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New Laws


9 November 2018

TURKEY: Ban on agreements in foreign currency

On 13 September 2018, the Turkish president signed a decree that requires property sales and rental agreements as well as vehicle leasing agreements to be made in Turkish Lira.

The decision came into effect on 6 October when published in Turkey’s Official Gazette.

Who is affected?

The new rule applies to everyone who has a Turkish ID & Turkish residency, including foreign tenants – expats who hold Turkish Foreign ID card.

The owners who do not live Turkey and do not hold a Turkish ID are exempt from the new decree as they are not Turkish citizens and do not officially live in Turkey. 

What is affected?

If a company that has no legal entity and activity in Turkey signs a lease, such company is exempted from the new decree and can continue paying rental amounts in USD or EURO.

If no exemption applies and if nothing particular has been agreed in the contract, all new leases must be signed in Turkish Lira.

The existing leases that are in foreign currency must be converted. The amount in Turkish Liras should be agreed by the parties. However, if the parties cannot reach an agreement on re-determining the pricing in Turkish Lira, then the Turkish Central Bank's effective foreign currency exchange rates as of 2 January 2018 (1 USD = 3.7776 TL and 1 EUR = 4.5525 TL) must be used. 

Fines for non-compliance

Those who will not comply with new rules will face sections for violating the Decree. Fines between 6.300 and 55.000 TL will be applied separately for each side of the contract. 

How does this affect the client?

Companies and employees, who haven’t reviewed their rental contracts yet, should do so as soon as possible. 

  

 

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