Company Tax Debt in Turkey: Personal Liability

A Turkish company’s unpaid public debt can lead to personal collection proceedings against a shareholder, legal representative or qualifying manager, but the conditions differ. Limited-company shareholder liability under Article 35 of Law No. 6183 is proportionate to the capital share. Tax representatives are also governed by Article 10 of the Tax Procedure Law, while social security debts have a separate joint-liability provision in Article 88 of Law No. 5510.

The first task is to identify the debt, the person’s capacity and the relevant period. This article concerns those liability rules. A claim for compensation for mismanagement is addressed separately in director liability in Turkey.

1. When Can a Legal Representative’s Assets Be Pursued?

Additional Article 35 of Law No. 6183 addresses public receivables that cannot be collected from the principal debtor, or are established to be uncollectable. Tax and social security debts also require the specific provisions explained below; the general collection provision is not the whole analysis. 6183 sayılı Amme Alacaklarının Tahsil Usulü Hakkında Kanun mükerrer m.35 — Liability of legal representatives

“Tüzel kişilerle küçüklerin ve kısıtlıların, vakıflar ve cemaatler gibi tüzel kişiliği olmayan teşekküllerin mal varlığından tamamen veya kısmen tahsil edilemeyen veya tahsil edilemeyeceği anlaşılan amme alacakları, kanuni temsilcilerin ve tüzel kişiliği olmayan teşekkülü idare edenlerin şahsi mal varlıklarından bu Kanun hükümlerine göre tahsil edilir. Bu madde hükmü, yabancı şahıs veya kurumların Türkiye’deki mümessilleri hakkında da uygulanır.”

(6183 sayılı Amme Alacaklarının Tahsil Usulü Hakkında Kanun mükerrer m.35)

Unofficial translation: “Public receivables that cannot be collected in whole or in part from the assets of legal persons, of minors and of persons under disability, and of entities without legal personality such as foundations and communities, or that are understood to be uncollectable, are collected from the personal assets of the legal representatives and of those administering the entity without legal personality, in accordance with the provisions of this Law. This provision also applies to the representatives in Türkiye of foreign persons or institutions.”

The provision expressly extends to the representative in Turkey of a foreign person or institution. The same article adds that the company entering liquidation, or having been liquidated, does not remove the representative’s liability for earlier periods, and that a representative who pays may seek recourse against the principal debtor.

2. Are LLC Shareholders Liable Even Without Management Powers?

Shareholder liability for public debt depends on company type. Article 35 of the same statute reaches shareholders, but only of limited companies:

“Limited şirket ortakları, şirketten tamamen veya kısmen tahsil edilemeyen veya tahsil edilemeyeceği anlaşılan amme alacağından sermaye hisseleri oranında doğrudan doğruya sorumlu olurlar ve bu Kanun hükümleri gereğince takibe tabi tutulurlar. Ortağın şirketteki sermaye payını devretmesi halinde, payı devreden ve devralan şahıslar devir öncesine ait amme alacaklarının ödenmesinden birinci fıkra hükmüne göre müteselsilen sorumlu tutulur.”

(6183 sayılı Amme Alacaklarının Tahsil Usulü Hakkında Kanun m.35)

Unofficial translation: “Shareholders of a limited company are directly liable, in proportion to their capital shares, for the public receivable that cannot be collected in whole or in part from the company or that is understood to be uncollectable, and they are subject to proceedings under the provisions of this Law. Where a shareholder transfers their capital share in the company, the transferor and the transferee are held jointly and severally liable for the payment of public receivables relating to the period before the transfer, in accordance with the first paragraph.”

The heading of that article is “Public debts of limited companies”, and its wording reaches only the limited company shareholder. A shareholder of a joint-stock company is not made liable for the company’s public debt by this provision; in a joint-stock company the route runs through legal-representative liability instead. Holding shares and acting as a legal representative are separate capacities. A person holding both must be assessed under both sets of conditions.

