Restructuring is needed to simplify a group, move an activity into a separate company, let a partner leave or bring in an investor. With the right route the transaction can be tax-neutral; if one condition is missed it is taxed like a liquidation and all exemptions are lost.
Routes and their tax treatment
| Transaction | What happens? | Tax-neutral? |
|---|---|---|
| Transfer (merger) | One company is absorbed into another; the whole balance sheet passes at book value | Yes, if conditions are met (CTL arts. 19–20) |
| Full demerger | A company splits into two or more companies and ceases to exist | Yes, with conditions |
| Partial demerger | A production / service unit, or a participation held for at least 2 full years, is contributed in kind at book value to another company | Yes, with conditions |
| Share exchange | Shares giving management control of a company are acquired in exchange for the acquirer's own shares | Yes, with conditions |
| Change of legal form | Limited → joint stock or vice versa; the legal entity continues | Not treated as liquidation for tax; tax number, contracts and permits continue |
Conditions for a tax-neutral transfer (summary)
- The acquiring company has its legal seat or place of management in Türkiye; both companies are full taxpayers.
- The entire balance sheet of the absorbed company is taken over at book value; no revaluation, no debts left behind.
- The transfer return is signed jointly; the acquirer undertakes to pay the taxes assessed and to be assessed of the absorbed company.
- Transfers and demergers made in line with the law are exempt from VAT, stamp duty and fees; VAT carried forward passes to the acquirer.
2026 note on partial demergers
Partial demerger is the most widely used route, but real estate is now excluded. Older guides say property can be moved by partial demerger; this is no longer possible.
Prior-year losses
Losses can pass to the acquirer only in transfers and full demergers, and three conditions apply together:
- The loss taken over is limited to the absorbed company's equity on the transfer date.
- The absorbed company's corporate tax returns for the last 5 years must have been filed on time.
- The activity taken over must continue for at least 5 years from the period of the transfer; if it stops earlier, the deduction is reversed with tax and late payment interest.
There is no loss carry-over in partial demergers or share exchanges. Loss carry-forward calculator
Capital loss and over-indebtedness (TCC art. 376)
Measured against the total of capital and legal reserves:
- Half lost: management immediately convenes the general meeting and proposes remedial measures.
- Two-thirds lost: unless the general meeting decides to replenish capital, accept one-third, or increase capital, the company is dissolved by law.
- Over-indebtedness: management notifies the court (except where creditors subordinate their claims or there is a credible recovery plan).
We also check whether the temporary rule excluding unrealised FX losses on foreign-currency debt applies in the relevant year. The obligation for pre-2024 companies to reach the minimum capital by 31 December 2026 is also part of this planning. Capital increase
Trade registry side: change of form, merger and demerger
Permitted changes of form (TCC art. 181): a capital company into another capital company or a cooperative; a general partnership into a capital company, cooperative or limited partnership; a limited partnership into a capital company, cooperative or general partnership; a cooperative into a capital company; a sole proprietorship into a joint stock or limited company.
Key documents for a change of form: change-of-form plan (art. 185) and report (art. 186), notarised general meeting resolution, new articles prepared in MERSİS, a sworn or certified public accountant's report showing paid-in capital and equity with the accountant's activity certificate (balance sheet date no older than 6 months), declarations for registered assets and rights, branch information, and a Ministry representative letter for conversion into a joint stock company. For a sole proprietorship, a separate report is required for registered assets permanently dedicated to the business.
Quorums: in a joint stock company two-thirds of votes present representing two-thirds of capital; in a limited company three-quarters of partners holding at least three-quarters of capital; in a general partnership unanimity (two-thirds may be provided in the articles).
Time limits:
| Transaction | Rule |
|---|---|
| Change of form | Plan, report and last three years' financial statements available to partners 30 days before the general meeting resolution |
| Merger | Notice of inspection right at least 3 business days before documents are made available; published 33 days before the resolution |
| Simplified merger (TCC 155/2) | Inspection right at least 30 days before the registration application |
| Full demerger | Notice of inspection right 2 months before the resolution |
| Interim balance sheet | Required if more than 6 months pass between the balance sheet date and the contract or report date |
| Call to creditors | Three times in the Trade Registry Gazette at 7-day intervals; for mergers generated automatically in the MERSİS application |
SME relief: companies meeting SME criteria, confirmed by a sworn or certified public accountant's report and approved by all partners, may proceed without a merger, demerger or change-of-form report and without waiting for the inspection period.
Order: the acquirer's resolution cannot be registered before the absorbed company's merger resolution is registered. If all partners are the same persons (TCC 155/1), no merger report or general meeting approval is required.
The Istanbul Chamber of Commerce (İTO) service fee for each of these is 3,440 TL; the amendment registration fee for capital companies is 8,598.80 TL. Trade registry fees
Process
| Step | Duration |
|---|---|
| Objective, choice of route, tax model | 2–4 weeks |
| Balance sheet date, book values, equity and valuation if needed | 3–6 weeks |
| Merger / demerger agreement, plan and board report | 2–4 weeks |
| Creditor and shareholder rights (inspection, notices) | Statutory periods |
| General meeting resolutions, registration and publication | 2–4 weeks |
| Transfer return and monitoring of 5-year conditions | Per tax calendar |
A simple intra-group transfer usually takes 3–5 months from decision to registration. Where valuation is needed: Company valuation.
Common mistakes
- Revaluing assets in a transfer or leaving some debts in the absorbed company.
- Acquiring a business to be closed only for its losses.
- Building a partial demerger around real estate.
- Having filed a return late in any of the last five years (loss carry-over is lost).
- Discovering "change of control" clauses in contracts after registration.
Sources
Turkish Commercial Code No. 6102 (arts. 134–194 mergers, demergers, change of form; art. 376 capital loss); Corporate Tax Law No. 5520 arts. 17–20; VAT Law No. 3065 art. 17/4-c; Stamp Duty Law No. 488; Law on Fees No. 492; İTO pages on change of legal form and merger / demerger (Turkish).