Doing business in Turkey
A Q&A guide to doing business in Turkey.
This Q&A gives an overview of key recent developments affecting doing business in Turkey as well as an introduction to the legal system; foreign investment, including restrictions, currency regulations and incentives; and business vehicles and their relevant restrictions and liabilities. The article also summarises the laws regulating employment relationships, including redundancies and mass layoffs, and provides short overviews on competition law; data protection; and product liability and safety. In addition, there are comprehensive summaries on taxation and tax residency; and intellectual property rights over patents, trade marks, registered and unregistered designs.
To compare answers across multiple jurisdictions, visit the Doing business in... Country Q&A Tool.
This article is part of the PLC multi-jurisdictional guide to doing business worldwide. For a full list of contents, please visit www.practicallaw.com/dbi-mjg.
Legal persons resident outside Turkey can freely purchase and sell Turkish securities and other capital market instruments, provided that banks and brokerage firms in Turkey act as intermediaries (Article 15(d)( i), Decree No. 32 Regarding Protection of the Value of Turkish Currency (as amended) issued under the Law Regarding Protection of the Value of Turkish Currency (Law No. 1567) (as amended) (Decree No. 32)). However, there are special prior approval requirements for owning shares and/or voting rights reaching certain thresholds in certain types of regulated companies. The companies subject to these requirements are generally:
Television and/or radio companies.
Asset management companies.
Financial leasing companies.
Financial holding companies.
Air transportation companies.
Any other company regulated by government authority.
Regulatory permission must be obtained from the relevant authority, irrespective of whether the relevant company is listed.
Foreign investors are free to make direct foreign investments in Turkey (Direct Foreign Investments Law No. 4875, 2003 (FDIL)). Direct foreign investment includes:
Foundation of a new company or opening a branch.
Direct acquisition of capital shares, not through the Securities Exchange.
Acquisition of capital shares equal to at least 10% of a company.
Acquisition of at least 10% of the voting securities in a company quoted and traded in the Securities Exchange by a foreign investor using economic assets supplied from overseas or from the domestic market.
Ownership of real property by foreign nationals is restricted to up to 10% of the real property in certain designated zones in each district. Companies incorporated in Turkey by foreign investors (or companies with foreign shareholders) can only acquire and use real properties to conduct the activities stated in their articles of association (articles). These real properties cannot be in military or private security zones. Foreign companies can only acquire real property in limited circumstances, under certain laws such as the:
Petroleum Law (Law No. 6326, 1954).
Encouragement of Tourism Law (Law No. 2634, 1982).
Banking Law (Law No. 5411, 2005).
Industrial Zones Law (Law No. 4737, 2002).
Foreign investors can freely transfer the following through Turkish banks (Decree No. 32):
Sale, liquidation and indemnity proceeds.
Consideration for licences, and management and similar agreements.
However, these banks must inform the relevant authority of Turkish lira transfers executed abroad, excluding payments for exports, imports and invisible transactions that are above the equivalent of US$50,000, within a 30-day period starting from the date of transfer.
Currency transactions are also subject to notification requirements under the Law Regarding the Prevention of Laundering of Crime Revenues (Law No. 5549, 2006).
Grants and incentives are available to both Turkish and foreign investors.
Available incentives include:
An investment allowance.
Tax exemptions (for example, customs duties) (see Question 24).
Insurance of export receivables.
State aid for certain expenses.
Free trade zones
Extensive incentives are available to investors in designated free trade zones and include (Law No. 5084, 2004):
A licence to set up and operate.
A location (office).
Tax advantages such as:
corporate tax exemption;
income tax exemption related to salaries.
Technology and development zones (known as techno parks) grant significant advantages to investors (Law No. 4691, 2001). Research and development incentives are available and include:
State aid for research and development activities.
Corporate tax exemption.
Income tax exemption.
A special regulation promoting investment and employment in less developed regions of the country provides for direct state aid in these regions.
Foreign investors that are required to give up their investment for public purposes must be compensated fairly.
The most common forms of corporate vehicles established in Turkey are joint stock companies (JSCs) and limited liability companies (LLCs).
