Dividend Tax and Profit Repatriation from Turkey

A Turkish limited company (LLC) or joint stock company (JSC) owned from abroad can pay dividends to its foreign shareholder and send the money to an overseas bank account. Turkish law protects that transfer. What it does not do is make the dividend tax-free or let the company pay out whatever cash is in the bank.

Three things have to be right before the money leaves: the profit must be legally distributable under the Turkish Commercial Code (TTK), the shareholders must adopt a valid distribution resolution, and the company must withhold Turkish tax at the correct rate. This guide walks through each step from the point of view of a foreign parent company or individual shareholder.

Dividends to Foreign Shareholders at a Glance

• Domestic withholding rate: 15% on dividends paid to non-resident companies (Corporate Tax Law, KVK, Article 30(3)) and to non-resident individuals (Income Tax Law, GVK, Article 94(6)(b)(ii)). Presidential Decision No. 9286 of 21 December 2024 set 15% for dividend payments from 22 December 2024.
• Not a distribution: adding profit to capital is expressly not treated as a profit distribution in both provisions.
• Treaty relief: possible only if the treaty gives a lower rate than 15% and the shareholder meets its conditions, with a residence certificate on file before payment.
• Company law: dividends come only from net profit for the period and reserves available for distribution, after the legal reserves (TTK Articles 509, 519, 523 for JSCs; Articles 608 and 610 for LLCs).
• Transfer: the Foreign Direct Investment Law (No. 4875) allows net profits and dividends to be transferred abroad freely through banks.

Step One: Is the Profit Distributable?

Accounting profit, cash in the bank and distributable profit are three different numbers. The TTK sets the limits.

The joint stock company

Under TTK Article 509(2), a JSC may pay dividends only from net profit for the period and from free reserves. Article 519(1) requires 5% of annual profit to be set aside as the general legal reserve until that reserve reaches 20% of paid-in capital. Article 519(2)(c) adds a further allocation that continues even after that limit is reached: once shareholders have received a 5% dividend, one-tenth of the total to be distributed to those sharing in the profit is added to the general legal reserve (Article 519(4) disapplies this second allocation for holding companies whose main purpose is to hold participations in other businesses). Article 523(1) states that no dividend can be set until the legal reserves and any reserves required by the articles have been set aside.

The limited company

For an LLC, TTK Article 608(1) uses the same principle: dividends may be paid only from net profit for the period and from reserves set aside for that purpose, and a distribution can be resolved only after the legal reserves and the reserves in the articles of association have been set aside. Article 610 applies the JSC rules on financial statements and reserves (Articles 514 to 527) to LLCs, so the Article 519 reserve also applies to an LLC.

Losses and capital

Prior-year losses reduce what is available, and a company whose last annual balance sheet shows serious capital loss has separate obligations under TTK Article 376 (applied to LLCs through Article 633). The reserve and loss calculation should be made from the company’s own approved financial statements. A shortcut such as “net profit times 85%” ignores the reserves and the losses.

Interim dividends

Dividends are normally decided on the approved annual accounts. For a JSC not subject to the Capital Markets Law, TTK Article 509(3) leaves interim dividends (kâr payı avansı) to a Ministry of Trade communiqué; read that communiqué before planning one. An interim dividend is still a dividend for withholding purposes: GVK Article 94 expressly covers amounts paid as advances.

Step Two: The General Assembly Resolution

Deciding on the dividend belongs to the general assembly and cannot be delegated to the managers or the board. For a JSC this is in TTK Article 408(2)(d); for an LLC in Article 616(1)(e). The ordinary general assembly meets within three months after the end of the financial year (Articles 409 and 617), which for most companies means by the end of March.

The resolution should state:

• the financial year and the approved financial statements it relies on;
• the reserve allocations;
• the gross dividend and each shareholder’s share;
• the payment date or method; and
• that Turkish withholding tax will be deducted.

If the foreign shareholder votes through a representative, the proxy or corporate authority should be in order before the meeting. Our power of attorney guide covers documents signed abroad.

Step Three: Turkish Withholding Tax

Rate and legal basis

KVK Article 30(3) imposes withholding on dividends that Turkish resident companies distribute to non-resident companies, unless the non-resident earns the dividend through a permanent establishment or permanent representative in Turkey. GVK Article 94(6)(b)(ii) does the same for non-resident individuals. GİB’s current withholding tables show 15% for both, applying to dividend payments from 22 December 2024 under Presidential Decision No. 9286.

As of October 2026, none of the later Presidential Decisions published on GİB’s website changes the dividend rate. Rates are set by Presidential Decision and can change at short notice, so confirm the current rate on GİB’s withholding table before each payment.

When the tax arises

Withholding is due when the dividend is paid in cash or credited to the shareholder. KVK Article 30(10) defines a credit (hesaben ödeme) as any record or transaction that shows the payer as indebted to the person entitled. Booking an approved dividend as a payable to the shareholder can therefore trigger withholding even if no money has moved.

Calculation

Withholding is calculated on the gross dividend. If the company agrees to bear the tax itself, KVK Article 30(11) requires the tax to be calculated on the amount actually paid plus the tax borne.

