An asset purchase agreement (APA) in Turkey is a private contract under the Turkish Code of Obligations (Türk Borçlar Kanunu, TBK, Law No. 6098) that transfers specifically identified assets — real estate, machinery, equipment, intellectual property rights, commercial receivables, inventory, trade licenses, or commercial contracts — from a seller to a buyer without the buyer assuming the legal identity or the general liabilities of the seller entity. This liability isolation is the primary commercial rationale for choosing an APA structure over a share purchase agreement (SPA) in Turkish transactions: in an SPA, the buyer acquires shares and steps into the seller's legal position including all undisclosed or contingent liabilities; in an APA, the buyer acquires only the specific assets listed in the agreement, with the seller's entity and its liabilities remaining with the seller. However, the APA's apparent simplicity in liability isolation is complicated by three dimensions that are specific to Turkish law: first, each asset category has different transfer formality requirements — real estate requires tapu sicili registration, IP requires TPMK (Turkish Patent and Trademark Office) registration, vehicles require traffic directorate registration — and the buyer does not legally acquire the asset until the relevant registry transfer is completed; second, the tax treatment of an APA differs significantly from an SPA across multiple taxes including VAT, stamp tax, real estate transfer tax, and income/corporate tax on gains; and third, the employee transfer obligations under İş Kanunu (Labor Code, Law No. 4857) Article 6 apply to workplace transfers including APAs that involve the transfer of a business unit, regardless of the transaction's APA characterization. This guide explains the legal framework, transaction structure, due diligence requirements, tax treatment, and closing mechanics for APAs in Turkey. Practice may vary by authority and year — verify current Turkish law requirements directly before relying on any information in this guide.
TBK framework and asset categorization — what transfers and how
A lawyer in Turkey advising on APA structure must explain that the Turkish Code of Obligations provides the general legal framework for asset purchase agreements — but the specific transfer mechanism for each asset category is determined by the legal regime governing that category, not by the APA itself. The APA creates the contractual obligation to transfer; the legal transfer of ownership occurs only when the category-specific formality is completed. Understanding this distinction is critical because it means that an APA signed and fully effective under TBK as a contract may not yet have transferred any legal ownership of the listed assets — legal ownership transfer requires separate, parallel action at the relevant registry or institution for each asset category. Practice may vary by authority and year — verify current Turkish law asset-specific transfer formality requirements and the specific evidence of ownership transfer that buyers should confirm for each asset category before completing any APA transaction involving multiple asset types.
An Istanbul Law Firm advising on real estate asset transfers must explain that real estate (taşınmaz) transfers in Turkey require execution before the Land Registry officer (tapu sicil müdürü) — the APA cannot itself transfer title to real estate, and a separately executed transfer of title (tapu devri) before the land registry is mandatory under the Land Registry Law (Tapu Kanunu) and the Turkish Civil Code (TMK) Article 705. The APA can obligate the parties to complete the tapu devri, can contain conditions precedent for the registry transfer, and can contain price adjustment mechanisms — but it cannot substitute for the tapu devri itself. For real estate that is subject to an existing mortgage, the mortgage holder's consent or the mortgage's discharge is a prerequisite for a clean transfer. For real estate in construction zones, zoning certificates and building permits must be confirmed as part of due diligence. Practice may vary — verify current land registry procedure requirements and the specific encumbrance discharge process applicable to the real estate assets included in any APA transaction.
A law firm in Istanbul advising on IP and contract transfers in Turkish APAs must explain that intellectual property transfers — trademarks (marka), patents (patent), and industrial designs (tasarım) — require registration of the transfer at the Turkish Patent and Trademark Office (TPMK) under the Industrial Property Law (Sınai Mülkiyet Kanunu, SMKK, Law No. 6769). The TPMK registration is constitutive for trademark transfers — the buyer does not acquire the trademark rights against third parties until the transfer is registered, regardless of the APA's effective date. For commercial contracts (client contracts, supplier agreements, distribution agreements, franchise agreements), the transfer of contractual rights requires the counterparty's consent unless the contract specifically permits assignment — a standard contract assignment provision in an APA does not override a counterparty's contractual non-assignment right without that counterparty's specific consent. We conduct contract-by-contract assignment permission analysis as a standard APA due diligence step — identifying which contracts require counterparty consent and which can be assigned without consent, and developing a consent procurement strategy for those that require it. Practice may vary — verify current TPMK registration procedures for IP transfers and the specific consent requirement analysis methodology applicable to the contract portfolio in any APA transaction. The M&A and business acquisition framework is analyzed in the resource on mergers and acquisitions in Turkey: a legal guide.