Foreign companies most commonly use the JSC and the LLC, as defined and regulated by the Commercial Code. These are the most common vehicles in Turkish commercial life and most other relevant laws take this into account. These company types also largely overlap with their counterparts in other jurisdictions. Therefore, these vehicles are more convenient.
Registration and formation
According to the new Commercial Code (Law No. 6102), published in the Official Gazette on 14 February 2011 and which entered into force on 1 July 2012, a JSC and an LLC must be incorporated with at least one shareholder. Both types of company must comply with the following procedures:
The articles must be executed by the shareholders and notarised by a Turkish notary public.
For certain JSCs such as banks and intermediary institutions, the Ministry of Industry and Commerce must authorise the adoption of, and modifications to, the articles.
The articles must be registered with, and published in, the Trade Registry Gazette.
At least 25% of the company's share capital must be paid before the registration of the company, and the remaining share capital within 24 months of registration.
The registration may take about one week, subject to the workload of the Trade Registry. The Trade Registry can require additional documents during evaluation of the incorporation documents, which may extend the registration process.
Each city's Trade Registry requires different documents, but they do not differ much in content. The required documents for registration are indicated at www.ito.org.tr for Istanbul, and at www.atonet.org.tr for Ankara.
JSC and LLC board of directors must prepare the following documents for the fiscal year, and present them to the general meeting of shareholders (general meeting) within three months of the balance sheet date (Article 514, Commercial Code):
Financial statements and annexes, prepared according to Turkish Accounting Standards. These must faithfully, truthfully and transparently present the company assets, debts and liabilities, equity capital and activity results, in a complete, understandable, comparable manner, according to the nature and needs of the company (Article 515, Commercial Code).
Annual activity report of the board of directors. This must reflect the flow of activities for that year and the financial situation of the company, based on the company financial statements, in a correct, complete, direct and truthful manner, and discuss the development of the company and the potential risks it faces (Article 516, Commercial Code). The annual report of the board of directors must also include:
significant events at the company that occurred following the end of the activity year;
research and development works of the company; and
financial benefits paid to directors and senior managers, such as salaries, expenses, allowances, guarantees, premiums and bonuses.
Details relating to these minimum content requirements are regulated by the Ministry of Customs and Trade.
Group companies must prepare consolidated financial statements as per the above requirements. The parent company board of directors must prepare an annual activity report for the group according to the above requirements.
Turkish accounting standards are published by the Turkish Accounting Standards Board, and are in-line with International Financial Reporting Standards (Article 88(2), Commercial Code).
There is no maximum share capital. The minimum share capital of an LLC is TRY10,000, and for a JSC is TRY50,000.
Companies can issue shares for non-cash consideration, provided that the consideration is valued by experts appointed by Turkish courts.
Rights attaching to shares
Restrictions on rights attaching to shares. There are no restrictions on rights attached to shares other than those in the company's articles.
Automatic rights attaching to shares. Some rights attached to shares are the right to (Commercial Code):
Appoint a representative.
Request a special audit.
Obtain and review information.
A JSC is managed by a board of directors comprising at least one member. An LLC is managed by its managers and shareholders. However at least one of the shareholders in an LLC must be appointed as a manager.
There are no restrictions on foreign directors.
Directors' and officers' liability
Directors who can represent and bind the company with their signatures are jointly and severally liable for the acts set out in the Commercial Code.
Parent company liability
A parent company is generally only liable if it guarantees the subsidiary's debts.
Laws, contracts and permits
Employment relationships are regulated by the Labour Law Code (Law No. 4857, 2003) (Labour Code) and its relevant regulations. The Labour Code applies to both Turkish and foreign employers and employees working for a Turkish entity in Turkey. Employment contracts are governed by the law chosen by the parties, however, the mandatory provisions of the law of the employee's habitual workplace will override any choice of law clause (Article 27, Act on International Private Law and Procedural Law (Law No. 5718) (published in the Official Gazette dated 12 December 2007, No. 26728)).
