Shareholder loans in Turkey can fund a company’s operations while leaving it with a repayment obligation to its shareholder. They differ from registered share capital and are subject to separate corporate tax tests. A Dubai transfer should therefore be classified by its legal basis and terms, rather than only by the sender’s name (6098 sayılı Türk Borçlar Kanunu m.386; 5520 sayılı Kurumlar Vergisi Kanunu m.12–13).
This guide addresses loan classification and corporate tax tests for a Turkish company receiving shareholder or group funding. Foreign-exchange borrowing permissions, banking reporting and treaty withholding require a separate review. The company formation guide covers incorporation, while the foreign company taxation guide addresses the separate taxable-presence question.
1. Shareholder Loans in Turkey: Debt or Capital?
Shareholder loans in Turkey are borrowing: the lender transfers ownership of money or other fungible property and the borrower undertakes to return the same amount and kind. A capital increase instead requires the corporate procedure applicable to the company. In a limited company, the relevant formation and contribution rules also apply to an increase (Türk Borçlar Kanunu m.386; 6102 sayılı Türk Ticaret Kanunu m.456, m.590).
Before transferring funds, distinguish the proposed transaction:
| Funding route | Main issue to resolve |
|---|---|
| Shareholder or parent loan | Repayment terms, interest and related-party tax tests (Türk Borçlar Kanunu m.386–387; Kurumlar Vergisi Kanunu m.12–13) |
| Capital increase | Corporate decision, subscription and registration procedure (Türk Ticaret Kanunu m.456, m.459, m.590) |
| Contribution of a receivable | Eligibility of the asset under the rules for the company type (Türk Ticaret Kanunu m.127, m.342) |
Record the lender, borrower, principal, currency, purpose, drawdown and repayment terms. These are a preparation checklist for identifying the transaction, rather than a claim that one document format fits every funding arrangement. Match the contract, bank movement and accounting records so that the legal and tax review concerns the same transaction.
2. Shareholder Loans in Turkey: Interest and Related Parties
Shareholder loans in Turkey require an interest analysis even where the parties call the funding informal. For a non-commercial consumption loan, interest is payable only if agreed; for a commercial consumption loan, interest may be claimed even without an agreement. The character of the loan therefore matters before assuming that silence means interest-free funding (Türk Borçlar Kanunu m.387).
Related-party lending and borrowing are expressly within the transfer-pricing provision. The arm’s-length principle asks whether the price or terms correspond to those that would arise without the relationship. The statute also requires supporting records, calculations and documents to be retained (Kurumlar Vergisi Kanunu m.13/1, m.13/3).
A file should explain why its interest and other pricing terms suit the particular loan. Relevant factual records may include currency, maturity, repayment pattern, security and the borrower’s financial position. These facts support the review; the statute does not supply a universal acceptable interest rate for every Dubai parent loan.
3. Shareholder Loans in Turkey: Thin Capitalisation
Shareholder loans in Turkey can fall within the thin-capitalisation rule where borrowing is obtained directly or indirectly from shareholders or related persons and used in the business. The part exceeding three times beginning-of-period equity at any point in the accounting period is treated as thin capital for that period. Beginning-of-period equity is defined by reference to the Tax Procedure Law measure (Kurumlar Vergisi Kanunu m.12/1, m.12/3-b).
Two details prevent an oversimplified year-end check. The statute looks at the position during the period, and it aggregates the relevant lenders and relationships. An apparently acceptable year-end balance does not establish that there was no excess earlier in the year (Kurumlar Vergisi Kanunu m.12/1, m.12/5).
The provision also contains qualifications and exclusions. These include the specified third-party borrowing backed by non-cash shareholder guarantees and qualifying on-lending of funds obtained from banks, financial institutions or capital markets on the same terms. They do not establish an exemption for every foreign lender or every parent company (Kurumlar Vergisi Kanunu m.12/6).
Identify the relationship, relevant equity, borrowing dates and movements before applying the test. The fact that the funds came from the UAE does not replace that analysis. Passing this amount test also does not resolve the separate arm’s-length pricing question under Article 13.
4. Shareholder Loans in Turkey: Deduction and Distribution Risks
Shareholder loans in Turkey that constitute thin capital have specified tax consequences. Interest, exchange differences and similar expenses paid or calculated on thin capital are excluded from deductible expenses. The rule should be applied to the identified thin-capital amount rather than used to describe all shareholder borrowing as non-deductible (Kurumlar Vergisi Kanunu m.11/1-b).
