As per the public announcement dated 10 June 2025 of the Personal Data Protection Authority (in Turkish, “Kişisel Verileri Koruma Kurumu”, the “Authority”), a significant transformation has been initiated in the procedures and principles regarding the notification of administrative fines imposed under the Law on the Protection of Personal Data (in Turkish, “Kişisel Verilerin Korunması Kanunu”, hereinafter referred to as “PDPL”).

As a result of the protocol efforts between the Authority and the Ministry of Treasury and Finance, the technical integration enabling notifications to be made via the E-Notification infrastructure of Revenue Administration Presidency has been completed, and the system has been activated.

Pursuant to Article 18 of the PDPL below, the administrative fines stipulated in subparagraphs (a), (b), (c), and (ç) of the first paragraph shall be imposed on the data controller, while the administrative fine stipulated in subparagraph (d) shall be imposed on natural persons or private legal entities who are data controllers or data processors.

Above-mentioned Article of the PDPL, titled “Misdemeanors,” includes the following provisions:

“(1) For those who fail to fulfill their obligations under this Law;

a) those who fail to comply with the obligation to inform under Article 10 shall be imposed an administrative fine from TRY 68,083 to TRY 1,362,021,

b) those who fail to comply with the obligations regarding data security under Article 12 shall be imposed an administrative fine from TRY 204,285 to TRY 13,620,402,

c) those who do not comply with the decisions made by the Board pursuant to Article 15 shall be imposed an administrative fine from TRY 340,476 to TRY 13,620,402,

ç) those who fail to fulfill the registration and notification obligation foreseen in Article 16 regarding the Data Controllers’ Registry shall be imposed an administrative fine from TRY 272,380 to TRY 13,620,402,

d) those who fail to fulfill the notification obligation stipulated in the fifth paragraph of Article 9 shall be imposed an administrative fine from TRY 71,965 to TRY 1,439,300.

(2) The administrative fines set forth in subparagraphs (a), (b), (c), and (ç) of the first paragraph shall be imposed on data controllers; whereas the administrative fine set forth in subparagraph (d) shall be imposed on data controllers or on natural persons and legal persons governed by private law who process data.”

Accordingly, pursuant to Article 26(4) of the Misdemeanor Law, administrative sanction decisions may be notified electronically by the Ministry of Treasury and Finance using the technical infrastructure established pursuant to Article 107/A of the Tax Procedure Law, under protocols to be executed between the relevant authorities and the Ministry of Treasury and Finance.

Within the scope of this systemic transition, administrative fines imposed by the Authority will now be notified to data controllers via the Revenue Administration Presidency’s E-Notification system (in Turkish, “Dijital Vergi Dairesi”).

However, notifications addressed to data controllers who do not have a tax registration or whose tax registration has been cancelled will continue to be made in accordance with the provisions of Notification Law.

This Newsletter is presented to your information referring to our Newsletter regarding Temporary Share Certificates sent on 18 April 2025.

1.    Income Tax Implications for Share Transfers

Pursuant to Repeated Article 80/1 of the Income Tax Law numbered 193 (“ITL”) and the 232nd series of the Income Tax General Communique, capital gains  (in Turkish, “değer artış kazancı”) derived from the sale of shares in joint stock companies (in Turkish, “Anonim Şirket”) by the Turkish full taxpayer (resident) individuals shall be exempt from income tax (levied at rates between 15% and 40%) provided that both of the following conditions are met:

•    The shares have been held in property by the seller for more than 2 (two) years, and
•    The shares are represented by duly issued share certificates (in Turkish, “hisse senedi”) including temporary share certificates (in Turkish, “geçici ilmuhaber”).

It is important to note that this tax income exemption does not apply to capital gains derived from the sale of shares in a limited liability company (in Turkish, “limited şirket”), regardless of whether share certificates (in Turkish, “pay senedi”) have been issued.

Share transfers in a limited liability company by real persons are treated differently than those in joint stock companies. In such cases:

•    The duration of shareholding is irrelevant, and
•    The entire capital gain is subject to income tax at the time of sale.

There are no holding period exemptions for capital gains arising from the disposal of shareholder rights or partnership interests in a limited liability company. Therefore, the net gain exceeding the annual exemption threshold will be taxable in accordance with general income tax rules.

Where the individual has additional income to declare in the annual income tax return, all income (including capital gains) will be aggregated and taxed at progressive rates.