APA vs SPA — liability isolation and strategic selection
An English speaking lawyer in Turkey advising on APA versus SPA selection must explain that the fundamental legal distinction between the two structures in Turkey — and the primary reason buyers choose APAs for acquisitions of distressed businesses, regulated assets, or businesses with significant undisclosed liability risk — is that an APA allows the buyer to select which assets to acquire and which liabilities to assume, while an SPA transfers the entire legal entity including all its liabilities whether or not the buyer was aware of them at the time of purchase. In Turkish law, an SPA buyer who discovers post-closing liabilities that were not disclosed has a claim against the seller for breach of warranty, but the buyer's company is still legally responsible for those liabilities to third parties — the litigation risk is against the seller, while the financial exposure to third parties has already been inherited. An APA buyer who correctly structured the acquisition to exclude specific categories of liability never inherits that liability to third parties in the first place, regardless of whether the seller ultimately satisfies it. Practice may vary by authority and year — verify current Turkish court interpretation of APA liability isolation and the specific liability categories that courts have held to transfer in business unit APAs (particularly under the İş Kanunu Article 6 workplace transfer analysis) before relying on APA structure for liability isolation purposes.
A Turkish Law Firm advising on tax differences between APA and SPA must explain that the tax treatment of the two structures differs significantly across multiple tax types in Turkey, and the comparison must be made specifically for the asset mix and transaction circumstances rather than in the abstract. For the buyer, an APA acquisition creates a cost basis in the acquired assets that can be depreciated from the acquisition date under Turkish tax law — which is a significant tax advantage compared to SPA, where the buyer's depreciation is based on the carrying value in the target company rather than the higher acquisition price. For the seller, an APA transaction may create capital gains taxable at the seller entity level (corporate income tax on the gain between selling price and book value of each transferred asset), whereas an SPA may produce a gain that is taxed differently depending on the seller's holding period and entity type. The VAT and stamp tax differences between the two structures are discussed separately below. Practice may vary — verify current Turkish corporate income tax, VAT, and stamp tax treatment for APA versus SPA structures with a Turkish tax advisor before any transaction structure decision. The corporate tax framework is analyzed in the resource on corporate tax for foreign companies in Turkey.
A lawyer in Turkey advising on Competition Authority clearance for APAs must explain that the Turkish Competition Authority (Rekabet Kurumu) merger control rules apply to APAs as well as SPAs where the transaction meets the defined thresholds — and the applicable thresholds are set by Communiqué No. 2010/4 (as amended). The notification obligation is triggered where: the combined Turkish turnover of the parties exceeds TRY 750 million; and either the Turkish turnover of at least two parties each exceeds TRY 250 million, or the worldwide turnover of one party exceeds TRY 3 billion and the Turkish turnover of the other party exceeds TRY 250 million. For APAs, the "turnover of the parties" analysis focuses on the parties' Turkish revenues from the relevant business segments, not on the transaction value — meaning an APA for a small asset package between companies with large overall Turkish revenues can require notification. Competition Authority clearance for APAs that meet the notification thresholds must be obtained before closing — completing the APA before clearance is granted constitutes a Gun Jumping violation that creates administrative fine exposure. Practice may vary — verify current Competition Authority notification thresholds and the specific turnover calculation methodology applicable to the transaction before any Competition Authority filing. Practice may vary — check current guidance before acting on any information on this page.
APA due diligence — targeted asset and liability analysis
An Istanbul Law Firm advising on APA due diligence must explain that the due diligence scope in an APA transaction is narrower than in an SPA — because the buyer is only acquiring specified assets rather than the entire company — but the depth of diligence on each included asset must be more granular than in an SPA, because the buyer must confirm that each specific included asset is legally clean and transferable rather than relying on company-level representations. The core APA due diligence workstreams include: title verification for each real estate asset (confirming clean ownership in the seller's name, absence of mortgage or encumbrance, zoning compliance, and absence of any dispute or claim on the property); contractual assignment analysis for each included commercial contract (confirming whether each contract permits assignment and whether counterparty consent is required); IP registration status verification (confirming current registration validity, absence of third-party challenges, and absence of license obligations that restrict the buyer's intended use); equipment and inventory condition and ownership verification (confirming that included physical assets are actually owned by the seller and not encumbered or subject to retention of title arrangements); and tax lien identification (confirming whether the seller's assets are subject to any tax authority annotations or encumbrances under VUK provisions). Practice may vary by authority and year — verify current Turkish land registry, TPMK, and tax authority inquiry procedures available to APA due diligence teams before designing the due diligence scope for any Turkish APA transaction.
A law firm in Istanbul advising on successor liability risk in Turkish APAs must explain that while the APA structure generally prevents the buyer from inheriting seller liabilities, Turkish law creates specific successor liability exceptions that apply to APAs and must be assessed in due diligence rather than assumed away. The most significant successor liability risk in Turkish APAs arises under two frameworks: the Social Security and General Health Insurance Law (Law No. 5510) and VUK's tax liability provisions for workplace transfers, which can impose liability on the buyer for the seller's unpaid social security premiums (SGK debts) and tax debts where the APA constitutes a transfer of a going concern workplace (işyeri devri). Under Sosyal Güvenlik Kurumu (SGK) practice, a buyer who acquires a workplace as a going concern can be held jointly liable for the seller's unpaid SGK premiums up to the value of the transferred assets. The APA's characterization as a transfer of isolated assets versus a transfer of a going concern workplace determines the scope of this successor liability risk — and the distinction is not always clear, particularly where the APA transfers assets, contracts, and employees simultaneously. We obtain SGK debt confirmation letters and assess going concern transfer risk as standard steps in every Turkish APA due diligence process. Practice may vary — verify current SGK and tax authority successor liability assessment procedures for Turkish APA transactions before any going concern workplace transfer analysis.
