Private client law in Turkey: overview

A Q&A guide to private client law in Turkey.

The Q&A gives a high level overview of tax; tax residence; inheritance tax; buying property; wills and estate management; succession regimes; intestacy; trusts; charities; co-ownership; familial relationships; minority and capacity, and proposals for reform.

To compare answers across multiple jurisdictions, visit the Private Client Country Q&A tool.

The Q&A is part of the Multi-jurisdictional Guide to Private Client law. For a full list of jurisdictional Q&As visit www.practicallaw.com/privateclient-mjg.

Fırat Yalçın and Sinan Sunay, Pekin & Pekin
Contents

Taxation

Tax year and payment dates

1. When does the official tax year start and finish in your jurisdiction and what are the tax payment dates/deadlines?

The official tax year is the calendar year, which starts on 1 January and ends on 31 December of the relevant year.

Private clients' income is subject to income tax and must be declared to the tax office between 1 March and 25 March. Tax is paid in two instalments in March and July.

 

Domicile and residence

2. What concepts determine tax liability in your jurisdiction (for example, domicile and residence)? In what context(s) are they relevant and how do they impact on a taxpayer?

Tax liability

The following individuals are liable for tax on their worldwide income in Turkey (Article 3, Income Tax Law (No. 193)) (ITL):

  • Those who are domiciled in Turkey (see below, Domicile and residence).

  • Turkish citizens who reside abroad, but who are affiliated with, or work for, official departments, establishments or organisations with head offices situated in Turkey. However, persons who are liable for income tax (or a similar tax related to the earnings and revenues earned in their country of residence) are not taxed again on overseas earnings and revenues.

Individuals who do not fall into these categories pay tax solely on their Turkish-based income (Article 6, ITL).

Domicile and residence

An individual is considered domiciled in Turkey if either of the following apply:

  • The individual is a Turkish resident (see below, Residence). Residency is the place where an individual has settled with the intention of living at that place permanently (Article 19, Turkish Civil Code (Law No.4721), published in the Official Gazette dated December 8, 2001 and numbered 24608) (Civil Code).

  • The individual remains continuously in Turkey for at least six months (temporary interruptions will not re-start the period) (Article 4, ITL).

Certain individuals are not considered Turkish residents even if their stay lasts for more than six months (see Question 4).

 

Taxation on exit

3. Does your jurisdiction impose any tax when a person leaves (for example, an exit tax)? Are there any other consequences of leaving (particularly with regard to individuals domiciled in your jurisdiction)?

There are no specific exit taxes. An exiting person is subject to Turkey's regular taxation regime.

 

Temporary residents

4. Does your jurisdiction have any particular tax rules affecting temporary residents?

The following foreign persons are not considered Turkish residents, even if their stay lasts for more than six months:

  • Businessmen, scientists, specialists, officials, and journalists who come to Turkey on a temporary mission or for business.

  • Those who come to Turkey for studies, medical treatment, rest or travel.

  • Those who are detained or remain in Turkey for reasons beyond their control, such as detention, conviction, or illness.

 

Taxes on the gains and income of foreign nationals

5. How are gains on real estate or other assets owned by a foreign national taxed? What are the relevant tax rates?

Capital gains tax on the sale of real estate is regulated under repetitive Article 80(6) of the ITL. Gains made on the disposal of real estates in the five years following its acquisition are considered a taxable capital gain. After completion of the five-year period, the capital gain derived through the disposal of real estates is not subject capital gains tax.

When calculating the capital gain, the real estate's cost and the expenses incurred selling the property, and the taxes paid can be deducted from the property's sale. The producer price index (PPI) can be used to index the cost of the property. (For applicable tax rates, see Question 6.)

Capital gains tax on the sale of securities is regulated under Article 80(1) of the ITL. Gains made on the disposal of securities are considered a taxable capital gain (except for share certificates of the Turkey resident joint stock companies held by individuals for at least two years).

If shares are traded on the Istanbul Stock Exchange (ISE), they are subject to withholding tax of:

  • 10% for the shares of investment companies which are held for less than one year. If those are held for more than one year then 0% withholding is applied. Investment companies are capital market institutions incorporated in accordance with the provisions of the law and formed as joint stock companies based on the registered capital principle, and operate portfolios that comprise (Article 4 of the Capital Market Board (CMB) Communiqué on Principles regarding Investment Companies Serial: VI, No: 30):

    • shares that belong to companies incorporated in Turkey, including companies that fall within the scope of privatisation, and debt instruments that are issued by the government or private sector;

    • foreign debt instruments that are issued by the government or private sector, which are allowed to be traded in accordance with the Decree regarding the Protection of the Value of the Turkish Currency No. 32;

    • gold and other valuable metals, which are traded on national or international stock markets and capital market instruments that have been issued based on those valuable metals and are traded on stock markets;

    • rent certificates, repurchase and reverse repurchase agreements, future, option and forward agreements;

    • money market transactions on Takasbank (a non-deposit taking bank authorised by the CMB to function, among other things, as the clearing and settlement institution for ISE markets) to utilise cash, and cash-based warrants traded on warrant and options markets.

