Primetax Guide: International Holding Companies in Türkiye

1. Is there a special international holding-company regime?

There is no separate incorporation regime or licence for an international holding company in Türkiye. A Turkish holding vehicle will ordinarily be incorporated as a joint stock company (A.Ş.) or a limited liability company (Ltd. Şti.) and will be a Turkish-resident corporate taxpayer because its legal seat is in Türkiye.

For a group that expects to receive foreign dividends only, either legal form can in principle benefit from the foreign participation income exemption in Article 5/1-b if the relevant conditions are met. The position changes where the holding company is expected to dispose of foreign subsidiaries. Article 5/1-c, which can exempt gains on qualifying disposals of foreign participations, is expressly limited to Turkish-resident joint stock companies. For that reason, an A.Ş. is generally the more flexible form where an international holding platform is intended to accommodate both dividend repatriations and future exits.

The tax profile therefore comes from the structure and the facts rather than from a “holding company” label in the articles of association. Ownership percentages, holding periods, the nature and tax burden of the foreign subsidiaries, the Turkish company’s asset composition, the source of later distributions and the domestic minimum tax all need to be reviewed separately.

2. The 2026 corporate tax framework

The standard Turkish corporate income tax rate is 25% for 2026. Certain regulated financial institutions and specified public-private partnership companies are subject to a 30% rate. A conventional Turkish holding company that does not fall within one of those special categories is ordinarily subject to the 25% rate on its taxable income.

Foreign dividends and foreign participation disposal gains are initially part of corporate income, but they may be removed from the ordinary corporate tax base under Articles 5/1-b and 5/1-c. The fact that income is exempt under those provisions does not, however, end the analysis. Since 2025, the domestic minimum corporate tax under Article 32/C has imposed a separate 10% floor calculated on a base that does not automatically allow all corporate tax exemptions to be deducted.

A holding-company model should therefore be evaluated on two levels: first, whether the ordinary participation exemption applies; and second, whether the same income creates an exposure under the domestic minimum corporate tax. For newly incorporated companies, the minimum corporate tax does not apply for the first three accounting periods beginning with the period in which the company commences activity.

3. Foreign dividends - the full exemption route

Article 5/1-b contains the long-standing full exemption for qualifying foreign participation income. Where all of the statutory conditions are satisfied, the qualifying dividend is exempt from ordinary Turkish corporate income tax.

The foreign subsidiary

The investee must be a company whose legal and business centres are both outside Türkiye and which is equivalent in nature to a joint stock or limited liability company. The classification of a foreign vehicle should therefore be checked rather than assumed from its commercial name, particularly for partnerships, transparent entities and hybrid legal forms.

Minimum 10% ownership

The Turkish corporate shareholder must hold at least 10% of the paid-in capital of the foreign subsidiary. The test is based on the participation in paid-in capital and must be satisfied for the dividend for which the exemption is claimed.

One-year holding period

The participation must have been held continuously for at least one year as of the date the participation income is derived. The law contains continuity rules for shares obtained through pre-emption rights or capital increases from the foreign subsidiary’s internal resources.

Foreign tax burden

The profits underlying the dividend must bear an income and corporate-type tax burden of at least 15% in the foreign jurisdiction. If the foreign subsidiary’s principal activity is financing, including financial leasing, insurance or securities investment, the required tax burden is increased to the Turkish corporate tax rate prescribed under Article 32 for the relevant period. The test is an effective tax-burden test; the foreign jurisdiction’s headline statutory rate is not sufficient on its own.

Repatriation to Türkiye

The participation income must be transferred to Türkiye by the deadline for filing the Turkish corporate income tax return for the accounting period in which the dividend is derived. The funds do not have to be converted into Turkish lira. Timing should be monitored carefully because a dividend transferred after the statutory filing deadline does not become exempt merely because it is later remitted to Türkiye.

Where the full exemption is available, it will generally be the starting point for a Turkish holding company. The simplified 80% route discussed below is most relevant where the full exemption cannot be satisfied, particularly because of the one-year holding period or the foreign tax-burden condition.

4. Foreign dividends - the 80% simplified exemption route

A second route exists within Article 5/1-b for substantial foreign participations. This route was introduced in 2023 and became materially more attractive in 2026.

