Acquire a Game Company in Turkey: Unlock VAT Refunds and Marketing Incentives
Acquire a Game Company in Turkey: Unlock VAT Refunds and Marketing Incentives
Acquire a Game Company in Turkey: Unlock VAT Refunds and Marketing Incentives
Introduction: The Smart Route into Turkey’s Booming Gaming Sector
Turkey is now firmly established as one of the fastest-growing gaming hubs in the world. A young and creative developer base, combined with government support, makes the country uniquely attractive for global investors.
But the real advantage is financial: acquiring an existing Turkish game company (with at least 1 year of operational history) unlocks immediate eligibility for VAT refunds on advertising and platform commission expenses—cost categories that dominate gaming business models.
At the same time, ownership of such an entity allows investors to apply for government-supported marketing incentives, such as those listed under EK-31A. These programs cover international promotion, advertising, and marketing activities for games, apps, and digital platforms.
1. Advertising and Commission Costs: The Hidden Burden in Gaming
1.1 Advertising as Growth Fuel
Most gaming studios allocate 40–60% of their revenue to user acquisition campaigns. Google Ads, Meta Ads, and influencer-driven campaigns represent essential but heavy expenditures.
1.2 Platform Commissions: The 30% Cut
Apple App Store and Google Play typically charge 30% commission on in-app purchases. Steam and similar platforms impose comparable rates.
1.3 Why Refunds Transform Economics
Without refunds, these are sunk costs. With Turkish VAT mechanisms, investors can recover up to 18–20% of these expenses. Over time, this refund system radically improves cash flow and profitability.
2. The Legal Framework for VAT Refunds
2.1 Export of Services Principle
Under Turkish VAT Law, revenues derived from exports of digital services—including games and mobile applications sold abroad—are exempt. This exemption allows companies to apply for refund of input VAT paid on expenses linked to such exports.
2.2 Refundable Categories
Advertising costs: Google Ads, Meta Ads, TikTok Ads.
Commission fees: App Store, Google Play, Steam.
Marketing services: Third-party publishers, influencers.
Operational services: Cloud hosting, payment gateways.
2.3 The One-Year Rule
A newly incorporated entity cannot apply for VAT refunds immediately. Tax authorities typically require at least one fiscal year of operations.
Acquisition Advantage: By buying an existing company with over one year of records, investors bypass the waiting period and file refund claims immediately.
3. Financial Impact of Refunds
| Expense Category | Annual Spend | Refund Eligibility (Approx. 18%) | Net Recovery |
| Advertising (Google/Meta) | $1,000,000 | $180,000 | Immediate |
| App Store Commissions | $500,000 | $90,000 | Immediate |
| Steam Fees | $250,000 | $45,000 | Immediate |
Total Benefit: ~$315,000 annual refund on a $1.75M spend.
4. Case Study: European Studio Acquisition
A European investor spending $2M annually on global marketing faced two options:
New Incorporation: wait 12 months before refund eligibility, losing ~$360,000.
Acquisition of 2-year-old Turkish studio: immediate eligibility, refunding ~$360,000 within the first year.
Outcome: Acquisition more than justified its price within the first year.
5. Marketing and Promotion Incentives: EK-31A Advantage
VAT refunds are not the only financial benefit. Turkey’s Ministry of Trade provides direct reimbursement for international promotion expenses.
5.1 Software, Gaming, App & Digital Platform Promotion
If the company develops a game, app, or digital service platform, expenses for international promotion and marketing activities are eligible. Covered costs include:
Digital advertising campaigns abroad,
Social media promotions,
App Store optimization (ASO) campaigns,
International fairs, expos, and conferences,
Promotional videos, demo productions, and PR campaigns.
5.2 General Brand Promotion
Companies may also claim support for general-purpose brand advertising—corporate videos, media campaigns, or brand-building exercises—provided these fall under EK-31A supported activities.
- Special promotions (e.g., sponsorships, major international PR events) require prior approval.
5.3 Strategic Benefit
Refunds reduce costs already incurred.
EK-31A support provides cash reimbursements for planned marketing activities.
Combined, they create a dual financial advantage for investors.
6. Due Diligence in Acquisition
When acquiring a Turkish game company, investors must ensure:
At least 1 year of clean tax history.
No unresolved VAT refund disputes.
Past eligibility for EK-31A supports documented.
Intellectual property (game code, trademarks, publishing rights) secured.
7. Acquisition Process Step by Step
Identify Target Company
- Preferably technopark-based with export history.
Preliminary Agreements
- Non-disclosure and term sheet.
Due Diligence
- Financial, legal, IP, and incentive eligibility review.
Share Purchase Agreement (SPA)
- Warranties covering VAT refund rights and incentive eligibility.
Registry and Notifications
- Shareholder changes at Trade Registry, tax office, and SGK.
Refund and Support Applications
- Submit VAT refund claims and apply for EK-31A reimbursements.
8. Risk Management
Tax Liabilities: Obtain clearance certificates.
Documentation Gaps: Ensure all advertising/commission invoices are archived.
Delayed Refunds: Build conservative cash flow models.
Employment Issues: Verify compliance with labor and SGK requirements.
9. Comparative Analysis: Incorporation vs. Acquisition
| Criteria | New Incorporation | Acquisition (Existing >1 Year) |
| VAT Refund Eligibility | After 12+ months | Immediate |
| EK-31A Marketing Support | After eligibility setup | Immediate |
| Market Entry Speed | 9–12 months | 2–3 weeks |
| Financial Efficiency | Delayed | Immediate refund & reimbursement |
| Risk | Lower at start | Managed with due diligence |
10. Frequently Asked Questions
Q1: Can foreigners fully own Turkish gaming companies?
Yes, there are no foreign ownership restrictions.
Q2: How quickly can refunds be received after acquisition?
Typically within 3–6 months, depending on documentation quality.
Q3: Are EK-31A supports automatic?
No. Companies must apply, but eligibility starts immediately post-acquisition.
Q4: Do refunds apply to global advertising spend?
Yes, as long as the invoices are billed to the Turkish entity and linked to export revenues.
Conclusion: The Double Benefit Strategy
Acquiring a Turkish game company with at least one year of history provides two immediate financial advantages:
VAT Refunds on advertising and commission expenses—transforming sunk costs into recoverable cash.
Government Marketing Supports (EK-31A)—reimbursing future international promotion expenses.
For foreign investors, this is not simply an entry strategy into Turkey—it is a financially optimized route that enhances ROI from the very first year.
Reach Us
👉 If you are considering acquiring a Turkish game company to unlock VAT refunds and government marketing supports, our advisory team provides:
Comprehensive due diligence on refund eligibility,
Structuring of SPA with protective clauses,
Guidance on EK-31A applications and compliance,
End-to-end legal and tax advisory.
Contact us today to explore opportunities tailored to your investment strategy.
info@ozmconsultancy.com