  • 0% for all other shares.

The capital gain on the sale of treasury bills and government bonds issued by the Undersecretariat of the Treasury and interest income is subject to 10% withholding tax.

The capital gain on the sale of Eurobonds is not subject to withholding tax nor does it need to be declared to the tax office. Interest income derived from Eurobonds is subject to 0% withholding tax.

 
6. How is income received by a foreign national taxed? Is there a withholding tax? What are the income tax rates?

In principle, there is no discrimination between the way foreign and Turkish nationals' income is taxed. Income received by foreign nationals can be taxed by submitting a tax return or by withholding income at source. Generally, income is subject to tax and should be declared to the tax office. However, certain types of income are taxed through withholding, for example, royalties, and professional services. For the year of 2014, Foreign and Turkish nationals' income is taxed as follows:

  • On income up to TRY11,000: 15%.

  • On income up to TRY27,000: TRY1,650 for the first TRY11,000, plus 20% on the excess.

  • On income up to TRY60,000 (TRY97,000 for wages or salaries): TRY 4,850 for the first TRY 27,000, plus 27% on the excess.

  • On income (other than wages and salaries) of more than TRY60,000: TRY13,760 for the first TRY60,000, plus 35% on the excess. On wages and salaries of more than TRY97,000: TRY23,750 for the first TRY97,000, plus 35% on the excess.

 

Inheritance tax and lifetime gifts

7. What is the basis of the inheritance tax or gift tax regime (or alternative regime if relevant)?

Any goods (real property, personal property, rights and receivables) that are transferred from one person to another on a free-of-charge basis are subject to inheritance and succession tax (Inheritance and Succession Tax Law No. 7338) (IST) Inheritance tax is imposed when the inheritance is transferred from the testator to their heirs on the testator's death. Succession tax is imposed when any good is transferred free of charge from a living person to another living person. IST is based on the value of the goods transferred, not on how much the beneficiary receives, who the beneficiary is, or the beneficiary's wealth. However, some circumstances will give rise to IST exemptions (see Question 8).

 
8. What are the inheritance tax or gift tax rates (or alternative rates if relevant)?

Tax rates

Inheritance tax rates for 2014 are as follows:

  • Up to TRY190,000: 1%.

  • Between TRY190,000 and TRY630,000: 3%.

  • Between TRY630,000 and TRY1.6 million: 5%.

  • Between TRY1.6 million and TRY3.4 million: 7%.

  • Exceeding TRY3.4 million: 10%.

Succession tax rates for 2014 are as follows:

  • Up to TRY190,000: 10%.

  • Between TRY190,000 and TRY630,000: 15%.

  • Between TRY630,000 and TRY1.6 million: 20%.

  • Between TRY1.6 million and TRY3.4 million: 25%.

  • Exceeding TRY3.4 million: 30%.

Exemptions

The following exemptions apply:

  • IST is not payable on goods up to TRY146,306 that are inherited by the deceased's wife and children or grandchildren. IST is not payable on goods up to a value of TRY292,792 if the only heir is the deceased's wife.

  • Gifts customarily gifted to others, such as gifts for seeing the bride's face, or a dowery.

  • Donations to charitable foundations.

  • Complimentary successions of up to TRY3,371, such as birthday gifts.

Techniques to reduce liability

There are no specific techniques to reduce liability.

 
9. Does the inheritance tax or gift tax regime apply to foreign owners of real estate and other assets?

The inheritance or succession of real estate that is owned by foreign nationals is subject to IST in Turkey. Foreign-owned goods are subject to IST in Turkey if the recipient is a Turkish citizen.

 
10. Are there any other taxes on death or on lifetime gifts?

There are no other taxes on death or on lifetime gifts.

 

Taxes on buying real estate and other assets

11. Are there any other taxes that a foreign national must consider when buying real estate and other assets in your jurisdiction?

Purchase and gift taxes

Gifts of real estate are subject to IST (see Question 7).

Wealth taxes

Property tax is a wealth tax (see below).

Other

The following are relevant to purchases of real estate:

Land registry fees. Transactions that must be registered with the land registry and cadaster offices are subject to land registry fees, including (tariff 4, attached to the Fees Act, Law No. 492):

  • Real estate transfers.

  • Mortgages.

  • Other restrictions registered against real estate.

Property tax. Real estate is subject to property tax, which is regulated by the Property Tax Law (Law No. 1319) (PTL). The tax rate is 0.1% for residents (private houses) and 0.2% for other buildings. Rates are doubled when the real estate is located within the boundaries of metropolitan areas or adjacent to municipal areas. Property tax is paid annually in two instalments. The first instalment is payable from 1 March to 31 May, and the second instalment is payable in November.

Land is also subject to property tax. Tax rates for land are 0.1% or 0.3% depending on the land's particular attributes. For example, land that is not zoned for housing is taxed at 0.1% and land that is zoned for housing is taxed at 0.3%.

