Foreign Currency in Contracts: What You Need to Know in 2025
Latest Regulations on Foreign Currency in Contracts: What You Need to Know in 2025
Latest Regulations on Foreign Currency in Contracts: What You Need to Know in 2025
Introduction:
In recent years, Turkey has imposed several restrictions on the use of foreign currencies in contracts. These regulations are primarily governed by the Presidential Decree No. 85 and the 32nd Presidential Decree, which have undergone numerous amendments, most recently in 2025. These regulations aim to strengthen the Turkish Lira (TRY) and curb the reliance on foreign currency for domestic transactions. This blog post will explore the key changes in these regulations, the types of contracts affected, and important exemptions that businesses need to understand to stay compliant in 2025.
Section 1: Key Changes in Foreign Currency Contract Regulations
Since the implementation of the 32nd Presidential Decree, significant changes have been introduced to limit the use of foreign currencies in various types of contracts. The latest amendments, which came into effect in February 2025, continue to restrict Turkey-based businesses and individuals from using foreign currencies unless explicitly exempted.
Under these regulations, individuals and businesses based in Turkey are prohibited from entering into agreements where the contract values or payments are denominated in foreign currencies for the following contract types:
Real estate transactions
Vehicle leasing and other leasing agreements
Service contracts
Labor contracts (employment agreements)
However, there are several exceptions that allow foreign currencies to be used, which we will discuss in the subsequent sections.
Table 1: Overview of Contracts Affected by Currency Restrictions
| Contract Type | Foreign Currency Restrictions | Exemptions |
| Real Estate Transactions | Cannot be in foreign currencies or indexed to foreign currencies. | Foreign nationals purchasing/selling property in Turkey can use foreign currencies. |
| Leasing Agreements | All leases (except vehicle leasing) must be in Turkish Lira. | Leasing agreements with foreign entities or in free trade zones can use foreign currency. |
| Service Contracts | Cannot be in foreign currencies unless certain conditions are met. | Service contracts related to international trade or those with foreign parties are exempt. |
| Labor Contracts | Employment agreements must be in Turkish Lira. | Wages for foreign nationals or employees stationed abroad can be paid in foreign currencies. |
Section 2: Who is Considered a ‘Resident’ in Turkey for Contract Purposes?
In order to apply the foreign currency restrictions, it is crucial to define who is considered a ‘resident’ in Turkey. According to the 32nd Presidential Decree, a resident refers to both individuals and businesses that have legal ties to Turkey. This includes:
Turkish citizens residing in Turkey.
Foreign nationals with legal residency status in Turkey.
Legal entities (companies, organizations, etc.) incorporated in Turkey.
However, those who do not meet this criterion, such as foreign companies, foreign nationals working for Turkish businesses but residing abroad, and foreign entities doing business in Turkey through a branch or representative office, may be eligible for exemptions regarding foreign currency use in contracts.
Section 3: Detailed Breakdown of Currency Restrictions
The key restriction outlined in the Presidential Decree is that contracts for certain goods and services must be agreed upon in Turkish Lira (TRY). These restrictions are placed on:
Real Estate Transactions: Sales and rental agreements for properties located in Turkey between Turkey-based residents must be denominated in Turkish Lira.
Leasing Contracts: Financial leasing agreements related to real estate, machinery, and other goods must be concluded in Turkish Lira, except for certain vehicles and equipment leased to foreign entities.
Service Contracts: All services provided within Turkey, including construction, consultancy, and technical services, must be billed in Turkish Lira.
Table 2: Types of Contracts and Foreign Currency Restrictions
| Contract Type | Foreign Currency Restrictions | Allowed Foreign Currency Use |
| Real Estate Sales & Rentals | Cannot be in foreign currency or indexed to foreign currency. | Foreign nationals can use foreign currency for sales/purchases. |
| Leasing of Machinery, Equipment | Must be in Turkish Lira, except for vehicle leasing. | Foreign entities in free zones or operating abroad may use foreign currency. |
| Service Contracts | Should be in Turkish Lira unless for international trade or foreign nationals. | Contracts with foreign clients or for exports can use foreign currency. |
| Labor Agreements | Wages and payments must be in Turkish Lira. | Wages for foreign nationals or employees working abroad can be in foreign currency. |
Section 4: Exemptions from Currency Restrictions
While there are strict rules on foreign currency in most contracts, several exemptions allow for foreign currency use. These exemptions apply in specific circumstances and include:
International Trade and Export Activities: Contracts that involve export or international trade, such as goods or services provided to foreign clients, can still be denominated in foreign currency.
Foreign Entities and Free Zones: If the contract involves foreign nationals or companies that operate in free trade zones, these transactions can be in foreign currency.
Government and Military Contracts: Public institutions and government agencies, especially those related to military projects or international agreements, can engage in foreign currency agreements.
Table 3: Exemptions and Allowed Foreign Currency Contracts
| Contract Type | Exemption Conditions | Foreign Currency Use Allowed |
| International Trade & Export Contracts | Export-related contracts or services involving foreign clients. | Foreign currency is allowed for payments and contracts. |
| Foreign Entities and Free Zones | Contracts with foreign nationals or entities in free zones. | Foreign currency can be used in such contracts. |
| Government/Military Contracts | Public sector projects or military contracts. | Foreign currency can be used for certain projects. |
| Foreign Nationals in Turkey | Foreign workers in Turkey or services to foreign clients. | Payments for labor and services may be in foreign currency. |
Section 5: Impact on Real Estate and Leasing Agreements
For contracts involving real estate and leasing, the regulations have significant implications. Specifically:
Domestic Real Estate Transactions: All contracts between Turkey-based residents involving property (e.g., buying, selling, or leasing) must be conducted in Turkish Lira.
Foreign Nationals: Foreign nationals purchasing property or engaging in property leases within Turkey are exempt from these restrictions and can use foreign currencies.
For leasing agreements, real estate leasing agreements between Turkey-based residents must also adhere to the Lira requirement, but leasing agreements related to commercial real estate in free zones or with foreign entities can be denominated in foreign currencies.
Section 6: International Trade and Financial Leasing Contracts
International trade agreements, particularly in the export sector, enjoy exemptions from these restrictions. Foreign entities engaged in trading goods or services internationally with Turkey-based companies may continue to use foreign currency for the payment and valuation of goods or services.
For financial leasing agreements, foreign currency use is permitted, particularly when the leases are for specialized equipment or vehicles leased to foreign entities.
Conclusion
The new regulations in Turkey surrounding foreign currency contracts are crucial for both businesses and individuals to understand and comply with in 2025. While there are restrictions in place, there are also numerous exemptions that allow foreign currency use in specific scenarios such as international trade, foreign entities, and certain government contracts.
It’s important for businesses to thoroughly assess the nature of their contracts and transactions to ensure compliance with the 32nd Presidential Decree and other related laws. If in doubt, seeking legal advice or consulting with financial experts can help navigate these complex regulations effectively.
For more information you can reach us info@ozmconsultancy.com
