase price of the real estate or on the official value of
the real estate for real estate tax purposes. Whichever is
higher, higher amount would be taken into account in the
determination of the RETT base. Despite 2 per cent RETT
liability of the transferor imposed by law, in practice, 2 per
cent tax liability of the transferor would be borne by the
transferee in addition to his RETT liability of 2 per cent.
Hence, 4% RETT related to the acquisition of the real estate
would be paid by the transferee.
• Stamp duty of 0,948% calculated over the amount stated in
the contract would arise when a promise to sale agreement
is signed between the potential buyer and the seller in
relation to the acquisition of real estates. If the parties have
not considered signing a contract other than promise to
sale agreement before the notary public, stamp duty and
notary fees would not arise. Kindly note that promise to sale
agreement must need to be signed before notary public. Also,
contracts that are not including any monetary amount are not
subject to stamp duty of 0,948%. Applicable stamp duty cap
for the year 2015 per agreement is TRY 1,702,138.
• Real estate transactions taken place within the context of
commercial activities (i.e. sales of real estate owned by
companies) in Turkey are subject to VAT. The sales of real
estates owned by non-commercial individuals are not subject
to VAT. i.e. real estate transaction between individuals, are not
subject to VAT.
• In certain circumstances, VAT exemption would be applied
for the acquisition of the real estate from VAT registered
companies. If the holding period of a real estate in the
balance sheets of companies is at least two years, the sale of
real estate is exempt from VAT. Input VAT incurred but not
deducted from output VAT in connection with the acquisition
of VAT exempt real estate transfers is no longer deductible
for VAT purposes but regarded as deductible expense for
corporate income tax purposes. Companies who are engaging
in business of real estate trading cannot benefit from such
VAT exemption for their trading real estate assets.
• Current VAT rates applied on real estate transaction are as
follows:
a. the sale of flat, house or residence owned by companies,
which have net usable space with less than 150 m2 or
equal to 150 m2, is subject to VAT of 1%;
b. the sale of flat, house or residence owned by companies,
which have net usable space with more than 150 m2, is
subject to VAT of 18%;
c. the sale of office premises owned by companies are
subject to VAT of 18%, regardless of its usable space size;
d. the sale of land owned by companies is subject to VAT of
18% regardless of its size.
• Kindly note that reduced VAT rate of 1% imposed for
residential properties having net usable space equal to or less
than 150 m
2
may not be applicable in following circumstances:
a. where construction permits of relevant residential
properties have been obtained on or after the date of
1 January 2013; and
b. where relevant residential properties have been
constructed as a luxury or first class construction in
metropolitan municipalities specified in Metropolitan
Municipalities Code numbered 5216 dated 10/07/2004.
However, urban renewal projects classified as a risky place
or a reserve building place within the scope of the Law
numbered 6306 in metropolitan municipalities are still
enjoy reduced VAT rates of 1 %.
• Applicable VAT rates for residential properties having net
usable space equal to or less than 150 m2 and satisfying
above conditions are as follows:
a. where official tax value of land where residential property
is constructed per m2 is equal to or more than TRY 1,000,
applicable VAT rate shall be 18%;
b. where official tax value of land where residential property
is constructed per m2 is equal to or more than TRY 500
but less than TRY 1,000, applicable VAT rate shall be 8%;
c. where official tax value of land where residential property
is constructed per m2 is less than TRY 500, applicable
VAT rate shall remain at 1%.
Acquisition of shares in a company holding a property
• Acquisition of shares of the company holding real estates
would not trigger RETT of 4%. The term of real estate
company has not been defined in Turkish legislation.
• Share purchase agreements are subject to stamp duty of
0,948% over the amount stated in the agreement. Share
transfer agreements of limited liability companies would need
to be made before the notary public, so that the notary public
fees of 0,113% per signature (not exceeding TRY 29,610.20)
would be paid over the amount of the share price.
• Share transfers made by a company via share certificates
or temporary share certificates (ilmuhaber) are exempt
from VAT. Share transfers of an individual are not subject to
VAT. Another VAT exemption in relation to the real estate
transactions is that; the acquisition of participation interest
(shares that is not represented by share certificates or
temporary share certificates) of any company, is exempt
from VAT as long as its holding period of time in the balance
sheet of the company would be at least two years. Companies
that are engaging in business of participation interest trading
cannot benefit from such VAT exemption, for such trading
assets. The sale of participation interest held less than two
years are subject to 18% VAT.
118 Investors Guide to Europe 2015