 
12. What tax-advantageous real estate holding structures are available in your jurisdiction for non-resident individuals?

In Turkey, real estate investment companies (REICs) offer certain tax advantages for real estate investment:

  • REICs are exempted from corporate income tax.

  • Shareholders' income is subject to 0% withholding tax.

  • Non-resident individual shareholders do not need to declare shareholder income to the Turkish tax authorities.

 

Taxes on overseas real estate and other assets

13. How are residents in your jurisdiction with real estate or other assets overseas taxed?

Turkey levies income tax based on the residency of real and legal persons (see Question 2). Resident taxpayers are taxed on their worldwide income, and must declare any income they receive from outside of Turkey. Income from foreign countries is earned:

  • In the year it is transferred to the taxpayer's account in Turkey.

  • In the year the taxpayer has the disposal right of the income (if it is substantiated that the income is not transferred to the taxpayer's account in Turkey for reasons beyond the taxpayer's control).

The Turkish tax system includes certain provisions for resident individual taxpayers who receive income from controlled foreign corporations (CFCs) (that is, a corporation that is registered and conducts business from outside Turkey). Income from CFCs is subject to taxation in Turkey whether or not it is distributed to its shareholders, provided that the shareholder holds 50% of the CFC's direct or indirect shares, or has the right to vote.

 

International tax treaties

14. Is your jurisdiction a party to many double tax treaties with other jurisdictions?

Turkey has concluded 82 tax treaties. Presently, 78 treaties are in force (including treaties with the UK and the US).

The treaties follow the OECD Model Tax Convention on Income and Capital (Model Convention). However, some differences exist, for example:

  • Some jurisdictions impose higher tax rates than the Model Convention.

  • Where the local tax authority seeks to secure a tax claim or by local regulation is forced to do so. For example, Article 6/2 of the Double Tax Treaty between Turkey and Austria includes fishery facilities of any kind in its definition of "immovable property", whereas the Model Convention does not. This allows the tax authority to tax income from immovable property that is not covered by the Model Convention.

 

Wills and estate administration

Governing law and formalities

15. Is it essential for an owner of assets in your jurisdiction to make a will in your jurisdiction? Does the will have to be governed by the laws of your jurisdiction?

It is not essential for an owner of assets in Turkey to make a will, although he or she is entitled to make a will on all or part of the owner's assets (Article 514, Civil Code). If an asset owner does not make a will or makes a will that only deals with part of that owner's assets, assets that are not dealt with pass to the owner's legal heirs under the intestacy rules (see Question 28). The legal basis and contents of a will are governed by the laws of the testator's country of citizenship, as per the general rule on the governing law of a decedent's estate (Article 20, International Private Law) (see Question 19).

Turkey ratified the HCCH Convention on the Conflicts of Laws relating to the Form of Testamentary Dispositions 1961 (Hague Testamentary Dispositions Convention) in 1983. Accordingly, Turkish law will recognise the form of a will if it conforms to the formalities for making a will under the laws of any of the following:

  • The location where the will was made.

  • The testator's country of citizenship when the testator made the will or at the time of the testator's death.

  • The testator's domicile when the testator made the will or at the time of the testator's death.

  • The testator's habitual residence when the testator made the will or at the time of the testator's death.

  • If the will related to real property, the location where the real property is situated.

The Convention was signed as a uniform law (loi uniforme), so is also applied generally by the signatories to foreign nationals of non-signatory states. Turkey has signed the Convention with three reservations:

  • The testator's domicile is designated under Turkish law.

  • Turkey reserves the right not to recognise verbal wills made by Turkish citizens under foreign law, except in extraordinary circumstances.

  • The Convention does not apply to provisions in wills that do not fall under Turkish inheritance law in wills whose forms are governed by foreign law (for example, trusts).

 
16. What are the formalities for making a will in your jurisdiction? Do they vary depending on the nationality, residence and/or domicile of the testator?

A will whose form is governed by Turkish law can be official, hand written or verbal (Article 531, Civil Code).

Official wills

Official wills must be (Article 532, Civil Code):

  • Made before an official (for example, a judge or notary) and two witnesses.

  • Prepared, dated and signed by the official, and signed by the testator and two witnesses.

In addition, the testator must declare to the witnesses that he acknowledges the contents of the will.

Handwritten wills

Handwritten wills (Article 538, Civil Code):

  • Must be entirely handwritten and include the day, month and year that the will was created.

  • Can be consigned to a notary, judge or authorised official for safekeeping.

Verbal wills

Verbal wills must comply with the following rules (Article 539, Civil Code):

  • They can be made if the testator is unable to make an official or handwritten will due to extraordinary circumstances, for example, danger of sudden death, failure of transportation, illness or war.

  • The testator must tell his last wishes to two witnesses, and the witnesses must write a testament in accordance with the testator's spoken wishes.

  • The witnesses' written testament must:

    • be signed by both witnesses;

    • include the last wishes of the testator, the location and the date that the verbal will was made; and

    • be submitted to the court.