Example, with no treaty reduction:

Reporting and payment

The company reports the withholding on its withholding tax return (muhtasar beyanname) for the period in which the dividend was paid or credited, and pays the tax by the payment deadline for that return. Our Turkish tax filing calendar shows the monthly deadlines.

Final tax for the shareholder

For a non-resident shareholder without a Turkish permanent establishment, the withholding is normally the end of the Turkish tax on the dividend. KVK Article 30(9) makes a Turkish return optional for income taxed by withholding, and GVK Article 86 lists fully withheld investment income of non-resident individuals among the income that is not declared. How the dividend is taxed in the shareholder’s home country, and whether a credit is available there, depends on that country’s rules; ask your adviser at home.

Corporate tax on the company’s profit is a separate layer that comes before any dividend. Our corporate tax guide explains it.

Step Four: Can a Tax Treaty Reduce the 15%?

Only sometimes. Each treaty’s dividend article sets a maximum rate that Turkey may charge, often with a lower ceiling for a company holding a minimum share of the capital or votes. Turkey then applies the lower of the treaty ceiling and the domestic rate.

GİB’s table of treaty dividend rates shows how different the results are:

• United Kingdom: 15% where the shareholder company controls at least 25% of the voting power, 20% in other cases. Against the 15% domestic rate, there is no reduction.
• United States: 15% where the shareholder holds at least 10% of the voting power, 20% in other cases. Again, no reduction.
• Germany (current agreement): 5% where the shareholding is at least 25%, 15% in other cases. A qualifying German parent can reduce the Turkish rate from 15% to 5%.

These are examples only. Read the dividend article and any protocol in the treaty text itself, because the conditions (who qualifies, direct or indirect holding, capital or voting power) differ.

To claim the lower rate, the Turkish company needs, before the payment:

1. confirmation that the treaty is in force for the year of payment;
2. the shareholder’s residence certificate with a certified Turkish translation;
3. evidence that the shareholder is the beneficial owner of the dividend; and
4. evidence of any shareholding threshold on the payment date.

Our tax residency certificate guide explains what the certificate must show and what happens if it arrives late. Without it, GİB’s circular says domestic law applies, so the company withholds 15%.

Step Five: Transferring the Money Abroad

Article 3(c) of the Foreign Direct Investment Law No. 4875 provides that net profits and dividends arising from foreign investors’ activities in Turkey can be transferred abroad freely through banks or special finance institutions. The Central Bank’s Capital Movements Circular (Article 9(2)) states that banks transfer the profits of foreign-capital companies and the dividends of partnerships under the principles of its Invisible Transactions Circular dated 18 May 2026.

In practice, the bank asks for documents that support the payment. It may request the general assembly resolution, the approved financial statements, the share ledger or shareholder list, and evidence that the withholding tax has been declared or paid. Ask your bank for its list early, because banks set their own document checks within these rules. The transfer is a banking and compliance step; it does not change the tax treatment.

Subsidiary or Branch: A Different Tax Point

A foreign company that operates in Turkey through a branch instead of a subsidiary does not pay dividends. Instead, KVK Article 30(6) taxes the after-tax profit that the branch transfers to its head office, also at 15% under the current decision. The result can look similar, but the timing, the treaty article and the documents differ. Our guide to opening a branch in Turkey compares the two structures.

Dividend, Capital Repayment and Loan Repayment

These cash flows are not interchangeable:

• a dividend distributes profit and triggers withholding;
• a return of capital requires a formal capital reduction under the TTK;
• repaying the principal of a genuine shareholder loan settles a debt; and
• interest on that loan has its own withholding, treaty and transfer pricing analysis.

Calling a payment “loan repayment” does not change its character if the loan agreement, the funding trail and the ledger do not support it. Intragroup financing should be priced and documented from the start; our transfer pricing guide explains the Turkish rules.

Practical Timeline

1. January to March: close the books, prepare the financial statements and calculate reserves and distributable profit.
2. Before the general assembly: decide the gross dividend, check the treaty position and request the residence certificate.
3. General assembly (within three months of year-end): approve the accounts and adopt the dividend resolution.
4. Payment or credit: withhold at the correct rate and keep the treaty file.
5. Following filing period: report and pay the withholding.
6. Transfer: give the bank the supporting documents and send the net amount.

Setting up the company with this in mind saves time later; our corporate setup services cover the share structure and articles from day one.

Official Sources

• GİB: Corporate Tax Law, Article 30
• GİB: Income Tax Law, Article 94
• GİB: withholding rates for non-resident taxpayers (KVK Article 30)
• GİB: withholding rates under GVK Article 94
• GİB: treaty rates on dividends in the source state
• Ministry of Trade: Turkish Commercial Code No. 6102, consolidated text
• Grand National Assembly: Foreign Direct Investment Law No. 4875
• Central Bank: Capital Movements Circular

Plan the Dividend Before Year-End

Dividend problems often start in the books, not at the bank: missing reserves, unapproved accounts or a residence certificate requested after the payment. Celikel CPA can calculate distributable profit, prepare the resolution file, apply the correct withholding and prepare the documents your bank will ask for. Official filings and correspondence with Turkish authorities are made in Turkish; we work with clients in English, Turkish, Russian, Chinese and Arabic. Speak to our tax services team before your next general assembly.