Presidential Decision No. 11257, published on 30 April 2026, reduced the required participation from 50% to 20% and increased the exemption rate for corporate taxpayers from 50% to 80%. The new parameters apply to income and gains relating to tax periods beginning on or after 1 January 2026.

Under this route, a Turkish corporate taxpayer that holds at least 20% of the paid-in capital of a foreign joint stock or limited liability company can exempt 80% of the foreign participation income if the dividend is transferred to Türkiye by the corporate tax return filing deadline. The other conditions of the full exemption - most importantly the one-year holding period and the 15% foreign tax-burden test - are not required for this simplified route.

What the 80% exemption means economically

The remaining 20% of the dividend remains within the ordinary Turkish corporate tax base. For a holding company subject to the standard 25% corporate tax rate, this produces a nominal Turkish corporate tax cost of 5% of the dividend before taking account of foreign tax credits, the domestic minimum tax and any other relevant adjustments.

The 80% route is therefore not a replacement for the full exemption. If the full exemption can be satisfied, a complete ordinary corporate tax exemption is generally more favourable. The 80% route is valuable because it provides a meaningful fallback where a substantial participation is held but the foreign subsidiary has a low effective tax burden or the one-year holding condition has not yet been met.

5. Foreign tax credits and choosing between the two dividend routes

The choice between the full exemption and the 80% exemption should not be made by comparing exemption percentages alone. Foreign taxes, the size of the participation and the domestic minimum tax can change the effective result.

Fully exempt dividends

Where a foreign dividend is fully exempt under Article 5/1-b, foreign taxes relating to that exempt income cannot generally be credited against Turkish corporate tax. This follows the basic principle that a foreign tax credit is available for foreign-source income that is taxed in Türkiye, not for income that has been removed from the Turkish corporate tax base by an exemption.

The taxable 20% under the simplified route

Where only 80% of the dividend is exempt, the remaining 20% is taxable in Türkiye. Foreign taxes attributable to the taxable portion should therefore be reviewed under Article 33. In particular, Article 33/3 permits a Turkish-resident corporation holding at least 25% of the capital or voting rights of a foreign subsidiary, directly or indirectly, to credit the underlying income and corporate-type taxes attributable to the dividend, subject to the statutory limits and gross-up mechanics.

This creates an important threshold mismatch: the simplified participation exemption is available from a 20% holding, but the statutory underlying-tax credit in Article 33/3 requires at least 25% of the capital or voting rights. A holding of between 20% and 24.99% may therefore qualify for the 80% exemption without qualifying for the underlying corporate-tax credit. Any source-country withholding tax imposed directly on the dividend should also be analysed under Article 33 and the applicable double-tax treaty.

In practice, the preferred route should be modelled using the foreign subsidiary’s effective tax burden, the shareholder percentage, foreign withholding taxes, the availability of underlying tax credits and the domestic minimum tax position of the Turkish holding company.

6. Disposal of foreign participations

Article 5/1-c provides a separate exemption for gains realised by a Turkish-resident joint stock company on the disposal of qualifying foreign participations. This is one of the main reasons an A.Ş. is often preferred for an international holding platform.

The exemption is available where, as of the date the gain is derived, at least 75% of the Turkish company’s non-cash assets have consisted continuously for at least one year of participations of at least 10% in foreign companies whose legal or business centre is outside Türkiye and which are equivalent to joint stock or limited liability companies. In addition, the foreign participation being sold must itself have been held for at least two full years.

If these conditions are met, the disposal gain falls within the Article 5/1-c exemption. Unlike the general domestic participation-share disposal exemption in Article 5/1-e, Article 5/1-c does not impose the same five-year special reserve-account requirement or the same collection-period mechanics. The conditions are instead centred on the nature of the Turkish company, the composition of its non-cash assets, the minimum participation percentage and the holding period of the shares disposed of.

The asset-composition test needs ongoing monitoring

The 75% test is not a one-day balance-sheet test performed only when a sale is contemplated. The required asset composition must have existed continuously for at least one year. Material cash accumulation, intercompany receivables, loans, local assets or other non-participation assets can therefore affect the availability of the exemption. A Turkish holding company expecting a future exit should monitor the test throughout the relevant period rather than reconstructing it only after signing a sale agreement.