  • If the circumstances that forced the testator to make a verbal will no longer apply, and the testator becomes able to make an official or handwritten will, the previously made verbal becomes invalid one month after the normalisation of circumstances.

 

Redirecting entitlements

17. What rules apply if beneficiaries redirect their entitlements?

The estate vests jointly in the statutory and appointed heirs (if any) of the deceased at the time of death (see Question 20). The statutory heirs are those that are entitled to a share of the estate under the forced heirship or intestacy rules, as applicable (see Questions 24 and 28). The heirs can then distribute the estate by mutual agreement or by applying to the court.

Heirs can redirect their entitlements to each other by mutual agreement so long as they do so within the rules of the distribution regime (see Question 24). Written estate-distribution contracts between heirs are binding on execution, whereas agreed distributions of estate shares between heirs are binding once the shares are actually claimed. (Article 676, Civil Code.) Heirs can also contract with each other to redirect their agreed share of the whole estate or a portion of the estate. The contracts must be in writing to be valid (Article 677, Civil Code.)

An heir can also transfer his share of the whole estate or a portion of the estate to a third person, but a notary public must draw up the transfer contract. Such contracts do not give third persons a right to join in the heirs' distribution regime. Rather, third parties can only enforce a transfer of the portion of the estate share that is allocated to the contracting heir after the distribution is executed (Article 677, Civil Code).

A contract between heirs (or between an heir and a third party) that concerns an inheritance and which is made before the death of the estate owner, is invalid unless the estate owner has participated in or permitted the contract (Article 678, Civil Code).

 

Validity of foreign wills and foreign grants of probate

18. To what extent are wills made in another jurisdiction recognised as valid/enforced in your jurisdiction? Does your jurisdiction recognise a foreign grant of probate (or its equivalent) or are further formalities required?

Validity of foreign wills

Turkey ratified the HCCH Convention on the Conflicts of Laws relating to the Form of Testamentary Dispositions 1961 (Hague Testamentary Dispositions Convention) in 1983. Foreign wills made in accordance with the Hague Testamentary Dispositions Convention are valid under Turkish law.

Validity of foreign grants of probate

Turkish courts recognise foreign grants of probate as final judgments or as conclusive evidence of a deceased's last wishes as long as (Article 58, International Private Law (Law No. 5718)):

  • The subject of the foreign judgment does not fall within the scope of the Turkish courts' exclusive jurisdiction.

  • The foreign judgment complies with public order.

  • In contentious cases, the defendant does not object to the enforcement of the foreign judgment by Turkish courts on the grounds that the defendant was not duly summoned or represented before the court, or that the defendant's fundamental procedural rights were not observed.

 

Death of foreign nationals

19. Are there any relevant practical estate administration issues if foreign nationals die in your jurisdiction?

As a general rule, the estate of the decedent is subject to the national law of the decedent's country of citizenship (Article 20, International Private Law). Therefore, if a foreign national dies in Turkey, the national law of the decedent's country of citizenship applies to the estate. However, the law provides certain exceptions to this general rule and subjects the following matters to Turkish law (Article 20, International Private Law):

  • Real property located in Turkey in the decedent's estate.

  • The reasons for opening the decedent's estate (for example, death or legal absence).

  • The vesting of the estate (see Questions 20 and 21).

  • The distribution of the estate (see Questions 20 and 21).

 

Administering the estate

20. Who is responsible for administering the estate and in whom does it initially vest?

Responsibility for administering

Partnership of heirs. At the time of death, title to the estate vests jointly in the statutory and appointed heirs (if any), forming a partnership of heirs jointly carrying all rights, benefits, and liabilities of the estate (Articles 640 and 641, Civil Code). The partnership of heirs is responsible for administering the estate until distribution, unless an administrator is appointed (see below). An heir can renounce his position verbally or in writing to a local judge at the deceased's place of residence within three months of the time of death for statutory heirs (unless delayed knowledge of heirship is proven), or at the time that they receive official notice of their heirship for appointed heirs (Articles 605 and 606, Civil Code). Once the estate has been distributed, the partnership dissolves by mutual agreement or by application to the court (Articles 642 and 646, Civil Code) (see below, Vesting).

Official administrator. A local judge at the deceased's place of residence, acting on the request of an heir or in the course of his duties, will ensure the protection of the estate until the beneficiaries take lawful possession of the estate's assets (Article 589, Civil Code).

A local judge can, to ensure protection, appoint an official administrator to the estate where:

  • An heir has been declared "absent" under Turkish law for a long time without a representative.

  • The existence of heirs is in doubt and no applicants can satisfactorily prove their right to inherit.

  • The list of heirs is incomplete.

  • Another statute requires an official administrator to be appointed (for example, Article 586 of the Civil Code, states that the estate share of an heir who cannot be located must be administered officially).

Official administration continues until the reason for the appointment of the administrator is resolved, or until the estate is distributed (Article 592, Civil Code). An appointed administrator can be a local judge or another individual.

If a will appoints an executor, or if the deceased had an appointed legal guardian or conservator, then that individual will administer the estate (see below).

The administrator (Article 593, Civil Code):

  • Keeps a record of the estate.