2.    VAT Exemption on Share Transfers

Under Article 17/4-g of the Value Added Tax Law numbered 3065 (“VAT Law”):

•    The transfer of shares in a joint stock company that are represented by share certificates (including temporary share certificates), is exempt from value-added tax (“VAT”).
•    Individuals are not considered VAT taxpayers unless they are engaged in a continuous commercial activity in their own name. Therefore, when a real person transfers shares in a joint stock company or a limited liability company, such transaction will not be subject to VAT, provided it does not constitute continuous commercial activity.

In addition, under Article 17/4-r of the VAT Law;

•    The transfer of shares held in subsidiaries by a company for at least 2 (two) full years,
•    The transfer of immovable property and equity participations by debtors or guarantors to banks, financial leasing companies, or finance companies as debt settlement (including sales via auction),
•    And the subsequent transfer of such assets by these financial institutions,
are all exempt from VAT.

3.    Tax Planning Consideration: Share Certificate Issuance

From a tax planning perspective, the issuance of share certificates (including temporary certificates) in a joint stock company may be a strategic measure to optimize secure the income tax exemption available under the ITL. As such, in any upcoming transactions involving share transfers, particularly in joint stock companies, it is highly recommended to consult your tax advisor to assess the most efficient structure from a legal and tax perspective.

Please do not hesitate to contact our Tax & Legal team for further details or tailored advice on your specific transactions.

This Newsletter is presented to your information referring to our Newsletter regarding Temporary Share Certificates sent on 18 April 2025.

1.    Income Tax Implications for Share Transfers

Pursuant to Repeated Article 80/1 of the Income Tax Law numbered 193 (“ITL”) and the 232nd series of the Income Tax General Communique, capital gains  (in Turkish, “değer artış kazancı”) derived from the sale of shares in joint stock companies (in Turkish, “Anonim Şirket”) by the Turkish full taxpayer (resident) individuals shall be exempt from income tax (levied at rates between 15% and 40%) provided that both of the following conditions are met:

•    The shares have been held in property by the seller for more than 2 (two) years, and
•    The shares are represented by duly issued share certificates (in Turkish, “hisse senedi”) including temporary share certificates (in Turkish, “geçici ilmuhaber”).

It is important to note that this tax income exemption does not apply to capital gains derived from the sale of shares in a limited liability company (in Turkish, “limited şirket”), regardless of whether share certificates (in Turkish, “pay senedi”) have been issued.

Share transfers in a limited liability company by real persons are treated differently than those in joint stock companies. In such cases:

•    The duration of shareholding is irrelevant, and
•    The entire capital gain is subject to income tax at the time of sale.

There are no holding period exemptions for capital gains arising from the disposal of shareholder rights or partnership interests in a limited liability company. Therefore, the net gain exceeding the annual exemption threshold will be taxable in accordance with general income tax rules.

Where the individual has additional income to declare in the annual income tax return, all income (including capital gains) will be aggregated and taxed at progressive rates.

2.    VAT Exemption on Share Transfers

Under Article 17/4-g of the Value Added Tax Law numbered 3065 (“VAT Law”):

•    The transfer of shares in a joint stock company that are represented by share certificates (including temporary share certificates), is exempt from value-added tax (“VAT”).
•    Individuals are not considered VAT taxpayers unless they are engaged in a continuous commercial activity in their own name. Therefore, when a real person transfers shares in a joint stock company or a limited liability company, such transaction will not be subject to VAT, provided it does not constitute continuous commercial activity.

In addition, under Article 17/4-r of the VAT Law;

•    The transfer of shares held in subsidiaries by a company for at least 2 (two) full years,
•    The transfer of immovable property and equity participations by debtors or guarantors to banks, financial leasing companies, or finance companies as debt settlement (including sales via auction),
•    And the subsequent transfer of such assets by these financial institutions,
are all exempt from VAT.

3.    Tax Planning Consideration: Share Certificate Issuance

From a tax planning perspective, the issuance of share certificates (including temporary certificates) in a joint stock company may be a strategic measure to optimize secure the income tax exemption available under the ITL. As such, in any upcoming transactions involving share transfers, particularly in joint stock companies, it is highly recommended to consult your tax advisor to assess the most efficient structure from a legal and tax perspective.

Please do not hesitate to contact our Tax & Legal team for further details or tailored advice on your specific transactions.

Our Law Firm remains at your disposal for any further clarifications you may need.

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