An English speaking lawyer in Turkey advising on warranty and indemnity structures in Turkish APAs must explain that APA warranties and indemnities serve a different function from SPA warranties — in an SPA, warranties cover the entire company including all assets and liabilities; in an APA, warranties are specifically focused on the included assets and on the completeness of the seller's disclosure about those assets. Core APA warranties in Turkish transactions typically cover: the seller's unencumbered title to each included asset; the absence of any third-party claims on the included assets; the accuracy and completeness of the asset schedule; the legal validity and transferability of each included commercial contract; the current registration status of included IP; the absence of pending litigation specifically relating to the included assets; and the accuracy of the employee headcount and employment terms for any transferred employees. Indemnity provisions should specifically address the successor liability risks discussed above — including specific indemnification by the seller for any SGK or tax debts that are imposed on the buyer under the successor liability framework after closing. Practice may vary — verify current Turkish court warranty breach and indemnity enforcement standards for APA transactions and the specific survival period requirements before any APA warranty and indemnity structure design. The M&A due diligence framework is analyzed in the resource on due diligence in Turkey: legal, commercial, and financial process.
Tax treatment of Turkish APAs — VAT, stamp tax, and capital gains
A Turkish Law Firm advising on VAT in APA transactions must explain that the VAT treatment of individual asset transfers in Turkish APAs depends on the category of each transferred asset — and the APA's aggregate purchase price does not produce a single VAT obligation; instead, each asset category triggers its own VAT treatment. Business assets generally subject to VAT at standard rates (currently 20% for most goods and 10% for some goods) create VAT obligations when transferred in an APA — the seller must charge VAT on the transfer price of each such asset, and the buyer can deduct the input VAT to the extent their business activities are VAT-generating. Real estate transfers in APAs are subject to KDV (VAT) at varying rates depending on the property type (residential properties below a certain gross floor area may be exempt or subject to reduced rates; commercial properties are generally subject to 20% KDV). A specific VAT exemption applies to the transfer of an entire going-concern business (işletme devri) under KDV Law Article 17/4-r — but this exemption requires the transfer to cover all or substantially all of the business's assets and operations, and a selective APA that excludes significant assets or liabilities may not qualify. Practice may vary by authority and year — verify current KDV rates and the specific going-concern transfer exemption requirements with a Turkish tax advisor before any APA structure decision with significant VAT implications.
An Istanbul Law Firm advising on real estate transfer tax and stamp tax must explain that real estate transfers in Turkish APAs are subject to the real estate transfer tax (tapu harcı) at a rate of 4% of the declared transfer value (or the official value if higher), split equally between buyer and seller under the current rules. This transfer tax obligation applies to each real estate parcel transferred under the APA — and it is a significant transaction cost in APAs that include substantial real estate. Stamp tax (damga vergisi) under the Stamp Tax Law (Damga Vergisi Kanunu) applies to the APA as a contract — contracts for a monetary consideration are subject to stamp tax at a rate of 0.948% on the contract's total monetary value (with certain exceptions and caps). For APAs with high total consideration values, the stamp tax can be material and must be accounted for in the transaction economics before the APA is signed. Practice may vary — verify current tapu harcı rate, stamp tax rate and cap for APA contracts, and the specific taxable value determination methodology before any APA transaction with significant real estate or high total value.
A lawyer in Turkey advising on seller capital gains treatment in Turkish APAs must explain that the seller entity in a Turkish APA recognizes a taxable gain on each transferred asset to the extent the transfer price exceeds the asset's tax book value (net book value after accumulated depreciation) — and this gain is subject to corporate income tax (kurumlar vergisi) at the current rate (currently 25% for most companies, with exceptions). For real estate assets held for more than two years at the time of transfer, a partial gain exemption (50% exclusion) is available under the Corporate Tax Law (Kurumlar Vergisi Kanunu) if the gain proceeds are kept in a restricted fund for five years — a significant tax incentive for sellers of long-held real estate assets. For individual seller shareholders who own the business through a personal name (şahıs işletmesi) rather than a corporate entity, the gain may be subject to income tax (gelir vergisi) at graduated rates. The tax treatment of individual asset sale gains versus business disposal gains differs under Turkish tax law, and the overall transaction structuring should be reviewed with a Turkish tax advisor for sellers with significant gain positions. Practice may vary — verify current corporate income tax capital gains treatment and the specific two-year real estate gain exclusion requirements with a Turkish tax advisor before any APA transaction structure that involves significant asset gains for the seller. Practice may vary — check current guidance before acting on any information on this page.