  • Takes any necessary protective measures.

  • Sells assets of the estate (if deemed to be in the heirs' benefit or in accordance with good administration principles).

  • Pays the deceased's debts.

  • Performs provisions of the will (if it exists), so long as the heirs' legal rights are not adversely affected, and subject to the approval of the local small claims and first instance judges.

  • Invests cash being held in the estate and secures those investments until distribution.

  • Operates any businesses or other enterprises in the estate (or liquidates them if there is no benefit to their continued operation).

The administrator carries out these responsibilities on behalf of the partnership of heirs and represents the partnership in court and in execution proceedings. The administrator is authorised to:

  • File lawsuits to protect the estate.

  • Begin execution proceedings and withdraw from, settle, or arbitrate legal claims on behalf of the partnership of heirs.

  • Keep heirs informed of lawsuits and legal actions about the estate.

Executor. The deceased can appoint one or more executors. The executor is informed of his duties by a local judge, and has 15 days to reject the office. If more than one executor is appointed, the executors act jointly (though in times of urgency, they also can act individually). The executor is responsible for, and authorised to, pursue all necessary proceedings to fulfil the deceased's last wishes, unless the will limits his office in any way. The executor's duties include:

  • Preparing a record of the estate's assets, rights and liabilities.

  • Administering the estate.

  • Settling the estate's debts.

  • Performing the provisions of the will.

  • Preparing a distribution plan for the estate.

  • Representing the partnership of heirs in estate-related legal proceedings, and if necessary, intervening in any of the heirs' lawsuits that are relevant to the estate.

  • Informing heirs of lawsuits and legal actions about the estate.

A local judge supervises executors, and any transfer or restriction of the real rights on estate assets by an executor (such as, transfer of ownership and granting an easement right) is subject to the authorisation of a local judge provided that the executor is not simply carrying out a transaction undertaken by the deceased before death. In giving his authorisation, the local judge will take heirs' wishes into consideration. Executors do not need authorisation for regular expenses arising from real estate transactions (Articles 550 to 556, Civil Code).

Vesting

The estate vests jointly in the statutory and appointed heirs (if any) at the time of death (see above, Responsibility for administering). Unless otherwise stipulated in the will, the claims of beneficiaries under the will are due when an heir accepts the estate (or the statutory deadline to renounce passes). Beneficiaries can then make individual testamentary claims to the executor, or to the statutory or appointed heirs (see above, Responsibility for administering). A beneficiary's right to sue for non-compliance with that request expires the later of ten years after the beneficiary learns of the claim or when the claim is due.

A local judge at the deceased's place of residence protects the estate until the beneficiaries take lawful possession of the assets (either during the course of their duties, or acting on the request of an heir). Executors and court-appointed administrators also hold certain rights and privileges over the estate in the course of their duties as described above. However, title remains with the partnership of heirs until the estate is distributed.

 
21. What is the procedure on death in your jurisdiction for tax and other purposes in relation to:
  • Establishing title and gathering in assets (including any particular considerations for non-resident executors)?

  • Paying taxes?

  • Distributing?

Establishing title and gathering in assets

Title to the estate vests jointly in the statutory and appointed heirs (if any) at the time of the testator's death and a local judge has responsibility for protecting the estate (see Question 20, Responsibility for administering).

Anyone who holds or finds a will is responsible for delivering it to the local court at the deceased's place of residence on learning of the death or that person will be held liable for any damages that result. The local judge must open the will within a month of delivery and will inform any beneficiaries at the estate's expense. Statutory heirs must apply to the court for heirship certificates (see Question 25). Appointed heirs or beneficiaries are certified by the court within a month if their position is not disputed during that time. Rights to file claims against disputed heirship certificates or testamentary dispositions are reserved. Claims against heirship certificates can be brought at any stage (Articles 595 to 598, Civil Code). (For challenges to testamentary dispositions, see Question 23.)

If the heirs accept the estate, payments are made from the estate in the following order:

  • The deceased's creditors, who must be paid first.

  • Beneficiaries, who take second precedence (and may be asked to return what remains of earlier dispositions if more of the deceased's creditors emerge).

  • The claims of personal creditors of the heirs, who may seek recourse to the share of the estate that the debtor heir is entitled to.

Procedure for paying taxes

IST returns must be declared to the tax office of the deceased's place of residence:

  • Within four months if the testator died in Turkey and the taxpayer is in Turkey.

  • Within six months if the testator died in Turkey and the taxpayer is outside of Turkey.

  • Within six months if the testator died outside of Turkey and the taxpayer is in Turkey.

  • Within four months if the testator died outside of Turkey and the taxpayer is in the same country.

  • Within eight months if the testator died outside of Turkey and the taxpayer is neither in Turkey nor in the jurisdiction where the testator died.

If the testator dies in a foreign country, the Ministry of Finance assigns a tax office to accept the IST return. IST can be paid in six equal instalments within three years after it accrues. Instalments are paid in May and November.

