April 22, 2022

What Regulation Introduces the Requirement for Payment in Turkish Lira in Securities Sale Contracts?

As is known, according to the Communiqué on the Decree No. 32 on the Protection of the Value of Turkish Currency (Communiqué No: 2008-32/34), it is possible for individuals residing in Turkey to agree on the contract amount and other payment obligations arising from movable property sale contracts, excluding vehicle sale contracts, in foreign currency or indexed to foreign currency.

With the amendment made to the Communiqué on the Decree No. 32 on the Protection of the Value of Turkish Currency (Communiqué No: 2008-32/34) published in the Official Gazette No: 31814 on April 19, 2022 (Communiqué No: 2022-32/66), the following sentence has been added to the end of the ninth paragraph of Article 8 of the Communiqué: “However, the payment obligations under the contract must be made and accepted in Turkish currency.”

Accordingly, while it was possible to agree on the contract amount and other payment obligations in foreign currency or indexed to foreign currency in movable property sale contracts excluding vehicle sale contracts between individuals residing in Turkey, it is now mandatory for these payment obligations to be made and accepted in Turkish currency.

Does the term "movable property sale contracts" include the sale of goods?

Yes, the term "movable" in the Communiqué covers "all types of goods and items" that do not fall within the definition of real estate.

Is it still permissible to conclude movable property sale contracts in foreign currency or indexed to foreign currency?

Yes, it is permissible. The possibility of entering into movable property sale contracts in foreign currency has not changed. The requirement for Turkish Lira applies to the performance and acceptance of payment under these contracts.

Is there a Turkish Lira payment obligation in the absence of a written contract?

The Communiqué does not impose restrictions on the form of contracts. Therefore, the formation of contracts is subject to the general provisions of the Turkish Code of Obligations, and this obligation also applies to contracts that are not in writing.

Have there been changes to Turkish Lira obligations for types of contracts other than movable property sale contracts?

No changes have been made to the requirements for payment obligations in Turkish Lira for contracts other than movable property sale contracts under Article 8 of the Communiqué. Existing exceptions remain valid.

Is there a Turkish Lira payment obligation for movable property sale contracts with firms operating in free zones?

According to Article 6 of the Free Zones Law No. 3218, the provisions related to customs and foreign exchange obligations do not apply in free zones. Therefore, if both parties are located in the free zone and the sale of movable property is related to activities conducted within the free zone, it is considered that there is no obligation to pay in Turkish Lira.

On the other hand, if one of the parties is not operating in the free zone, the application of the Communiqué in this context has not been regulated. Based on past administrative approaches, it is believed that there may be no Turkish Lira payment obligation in these cases; however, clarification from the Ministry of Treasury and Finance is needed.

Is there a Turkish Lira payment obligation for sales conducted in customs warehouses?

Since contracts are regulated under the Communiqué for agreements made between residents in Turkey, the Turkish Lira payment obligation also applies to sales conducted in customs warehouses if the parties are residents in Turkey.

Does this apply to contracts made before the amendment to the Communiqué?

Payment obligations under invoices issued before April 19, 2022, can still be made and accepted in foreign currency.

Payment obligations under contracts made before April 19, 2022, and valuable documents in foreign currency that entered circulation before this date can be made and accepted in foreign currency.

Which exchange rate should be used to convert to Turkish Lira?

The Communiqué does not provide provisions on the exchange rate to be used for conversion following the amendment related to movable property sale contracts.

However, it is considered that the exchange rate to be used for conversion to Turkish Lira should be determined by the parties. If this is not possible, the effective selling rate of the Central Bank of Turkey on the date of fulfilling the payment obligation can be used.

What is the penalty for violating the Communiqué?

For violations of the Communiqué, administrative fines of approximately 11,000-100,000 TL will be imposed on each party to the contract separately, considering the revaluation rates under Article 3 of Law No. 1567 on the Protection of the Value of Turkish Currency. In cases of repetition, these fines will be doubled.