A separate provision treats interest and similar amounts on thin capital, excluding exchange differences, as distributed profits or, for non-residents, amounts transferred to the head office at the end of the relevant period. The statutory correction mechanism has conditions, including finalisation and payment of the taxes assessed on the company using thin capital (Kurumlar Vergisi Kanunu m.12/7).
This guide does not state a withholding rate, treaty exemption or all-inclusive transfer cost. Those require a separate review of the payment, recipient and applicable instruments. The distinction matters: the deductible-expense rule and the deemed-distribution rule do not describe exchange differences in the same way.
5. Shareholder Loans in Turkey: Converting Debt into Capital
Shareholder loans in Turkey may prompt a proposal to contribute the shareholder’s receivable as capital. The general list of potential contributions includes receivables, subject to the company-specific exceptions. For a joint-stock company, the contributed asset must meet the transferability and other statutory conditions; unmatured receivables cannot constitute capital (Türk Ticaret Kanunu m.127, m.342).
For joint-stock capital increases, the decision, subscription and registration requirements remain relevant. Limited company increases follow their own applicable rules. A bank reference saying “capital” or an internal accounting entry does not itself establish compliance with those procedures (Türk Ticaret Kanunu m.456, m.459, m.590).
Where shareholders disagree about the funding or conversion, distinguish the debt claim from share ownership and voting issues. The shareholder disputes guide addresses that wider company dispute.
6. Shareholder Loans in Turkey: Capital Loss and Overindebtedness
Shareholder loans in Turkey should be examined alongside capital-loss and overindebtedness duties. Article 376 prescribes action where the relevant balance-sheet losses occur and requires interim balance sheets where signs of overindebtedness arise. If assets do not cover creditor claims, it specifies a court notification and bankruptcy request, subject to its defined exception (Türk Ticaret Kanunu m.376).
That exception requires creditors to accept in writing a ranking after all other creditors for debt sufficient to remove the shortfall, and validation by experts appointed by the relevant court. A private subordination agreement alone should not be presented as satisfying the entire exception. The corresponding joint-stock provisions apply by analogy to limited companies (Türk Ticaret Kanunu m.376/3, m.633).
The director liability guide explains the separate responsibility framework. The company tax debt guide addresses another question: when public liabilities reach shareholders or representatives personally. Neither issue is settled merely by labelling a transfer a shareholder loan.
Frequently Asked Questions
Is a shareholder loan the same as share capital?
A loan creates an obligation to return money or equivalent fungible property. A capital increase follows company-law decisions and formalities. Sending funds from a shareholder’s account does not by itself complete those formalities. Identify the funding basis before recording the transfer (6098 sayılı Türk Borçlar Kanunu m.386; 6102 sayılı Türk Ticaret Kanunu m.456, m.590).
When does a shareholder loan become thin capital?
The statutory test concerns borrowing obtained directly or indirectly from shareholders or related persons and used in the business. The part exceeding three times the company’s beginning-of-period equity at any point during the accounting period is treated as thin capital, subject to the statutory qualifications and exceptions (5520 sayılı Kurumlar Vergisi Kanunu m.12).
Does staying below the thin-capital threshold settle pricing?
No. Related-party lending and borrowing are also covered by transfer-pricing rules. Terms must satisfy the arm’s-length principle, with supporting calculations and records retained. The thin-capital amount test and the pricing test ask different questions; satisfying one does not establish compliance with the other (5520 sayılı Kanun m.12–13).
Can interest and exchange losses on thin capital be deducted?
The corporate tax statute excludes interest, exchange differences and similar expenses paid or calculated on thin capital from deductible expenses. A separate rule treats interest and similar amounts, excluding exchange differences, as distributed profits or head-office transfers for the relevant tax purposes (5520 sayılı Kanun m.11/1-b, m.12/7).
Can shareholder debt be converted into capital automatically?
No automatic conversion follows from a bank transfer or an accounting label. Receivables are among the general potential capital assets, subject to company-type restrictions. For a joint-stock company, unmatured receivables cannot be contributed as capital, and the statutory increase procedure remains relevant (6102 sayılı Kanun m.127, m.342, m.456).
Does a new loan remove the directors’ insolvency duties?
A financing decision must be assessed alongside the statutory capital-loss and overindebtedness rules. Article 376 specifies balance-sheet checks, corporate action and the conditions for creditor subordination in the insolvency context. A private loan or subordination letter alone does not establish that these requirements are met (6102 sayılı Kanun m.376, m.633).
Legal Sources
The legal statements in this guide rely mainly on the Turkish legislation below. The relevant articles are also cited in the text.
Legislation
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