Distributing the estate

The estate is evaluated, for the purposes of its subsequent distribution, as at the time of death, including all dispositions made during the deceased's lifetime and all testamentary dispositions. Assets that are likely to significantly depreciate in value if divided are distributed as a whole. If the allocation of an asset as a whole to one heir is challenged and mutual agreement cannot be reached, then the asset will be sold and the returns will be distributed in accordance with each heir's share under the agreed distribution scheme. Heirs can request that items that form a whole due to their purpose or particular qualities remain undivided. Family documents or items of special sentimental value cannot be sold if there is a dispute between heirs (Articles 651 to 653, Civil Code).

Any lifetime dispositions to an heir are returned to the estate to balance the heirs' shares in the estate, unless the will indicates otherwise (Article 669, Civil Code). Any lifetime disposition that exceeds an heir's portion in the estate is exempt from balancing by the amount exceeded, which remains with that heir (Article 672, Civil Code).

A deceased's lifetime expenditures for a child's education are only subject to the duty to return for balancing amounts above and beyond that which is customary. Regular gifts and customary matrimonial expenditures do not need to be balanced (Articles 674 and 675, Civil Code).

The estate is distributed by mutual agreement of the heirs or by the court on any heir's application:

  • By application to the local court (Articles 642 and 650, Civil Code). If an heir asks the court to distribute the estate, the court will take into account local customs, heirs' personal situations, and the wishes of the majority. The court will consider both the estate as a whole and the individual assets it includes, trying to allocate any real property without dividing it between individual heirs. Differences in value between real property that is distributed without division is offset by cash payments when heirs' portions are balanced. If immediate distribution would probably materially reduce the value of the asset or the estate, the heirs can ask the judge to delay distribution.

  • By mutual agreement of the heirs (Articles 646 to 650, Civil Code). Unless otherwise stipulated in the law or in the deceased's will, all statutory and appointed heirs have equal rights to all assets in the estate. The heirs can ask for the debts of the deceased to be paid off prior to distribution or to be otherwise secured. Heirs must inform each other of all relevant information on their relationship with the deceased to achieve an equitable distribution. There are as many portions in the estate as there are heirs, and the allocation of portions to each heir is performed by mutual agreement (or by lottery, if an agreement is not possible). Distribution between heirs can also be executed by a written contract, which is signed after the estate is opened.

Distribution is subject to the forced heirship regime and any distribution rules set out in a testamentary disposition or a lifetime allocation to an heir (Article 647, Civil Code) (see Question 25).

 
22. Are there any time limits/restrictions/valuation issues that are particularly relevant to an estate with an element in another jurisdiction?

There are no time limits, restrictions or valuation issues that are particularly relevant to an estate with a foreign element.

 
23. Is it possible for a beneficiary to challenge a will/the executors/the administrators?

A beneficiary can challenge a will before the relevant court if the will:

  • Has been executed by a person without testamentary capacity.

  • Has been executed by mistake, fraud, threat or force, or under duress.

  • Contains content that is contrary to the law or to public policy.

  • Has not been executed in accordance with the provisions of the law.

A will can be challenged as a whole or in part. Beneficiaries must file a claim within one year from the date that the beneficiary becomes aware of any of the above reasons and within ten years of the opening of the will in all cases (Article 559, Civil Code).

 

Succession regimes

24. What is the succession regime in your jurisdiction (for example, is there a forced heirship regime)?

Turkey has a forced heirship regime. When the deceased has made a testamentary disposition, a portion of the estate is reserved for the forced heirs. That amount is a proportion of the amount that they would receive on intestacy (statutory share) (see Question 28). The forced heirs reserved portions are:

  • Descendants of the deceased: one-half of their statutory share.

  • Deceased's parents: 25% of their statutory share.

  • Deceased's brothers and sisters: one-eighth of their statutory share.

  • Surviving spouse: if he or she is a co-heir along with the deceased's issue or parents, the entire statutory share. If he or she is the only heir, one-half his or her statutory share.

Excluding reserved portions under the forced heirship regime, all of the deceased's estate can be freely distributed (see Question 25). If no forced heirs exist, then the entirety of a person's estate can be distributed through testamentary dispositions (Article 505, Civil Code). An individual can (Articles 520 to 522, Civil Code):

  • Appoint heirs and designate beneficiaries for specific assets, rights, and privileges in a will or a lifetime testamentary contract.

  • Designate reserve heirs (in case an appointed heir dies or renounces his or her heirship) or sub-heirs to appointed heirs (to receive the appointed heir's portion on the appointed heir's death).

Before calculating the portion of the estate that may be freely distributed, the following are deducted from the estate:

  • The deceased's debts.

  • Funeral expenses.

  • Any sealing and record-keeping expenses.

  • The three-month living expenses of any of the deceased's dependents and co-residents.

Lifetime dispositions of the deceased are added to the calculation to the extent that they are subject to balancing heirs' portions in the estate (Articles 507 and 508, Civil Code) (see Question 21, Distributing the estate).