The Council of State discusses the shareholder’s capital obligation before explaining responsibility for collection of the company’s public debts:

“Limited şirket ortağının sorumluluğu, ortağın şirkete karşı koymayı taahhüt ettiği esas sermaye paylarını ödemeye ilişkindir. Bu durumu sınırlı şahsi sorumluluk olarak tanımlamak mümkün olup, aynı zamanda kusursuz sorumluluk olarak da kabul edilmektedir.”

(Danıştay 4. Dairesi, E. 2019/5376, K. 2022/5525, T. 11.10.2022 — bozma)

Unofficial translation: “The liability of a limited company shareholder relates to paying the principal capital shares that the shareholder has undertaken to contribute to the company. It is possible to define this situation as limited personal liability, and it is at the same time accepted as liability without fault.”

That passage should not be read as capping public-debt exposure at the unpaid capital contribution. Article 35 refers to the shareholder’s proportion of the company’s uncollectable public debt. In the same decision, the court distinguishes shareholder collection liability from the tax duties of a legal representative and requires the two capacities to be assessed separately.

3. What Must the Administration Establish Before Pursuing a Representative?

The Council of State’s Tax Case Chambers Council sets out the following requirements for a payment order against a legal representative:

“Asıl borçlu şirketten tahsil edilemeyen veya edilemeyeceği anlaşılan amme alacaklarının tahsili amacıyla kanuni temsilci sıfatıyla ödeme emri düzenlenebilmesi için öncelikle amme alacağının asıl borçlu şirket adına usulüne uygun olarak tahakkuk ettirilmesi ancak alacağın 6183 sayılı Amme Alacaklarının Tahsil Usulü Hakkında Kanun’un 37. maddesindeki kurallar uyarınca belirlenen vadesi içinde ödenmemesi gerekmektedir. Ayrıca asıl borçlu şirketin anılan Kanun’un 54. maddesinde öngörülen yöntemlere göre usulüne uygun bir biçimde takip edilmesi, bu kapsamda özellikle teminatsız alacaklarda asıl borçlu şirket adına düzenlenen ödeme emrinin usulüne uygun bir şekilde tebliğ edilmesi hukuken zorunludur. Öte yandan asıl borçlu şirketle ilgili mal varlığı araştırması sonucunda amme alacağının sözü edilen Kanun’un 3. maddesinde tanımlandığı biçimde tahsil edilemediğinin veya tahsil edilemeyeceğinin anlaşıldığının idarece ortaya konulması da gerekir.”

(Danıştay Vergi Dava Daireleri Kurulu, E. 2021/23, K. 2022/1133, T. 05.10.2022 — bozma)

Unofficial translation: “In order for a payment order to be issued in the capacity of legal representative for the purpose of collecting public receivables that cannot be collected from the principal debtor company or that are understood to be uncollectable, the public receivable must first be duly assessed in the name of the principal debtor company, and the receivable must not have been paid within the due date determined under the rules in Article 37 of Law No. 6183. Furthermore, it is legally required that the principal debtor company be duly pursued in accordance with the methods provided for in Article 54 of the said Law, and in this context, particularly for unsecured receivables, that the payment order issued in the name of the principal debtor company be duly served. On the other hand, it is also necessary that the administration establish that, as a result of the asset investigation concerning the principal debtor company, the public receivable could not be collected or is understood to be uncollectable, as defined in Article 3 of the said Law.”

The representative’s file should therefore establish four matters: was the receivable duly assessed against the company, did it fall due unpaid, was the company itself pursued and served in due form, and did the administration establish through an asset investigation that collection failed. The quoted decision requires the administration to establish failed collection or uncollectability; the company’s unpaid balance alone does not address every condition. The decision also contains a disagreement over the use of the general public-debt provision rather than the tax-specific Article 10. For tax debts, Article 10 must be examined separately.

4. What Is Different About a Legal Representative’s Tax Liability?

Article 10 of the Tax Procedure Law connects liability to failure to perform the relevant tax duties and the resulting inability to collect the tax and related receivables from the taxpayer’s assets. It also applies to representatives in Turkey of taxpayers who are not in Turkey.

