Overview: Foreign Exchange Framework in Turkey
Turkey’s foreign exchange (FX) regulations are primarily governed by Decree No. 32 on Protection of the Value of Turkish Currency and regulations issued by the Central Bank of the Republic of Turkey (TCMB) and the Treasury and Finance Ministry.
Historically, Turkey has maintained relatively liberal capital controls, allowing free capital movement for current account transactions and most capital account transactions. However, specific restrictions and reporting requirements apply, particularly:
- FX borrowing restrictions for companies
- Mandatory FX sale rules (for export proceeds)
- Reporting requirements for large capital movements
- Mandatory TRY invoicing and contract requirements for domestic transactions
Foreign investors should understand these rules to avoid inadvertent violations.
Inbound Foreign Investment
Capital Contribution Transfers
When a foreign investor forms a Turkish company and contributes capital:
- Capital can be transferred from abroad via bank transfer in foreign currency (USD, EUR, GBP, etc.) or TRY
- No prior Central Bank approval is required for foreign direct investment
- The Turkish bank receiving the transfer must report the inflow to the Central Bank’s balance of payments system
- It is good practice to retain documentation of the capital transfer showing its FDI nature (formation documents, company name, investor name)
Foreign Direct Investment Reporting
Foreign investors are not required to obtain pre-approval for direct investment in Turkey. However:
- The Ministry of Industry and Technology and Treasury maintain FDI statistics
- Banks are required to report FDI capital inflows to the Central Bank
- For tracking purposes, the investor may receive a FDI notification number (yabancı sermaye bildirim numarası) from the relevant authority
Operating Account Management
Multi-Currency Banking
Turkish companies can hold bank accounts in Turkish Lira (TRY) and foreign currencies (USD, EUR, GBP, etc.). There are no restrictions on maintaining FX deposits.
FX Transactions
Companies can freely conduct FX transactions for:
- Paying for imported goods and services
- Receiving payment for exports in foreign currency
- Paying salaries to foreign employees in foreign currency (subject to some limitations)
- Dividend remittances to foreign shareholders
Domestic Contract Currency
Important restriction: Contracts between Turkish residents for the sale of goods, services, or rental of real estate must generally be denominated in Turkish Lira (not foreign currency), with limited exceptions. This restriction applies to:
- Real estate lease agreements between residents
- Employment contracts (wages must be set in TRY or, for some categories, FX-indexed)
- Domestic service contracts between resident companies
Contracts with non-residents can be denominated in foreign currency.
FX Borrowing Restrictions
One of the more complex areas of Turkish FX regulations concerns FX-denominated borrowing:
For Non-Financial Companies
Non-financial Turkish companies face restrictions on taking FX loans:
- Companies with total assets below a certain threshold (approximately $15 million USD equivalent — verify current threshold at tcmb.gov.tr) generally cannot take new FX loans from abroad
- Companies above the threshold can take FX loans from abroad subject to Central Bank reporting
- FX loans from Turkish banks are subject to banking regulations
These restrictions are designed to reduce corporate FX exposure (“currency risk”) in the Turkish economy.
For Financial Companies
Banks and financial institutions have different rules governing FX borrowing.
Export Proceeds: Mandatory FX Sale
Exporters are required to sell a portion of their FX export proceeds to Turkish banks (and by extension, the banking system):
- Currently, 25% of FX export proceeds must be sold to Turkish banks within 180 days of the export transaction (verify current percentage — this rate has been adjusted over time)
- The sold FX is converted to TRY at the prevailing exchange rate
This requirement applies to companies exporting goods and services. It reduces the exporter’s FX holdings and effectively converts part of export earnings to TRY.
Dividend Repatriation
Sending Dividends Abroad
Foreign shareholders of Turkish companies can repatriate dividends freely:
- No Central Bank approval is required
- The Turkish company must withhold dividend withholding tax (15% or treaty rate) before remittance
- The bank processes the transfer and reports it to the Central Bank for balance of payments purposes
Practical process:
- The Turkish company declares a dividend at the general assembly
- Dividend withholding tax is deducted (15% or treaty rate)
- Net dividend amount is wired to the foreign shareholder’s bank account abroad
- The Turkish bank reports the outflow as “income account” FX transfer
Documentation Required
Turkish banks typically require:
- Company’s general assembly minutes declaring the dividend
- Evidence of withholding tax payment (tax receipt)
- Shareholder’s bank details
- Shareholder identification
Capital Repatriation (Liquidation Proceeds)
When a company is liquidated and proceeds are sent to foreign shareholders:
- Capital repatriation (return of contributed capital) is free
- Any capital gain component may be subject to withholding tax
- Documentation of the original capital contribution amount is important to establish the tax-exempt capital return portion
Central Bank Reporting Requirements
Turkish banks automatically report FX transactions to the Central Bank under their legal obligations. Companies themselves must report certain transactions:
- FX loans from abroad: Must be reported to the Central Bank through the lending bank
- FX transactions above specified thresholds: Reported by banks; companies may need to provide supporting documentation
Companies do not typically file direct reports with the Central Bank — banks handle most reporting obligations on behalf of their clients.
Practical Considerations for Foreign-Owned Companies
- Maintain FX accounts for international transactions — USD and EUR accounts at major Turkish banks
- Budget for TRY conversion: FX inflows from capital or export proceeds will partially convert to TRY under mandatory sale rules
- Monitor FX borrowing rules before entering into FX-denominated loan agreements
- Document all capital inflows as FDI from the outset to simplify future repatriation
- Consult a Turkish banking partner early — major banks (İşbankası, Garanti BBVA, Yapı Kredi, Akbank) have dedicated teams for foreign corporate clients
FX Rate Risk Management
Turkish Lira has historically experienced significant volatility. Foreign-owned companies operating in Turkey should consider:
- FX hedging instruments offered by Turkish banks (forwards, options)
- Natural hedging through matching FX revenues with FX costs
- Pricing strategies that account for FX risk in TRY-denominated contracts
Frequently Asked Questions
Can a Turkish company maintain bank accounts in USD or EUR? Yes. Turkish companies can maintain accounts in Turkish Lira and any foreign currency at Turkish banks. There are no restrictions on holding FX deposits.
Must my foreign investment in a Turkish company be registered with any Turkish authority? No formal pre-registration is required. The investment is automatically reported through the banking system. However, keeping documentation of capital contribution amounts is essential for future dividend repatriation and liquidation.
Is there a limit on how much money I can take out of Turkey? There is no absolute limit on the repatriation of legitimate business profits, dividends, or capital. Applicable taxes (dividend withholding) must be paid first. Large transfers require supporting documentation and are reported by the bank to the Central Bank.
Does the mandatory FX sale rule apply to service exports? Service export proceeds are generally subject to the same FX conversion requirement as goods exports. Verify the current rate (25% as of 2026) with your bank, as this rule has been adjusted several times and may change again.