If the parties have not chosen any law, the employment contract is governed by the law of the employee's habitual workplace. If an employee is temporarily assigned to another country, that workplace is not treated as his habitual workplace.
If an employee conducts his duties in more than one country, his employment contract is subject to the law of the country where his principal workplace is located.
The new Code of Obligations (Law No. 6098) (published in the Official Gazette dated 4 February 2011, No. 27836) became effective on 1 July 2012. The new Code of Obligations sets out detailed provisions on the employment relationship that are in parallel with the Labour Code, and further stipulates the conditions of the release letter/agreement. Accordingly, a release letter must be drawn up in written form and submitted one month after termination of the employment agreement. The nature and amount of receivables subject to release must be expressly stated in it, and relevant payments must be made by bank transfer.
Employment contracts for a duration of one year or more must be executed in writing.
Employment contracts must be in Turkish where they are between employees who are Turkish citizens and legal entities incorporated under the laws of Turkey. Failure to do so invalidates the contract.
If there is no written contract, the employer must, within two months of the start of employment, give the employee a document outlining:
General and specific working conditions.
Daily or weekly work periods.
The length of term of the employment contract, if specified.
Salary and the intervals at which it is paid.
Additional payments, if any, such as allowances, bonuses, premiums and so on.
Conditions of termination.
Collective bargaining agreements also govern employment relationships.
Only employers with five or more Turkish employees can employ a foreign national.
Foreign nationals must obtain a permit before starting work either independently or for an organisation, unless otherwise provided for in any bilateral or multi-lateral agreements to which Turkey is a party (Law on Work Permits for Foreigners (Law No. 4817)).
The application process differs depending on whether a foreign employee is applying from within Turkey or from abroad.
If applying from abroad an employee must obtain a:
Work permit by applying to Turkish diplomatic representatives in their country of residence. The application is then forwarded to the Ministry of Labour and Social Security. This is granted within 30 days of filing.
Work visa (from the diplomatic representatives of Turkey in their country of residence).
Residence permit (from the Foreign Affairs Department of the police headquarters in the city where the head office of the employer is located) within 30 days of entering the country. A residence permit can be obtained within three business days.
If applying from within Turkey an employee must:
Obtain a temporary residence permit from the police headquarters of the city where the head office of the employer is located.
Obtain a residence permit.
Obtain a work permit by applying to the Ministry of Labour and Social Security.
Apply to the police headquarters for registration of the work permit in the residence permit.
A work permit is only valid when the required work visa and residence permit are obtained. Foreign persons who have been issued with a work permit must request a visa to enter the country no later than 90 days after receiving the work permit.
Termination and redundancy
Employees are not entitled to direct management representation or consultation. Collective bargaining agreements provide for employee representation and consultation through trade unions. Collective dismissal provisions apply in certain circumstances (see Question 15).
The Labour Code stipulates the categories of employees entitled to job security and sets the grounds on which an employment contract can be terminated.
An employer can terminate the employment contract without waiting for the notice period or paying any notice pay for the following reasons (Article 25, Labour Code):
Health grounds, if:
absence due to sickness or disability resulting from the employee's own intent, his disordered life or addiction to alcohol exceeds three consecutive days or five days in a month;
it is determined by a medical board that the employer has a health condition which is incurable and creates an unhealthy work environment.
For other health-related reasons such as sickness, accident, birth and pregnancy, the employer can dismiss the employee six weeks after the expiration of the notice period in the employee's severance (Article 17, Labour Code).
Events contrary to ethical rules and goodwill to others, for example the employee:
misleading the employer by giving false information;
acting contrary to Article 84 of the Labour Code (ban on the use of alcoholic drinks and drugs);
the employee not acting with good faith and honesty;
the employee committing a criminal offence in the workplace;
A compelling event preventing the employee from working in the workplace for more than one week.
The employee is absent for longer than his applicable notice period, due to his detention and arrest.
If an employer cannot prove that the relevant grounds exist, the employee must be either:
Reinstated, if possible.
Paid a special indemnity by the employer. The court determines the total, which can vary from four to eight months' salary.
