Navigating Foreign Currency Regulations for Real Estate Transactions in Turkey
In recent revisions to the Capital Movements Communiqué issued by the Central Bank of the Republic of Turkey, significant amendments have been introduced concerning the obligation of foreign nationals purchasing real estate in Turkey to conduct transactions in foreign currency.
Alongside this, the Implementation Directive on Foreign Exchange Sales to the Central Bank of the Republic of Turkey has also been enacted.
Related: Turkish Residency Through Property Acquisition
It is now mandated, as per Article 13 of the Capital Movements Communiqué, that non-citizens lacking any citizenship connections to Turkey must fulfill their payment obligations for real estate acquisitions in foreign currency.
This necessitates the sale of foreign currency to a bank, supported by appropriate documentation, prior to the initiation of title deed procedures.
Subsequently, the bank is tasked with selling this foreign currency to the Central Bank, with payments to involved parties settled in Turkish Lira.
Applicants are obligated to furnish the title deed office with a foreign exchange purchase document (Döviz Alım Belgesi), attesting that the sales price stated in foreign currency has been sold to a bank before the title deed procedures.
The Turkish Lira equivalent, as stipulated in the foreign exchange purchase document, is then declared as the sales price to the title deed office.
Notably, foreign exchange transactions are exclusively conducted through banks by the buyer, seller, their proxies, or representatives.
Additionally, the Implementation Directive on Foreign Exchange Sales to the Central Bank of the Republic of Turkey specifies that the foreign currency types eligible for sale to the Central Bank are restricted to US Dollar, Euro, and British Pound Sterling.
Transactions involving other foreign currency types are converted by the bank into one of these currencies before being sold to the Central Bank.
The exchange rate for conversion to US Dollars is determined based on the rate announced simultaneously with the transaction.
Before transactions fall under the scope of the second paragraph of Article 13, the respective foreign currency amounts are sold to a bank to be subsequently sold to the Central Bank at the transaction rate.
The Central Bank establishes accounts in US Dollars, Euros, and British Pound Sterling at the bank, where the foreign currencies purchased under this directive are collectively transferred by the bank before 5:00 p.m. on the same day.
Following the completion of the foreign exchange purchase process by the Central Bank, transactions cannot be canceled, and the parties involved are notified of this by the banks prior to the transaction.
Any Turkish Lira amounts corresponding to foreign exchange purchases are transferred to the bank’s EFT center by the Central Bank without incurring any charges.
Transactions not finalized by 5:30 p.m. result in Turkish Lira amounts being transferred to the bank’s reserve requirement account at the Central Bank.
In conclusion, these regulatory updates underscore the necessity for compliance with foreign currency obligations for foreigners engaging in real estate transactions in Turkey.
It is crucial for both buyers and sellers to adhere to these revised guidelines to ensure a seamless and legally compliant process. For personalized assistance and expert guidance on navigating these regulations, reach out to Bayraktar Attorneys today.
For expert guidance and assistance in navigating the foreign currency regulations for real estate transactions in Turkey, contact Bayraktar Attorneys today.