Employee transfer — İş Kanunu Article 6 obligations
An English speaking lawyer in Turkey advising on employee transfer in Turkish APAs must explain that İş Kanunu (Labor Code, Law No. 4857) Article 6 creates mandatory obligations where an APA constitutes a "transfer of a workplace or a part thereof" (işyeri veya bir bölümünün devri) — and these obligations apply regardless of the APA's characterization as a selective asset purchase rather than a business transfer. Article 6 provides that: all employment contracts existing at the time of the transfer are automatically transferred to the buyer (the new employer) by operation of law, maintaining all existing employment terms; the seller (previous employer) and buyer are jointly liable for any claims arising from employment contracts that existed before the transfer date; the employees cannot be terminated solely by reason of the workplace transfer; and union recognition and existing collective labor agreements continue to bind the buyer for the remaining period of their validity. The triggering question — whether an APA constitutes a workplace transfer under Article 6 — depends on whether the APA transfers an "economic unit" that retains its identity after the transfer (assessed by considering whether the transferred assets, employees, and operations constitute a functioning business unit rather than isolated assets). Practice may vary by authority and year — verify current Turkish court Article 6 workplace transfer analysis methodology and the specific factual indicators that courts consider when determining whether an APA constitutes a workplace transfer before relying on APA structure for employee exclusion purposes.
A Turkish Law Firm advising on voluntary employee transfer mechanics must explain that even in APA transactions that do not constitute mandatory Article 6 workplace transfers — where the buyer is acquiring truly isolated assets without a functioning business unit — the buyer and seller must specifically plan for how employees attached to the transferred assets will be managed. Options include: the seller terminating employees before closing with full statutory severance (kıdem tazminatı) and notice pay (ihbar tazminatı) obligations, with the buyer then hiring selected individuals on new employment terms; the seller and buyer agreeing on which employees will be offered positions with the buyer, with the seller paying severance for those not offered positions and the buyer offering market-rate employment to those selected; or where Article 6 applies, the automatic transfer of all employment contracts with the buyer assuming responsibility for all pre-transfer employment obligations jointly with the seller. Each option has different cost, timing, and legal risk implications — and the employee transition plan must be embedded in the APA's conditions precedent and closing mechanics to avoid uncertainty at closing. Practice may vary — verify current İş Kanunu termination cost calculation methodology and the specific notification requirements for employee transfers applicable to the specific transaction structure before designing any employee transition plan.
A lawyer in Turkey advising on collective labor agreement considerations must explain that where the transferred workplace is subject to a collective labor agreement (toplu iş sözleşmesi) between the seller and a trade union, the buyer's obligations under Article 6 include continuing to observe the terms of that collective agreement for the remaining period of its validity — unless the collective agreement contains specific provisions addressing workplace transfer. This means that an APA buyer who does not want to be bound by the seller's existing collective labor agreement must specifically analyze the agreement's transfer provisions, the union's legal status and recognition rights, and the contractual and legal consequences of any attempt to renegotiate or terminate the collective agreement upon transfer. An APA buyer who proceeds with a workplace transfer without adequately addressing the collective agreement dimension creates potential unfair labor practice exposure under the Trade Unions and Collective Labor Agreements Law (Sendikalar ve Toplu İş Sözleşmesi Kanunu, Law No. 6356). Practice may vary — verify current Law No. 6356 collective agreement transfer obligations and the specific union recognition rights applicable to the transferred workplace before any employee transition planning in an APA involving a unionized workforce. The employment law framework is analyzed in the resource on employment law in Turkey: employer obligations for foreign companies.
Regulatory approvals and third-party consents
An Istanbul Law Firm advising on regulatory approvals for Turkish APAs must explain that sector-specific regulation imposes approval requirements for asset transfers in regulated industries that operate independently of and in addition to Competition Authority notification — and failing to obtain required regulatory approvals before closing can render the asset transfer legally ineffective or create administrative sanctions. The most significant sector-specific approval requirements in Turkish APA practice include: banking and financial services (Banking Law, Law No. 5411 — BDDK approval required for transfers of banking assets and licenses); energy (Electricity Market Law and Natural Gas Market Law — EPDK approval required for transfers of generation, distribution, and supply licenses and associated assets); telecommunications (Electronic Communications Law — BTK notification or approval for transfers of telecom infrastructure and licenses); healthcare (Ministry of Health approvals for transfers of hospital, clinic, or medical device-related assets); and education (Ministry of National Education approval for transfers of private school assets and licenses). Practice may vary by authority and year — verify current sector-specific regulatory approval requirements and the specific application timelines applicable to the regulated assets included in any APA before designing the closing conditions and timeline.