Collective dismissal provisions apply to all workplaces employing more than 20 employees. A collective dismissal occurs where, on the same date or within one month:
At least ten employees are dismissed in a workplace employing between 20 and 100 employees.
At least 10% of the employees are dismissed in a workplace employing between 101 and 300 employees.
At least 30 employees are dismissed in a workplace employing more than 300 employees.
If the employer is contemplating collective dismissals for economic, technological, structural or similar reasons or other reasons of necessity, it must supply written information at least 30 days before the intended dismissal to the following:
The workplace trade union representatives (if any).
The relevant regional directorate of the Social Security Authority.
The relevant Labour District Office.
This notice must contain the following information:
Grounds for dismissal.
The number and categories of employees affected.
The time period within which the dismissal is anticipated to take place.
After the notice has been served, the employer must consult with the union representatives about measures that can be taken to avert or reduce the number of terminations, as well as to mitigate or minimise their adverse effects on the employees affected. A document recording the consultation must be drawn up at the end of the meeting.
Termination notices take effect 30 days after notification to the relevant regional directorate.
In the event of a total closure of a workplace and the permanent discontinuance of operations, at least 30 days before the intended closure the employer must:
Notify the relevant regional directorate of the Social Security Authority.
Notify the relevant Labour District Office.
Post the relevant announcement in the workplace.
An employer cannot use the collective dismissal process to circumvent the Labour Code's job security provisions. Failure to follow the collective dismissal process can result in the employer or the employer's representative being fined TRY485 for each employee dismissed, according to 2013 figures (Article 100, Labour Code).
Taxes on employment
Tax resident employees
Turkey resident employees are subject to tax on their worldwide wage and non-wage income in 2013 at the following rates:
Up to TRY10,700: 15%.
Up to TRY26,000: TRY1,605 for the first TRY10,700, plus 20% on the excess.
Up to TRY60,000: TRY4,665 for the first TRY26,000, plus 27% on the excess. (For wage income up to TRY94,000: TRY4,665 for the first TRY26,000, plus 27% on the excess.)
More than TRY60,000: TRY13,845 for the first TRY60,000, plus 35% on the excess. (For wage income exceeding TRY94,000, TRY23,025 for the first TRY94,000, plus 35% for the excess.)
Employees must also pay social security contributions (see below, Employers).
Non-tax resident employees
Non-tax resident employees are taxed solely on income derived from activities performed in Turkey at the same income tax rates applicable to tax resident employees. However, double tax treaties may provide reduced rates or exemptions (see Question 25).
Employers must pay the following social security contributions as a portion of an employee's gross salary (Law on Social Insurances and General Health Insurance Law No. 5510, Official Gazette 16 June 2006 No: 26200):
Short term insurance premiums: employer 1% to 6.5%.
Disability, old age and death premiums: employee 9%, employer 11% (12% to 14%, for workplaces where a wage increase for the actual service period is applied).
General health insurance premiums: employee 5%, employer 7.5%.]
Tax resident business
Companies incorporated in Turkey or branch offices of non-resident companies (parents) established in Turkey are fully tax liable business entities (Corporation Tax Law). Turkey resident companies with a registered address or principal centre of business in Turkey are subject to tax on the income derived from their worldwide activities.
Companies that do not have their registered address or principal centre of business in Turkey are subject to tax only on income derived from activities performed in Turkey.
Non-tax resident business
Non-tax resident business vehicles are taxed, principally, on the income derived from activities in Turkey only, at the same rate as Turkey-resident business vehicles (see Question 17).
A company's net income is subject to corporate income tax at a rate of 20%. Corporate tax is a declaration based tax. The declaration must include details of the results of the financial year for which it is submitted.
Value added tax (VAT)
The transfer of goods and the rendering of services, including imports into Turkey, are generally subject to VAT at 18%.
There are some exceptions, such as a 1% or 8% rate on certain goods and services, and increased VAT rates on the sale of some luxury goods and cars.
Banking and insurance transaction tax (BITT)
All revenues of resident banks, finance and insurance companies, such as interest, commission, premiums and other fees and charges, are subject to BITT at 5%. Reduced rates of 1% are available for certain transactions.