“Yukarıda yazılı olanların bu ödevleri yerine getirmemeleri yüzünden mükelleflerin veya vergi sorumlularının varlığından tamamen veya kısmen alınamayan vergi ve buna bağlı alacaklar, kanuni ödevleri yerine getirmeyenlerin varlıklarından alınır. Bu hüküm Türkiye’de bulunmayan mükelleflerin Türkiye’deki temsilcileri hakkında da uygulanır.”

(213 sayılı Vergi Usul Kanunu, VUK m.10)

Unofficial translation: “Tax and related receivables that cannot be collected wholly or partly from the assets of taxpayers or tax-responsible persons because those specified above failed to perform these duties are collected from the assets of those who failed to perform the statutory duties. This provision also applies to representatives in Turkey of taxpayers who are not present in Turkey.”

The appointment period, the duty that was not performed and the debt period must be connected. The current text of Additional Article 35 includes annulled paragraphs. Their former wording should not be used as an independent basis for automatically making successive representatives liable together. Share transfers by LLC shareholders remain a different issue governed by Article 35.

5. Does Selling an LLC Share Remove Earlier Public-Debt Liability?

No automatic release follows from a share transfer. Article 35 makes the transferor and transferee jointly liable, within the first paragraph’s share-based framework, for public receivables relating to the period before the transfer. Its third paragraph also addresses different shareholders at the time a public receivable arises and when it becomes payable.

“Amme alacağının doğduğu ve ödenmesi gerektiği zamanlarda pay sahiplerinin farklı şahıslar olmaları halinde bu şahıslar, amme alacağının ödenmesinden birinci fıkra hükmüne göre müteselsilen sorumlu tutulur.”

(6183 sayılı Amme Alacaklarının Tahsil Usulü Hakkında Kanun m.35)

Unofficial translation: “Where the shareholders are different persons when the public receivable arises and when it must be paid, those persons are jointly and severally liable for payment of the public receivable under the first paragraph.”

The sale agreement, transfer date, share proportion and debt periods therefore need to be read together. A private allocation of liabilities between buyer and seller should not be confused with the collection conditions stated in Article 35.

6. How Does Liability for Social Security Debts Differ?

Article 88 of Law No. 5510 expressly addresses unpaid social insurance contributions and other institutional receivables. If these are not paid within the statutory periods without a justified reason, the specified senior managers or authorised officers, including company board members, and legal representatives are jointly and severally liable with the employer. This provision should not be presented as merely another application of the tax representative’s rule.

“Kurumun sigorta primleri ve diğer alacakları haklı bir sebep olmaksızın bu Kanunda belirtilen sürelerde ödenmez ise kamu idarelerinin tahakkuk ve tediye ile görevli kamu görevlileri, tüzel kişiliği haiz diğer işverenlerin şirket yönetim kurulu üyeleri de dahil olmak üzere üst düzeydeki yönetici veya yetkilileri ile kanuni temsilcileri Kuruma karşı işverenleri ile birlikte müştereken ve müteselsilen sorumludur.”

(5510 sayılı Sosyal Sigortalar ve Genel Sağlık Sigortası Kanunu m.88)

Unofficial translation: “If the Institution’s insurance contributions and other receivables are not paid within the periods specified in this Law without a justified reason, public officials responsible for assessment and payment in public administrations, and the senior managers or authorised officers, including company board members, and legal representatives of other employers with legal personality, are jointly and severally liable to the Institution together with their employers.”

The exact position held, the unpaid period and any asserted justified reason require evidence. The tax cases quoted above concern tax collection; they do not establish that the same sequence must be completed before every claim under Article 88.

7. Does Liquidation End Personal Liability?

Additional Article 35 and Article 10 both state that entering or completing liquidation does not remove representatives’ liability for periods before liquidation. Both also provide recourse against the principal debtor or taxpayer for amounts paid under their respective rules. The dissolution date therefore does not by itself answer whether an earlier debt can be pursued.

For the company’s closing procedure, see company liquidation in Turkey. To assess a personal demand, collect the payment order and service record, the legal basis cited, company assessment and collection records, appointment or share-transfer documents and a breakdown of the periods claimed. Tax and social security demands must be classified separately before choosing a challenge procedure or calculating its deadline.