Turkey’s Law No. 7566 (Dec 2025): What Foreign Companies Must Know for 2025–2026 Tax, Transaction, and Payroll Planning
Turkey’s Law No. 7566 (Dec 2025): What Foreign Companies Must Know for 2025–2026 Tax, Transaction, and Payroll Planning
Turkey’s Law No. 7566 (Dec 2025): What Foreign Companies Must Know for 2025–2026 Tax, Transaction, and Payroll Planning
A practical compliance and deal-risk guide for international investors, CFOs, and founders
Turkey enacted Law No. 7566 after adoption by Parliament on 4 December 2025, and publication in the Official Gazette on 19 December 2025. The law amends multiple tax and social security rules and has immediate implications for:
M&A / due diligence (real estate and transaction taxes, penalty exposure)
Operating cost models (payroll/social security, incentives)
Treasury and cash planning (provisional tax timing)
Regulated sectors (new annual license fees)
Capital markets structuring (investment fund withholding rules)
If you run—or plan to run—operations in Turkey, you should treat this law as a budget and compliance recalibration rather than a “local tax update.”
Who this guide is for (and how to use it)
This article is built for:
Foreign parent companies with a Turkish subsidiary/branch
Founders and CFOs building 2026 budgets
Buyers assessing Turkish targets (especially with property, payroll, or regulated activities)
Investors or funds evaluating Turkish exposure
How to use it: each section provides (i) what changed, (ii) effective date, (iii) why it matters for foreign companies, and (iv) practical actions.
1) Residential Rental Income: Interest Deduction Removed (Effective for 2025 Income)
What changed
Interest on loans used for residential rental properties can no longer be deducted from taxable rental income. Interest deductibility remains available only for non-residential (e.g., commercial) rentals.
The 5% acquisition cost deduction for one residential property (available for five years from acquisition) continues unchanged.
Effective date
The rule applies to income from 1 January 2025 onward, although it entered into force on 19 December 2025.
Why this matters for foreign companies
If your group:
leases housing for executives through structures involving owned property, or
invests in Turkish residential real estate via corporate vehicles,
this change increases the effective tax friction on leverage-driven residential investments.
Action checklist
Re-run residential rental models assuming no interest deduction
Reassess “leveraged residential” as a corporate treasury allocation
Ensure your Turkish accounting/tax workflow reflects the retroactive application for 2025 income
2) Provisional Corporate/Income Tax: The 4th Quarter Return Is Back
What changed
The 4th provisional tax period has been reintroduced. Taxpayers will again compute income on a 3, 6, 9, and 12-month basis, including the last quarter (Oct–Dec) filing.
Effective date
Applies to periods starting 1 January 2025 (entered into force 19 December 2025). Calendar-year corporations will file for Q4 2025.
Why this matters for foreign companies
This is a cash-flow timing and close process issue:
It pulls tax payments forward.
It affects year-end reporting readiness, especially where HQ requires consolidated reporting.
It can increase compliance load for fast-growing companies.
Action checklist
Adjust your 2026 tax calendar and internal close schedule
Confirm whether your ERP and finance team can support the extra filing cycle
Update investor reporting timelines if you rely on Turkish entity numbers
3) Investment Funds: Withholding Exemption Narrowed (Capital Markets Structuring)
What changed
The law narrows the withholding exemption on gains from fund participation units held for more than one year.
Broadly, funds that are public-facing and traded through the more transparent ecosystem remain within the policy preference, while certain funds designed for qualified investors—especially those outside TEFAS and without portfolio constraints—are pushed out of the exemption.
Effective date
19 December 2025
Why this matters for foreign companies
If your group treasury allocates to Turkish financial instruments, or if you structure investment flows through Turkey:
post-tax return assumptions may change
withholding classification becomes a due diligence point
Action checklist
Map fund holdings by: investor type, platform (TEFAS vs not), portfolio constraints
Recalculate expected net returns for 2026 onward
Align corporate treasury policy with local withholding impacts
4) Real Estate Transfers: Under-Declaration Now Triggers a “1x” Tax Loss Penalty
What changed
If the declared transfer value is found to be understated, the associated fee can be assessed, and the tax loss penalty is now applied at one full multiple (1x) instead of 25%.
Effective date
19 December 2025
Why this matters for foreign companies (M&A and asset deals)
This is a direct transaction risk item:
A buyer inheriting historical practices can face assessments post-deal.
It increases the risk of “informal” valuation behaviors that were previously tolerated.
Action checklist
In due diligence, test for historic practices of under-declaration
Require clear documentation supporting transfer values and valuations
Consider reps/warranties + indemnities specifically covering fees/penalties
5) Vehicle Transfers: 0.2% Notary Fee (Minimum TRY 1,000) From 1 January 2026
What changed
Vehicle sales/transfers will attract a 0.2% (2 per mille) notary fee, minimum TRY 1,000, calculated on the transfer price.
Exception: transfers to licensed second-hand dealers are carved out.
