The transfer of assets is described as the transfer of the ownership of a property from one legal party to the other. Mergers and Acquisitions (M&A) by themselves are not specifically addressed in Turkish legislation. However, certain Turkish laws need to be analyzed to ensure desired results from an M&A type of activity.

Article 179 and Article 180 of the Turkish Obligation Code refer to asset and business transfer in terms of “mergers and acquisitions”. In general, companies tend to avoid any risk of tax obligations and liabilities arising from an asset transfer. According to the above-mentioned articles, if a legal entity takes over a business (company) with its assets and liabilities, then it is liable for the debts and credits of the same company. As it can be derived from Article 179 of the Turkish Obligations Code, starting from the notification to the creditors or announcement, the transferee and the transferor shall be jointly liable to indemnify the debtors for a period of two years.

In some cases where the purchaser may not want to be liable for the debts and legal liabilities of the acquired company during the asset transfer, the legal documentation may vary depending on the nature of the asset.

The relation between the transferor and transferee is based on the agreement made for the transfer of assets and liabilities of a business. Both parties are subject to the signed contract. The legal validation of the transfer should be announced through various means of communication.

The asset transfers are taxable since they may be considered to be the income of selling a company, therefore a corporate tax liability applies. The asset transfer is generally subject to VAT based on the sales value of the assets. Although the VAT rate may differ according to the different assets (1%, 8% and 18%), the general rate for VAT is 18%. VAT liability can be reduced by different methods, such as the investment incentive certificate.

Important articles in asset transfer:

a) Turkish Obligation Code: Articles 179 and 180
b) Bankruptcy Law: Article 280
c) Law on the Procedures for the Collection of Public Receivables: Article 30


Source: Republic of Turkey Prime Ministry Investment Support and Promotion Agency

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