 

Forced heirship regimes

25. What are the main characteristics of the forced heirship regime, if any, in your jurisdiction?

Avoiding the regime

As estates are subject to decedents' national laws, the forced heirship regime does not apply to foreign nationals' estates (see Question 19). Turkish nationals cannot avoid the forced heirship regime.

Assets received by beneficiaries in other jurisdictions

When applying forced heirship rules to the estate, Turkish law takes into account the whole estate of the decedent. Matters such as the location of the estate, or whether an offshore entity or another entity holds the assets are not taken into consideration.

Mandatory or variable

Forced heirship rules are generally mandatory for the testator, although the testator is entitled to abolish the forced heirship right of the testator's heir where that heir has:

  • Committed a crime against the testator or his or her relatives.

  • Failed considerably in his or her duties to the testator's family members under family law.

In addition, the forced heir is entitled to waive forced heirship rights.

 

Real estate or other assets owned by foreign nationals

26. Are real estate or other assets owned by a foreign national subject to your succession laws or the laws of the foreign national's original country?

The Act on Private International Law and Procedural Law (Law No. 5718) ("Act on Private International Law") distinguishes between the immovable and movable assets of a foreign decedent (Article 20, Act on Private International Law). Accordingly, the movable assets of a foreign decedent that are located in Turkey are subject to the laws of the foreign national's country of origin. However, Turkish law governs the:

  • Process of opening and distributing an estate.

  • Immovable assets of foreign nationals' estates that are located in Turkey.

(For details about the estates of foreign nationals in Turkey, see Question 19.)

 
27. Do your courts apply the doctrine of renvoi in relation to succession to immovable property?

Immovable property in Turkey that is owned by a foreign decedent is always subject to Turkish law (see Question 26). The rule cannot be overcome by the decedent's will (professio iuris). Therefore, the courts in Turkey will not refer succession issues to a foreign national's home jurisdiction where that issue includes real property located in Turkey.

 

Intestacy

28. What different succession rules, if any, apply to the intestate?

In case of intestacy, heirs to an estate are classified according to their degrees of kinship to the decedent into four classes, or degrees of kinship.

The deceased's estate passes to each class in descending order (from first-degree heirs to second-degree heirs, and so on) where there are no heirs in the relevant class:

  • First-degree heirs. The decedent's first-degree heirs are his surviving spouse and descendants. Descendants include the decedent's children or, where the decedent's children have predeceased the decedent, the children or grandchildren of the decedent's children (the decedent's issue).

    The decedent's children have an equal share in the decedent's estate. The decedent's issue are entitled to their predeceased parent's share in equal proportions with their brothers and sisters (per stirpes).

    The decedent's adopted children and their descendants enjoy the same rights of inheritance from the estate of the adopting parent as the decedent's natural children.

    Although the decedent's spouse is considered a first-degree heir, his or her share is subject to separate rules (see below).

  • Second-degree heirs. The second-degree heirs are the decedent's parents. The decedent's parents (if there are no descendants) receive the decedent's estate per capita (in equal shares). A predeceased father or mother is represented by his or her issue, who receive the share of their parent per stirpes. Where one parent of the decedent has heirs and the other has no heirs, the whole estate passes to the heirs of the decedent's parent who has heirs.

  • Third-degree heirs. The third-degree heirs are the decedent's grandparents. The grandparents receive the estate per capita, if there are no heirs in the previous classes. If any of the decedent's maternal and paternal grandparents predecease the decedent and do not have descendants, and the decedent does not have a surviving spouse, the grandparents are represented by their heirs through succession. If any of a decedent's maternal or paternal grandparents do not have heirs, the whole estate passes to the heirs of the decedent's other maternal or paternal grandparent who do have heirs.

The surviving spouse can take a share of the estate together with the first, second and third-degree heirs of the decedent. The surviving spouse's share of the decedent's estate varies depending on the degree of kinship between the decedent and the inheriting heirs:

  • 25% of the estate where the decedent's other heirs are the decedent's descendants.

  • One-half of the estate where the decedent's other heirs are the decedent's parents and the parents' descendants.

  • 75% of the estate where the decedent's other heirs are the decedent's grandparents.

  • The entire estate where the decedent does not have any of the heirs mentioned above.

The estate of a decedent who does not leave any first, second or third-degree heirs passes to the state.

 
29. Is it possible for beneficiaries to challenge the adequacy of their provision under the intestacy rules?

It is not possible for beneficiaries to challenge the adequacy of their provision under the intestacy rules.

 

Trusts

30. Are trusts (or an alternative structure) recognised in your jurisdiction?

Type of trust and taxation

The concept of a trust or an alternative structure does not exist in Turkey's inheritance laws. Under Turkish law, even if a vehicle similar to a trust is established without being labelled as a trust, it cannot claim any rights to the estate, any rights arising from the estate, or any rights as the estate's heirs.

Residence of trusts

Residence of trusts is not relevant, as the concept of a trust does not exist in Turkey.

 
31. Does your jurisdiction recognise trusts that are governed by another jurisdiction's laws and are created for foreign persons?

Foreign trusts are not recognised in Turkey.