A law firm in Istanbul advising on third-party consent requirements must explain that commercial contracts transferred in an APA create a consent layer — many commercial agreements contain explicit non-assignment provisions, change of control clauses, or provisions requiring counterparty consent to assignment — and the APA buyer's right to receive the benefit of these contracts is legally effective only if the counterparty's consent is obtained where required. The consent procurement process must be planned before signing the APA — identifying all contracts subject to consent requirements, ranking them by commercial importance to the buyer, and assigning responsibility for the consent procurement process to a specific party. Contracts that cannot be assigned — because the counterparty refuses consent or because the contract is inherently personal to the seller — must be addressed in the APA's conditions precedent: either the seller must obtain consent before closing is obligated, or the buyer must accept the risk of specific contract non-assignment with a price adjustment or indemnity to reflect the risk. Practice may vary — verify current TBK contract assignment requirements and the specific consent obligation analysis applicable to Turkish law-governed commercial contracts before any APA contract portfolio assignment analysis.
An English speaking lawyer in Turkey advising on municipal and administrative consents must explain that certain asset categories require specific municipal or administrative notifications or approvals that are separate from the APA closing — and overlooking these requirements creates post-closing complications that can include operating without required permits, regulatory sanctions, or inability to register assets in the buyer's name. Specific examples include: trade licenses (ticaret sicil belgesi, işyeri açma ve çalışma ruhsatı) that are issued to specific legal entities and must be re-applied for by the buyer rather than transferred from the seller; environmental permits that require notification of the permit authority of any change in the permit holder; and food safety, pharmaceutical, or medical device operation permits that require renewed application. Some permits are not transferable at all — the buyer must apply for new permits in its own name — while others can be transferred with regulatory notification. We prepare a permit and license transfer analysis as a standard APA due diligence deliverable for every transaction involving operational business assets. Practice may vary — verify current transfer eligibility and notification requirements for each permit and license category included in any APA transaction before designing the post-closing integration plan. Practice may vary — check current guidance before acting on any information on this page.
Non-compete and post-closing restrictive covenants
A Turkish Law Firm advising on non-compete covenants in Turkish APAs must explain that restrictive covenants — specifically non-compete obligations requiring the seller not to compete with the buyer in the transferred business after closing — are enforceable in Turkish APA transactions but subject to specific enforceability requirements under TBK and competition law (Rekabet Kanunu, Law No. 4054). Under TBK principles, a non-compete obligation must be reasonable in scope, territory, and duration to be enforceable — an overly broad non-compete that prevents the seller from engaging in any commercial activity for an extended period may be reduced by courts to a reasonable scope or declared unenforceable in its entirety. Under Competition Law, non-compete obligations ancillary to a legitimate business transfer (specifically, protecting the buyer's acquired goodwill and customer relationships from the seller's competing activity) are treated as ancillary restraints that are acceptable under Article 4 — but the scope must be directly related to the legitimate protection purpose. Practice may vary by authority and year — verify current TBK and Competition Authority guidance on non-compete enforceability standards for APA transactions and the specific scope, territory, and duration limits that Turkish courts and the Authority currently consider reasonable before drafting any non-compete covenant in a Turkish APA.
An Istanbul Law Firm advising on non-solicitation covenants must explain that non-solicitation covenants — prohibiting the seller from soliciting the transferred business's customers, suppliers, or employees after closing — are recognized in Turkish APA practice and are generally more enforceable than broad non-compete covenants because their scope is more precisely defined and their legitimate protective purpose is more directly connected to the transferred business's value. A non-solicitation covenant that specifically prohibits the seller from approaching customers and suppliers who were identified in the APA schedule (rather than a general prohibition on any commercial contact with former counterparties) is more likely to be enforceable than a broader formulation. For employee non-solicitation, Turkish courts have recognized that prohibiting the seller from hiring transferred employees who have left the buyer for a defined period after closing is a legitimate protective measure — provided the period is reasonable (typically 12-24 months is considered reasonable in Turkish practice). Practice may vary — verify current Turkish court enforcement standards for non-solicitation covenants in APA transactions and the specific scope limitations that courts currently apply before finalizing any non-solicitation covenant.
A lawyer in Turkey advising on enforcement mechanisms for APA covenants must explain that breach of an APA covenant — including non-compete, non-solicitation, or confidentiality — is enforced through Turkish civil courts under TBK's contract breach framework, and the available remedies include: specific performance (requiring the breaching party to perform its covenant obligations); injunctive relief (ihtiyati tedbir under HMK Article 389) requiring immediate cessation of the prohibited activity while the main breach proceedings continue; and damages (tazminat) for losses caused by the breach. Injunctive relief is particularly important for non-compete and non-solicitation breaches — because damages paid after extended litigation may be insufficient to compensate the buyer for the business harm caused by continued seller competition or solicitation during the period between the breach and the final judgment. A well-structured APA covenant should include a specific liquidated damages clause (cezai şart) that quantifies the consequences of breach to facilitate faster and more certain remedy. Practice may vary — verify current Turkish court enforcement standards for APA covenant breach remedies and the specific liquidated damages clause requirements that courts currently enforce before designing any covenant enforcement mechanism in a Turkish APA. Practice may vary — check current guidance before acting on any information on this page.
