When purchasing real estate in Turkey, foreigners are required to obtain a Foreign Currency Purchase Certificate. This certificate confirms that the currency used in the real estate transaction has been exchanged through a Turkish bank and transferred to the Central Bank, a critical requirement particularly relevant for those pursuing Turkish citizenship through property investment.
What are Foreign Currency Transactions in Turkey?
Foreign currency transactions involve exchanging one currency for another, typically when individuals or entities transact in currencies other than their primary functional currency. The functional currency refers to the main currency used in an individual's or company's primary economic environment.
Types of Foreign Exchange Market Transactions
In Turkey's foreign exchange market, transactions mainly fall into two categories:
- Spot Market Transactions: Settled immediately or within 48 hours.
- Forward Market Transactions: Agreements to buy or sell currency at a future date, usually between one to six months. Forward market rates may differ from spot market rates due to market factors like interest rates and economic forecasts.
Required Documents for Foreign Currency Exchange in Turkey
Foreigners must provide specific documentation to secure a Foreign Currency Purchase Certificate from a Turkish bank. Essential documents and information include:
- Full name (as shown on passport or ID)
- Passport number or national ID number
- Total transaction amount in Turkish Lira (TL), equivalent to the exchanged foreign currency
- A declaration compliant with Article 13 of Turkey's Circular on Capital Movements
Recording Foreign Currency Transactions
Accurate documentation is essential when recording foreign currency transactions. Companies must identify their functional currency and document all transactions using the official exchange rate at the time of the transaction. Currency fluctuation gains or losses must be clearly recorded to comply with Turkish accounting standards.
Critical Points from the Circular on Capital Movements
Foreigners involved in currency exchange for real estate investments in Turkey should keep in mind the following points outlined by Turkish regulations:
- The foreign currency must first be exchanged through a Turkish bank before transfer to the Central Bank.
- All real estate transactions must comply with Turkish real estate law.
- A Foreign Currency Purchase Certificate is mandatory for all related transactions.
- Permissible currencies include Euro (EUR), Pound Sterling (GBP), and US Dollar (USD).
- Upon completion of the currency exchange, withdrawal from the agreement is not permitted.
For detailed legal assistance regarding foreign currency purchase certificates and real estate investments in Turkey, experienced legal advice is highly recommended.
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