Additionally, the blanket exemption on fees for notary-led second-hand transfers is removed.
Effective date
1 January 2026
Why this matters for foreign companies
If you operate fleets or have employee-car programs, this is a real cost item in:
fleet rotation
corporate disposals
asset transfer planning
Action checklist
Adjust fleet cost models for 2026
Review whether dealer transfers are available and compliant for your structure
6) Property Fee Base Clarified: “Declared Value Not Below the Property Tax Value”
What changed
The legal phrasing is aligned to confirm that transfer fees are calculated on the declared value, provided it is not less than the property tax value.
Effective date
19 December 2025
Why this matters
This is mainly legal hygiene—but it reduces argument space and increases enforcement predictability.
Action checklist
- Ensure transaction templates and internal guidance align with the clarified base
7) New Annual License Fees: Regulated Sectors Face Recurring Fiscal Charges (From 2026)
What changed
Multiple authorizations now attract annual fees, including:
jewelry trade
second-hand motor vehicle trade
real estate trade authorization
private healthcare and dental institutions
veterinary institutions
precious metals licenses
aviation operating licenses
certain tourism and lab/hospital permits (as listed)
Effective date
1 January 2026
Why this matters for foreign companies
This is not symbolic. For regulated sectors, it changes:
operating cost baseline
break-even analysis
expansion planning (branch vs centralization decisions)
Action checklist
Identify whether your planned Turkey activities fall into annual-fee categories
Build annual license fees into 2026 budgets
Validate whether metropolitan multipliers apply based on location
8) Property Tax: A Cap on 2026 Value Increases (Plus a 2027–2029 Framework)
What changed
For 2026, property tax values cannot exceed two times the 2025 value.
For 2027–2029, values will increase based on the revaluation rate.
Effective date
19 December 2025
Why this matters
Property tax values influence other fiscal items and can affect:
facility cost forecasts
long-term lease economics (where taxes are passed through)
asset valuation expectations
Action checklist
Update property tax forecasts for 2026–2029 in your long-range plan
Check tax pass-through clauses in commercial leases
9) UEFA Events: VAT Exemption on Supplies + Income/Corporate Tax Exemption for Non-Residents
What changed
For designated UEFA events (2026, 2027 finals; 2032 tournament), certain supplies and services are VAT-exempt, and non-resident UEFA/teams/appointed entities may be exempt from income/corporate taxes on Turkey-sourced event income.
Effective date
19 December 2025
Why this matters
If you are a sponsor, vendor, broadcaster, or service provider tied to these events, the VAT and tax treatment can materially change pricing and contract structures.
Action checklist
Review contracts for VAT clauses and invoicing requirements
Confirm eligibility criteria: residency, Turkish permanent establishment, and role classification
10) Associations and Foundations: “No Economic Enterprise” Period Extended to 2035
What changed
Certain income streams (already taxed via withholding) earned by associations/foundations and certain education-related units will not create an “economic enterprise” until 31 December 2035.
Effective date
19 December 2025
Why this matters for foreign groups
Relevant mainly if your group operates:
- foundations, CSR vehicles, or education partnerships in Turkey
11) Checks: Early Presentation Ban Extended to End-2028
What changed
Presenting a check before the written issue date remains legally invalid until 31 December 2028.
Effective date
19 December 2025
Why this matters
It impacts payment practices in local trade and should be understood in credit risk and payment workflows.
12) Social Security (SGK) Changes: Higher Employer Cost, Reduced Incentives, Higher Ceilings
This package is where operating cost meets human resources reality.
Key changes
Employer share for MYO insurance rises from 11% to 12%
Non-manufacturing employers’ 4-point Treasury incentive drops to 2 points
Premium ceiling rises from 7.5x to 9x minimum wage
Buy-back premiums (excluding birth-related) and Bağ-Kur revival rate rises to 45%
Certain MYO rates rise 20% → 21%
Pension/income deductions for premium debt collection up to 25%
Presidential authority to adjust BES state contribution up to 50% (or down to zero)
Young entrepreneur one-year premium support is abolished (per the circular)
Effective date
Most items: January 2026
Why this matters for foreign companies
This directly affects:
payroll cost and hiring budgets
expat/local executive compensation design (due to the higher ceiling)
HR policies and employee communications
Action checklist
Reprice 2026 headcount plans with updated employer SGK burden
Review executive comp structures against the new premium ceiling
Confirm which incentives still apply to your sector/location
What to do next (for foreign companies): A practical “first 30 days” plan
If you are a foreign company with Turkey exposure, you should treat Law No. 7566 as a trigger for a structured review:
Tax compliance calendar refresh (especially provisional tax Q4)
Deal-risk mapping (real estate values and penalty exposure)
Payroll and incentives recalculation (SGK cost baseline)
Regulatory fee audit (annual license fees in regulated sectors)
Treasury and investment review (fund withholding treatment)
Want a tailored “Law 7566 Impact Memo” for your Turkey entity?
Reach us info@ozmconsultancy.com