All documents that contain monetary consideration are subject to stamp tax at 0.948%. However, exemptions are available in relation to certain transactions, such as cross-border financing (excluding transactions regarding repayment), derivatives and factoring agreements, and so on, provided such exemptions are explicitly granted by law.
Resource utilisation support fund (RUSFL)
The Resource Utilisation Support Fund was established within the Central Bank of Turkey to direct investments and to lower costs incurred in special loans, according to development plans and yearly programmes.
The RUSFL applies to the following transactions:
Credit supplied by Turkish banks and financial institutions.
Credit obtained by Turkish banks and financial institutions from abroad.
Credit obtained by Turkish residents, other than banks and financial institutions, from abroad.
Imports realised under acceptance credits, term letters of credit and on a cash-against-goods basis.
RUSFL applies at a rate of 3% on loans provided abroad by persons resident in Turkey, apart from banks and financial institutions depending on their maturity dates.
Foreign currency loans and gold loans (without fiduciary transactions) obtained abroad by persons apart from banks and financial institutions are subject to RUSFL at rates varying from 0% to 3%.
Other taxes relating to the environment, property, motor vehicles and inheritance can also apply.
There are no local/state taxes applicable as Turkey is a unitary state.
Dividends, interest and IP royalties
Dividends paid to foreign corporate shareholders?
Dividends received from foreign companies?
Interest paid to foreign corporate shareholders?
Intellectual property (IP) royalties paid to foreign corporate shareholders?
A withholding tax of 15% applies, unless reduced by a double tax treaty.
Real persons are subject to taxation from 15% to 35% (see Question 17) whereas legal entities pay corporate tax of 20% (see Question 19) (although a treaty reduction may apply). An exemption applies to dividend flows among resident companies.
Interest paid by a Turkish entity to a foreign corporate shareholder is subject to withholding tax at 10%. There is no withholding obligation if the foreign lender is a duly qualified non-resident financial institution, such as a bank (other than a branch of a Turkish bank) or a licensed financial institution located outside Turkey. (See also Question 21.)
Interest paid to foreign shareholders on foreign exchange deposit accounts and on deposit accounts is subject to withholding tax, at rates varying from 10% to 18%.
IP royalties paid
Withholding tax of 20% applies to the payment of IP royalties to a foreign corporate shareholder, including in relation to copyright, patents and trade marks.
Double tax treaties generally reduce the rate to 10%.
Groups, affiliates and related parties
Thin capitalisation rules apply when total loans received from shareholders or other related parties exceed either:
Three times the Turkish company's total equity.
Six times the Turkish company's total equity (where the shareholder or related party is a bank or financing company).
Related parties include, among others, shareholders of the company who are directly or indirectly related to shareholders who control, or are controlled by, the company through management, supervision or capital.
Interest and foreign exchange losses on any borrowing that is deemed thin capitalisation are non-deductible. In addition, such parts of any borrowing are considered profit and are subject to dividend taxation.
Controlled foreign company (CFC) rules apply if the subsidiary operates out of a tax haven jurisdiction. A penalty withholding tax of 30% applies on all accruals of and payments by the resident parent to its tax haven subsidiary. However, the application of the tax haven withholding tax is tied to the list of tax haven countries which will be promulgated by the Council of Ministers. Since the list has not been promulgated so far, tax haven withholding tax is currently not applied. Countries that are party to a tax treaty with Turkey usually prevent CFC rules from applying.
A Turkish company must apply arm's-length transfer prices for related parties.
Transfer prices are determined in accordance with Organisation for Economic Co-operation and Development (OECD) transfer pricing guidelines, which recognise three acceptable transfer pricing methods:
Comparable price method.
Cost plus method.
Resale minus method.
Other methods are subject to approval by the Ministry of Finance.
The Turkish Internal Revenue Service has introduced a very broad definition of related entities and individuals that may fall in the scope of non-compliance with transfer pricing regulations. All taxpayers involved in inter-company transfer pricing should make use of the advance clearing option.
