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Trust in Turkey
As in many other countries, a Trust in Turkey can be a very valuable way of managing your assets. Both foreigners and native Turkish citizens can benefit from them. They’re very important for managing your property, but they can also be used for other purposes.
The Turkish Civil Code1 will provide you with several options for safeguarding your possessions. Creating a foundation or a testament is one of these options. The Trust, however, is not covered by Turkish law.
If you are looking to set up a Trust in Turkey, then the private foundation is the most resembling solution offered.
What is a Trust?
A trust is a legal structure in which one person or a group of people is entrusted with the management of assets for the benefit of another person or group of people.
The people in charge of the assets and who administer the Trust are referred to as “Trustees,” whereas the people who benefit from the trust are referred to as “Beneficiaries.” The “Settlor” is the individual who establishes the Trust.2
The arrangement must be put up in such a way that it is legally recognized, and the Trustees must be subject to legal oversight. The most important aspect of establishing a Trust is the “Deeds of Trust,” which is a written document.
The assets are subsequently placed in the trust and will be handled and released per the terms of the “Deed of Trust.” They could, for example, be used for Mr. X’s gain until his passing and subsequently for the benefit of his offspring, or they could be held safe by the Trustees until someone reaches the age of twenty-five.
How can you open a Trust in Turkey?
Turkey recognizes the concept of Trusts. According to the Turkish Civil Code, you can establish a Trust, which must be a legal entity registered with the Directorate General of Foundations.3
The definition and functioning of a Trust in Turkey compared to your home nation, on the other hand, are likely to differ. In Turkey, a Trust can’t be applied in the same way that it can in other countries, such as the United States.
This doesn’t rule out the possibility of using a Trust in Turkey. There are times when it is more practical to hold assets on behalf of a group of individuals rather than in the names of each member.
In these situations, the asset could be controlled by a Turkish Limited Company with a few formal owners who held the shares on trust for the rest of the group. The owners would be considered the beneficial and full proprietors of the shares.
If the official shareholders (Trustees) came from a place (a country) where Trusts were recognized, the rest of the group’s rights may be enforced in the country where the official shareholders live.
Types of Trusts and Foundations that can be set up in Turkey
Turkey doesn’t quite recognize Trusts and doesn’t have any laws that allow them to be established. Since it can be set up for the same objective and has the same structure in terms of members, the Private Foundation in Turkey is similar to the Trust. A Private Foundation, similar to a Trust, can be established in Turkey for the following purposes:
- Private Foundations,
- State Foundations,
- Public Services,
- Estate Planning,
The main difference between State and Private Foundations is simple; State Foundations are considered governmental entities. On the other hand, Private NGOs can be set up by local Turkish Citizens or even foreign citizens living in Turkey.
If you wish to establish a Trust in Turkey, you will need to prepare a set of documents that the Settlor and the Trustee should sign. These documents will be the “Deed of Trust” or a will, and which will be notarized by a public notary.
What are the steps to opening a Trust in Turkey?
No matter the type of fund you have selected in Turkey, the setup and registration process usually stays the same. The approval of the Capital Market Boards (CMB) is necessary for Turkey. The fund must also beset by a Portfolio Management Company established as a Turkish Company in the future.
Once the company is registered with the official Turkish Company Register, an agreement with a depositary acknowledgment will be prepared by the CMB. The main work of a depositary is to keep the funds’ assets per Turkey’s company laws.
A set of documents containing the investment’s internal rules and regulations should be drafted, and you have to get it approved from the CMB. Plus, registration with the Trade Register is also necessary. The primary tool to establish companies in Turkey is the Ministry of Commerce’s web portal MERSIS, and you can register regardless of the company type.
Type of the company, its full title, address, founding partners, objectives and subjects, capital, Board of Directors, signature officials, preferred shares (if any), share transfer restrictions (if any), and other necessary information are entered through this portal.
Once you have entered the information, MERSIS will prepare the Company’s Articles of Association for you and your company. When all the pending permissions are approved, the location where the company will be established is to be referred to the Commercial Registry Office.
The established company’s founding partners, registration declarations, and all the essential and related documents must be presented and deposited.
Can anyone open a Trust in Turkey?
As per the Turkish Commercial Code, you have to pay a minimum of ¼th of the capital of Joint-Stock Companies before the registration, which is supposing the established company is a Joint-Stock Company and has cash as capital. In that case, an account must be opened by the new company’s name after the signature and approval of the Articles of Association by the Commercial Registry Office. You have to pay ¼th of the capital to the designated bank.
The bank shall block the deposited capital until registration, and the bank shall prepare a letter of the blockade. If you wish to open a Joint Stock Company then you’ll need to register it with the submission of the blockage letter and then send it to the Directorate of Trade Registry.
When you want to place your property as real capital, you can include assets containing; intellectual property rights, virtual environments, which have no limited real rights, seizure, and injunctions, which can be evaluated and transferred in cash.
If you own a Limited Company, you need not have deposit capital before registration according to the Turkish Commercial Code. Consequently, the Articles of Association’s signature and deposition of the Commercial Registry Office’s fees officially register the company.
The company’s type doesn’t matter. Regardless of how much capital has been invested in the company before registration, you have to invest the companies total capital within twenty-four months after the partners’ registration.
What are the elements of a Trust in Turkey?
A Settlor, who might be an individual or a business, is required for the trust. Trusts can also be established outside of Turkey by Turkish Corporations. The Settlor must next choose a Trustee, who can be an individual or a business, to oversee the assets transferred under the Deed of Trust. The trust’s beneficiary or beneficiaries are individuals for whom the trust was established. Beneficiaries might be either foreigners or Turkish citizens.
What is the taxation rate of a Trust in Turkey?
Because Trusts aren’t recognized as legal entities in Turkey, the applicable taxation system of companies in Turkey will have no detrimental effect on the Settlor or Beneficiaries of the Trust. Because most nations employ trusts for estate planning, the Turkish Tax Code allows for the imposition of a real estate transfer tax as well as a value-added tax.4
Final Words and Conclusions on: “How to Open a Trust in Turkey?”
There are several reasons why it is beneficial to open a Trust in Turkey. Some of the benefits of Trusts are; they can reduce inheritance tax, abridge the inheritance process, safeguard your assets from attack by creditors, provide protection for young children or people with a limited lifetime, ensure assets are adequately looked after.
Therefore, considering all of the above, you can invest and open Trust in Turkey without having second thoughts.
Remember to get aid from an experienced law firm while creating a Trust in Turkey if you aren’t completely knowledgeable about the legislation.