The basic framework for foreign investment in Türkiye is set by Foreign Direct Investment Law No. 4875, which entered into force in 2003. The Law abandoned the permit- and approval-based system of the previous period and adopted a notification-based model that grants investors equal treatment.

Basic principles

• Freedom to invest: Subject to international agreements and the provisions of special laws, foreign investors are free to make foreign direct investments in Türkiye.
• National treatment: Foreign investors are subject to equal treatment with domestic investors.
• Guarantee against expropriation: The investments of foreign investors may not be expropriated or nationalised unless the public interest so requires and compensation is paid.
• Freedom of transfer: Payments such as profits, dividends, sale and liquidation proceeds, and licence and management fees may be freely transferred abroad through banks or special finance institutions.

Company formation

Foreign investors may establish any of the company types provided for in Turkish Commercial Code No. 6102 under the same conditions as domestic investors; no separate permit is required for incorporation. However, in certain sectors such as banking, insurance, energy, media and civil aviation, permission from the relevant regulatory authority or special rules on share acquisitions apply. Foreign-capital companies must also report certain information in the manner prescribed by the Law.

Acquisition of immovable property

• Foreign natural persons: May acquire immovable property in Türkiye, subject to compliance with statutory restrictions. There are limits on the total area that may be acquired and on the total proportion within the same district; acquisition in military prohibited zones and security zones is subject to permission.
• Turkish companies with foreign capital: May acquire immovable property for the purpose of carrying out the fields of activity specified in their articles of association. These acquisitions are reviewed as to whether they relate to the field of activity.

Acquisition of Turkish citizenship through investment in immovable property, on the other hand, is subject to conditions laid down in the implementing regulation of the Turkish Citizenship Law, such as a minimum amount and an undertaking not to sell the property for a certain period.

Dispute resolution

Law No. 4875 recognises that, in disputes between the investor and the State, recourse may be had, in addition to the competent courts, to international arbitration and other dispute resolution methods, provided that the relevant conditions are met. Bilateral investment treaties to which Türkiye is a party also provide investors with additional guarantees and dispute resolution mechanisms. In commercial disputes, institutional arbitration options such as the Istanbul Arbitration Centre (ISTAC) are increasingly preferred.

Assessment

The legal framework for foreign investment in Türkiye is generally liberal; the real complexity lies in sector-specific permits, limits on the acquisition of immovable property and tax planning. Structuring the investment correctly from the outset significantly reduces later shareholder disputes, transfer problems and tax risks.