 
32. What are the tax consequences of trustees (for example, of an English trust) becoming resident in/leaving your jurisdiction?

There are no tax consequences of trustees leaving the jurisdiction, as the concept of a trust does not exist in Turkey.

 
33. If your jurisdiction has its own trust law:
  • Does the law provide specifically for the creation of non-charitable purpose trusts?

  • Does the law restrict the perpetuity period within which gifts in trusts must vest, or the period during which income may be accumulated?

  • Can the trust document restrict the beneficiaries' rights to information about the trust?

Purpose trusts

See Questions 30 and 31.

Perpetuities and accumulations

See Questions 30 and 31.

Beneficiaries' rights to information

See Questions 30 and 31.

 
34. Does the law in your jurisdiction recognise claims against trust assets by the spouse/civil partner of a settlor or beneficiary on the dissolution of the marriage/partnership?

See Questions 30 and 31.

 
35. To what extent does the law of your jurisdiction allow trusts to be used to shelter assets from the creditors of a settlor or beneficiary?

See Questions 30 and 31.

 

Charities

36. Are charities recognised in your jurisdiction?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

 
37. If charities are recognised in your jurisdiction, how can an individual donor set up a charity?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

 
38. What are the benefits for individuals when setting up charitable organisations?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

 

Ownership and familial relationships

Co-ownership

39. What are the laws regarding co-ownership and how do they impact on taxes, succession and estate administration?

Turkish law recognises co-ownership. If a decedent is a co-owner of an asset, only the decedent's share in the relevant asset is taken into consideration with respect to taxes, succession and estate administration.

 

Familial relationships

40. What matrimonial regimes in trust or succession law exist in your jurisdiction? Are the rights of cohabitees/civil partners in real estate or other assets protected by law?

Husbands and wives are free to make arrangements about the matrimonial regime that is applied to their marriage. Arrangements can be made by a notarised agreement entered into before or after the marriage.

If no arrangements are made, the statutory regime applies. So, acquired property is matrimonial property and is subject to distribution on death, divorce or annulment. However, spouses' personal property is exempt (see below). Acquired property includes the following for either spouse:

  • Earnings.

  • Social security payments received.

  • Workers' compensation payments.

  • Income generated from personal property (for example, rental payments from personal real property).

Spouses' personal property that is exempt from the statutory regime (and thus is not subject to distribution to the other spouse) includes:

  • Personal chattels used by only one spouse.

  • Assets owned before marriage.

  • Assets received through personal inheritance.

  • Assets receive without consideration (for example, gifts).

  • Moral compensation receivables.

 
41. Is there a form of recognised relationship for same-sex couples and how are they treated for tax and succession purposes?

There is no form of recognised relationship for same-sex couples under Turkish law.

 
42. How are the following terms defined in law:
  • Married?

  • Divorced?

  • Adopted?

  • Legitimate?

  • Civil partnership?

Married

This term means a person who has been married in a marriage ceremony that is performed by an authorised public marriage officer before two witnesses over eighteen years of age who are of legal capacity (Articles 134 to 144, Civil Code).

Divorced

This term means the termination of a marriage by a judgment of the authorised civil court.

Adopted

This term means a child who has been adopted in accordance with Articles 305 to 320 of the Civil Code.

Legitimate

This term means a child who:

  • Is born inside of a marriage.

  • Is acknowledged by the father in a unilateral recognition made in notarised form, or by application to the court or to a birth registration officer.

  • Is affiliated with the father in a court decision (a patrimonial lawsuit).

Illegitimate children of male testators must prove their kinship with the testator before the law to receive a share of the estate.

Civil partnership

Civil partnerships are not recognised in Turkey.

 

Minority

43. What rules apply during the period when an heir is a minor? Can a minor own assets and who can deal with those assets on the minor's behalf?

An heir is considered a minor until the age of 18. A minor can own assets; however, the parents or a court appointed legal guardian administer the assets until the minor comes of age.

 

Capacity and power of attorney

44. What procedures apply when a person loses capacity? Does your jurisdiction recognise powers of attorney (or their equivalent) made under the law of other jurisdictions?

If a person loses capacity, he or she is placed under the guardianship of a legal guardian appointed by the court (Articles 404 to 407, Civil Code). The guardian represents the person who has lost capacity in legal transactions and administers their estates. A guardian cannot be a guarantor in the name of the incapacitated person they represent, and cannot establish a foundation or make large donations from the incapacitated person's funds (Article 447, Civil Code).

 

Proposals for reform

45. Are there any proposals to reform private client law in your jurisdiction?

There is a draft law before the Ministry of Finance to unite the Income Tax Code (which applies to real persons) and the Corporate Income Tax Code (which applies to corporations) under a new income tax code.

 

Online resources

W www.mevzuat.gov.tr

This website provides official up-to-date legislation and is maintained by the General Directorate of Legislation Development and Publication. It is possible to find all the legislation that is currently in force. Legislation is only provided in Turkish. Currently, there is no website that provides English translations (or other translations) of Turkish legislation.


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