Double tax treaties
The Competition Authority (www.rekabet.gov.tr) regulates and supervises competition rules and practices. Its website provides guidance on competition law rules. The Law on the Protection of Competition (Law No. 4054, 1994) (Competition Law) regulates competition matters.
Restrictive agreements and practices
The list of prohibited anti-competitive practices includes (Competition Law):
Partitioning markets or controlling resources.
Controlling supply or demand.
Complicating and restricting the supply of goods or services.
Excluding firms operating in the market by boycotts or other behaviour, or preventing potential new competitors entering the market.
Applying different conditions to equivalent transactions (with the exception of exclusive dealing agreements).
Abuse of a dominant position through agreements or concerted actions with others.
The abuse of a dominant position is regulated and prohibited under the Competition Law. However, the actions of a company leading to a dominant position are not regulated.
A transaction is subject to the prior approval of the Competition Board within the Competition Authority if either:
Worldwide turnover of one of the parties exceeds TRY500 million and the Turkey turnover of at least one of the other parties exceeds TRY30 million.
Aggregate Turkey turnover of the parties exceeds TRY100 million and Turkey turnover of at least two of the parties individually exceed TRY30 million.
The filing requirement can be avoided (except for joint ventures) if the undertakings concerned do not have any overlapping activities.
Definition and legal requirements. An invention is patentable if it:
Improves on the current state of the art.
Is capable of industrial application.
There are two types of patents:
A patent with examination, which is granted after any objections from third parties and submissions from the applicant in response to those objections.
A patent without examination, which is granted without considering the views of third parties.
Registration. Protection is granted by registration with the Patent Institute (www.tpe.gov.tr/portal/default_en.jsp). Its website provides guidance on the application procedure.
Enforcement and remedies. The patent holder can prevent the production, sale, use and importation of the patented product or process. A patent right is protected through civil and criminal actions before the specialist IP courts. The patent holder can seek:
Termination of the infringement and its ongoing acts.
Material and moral damages.
An order to confiscate from the infringers the products and the equipment used to make them.
An order for possession of the products confiscated (their value is deducted from the compensation awarded or, if they are more valuable than the compensation, the patent holders repays the difference to the infringer).
Enforcement measures to prevent continued infringement, deletion of the patented invention from the infringer's products or, if it is essential to prevent infringement, the destruction of the products and equipment used to make them.
An order to disclose to the public and to those persons related to the infringer of the court's judgment, at the offending party's expense.
Patent infringement can be punishable by imprisonment for between one and two years and/or a fine between TRY14,000 and TRY46,000.
Length of protection. A patent with examination is protected for 20 years. A patent without examination is protected for seven years, and can be upgraded to a patent with examination on application at any time during this seven-year period.
Definition and legal requirements. To be registered, a trade mark must be capable of:
Distinguishing the goods or services of one undertaking from those of other undertakings.
Being represented in graphic form, and published and reproduced in print.
Goods are divided into 34 classes. Services are divided into 11 classes. A trade mark can include:
Protection. Protection is granted by registration with the Patent Institute under various legislation (www.tpe.gov.tr/portal/default_en.jsp). Guidance on the application procedure can be found on its website.
A trade mark application will not be registered following opposition if the trade mark applied for is:
Identical with a registered trade mark, or a trade mark with an earlier application date, in relation to identical goods and services.
Identical with or similar to a trade mark with an earlier application date, or to a registered trade mark, in relation to identical or similar goods and services, and there is a likelihood of confusion by the public.
Unregistered trade marks are further protected under unfair competition provisions in the Commercial Code.
Enforcement and remedies. The right holder can prevent the:
Use of any sign relating to the trade mark.
Use of the sign of the trade mark on any package.
Importation of the signed product.
Use of the sign in adverts and business.
Enforcement is the same as for patents (see above, Patents: Enforcement and remedies).
Length of protection and renewability. Protection lasts for ten years from the date of application for registration. This can be renewed indefinitely for additional ten-year periods, on the payment of the renewal fee.