APA closing mechanics — execution, timing, and condition precedents
An English speaking lawyer in Turkey advising on APA closing structure must explain that Turkish APA closings require careful sequencing of multiple parallel actions — because the legal transfer of different asset categories occurs through different mechanisms with different timing implications, and a poorly sequenced closing can leave the buyer with some assets transferred and others not yet transferred (creating an incomplete or partial closing that exposes both parties to risk). A typical Turkish APA closing sequence involves: execution of the main APA document (as a private written agreement under TBK, not requiring notarization for the contract itself unless parties choose notarization for evidentiary security); simultaneous execution of asset-category-specific transfer instruments (tapu devri before the land registry for real estate; vehicle transfer documents at the traffic directorate; assignment agreements for commercial contracts; TPMK transfer applications for IP; physical delivery records for movable assets); payment of the purchase price through an escrow account or simultaneous bank transfer tied to the registration confirmations; and filing of post-closing notifications (SGK workplace transfer notification, trade registry notifications for any commercially registered assets, tax authority notifications). Practice may vary by authority and year — verify current Turkish registry and authority timing requirements for each asset category closing step and the specific simultaneous closing mechanics available at the relevant registries before designing any APA closing sequence.
A Turkish Law Firm advising on conditions precedent structure must explain that Turkish APAs typically include specific conditions precedent (askı koşulları) that must be satisfied before the buyer is obligated to complete closing — and the conditions must be precisely drafted to avoid disputes about whether they have been satisfied at the time closing is demanded. Common APA conditions precedent include: receipt of all required regulatory approvals (Competition Authority clearance, sector-specific approvals); receipt of all material third-party consents (counterparty consents for assigned commercial contracts); completion of the seller's pre-closing obligations (discharge of identified encumbrances, cure of identified title defects, completion of specific pre-closing restructuring); accuracy of seller warranties at closing (the warranties remain accurate as of the closing date, not just the signing date); and absence of material adverse change (no event occurring between signing and closing that materially and adversely affects the transferred assets as a whole). Each condition precedent must specify who is responsible for satisfying it, what the evidence of satisfaction is, and what happens if the condition cannot be satisfied (the APA is terminated, or the parties negotiate a modified closing). Practice may vary — verify current Turkish commercial court condition precedent interpretation standards and the specific material adverse change definition practices in Turkish APA transactions before designing any condition precedent structure.
A lawyer in Turkey advising on escrow mechanics for Turkish APAs must explain that escrow arrangements — holding a portion of the purchase price in a designated account pending post-closing conditions — are commonly used in Turkish APA transactions to manage post-closing risk exposure, particularly for: (1) unknown or undisclosed liabilities that may surface after closing, secured by a retention amount available to the buyer for indemnity claims during a defined post-closing period; (2) conditions that are satisfied after closing rather than before (such as third-party consents that could not be obtained before the main closing but are expected within a defined period); and (3) earn-out arrangements where additional consideration is payable based on the transferred business's post-closing performance. Escrow accounts in Turkish APA practice are typically established at Turkish banks under a three-party agreement between the seller, the buyer, and the escrow bank — with release conditions, release triggers, and dispute resolution mechanisms specified in the escrow agreement. The escrow agreement should be reviewed for Turkish bank requirements before signing — because Turkish banks' standard escrow terms may not align with the parties' negotiated escrow mechanics, and a purpose-drafted escrow agreement may be needed. Practice may vary — verify current Turkish bank escrow account requirements and the specific escrow release condition documentation standards before designing any APA escrow arrangement. Practice may vary — check current guidance before acting on any information on this page.
How we work in APA transaction mandates
A best lawyer in Turkey managing a Turkish APA mandate begins with a transaction mapping exercise: identifying every asset in the proposed transfer scope, determining the applicable transfer formality for each (land registry, TPMK, traffic directorate, contract assignment, physical delivery), assessing the realistic timeline for each transfer formality, and identifying the regulatory approvals and third-party consents required before closing can occur. This mapping exercise produces a complete closing checklist — organized by asset category, with responsible party, required action, timing, and evidence of completion for each item — that serves as the project management backbone for the entire transaction from signing to post-closing. The closing checklist is shared with all parties and their advisors at the beginning of the transaction to ensure that no formality is overlooked and that the closing sequence is correctly designed before any binding commitments are made.
