Transfer of Turkish Lira in Contracts

If the parties cannot agree, the effective sales rate of the Central Bank on January 2 will be based on the conversion of the foreign currency value of the contracts concluded before January 2, 2018 to TL. If the parties agree, they will also be able to switch to TL at different prices. The newly determined prices will be updated every year according to the increase in the consumer price index (CPI) of the Turkish Statistical Institute (TURKSTAT). Here are all the details of the regulation on the transition from currency to TL in contracts.

In the draft of the four-page communiqué, the mandatory contracts to be concluded with TL and the contracts covered by the exception were organized in 23 titles. According to their subjects, the rules that will be applied in old and new contracts are as follows:

Sales and rents of residential and business premises: Residents of Turkey will not be able to Decide the contract price in foreign currency or indexed in foreign currency in real estate sales or lease agreements, including residential and roofed businesses, among themselves.
Employment contracts: Persons residing in Turkey; they will not be able to make employment contracts other than those that will be executed abroad in foreign currency or with a foreign currency index.

Service contracts: Dec resident in Turkey will not be able to sign a service agreement between themselves, including foreign exchange or foreign currency indexed consulting and brokerage. The exceptions to this prohibition are as follows:

– Service contracts to which persons who do not have citizenship ties with the State of the Republic of Turkey are parties,
– Service contracts concluded within the scope of export, transit trade, sales and deliveries considered export, as well as services and activities that earn foreign currency,
– Service contracts concluded within the scope of activities that residents of Turkey will perform abroad.

Artifact contracts: Dec based in Turkey will not be able to make artifact contracts that are outside the construction of ships among themselves on foreign currency.

Securities sales contracts: Residents of Turkey will be able to make securities sales and leasing contracts that are outside of vehicle sales contracts, including business machines, among themselves Dec foreign currency.

Leasing contracts: Leasing and leasing contracts related to ships can be concluded in foreign currency. Financial
the costs related to leasing contracts can be decided in foreign currency.

Non-citizens and residents of Turkey: In employment contracts concluded by residents of Turkey who do not have citizenship ties with the State of the Republic of Turkey, the contract price and other payment obligations arising from these contracts may be determined in foreign currency or indexed in foreign currency.

Public institutions: public institutions and companies in the defense industry, where it has a direct or indirect shareholding of these institutions and organizations, real estate sales and rentals in foreign currency contracts will be able to outside.

Foreign company branches: Foreign company branches, representative offices, offices, contact offices located in Turkey, companies with fifty percent or more shares, as well as companies located in free zones, business and service contracts to which residents are parties, can be concluded in foreign currency.

Airline companies: Domestic airlines and residents of Turkey who provide technical maintenance services to these companies will be able to make contracts other than real estate sales – leasing and employment contracts in foreign currency.

Checks and bills of exchange: The amounts contained in securities such as checks, bills of exchange, which will be issued under contracts that prohibit foreign exchange, will not be indexed in foreign currency or foreign currency.

Indexing to precious metals: Contracts indexed to precious metals and/or commodities, the price of which is determined in foreign currency in international markets, will be considered as contracts indexed to foreign currency.

Branches abroad: A branch, representative office, office, liaison office of persons resident in Turkey abroad, funds operated or managed by it will be considered “resident in Turkey”.

Old vehicle rental agreements: Vehicle rental agreements, including work machines that were previously concluded, will continue.

If the parties cannot agree, the exchange rate on January 2 will be based on:
if Dec cannot be agreed between the parties on the conversion of prices to TL, in contracts concluded on or before January 2, 2018, the prices will be converted to Turkish lira using the effective sales rate of the Central Bank of this date (3.7776 TL).
For contracts signed after January 2, the current exchange rate will be taken into account on the contract date. These amounts will be applied until the renewal period of the contract. The amounts to be determined again during the renewal period will not exceed the amount to be calculated based on the monthly change rates of the consumer price index (CPI) determined by the Turkish Statistical Institute for each month.

You can access our other articles and petitions from clicking here.