Definition. To be registered, a design must:
Relate to the features of the whole or part of a product, or its ornamentation.
Have an individual character.
Registration. Protection is granted by registration with the Patent Institute under various legislation (www.tpe.gov.tr/portal/default_en.jsp). whereby guidance on application procedure can be found online.
Enforcement and remedies. The right holder can (if there is more than one right holder, subject to the approval of the others):
Use the design.
Take necessary precautions to protect the design.
License the use of the design to third parties.
Third parties cannot dispose of the design licence without the approval of the right holder. Enforcement is the same as for patents (see above, Patents: Enforcement and remedies).
Length of protection and renewability. Protection lasts for five years from the date of application for registration. This can be renewed for additional five-year periods up to a maximum of 25 years.
Definition and legal requirements. There is no specific protection for unregistered designs. They are protected through general civil and criminal actions in the courts. They can also be protected by copyright, subject to meeting the legal requirements for copyright (see below, Copyright).
Unregistered designs are further protected under unfair competition provisions in the Commercial Code.
Enforcement and remedies. Unregistered designs are protected through general civil and criminal actions in the courts. The action must be filed within one year starting from the date when the relevant party became aware of the infringement, and in any case within three years of the date of the infringement.
Main remedies are:
An action for annulment of an infringement of the design
Action to prevent a potential infringement.
An action for annulment of a continuing infringement is not subject to the limitation period for bringing an action.
To claim compensation for a tangible three-dimensional design, the design owner must prove the design is not commonplace and has been infringed by copying.
Length of protection. Protection lasts as long as the design continues to be distinctive in the minds of consumers and is used in commerce.
Definition and legal requirements. For copyright protection to arise, the work must be both:
An intellectual or artistic creation bearing the characteristics of its author.
A scientific (including computer programs), literary (which can also include computer programs), musical, artistic or cinematographic work.
Protection. Protection subsists automatically on the creation of eligible works (see above, Definition and legal requirements) (Law No. 5846 dated 1951 on Intellectual and Artistic Works, as amended by Law No. 5728 dated 2008).
Registration of copyright is:
Mandatory for cinematographic and musical works (including computer games).
Optional for other eligible works protected under the Law on Intellectual and Artistic Works.
The Ministry of Culture and Tourism is the registration authority.
Enforcement and remedies. The right holder has the following economic rights:
Process (for example, translating, editing, compiling or preparing for publication).
Presentation (for example, reading, playing or displaying a work in public).
The owner of the work or the holder of moral or economic rights can seek to:
Stop the infringement.
Prevent future infringement.
The infringer can be sentenced to imprisonment for between one and seven years, or be liable to an administrative fine.
Length of protection and renewability. Protection lasts for the life of the author plus 70 years. If the work has more than one author, this period ends 70 years after the last surviving author's death.
Other main intellectual property rights in Turkey include:
The main activities of an agency must be (Commercial Code):
Relevant to a business enterprise.
Carried out in a defined area or region.
Carried out on a permanent basis.
Carried out based on a contract.
The Commercial Code also imposes obligations on an agent, such as to:
Take measures to prevent damage or loss to the value of products while handled by an agent.
An agent also has rights, such as to:
Liens that an agent can hold over products.
In addition, the Commercial Code regulates the termination of agency agreements and the obligations to compensate agents.
There is no specific law regulating distribution agreements. However, there are circumstances, listed in the Communiqué on Block Exemptions for Vertical Agreements 2002/2 (Communiqué on Vertical Agreements), in which a distribution agreement is exempted from the prohibitions in the Competition Law (see Question 26).
Franchise agreements are regulated by, among other things the:
Code of Obligations
Communiqué on Vertical Agreements, which regulates:
circumstances in which a vertical agreement is exempt from the prohibitions in the Competition Law;
assignment, sale and use of intellectual property rights; and
validity of non-competition clauses.
There are pieces of legislation regulating e-commerce in Turkey in areas such as e-government, e-banking and e-business.
Electronic signatures are regulated by the Electronic Signature Law (Law No. 5070, 2004). An electronic signature has the same legal consequences as a physical signature, except in certain specific transactions and agreements (Article 5, Electronic Signature Law).