ER&GUN&ER advises buyers and sellers across the full spectrum of Turkish APA transactions — asset scope and transfer formality analysis, APA versus SPA structure selection, TBK contract drafting and negotiation, condition precedent design, Competition Authority notification filing and clearance, sector-specific regulatory approval coordination (BDDK, EPDK, BTK, Ministry of Health, Ministry of Education), APA due diligence (title verification, encumbrance review, contract assignment analysis, TPMK IP status verification, SGK debt confirmation, tax lien search), İş Kanunu Article 6 workplace transfer analysis and employee transition planning, VAT and stamp tax analysis, capital gains tax structuring, non-compete and non-solicitation covenant drafting, escrow arrangement design, closing sequence coordination, TPMK IP transfer registration, land registry closing coordination, post-closing notification management, and APA warranty and indemnity enforcement. We work in English throughout all international mandates. For the M&A and business acquisition framework — see the resource on mergers and acquisitions in Turkey. For the corporate tax framework — see the resource on corporate tax for foreign companies in Turkey. Practice may vary — check current guidance before acting on any information on this page.
Frequently Asked Questions
- What is an asset purchase agreement (APA) and how does it differ from a share purchase agreement (SPA) in Turkey? An APA transfers specifically identified assets from seller to buyer without the buyer assuming the seller entity's general liabilities. An SPA transfers shares, making the buyer the owner of the entire entity including all its liabilities. In Turkey, the key APA advantages are liability isolation (excluding undisclosed seller liabilities) and a higher depreciation basis for the buyer (assets are acquired at purchase price, not book value). Key disadvantages include higher VAT and transfer tax, more complex formalities (each asset category has its own transfer mechanism), and potential İş Kanunu Article 6 employee transfer obligations for business unit acquisitions.
- Does an APA itself transfer ownership of Turkish real estate? No — the APA creates the contractual obligation to transfer, but legal ownership of Turkish real estate transfers only upon execution of the tapu devri (title transfer) before the Land Registry officer (tapu sicil müdürü). The APA cannot substitute for the registry transfer. The tapu devri must be coordinated with payment of the purchase price and satisfaction of any closing conditions. Transfer tax (tapu harcı) of 4% of the declared value is payable at the registry transfer.
- What happens to employees when a Turkish business is acquired through an APA? İş Kanunu Article 6 provides that where an APA constitutes a "transfer of a workplace or part thereof," all employment contracts automatically transfer to the buyer by operation of law with existing terms maintained, and employees cannot be terminated solely due to the transfer. The buyer and seller are jointly liable for pre-transfer employment obligations. Whether a specific APA triggers Article 6 depends on whether the transferred assets and operations constitute an economic unit retaining its identity after transfer — a fact-specific analysis requiring specific legal assessment.
- Is VAT charged on asset transfers in Turkish APAs? Yes, for most asset categories. Business assets transferred in APAs are generally subject to VAT at applicable rates (currently 20% for most assets, lower rates for some categories). A going-concern transfer exemption (KDV Law Article 17/4-r) may apply if the APA covers all or substantially all of a business's assets, but selective APAs excluding significant assets may not qualify. Real estate transfers are subject to KDV at varying rates by property type. Buyers who are registered VAT taxpayers can typically deduct input VAT. Practice may vary — verify with a Turkish tax advisor.
- Does stamp tax (damga vergisi) apply to a Turkish APA? Yes — the APA as a monetary contract is subject to stamp tax at 0.948% of the total consideration value under the Stamp Tax Law, subject to specific caps. For high-value APAs, the stamp tax can be a material transaction cost. Stamp tax must be paid before the contract can be used as evidence in proceedings. Practice may vary — verify current stamp tax rate and cap with a Turkish tax advisor before signing any APA.
- Can the buyer depreciate acquired assets from the APA purchase price under Turkish tax law? Yes — this is a key buyer tax advantage of APA over SPA. In an APA, the buyer establishes its cost basis in the acquired assets at the purchase price paid, and depreciates from that basis under Turkish corporate income tax rules. In an SPA, the buyer's depreciation basis in the assets held by the target company is the target company's existing book value, not the acquisition price — meaning the buyer cannot step up the depreciation basis to the higher acquisition price.
- Does the Turkish Competition Authority need to approve an APA? Approval is required when the transaction meets defined notification thresholds under Communiqué No. 2010/4: combined Turkish turnover exceeds TRY 750 million, and either both parties have Turkish turnover exceeding TRY 250 million, or one party has global turnover exceeding TRY 3 billion while the other has Turkish turnover exceeding TRY 250 million. Completing an APA before required Competition Authority clearance constitutes a Gun Jumping violation with administrative fine exposure. Practice may vary — verify current thresholds before any transaction.
- What due diligence is required in a Turkish APA? Core APA due diligence covers: title verification for each real estate asset (land registry search); IP registration status (TPMK search); contract assignment permission analysis for each included commercial contract; equipment ownership and encumbrance verification; SGK debt confirmation (to assess successor liability risk); tax lien search; permit and license transfer eligibility analysis; and employment obligation assessment (İş Kanunu Article 6 analysis). The scope is asset-specific rather than company-wide, but the depth on each included asset must be thorough.
