Turkey: Exceptions to the foreign currency contract prohibitions

In order to prevent devaluation of the Turkish Lira, the Turkish administration has issued a presidential decree dated 12 September 2018 (the “Decree”) establishing restrictions on agreements denominated in foreign currencies or indexed to foreign currencies if such agreements are concluded between individuals and/or legal entities residing in Turkey.
According to the Decree, a Turkish resident who is a party to one of the following types of contracts with another Turkish resident is prohibited from using foreign currency (including Turkish Lira indexed to foreign currency) in determining the contractual value and payment obligations:

a) Contracts for the purchase and sale of any movable and immovable (i.e. real estate),
b) Contracts regarding rental of any movables and immovable assets including car rentals and financial leasing contracts,
c) Leasing contracts,
d) Employment contracts,
e) Service contracts,
f) Contracts of work.
More information and a link to the full newsletter may be found here.

In the last months the Turkish administration has published several communiques providing for certain exemptions to the Decree, since the restrictions haven’t been taken well by the foreign investors.
We provide in the below table a summary of the exceptions, according to which the parties may use foreign currency in their contracts:

a) Contracts for the purchase and sale  

b) Contracts regarding rental of movable and immovable assets


c) Financial leasing contracts regarding foreign currency borrowing

d) Employment Contracts:

e) Service contracts including brokerage and consultancy:

f) Contracts for Work:

g) Contracts concluded with Public Institutions:

 

Dr Gökce Uzar Schüller, Attorney
Frankfurt am Main and Istanbul  

Tugce Zeynep Tanin, Trainee
Frankfurt am Main

 


April 2019


JETZT ANMELDEN