# 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: 1. **Tax compliance calendar refresh** (especially provisional tax Q4) 2. **Deal-risk mapping** (real estate values and penalty exposure) 3. **Payroll and incentives recalculation** (SGK cost baseline) 4. **Regulatory fee audit** (annual license fees in regulated sectors) 5. **Treasury and investment review** (fund withholding treatment) --- ## Want a tailored “Law 7566 Impact Memo” for your Turkey entity? 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