- Are non-compete covenants enforceable in Turkish APAs? Yes, with limitations. TBK requires that non-compete obligations be reasonable in scope, territory, and duration — overly broad covenants may be reduced or declared unenforceable. Competition Law treats non-competes ancillary to legitimate business transfers as acceptable restraints provided the scope is directly related to protecting the acquired goodwill. A defined territory, specific business scope, and reasonable duration (typically 2-3 years is considered reasonable in Turkish practice) strengthens enforceability. Liquidated damages (cezai şart) clauses strengthen the enforcement mechanism.
- What regulatory approvals may be required before an APA closes? Sector-specific approvals may be required for transfers in: banking (BDDK approval); energy (EPDK approval); telecommunications (BTK notification or approval); healthcare (Ministry of Health); education (Ministry of National Education); and other regulated sectors. The specific approval requirement depends on the nature of the transferred assets and whether the transferred operational license or regulated status constitutes a "transfer" under the applicable sectoral regulation. Each sector has different approval timelines that must be factored into the APA closing schedule.
- Can commercial contracts be transferred in an APA without counterparty consent? Only if the contract expressly permits assignment without consent. Contracts with explicit non-assignment provisions, change of control clauses, or general consent requirements cannot be assigned without the specific counterparty's consent — and the buyer does not receive the legal benefit of the contract without a valid assignment. The APA should specifically identify which contracts require counterparty consent, allocate responsibility for obtaining consent, and address what happens if consent cannot be obtained (condition precedent, price adjustment, or seller indemnity).
- How is an APA closed in Turkey? Closing requires simultaneous execution of asset-category-specific transfer instruments: tapu devri before the land registry for real estate; vehicle transfer documents at the traffic directorate; assignment agreements for commercial contracts; TPMK applications for IP transfers; physical delivery records for movable assets. Payment is typically structured through escrow or simultaneous bank transfer tied to registry confirmations. Post-closing obligations include SGK workplace transfer notification, trade registry notifications where applicable, and tax authority notifications. The entire sequence should be documented in a closing checklist designed before signing.
- What are the seller's capital gains tax obligations in a Turkish APA? The seller entity recognizes a taxable gain on each transferred asset equal to the transfer price less the asset's tax book value (net of accumulated depreciation), subject to corporate income tax at the current rate (25% for most companies). Real estate assets held more than two years may qualify for a 50% gain exclusion if proceeds are maintained in a restricted fund for five years. The overall tax exposure depends on the book values, holding periods, and asset mix — requiring case-specific tax analysis. Practice may vary — verify with a Turkish tax advisor.
- How should the purchase price be structured in a Turkish APA? Common price structures include: fixed lump sum (simple, but risks over or under-payment relative to actual asset values); working capital adjustment (price adjusts based on net working capital at closing versus target); and earn-out (additional consideration contingent on post-closing business performance). Escrow holdbacks for indemnity claims are standard for managing post-closing risk. Each structure has different accounting, tax, and enforcement implications under Turkish law. The choice of structure should be informed by tax analysis (particularly regarding timing of VAT and capital gains recognition) and by the specific risk profile of the acquired assets.
- Can a Turkish APA be governed by foreign law? Yes — parties can choose foreign governing law for Turkish APAs under TBK's conflict of laws provisions (and MÖHUK, Law No. 5718). However, certain aspects of Turkish APA transactions are governed by mandatory Turkish law regardless of the chosen governing law: land registry transfers require Turkish law formalities; employment obligations under İş Kanunu apply regardless of governing law; Turkish competition law and regulatory approvals apply regardless of governing law; and Turkish tax obligations apply regardless of governing law. For international APAs, a dual governing law structure (Turkish law for Turkish registry formalities and mandatory law provisions; chosen foreign law for the commercial terms) is commonly used.
Author: Mirkan Topcu is an attorney registered with the Istanbul Bar Association (Istanbul 1st Bar), Bar Registration No: 67874. His practice focuses on cross-border and high-stakes matters where evidence discipline, procedural accuracy, and risk control are decisive.
He advises buyers and sellers across Asset Scope and Transfer Formality Analysis, APA vs SPA Structure Selection, TBK Contract Drafting and Negotiation, Condition Precedent Design, Competition Authority Notification, Sector-Specific Regulatory Approval Coordination (BDDK, EPDK, BTK, Ministry of Health), APA Due Diligence, İş Kanunu Article 6 Workplace Transfer Analysis, VAT and Stamp Tax Analysis, Capital Gains Structuring, Non-Compete and Non-Solicitation Covenant Drafting, Escrow Arrangement Design, Closing Sequence Coordination, TPMK IP Transfer Registration, Land Registry Closing Coordination, and Post-Closing Integration matters where transactional precision and multi-authority coordination are decisive.
Education: Istanbul University Faculty of Law (2018); Galatasaray University, LL.M. (2022). LinkedIn: Profile. Istanbul Bar Association: Official website.