There are no specific laws and regulations dealing with data protection. However, privacy and data security are regulated by general laws and regulations, such as the:
Criminal Procedure Code.
Civil Procedure Code.
Enforcement and Bankruptcy Law.
Tax Procedural Law.
Law Regarding the Protection of the Value of Turkish Currency.
Telegraph and Telephone Law.
These regulations cover:
Intellectual property and pharmaceutical data.
The collection of customer data.
The protection of customer privacy.
Public authorities and privacy.
Other secrecy related laws and regulations.
Product liability and product safety are regulated by the:
Code of Obligations.
Consumer Protection Law (Law No. 4077, 1995).
Law on the Preparation and Implementation of Technical Legislation of Products (Law No. 4703, 2001) which, to a large extent, implements Directive 2001/95/EC on general product safety.
Regulation on Market Surveillance and the Auditing of Products.
Product liability is also regulated under other pieces of legislation specific to certain goods or services, such as textiles, food and cosmetics.
Defective products and liability
These are goods which either (Article 4, Consumer Protection Law):
Have defects which are in conflict with the indicated qualities or the quantities.
Are not fit for purpose.
To claim product liability, the product must either (Code of Obligations):
Be defective in the named and promised qualities.
Have physical, legal, or economic deficiencies that contradict the quality or quantity expected by the buyer, in relation to the purpose they were intended to be used for.
The seller is liable for defective products Under the Code of Obligations. The Consumer Protection Law extends joint and several liability to any dealer, agent, manufacturer or producer, importer and creditor who provided a means of payment to the consumer.
The buyer can claim the following, provided he notifies the defect to the seller within 30 days of delivery (Consumer Protection Law):
Rescission of the contract, and a refund of the purchase price.
Replacement of the goods by non-defective generic goods.
Reduction of price in proportion to the defects.
Request for free repair.
Damages for any loss incurred.
Shorter time limits to notify defects apply to commercial sales, in certain circumstances.
The buyer can also bring a general claim for damages for losses he has incurred under the Code of Obligations.
The limitation periods for claims are:
Two years from the delivery of the defective product to the consumer, even if the defect appears after this date, unless those liable have assumed liability for a longer period (Consumer Protection Law).
Three years for general claims for damages.
All these claims are extinguished ten years from the introduction of the defective product into the market. The relevant prescription period does not apply if the defect is hidden by gross fault or deceit by the seller.
Law No. 4703 regulates products which are new to the market and provides heavy sanctions for unsafe products introduced to the market.
Main business organisations
Chamber of Commerce (Ticaret Odası)
Main activities. This institution organises and records the commercial transactions of individuals and commercial entities. It also keeps records for companies.
General Directorate of Land Registry and Cadastre (Tapu ve Kadastro Genel Müdürlüğü)
Main activities. This maintains the land registers, according to the relevant legislation, to protect records and documents and make register changes.
Ministry Of Customs and Trade
Main activities. This is responsible for:
Collecting and safeguarding customs duties.
Controlling the flow of goods in and out of Turkey, including animals, transport, personal items and hazardous items.
Combating and investigating smuggling.
Ministry of Labour (Çalışma Bakanlığı)
Main activities. This is responsible for setting national labour standards and dispute mechanisms.
Competition Authority (Rekabet Kurulu)
Main activities. This monitors, regulates and supervises markets, to prevent anti-competitive agreements, abuses of dominant position and mergers and acquisitions that would significantly decrease competition.
Description. The official government website where up-to-date legislation, case law and rules can be obtained. Anyone can access the relevant webpage. However, the webpage is in Turkish, and there are no official websites for English translations of legislation, case law and rules.
Pekin & Pekin
Professional qualifications. Turkey, 2005
Areas of practice. Tax.
Pekin & Pekin
Professional qualifications. Turkey
Areas of practice. Corporate law; M&A
Pekin & Pekin
Professional qualifications. Turkey, 2008
Areas of practice. Corporate law; M&A employment law; IP law.