Last Updated on 08/02/2022
According to the 13th Article of the Capital Movements Circular and the Implementation Instructions on the Sales of Foreign Exchange to the Turkish Central Bank, some amendments were made to the Turkish Citizenship Law’s implementation. The contents of the change are contained in circulars 2022/1 and 2019/5, both of which were released on January 21, 2022.
When international buyers are engaged in a transaction, the Central Bank now requires the exchange to foreign currency. Foreigners must first sell their foreign currency to the Turkish Central Bank through a bank transfer, then present the Foreign Exchange Purchase Certificate issued by the bank to the land registry office, according to the regulation, which is detailed in the circular texts.
This practice became effective on January 24, 2022, and foreign real estate buyers are now obliged to submit a foreign currency purchase document.
1- Is it mandatory to exchange foreign currency in sales transactions where foreigners are buyers?
According to the 13th Article of the Capital Movements Circular and the Implementation Instructions on the Sales of Foreign Exchange to the Turkish Central Bank, some amendments were made to the Turkish Citizenship Law’s implementation. According to the regulation, foreign investors must first sell their foreign currency to the Turkish Central Bank through a bank transfer, then present the Foreign Currency Exchange Purchase Certificate issued by the bank to the land registry office, detailed in the circular texts.
2- Where must the foreign currency be exchanged?
The foreign currency must be exchanged to the Turkish Central Bank through any bank operating legally in Turkey. Thus, foreign exchange offices or the foreign currency exchanged by hand are not accepted in real estate purchases.
3- How much foreign currency must we exchange?
According to the 3rd article 3 of the Turkish Central Bank Capital movements Circular, the foreign currency should be exchanged as much as the total sales price.
4- What is the Foreign Currency Purchase Certificate?
It is a document showing that the foreign currency was sold to a bank operating in Turkey to be sold to the central bank before the foreign buyer purchases the property at the land registry office.
5- What should minimum information be included in the Foreign Currency Certificate so the land registry office can accept it?
The foreign currency purchase document must include the following information, as a minimum:
- The name and surname of the person for whom the foreign currency was exchanged,
- His passport number or foreign identity number
- the US dollar equivalent of the foreign currency purchased (TL equivalent in all cases)
- A statement declaring that this transaction was carried out within the requirements of the “13th article of the of capital movements circular.”
6- Does the foreign buyer have to exchange the foreign currency at the bank by himself exclusively?
The foreign currency purchase is not necessary to be done by the foreign buyer. The relevant real estate buyer, seller, or their representatives are eligible to do it.
7- Can I make the foreign currency purchase process before the property sale transaction?
The foreign currency must be exchanged before the title deed transactions, and the foreign currency purchase document must be submitted to the title deed directorate before the sale.
8- Is there an obligation to exchange foreign currency in the citizenship process?
In case the buyer is a foreigner, both in the acquisition of citizenship by real estate purchase or in the sale transaction that will not be subject to citizenship, the foreign currency exchange is mandatory.
9- Except for the foreign exchange purchase document, is another document required for the citizenship acquisition process?
In citizenship transactions, the land registry directorates will request the purchase document and the approved bank receipt showing that the cashed mileage has been sent to the seller’s account. While it is obligatory to present the foreign currency purchase document to the land registry office before the sale transaction, it is possible to submit the immovable payment receipt (money transfer from the buyer to the seller) together with the foreign currency purchase document before the sale transaction or before the commitment transaction and at the latest before the issuance of the conformity certificate.
10- Is it possible to exchange the foreign currency after it is transferred to the seller’s account?
The currency may be transferred first by the buyer to the seller’s account and then by the seller to a bank for exchange to the central bank. The critical point here is that the foreign exchange purchase document must be made before the transaction.
11- Are the payments made before the effective date of the new regulation publication valid?
Payment receipts made before the effective date of the application will continue to be accepted in transactions. There is no need to issue a foreign exchange purchase document for this transaction. However, the approved bank receipt must be submitted to the land registry office for these payments. Yet cash payments are not accepted.
12- How are the receipts issued before the effective date of the application evaluated, and how is the value declared to the title deed calculated?
Suppose the sales price is deposited into the buyer’s account before the effective date of the application. In that case, it will not be possible to exchange foreign currency in return for the price. And if this situation is documented with an approved bank receipt, there is no need to request a foreign currency purchase document.
In this case, the sale value stated in the official promissory note must not be lower than the value deposited in the buyer’s account. The Turkish lira value in the preceding central bank’s effective selling rate on the date of issue of the receipt will be required if payment is made in foreign currency to the buyer’s account.
13- Is the base value of expenditure in the title deed transactions is the same Turkish lira value as in the foreign currency purchase document?
Involved persons are obliged to submit the foreign exchange purchase document proving that the foreign exchange, which is the sales price, has been sold to a bank to the title deed administration.
The Turkish lira amount registered in the foreign exchange purchase document is declared to the title deed as the sales price by the relevant parties.
14- Will the provisions of this circular be applied in the applications that have been submitted to the land registry directorate before this new regulation application date (24th of January 2022)?
The provisions of this circular will not be applied for the applications that the land registry directorate has processed before the 24th of January 2022; in other words, the procedures will be completed according to the current legislation at the time of application.
If you would like to know further details about the real estate investment in Turkey, or you are willing to invest in this Sector, MEO Consultants offer you a complete advisory. Contact us
