A mining royalty agreement lets a licence holder hand all or part of a site to a third party to operate, usually for a fee per tonne or a share of sales. Neither the licence nor the holder’s obligations to the authorities change hands. Below: the permission procedure, the single-agreement rule of 30 October 2025, liability and the 2026 tax burden.
Under additional article 7 of Mining Law no. 3213 the agreement needs Ministry permission and is annotated on the mining register; activity without permission is halted. Underground coal is closed to all but public bodies. Labour and safety liability rests with the operator; the holder’s statutory duties continue.
What the agreement is
Mining rights in Turkey go only to citizens and to locally incorporated companies whose constitution permits mining. An investor therefore has two routes to a site: buy the company that holds the licence, or enter into a royalty agreement with the holder. On the second route the licence stays put while production and its risk pass to the operator. The contract is treated as a produce lease, since the fee follows output rather than a fixed rent.
What counts as a royalty agreement
- The licence holder stays the same; the site is handed over
- The fee follows tonnage produced or sales proceeds
- Commercial risk of production sits with the operator
- Permission required; contract annotated on the register
What does not count
- Transfer of the whole licence, which is registered
- A mining services contract paid at a fixed rate
- A site the holder works with its own employees
- A plain lease of machinery or equipment
Permission and registration
Article 101 of the Mining Regulation sets out the procedure. The General Directorate is not a party to the contract; it checks the parties and the site, then annotates the agreement.
- The contract is drawn up. Coordinates, term and end date, including any extension the parties expect to seek.
- The licence holder clears its dues. Licence fees, stamp duty and the environmental guarantee paid; no overdue state royalty.
- The operator files its documents. Shareholding, addresses, registered electronic mail address, financial capacity and bank details.
- The General Directorate assesses. Whether the area is large enough to mine and whether operations would interfere with one another.
- Permission is granted and the contract annotated. Later extensions or coordinate changes are fresh applications.
A company files its shareholders, addresses and registered electronic mail address; its constitution must cover mining.
The balance is shown by bank documents. An individual shows the full amount by a bank reference letter under fifteen days old.
No permission is granted on a site with an operating permit until a resident supervisor is appointed.
Activity under an unpermitted agreement is halted. The contract may bind the parties, but nothing can be produced on the site.
Where it cannot be used
| Situation | Rule |
|---|---|
| Underground coal operation | Not available except to public bodies and their affiliates |
| Second agreement on one site | Not available outside group IV (c) and public licences |
| Contract with no coordinates | Not annotated on the mining register |
| Same area at a different level | No separate agreement allowed |
| Extension or change of coordinates | Counts as a fresh application |
| Share transfer in the operator | Permission needed above ten percent |
The single-agreement rule is new. Until 30 October 2025 several agreements could be made within one site if the areas did not overlap. That has been reversed: outside group IV (c) licences, covering metallic minerals, and public licences, one agreement per licence area is the limit. Check the licence group before planning to work a site in parcels.
Where liability stays
| Obligation | Rests with |
|---|---|
| Labour law, health and safety | Operator |
| Production, dispatch and stock records | Operator |
| Technical duties under the Mining Law | Licence holder |
| State royalty and licence fees | Licence holder |
| Environmental guarantee, rehabilitation | Licence holder |
| Register filings and permission requests | Licence holder |
The first row is the one argued over. Where the licence holder keeps its own supervisor or technical staff on site, social security practice and the courts may treat it as principal employer and the operator as subcontractor, with joint liability for wage claims and unpaid premiums. The Court of Cassation describes the arrangement as a time-limited lease of operating rights.
The tax burden
| Tax | How it applies in 2026 |
|---|---|
| Value added tax | Leasing a right is taxable, at 20 percent |
| Who declares it | The operator, where the holder is not registered |
| Income tax withholding | 20 percent on payments to an individual |
| Corporate tax | Ordinary income of a corporate licence holder |
| Stamp duty | 0.948 percent, or 0.189 percent if treated as rent |
| Stamp duty ceiling | 29,115,961.10 lira |
The common mistake is to assume the property rental exemption carries over. It does not: it reaches only immovable property outside a business, and a mining right is a right. Where the holder is not registered and the operator is, the operator accounts for the tax itself under full withholding. Income tax withholding arises only where the holder is an individual. For stamp duty the rate turns on how the contract is characterised and the base on the minimum production commitment; a written ruling before signature settles the point.
State royalty, licence fees and easement charges are the holder’s debt to the authorities. The burden can be shifted by contract, but the documents are in the holder’s name, so the operator cannot deduct directly; a recharge invoice from the holder restores the deduction.
What the contract has to cover
- Area and termCoordinates, levels and end dateWorking levels, plant and stockpile areas defined, with a consequence for working outside them.
- FeeMeasurement and adjustment rulesWeighing point, moisture and grade adjustment; for a revenue share, returns, discounts and freight.
- OutputMinimum production commitmentShortfall and force majeure; the commitment also fixes the stamp duty base.
- Public duesExit on non-paymentCollection from the guarantee, termination and recourse if state royalty goes unpaid.
- SecurityLayered guaranteesBank guarantee, cash deposit, insurance and liquidated damages; recourse for accidents.
- ExitHandover and closureRemoval of stock, waste rock and equipment, rehabilitation, workforce and final notification.
The mistakes made most often
- Starting production before permission. A signed contract is not enough; the activity is halted.
- Not checking the licence group. Splitting a site among operators is blocked on most groups.
- Overlooking value added tax. The property rental exemption does not reach the leasing of a right.
- Ignoring the employer question. The holder’s own staff on site opens the principal employer argument.
Frequently asked questions
Does the agreement have to be notarised?
No. The law asks for Ministry permission and an annotation on the register; a notary helps on evidence but produces no effect without permission.
Can a foreign-owned company be the operator?
A licence goes only to companies incorporated in Turkey, so the investor sets up a local company first, which can act as operator if it meets the capacity tests.
Can two operators work the same licence area?
As a rule no. Since 30 October 2025 one agreement per licence area is the limit, except on group IV (c) metallic mineral licences and public licences.
Who answers for a workplace accident?
Administrative, financial and legal liability rests with the operator. The holder’s statutory duties continue, and its own staff on site opens the principal employer argument.
What happens when the term ends?
It is struck from the register. An extension is a fresh application, so producing before it is granted and annotated risks being treated as unpermitted activity.
Ozbek CPA works on the permission file for mining royalty agreements, fee and measurement clauses, the value added tax and stamp duty burden, and recharged public costs. A related subject is tax treaties in Turkey. To have a contract reviewed, get in touch.
- Mining Law no. 3213 — additional article 7 and articles 2, 6, 14 and 38
- Mining Regulation, article 101 on royalty arrangements
- Regulation amending the Mining Regulation — Official Gazette of 30 October 2025, no. 33062
- Income Tax Law no. 193, article 70 and article 94/5-a
- Value Added Tax Law no. 3065, articles 1/3-f and 17/4-d, and the leasing section of the general application communique
- Stamp Duty Law no. 488 and general communique series no. 71 — Official Gazette of 31 December 2025, no. 33124, fifth repeated issue
- General Directorate of Mining and Petroleum Affairs — current application documents and announcements
