In Turkey, corporations that sell real estate, participation shares, founders’ or redeemed shares, pre-emptive rights, or venture capital fund participation units held on their balance sheet for at least two full years may benefit from a partial corporate income tax exemption.
The purpose of this incentive is to help companies generate financing through asset sales and increase liquidity within the Turkish economy.
Conditions for the Exemption
- Type of Asset:
The sale must involve real estate, participation shares, founders’ or redeemed shares, pre-emptive rights, or venture capital investment fund participation units. - Holding Period:
The asset must have been held for a minimum of two full years (730 days) in the company’s balance sheet. - Exemption Rate:
- 50% of the gain from real-estate sales,
- 75% of the gain from other qualifying asset types is tax-exempt.
- Genuine Transaction:
The sale must be a real and completed transfer, not a fictitious or symbolic one. - Registration Requirement:
Real estate must be registered in the company’s name in the land registry. - Use of the Gain:
The exempt portion must be recorded in a special reserve account and later added to the company’s capital.
Explanation and Scope
The exemption covers sales of real estate, participation shares, founders’ or redeemed shares, pre-emptive rights, and venture capital fund units.
According to the Turkish Civil Code, real estate includes land, registered permanent rights, and condominium units.
- Participation shares and founders’ or redeemed shares must be held for at least two years.
- Profits from selling pre-emptive rights are 75% tax-exempt.
- Venture capital fund units also benefit from the same 75% exemption rate.
- For incomplete constructions, only the portion of the gain attributable to land qualifies for the exemption.
Examples
- A company sells a factory building purchased in 2019 for a gain of TRY 10 million in 2025 → 50% (TRY 5 million) is exempt.
- Participation shares bought in 2021 and sold in 2025 yield TRY 4 million → 75% (TRY 3 million) is exempt.
- A pre-emptive right sold after two years for TRY 800 thousand → 75% (TRY 600 thousand) is exempt from corporate tax.
Legal Basis
This exemption is regulated under Article 5/1-e of the Turkish Corporate Tax Law (No. 5520).
For real estate recorded before 15 July 2023, only 25% of the gain is exempt, while for all other qualifying assets the 75% exemption remains valid.
The regulation supports companies in strengthening their capital structure and improving liquidity through the efficient disposal of long-term assets.
For professional advice on corporate tax exemptions, asset sales, and capital restructuring in Turkey, contact ÖzbekCPA.