The documentation should also be capable of demonstrating that each foreign investee included in the 75% computation is an eligible foreign joint stock or limited liability-type company and that the minimum 10% participation threshold is satisfied. Current certification guidance places particular emphasis on corporate registry evidence, shareholder information, holding periods and the location of the investee’s legal and business centres.

7. Outbound dividends from the Turkish holding company

The ordinary Turkish withholding tax rate on dividends paid by a Turkish-resident company to a non-resident corporate shareholder is 15% for distributions made from 22 December 2024 onwards, subject to any lower rate available under an applicable double-tax treaty.

The special 7.5% domestic rate is not a general holding-company rate

Corporate Tax Law Article 30/4 contains a special rule for the Turkish-resident joint stock companies described in Article 5/1-c. Where the statutory conditions are met, dividends distributed to non-resident joint stock or limited liability-type corporate shareholders out of the exempt foreign participation disposal gains specified in Article 5/1-c and qualifying foreign participation income under Article 5/1-b are subject to a withholding rate that may not exceed half of the ordinary Article 30/3 rate. Under the current rate decisions, this produces a 7.5% domestic withholding rate.

The distinction is important. A Turkish company does not obtain a 7.5% outbound dividend rate merely because it is described commercially as a holding company. The special rate is connected to the Article 5/1-c holding-company profile and to the source of the profits being distributed. Ordinary profits and distributions by companies outside that statutory profile remain subject to the general 15% domestic rate unless a treaty provides a lower ceiling.

Treaty access should be tested separately

A double-tax treaty may reduce the Turkish withholding rate where the recipient satisfies the treaty ownership and beneficial-owner conditions. For structures involving intermediate holding companies, the relevant treaty, the Multilateral Instrument where applicable, beneficial ownership and the principal purpose test should be reviewed before assuming that a treaty rate is available. The lower of the applicable domestic rate and the treaty ceiling will generally determine the Turkish withholding burden.

8. Domestic minimum corporate tax

Türkiye’s domestic minimum corporate tax is now a central part of holding-company modelling. Article 32/C provides that corporate tax calculated under the ordinary rules cannot generally be lower than 10% of the adjusted pre-exemption corporate profit. The regime applies for 2025 and subsequent periods, including provisional tax periods.

Foreign participation income exempt under Article 5/1-b and foreign participation disposal gains exempt under Article 5/1-c are listed among the exemptions that are not automatically deducted in computing the domestic minimum tax base. Accordingly, the statement that a dividend or exit gain is “corporate-tax exempt” does not necessarily mean that the Turkish holding company will have no Turkish corporate tax cost for the period.

Foreign tax burden can materially affect the minimum-tax result

Revenue Administration guidance contains specific examples for foreign-source exempt income and takes foreign taxes into account in determining the domestic minimum tax effect. In its current guidance, a foreign participation dividend carrying a 15% foreign tax burden is illustrated as falling outside the minimum-tax charge because the foreign tax burden exceeds the 10% Turkish minimum rate. The precise result therefore needs to be modelled by reference to the foreign taxes actually borne and the character of the income rather than by applying a mechanical 10% charge to every exempt foreign dividend.

Newly established companies

The domestic minimum corporate tax does not apply to a company for the first three accounting periods beginning with the period in which it first commences activity. A company established in 2026 is therefore outside the Article 32/C minimum-tax regime for 2026, 2027 and 2028. Reorganisations such as mergers, demergers or changes of legal form do not automatically create a new three-year period.

The minimum-tax position should be calculated together with the participation exemption analysis. It can materially change the effective Turkish tax rate of a mature holding company, particularly where the company has large disposal gains or foreign dividends but little other taxable income.

9. Acquisition financing and holding-company expenses

The manner in which the Turkish holding company is financed can be as important as the treatment of its dividend and disposal income. Article 5/3 generally restricts the deduction of expenses relating to exempt income, but it expressly carves out financing expenses incurred for the acquisition of participation shares from that general restriction.

This does not mean that acquisition financing is automatically fully deductible. Related-party borrowing remains subject to transfer pricing, thin-capitalisation and financing-expense limitation rules, and cross-border borrowing may also create withholding tax, VAT, stamp tax and Resource Utilisation Support Fund issues depending on the lender and the instrument. These points should be modelled separately when debt is placed at Turkish HoldCo level.

For acquisition structures, the practical question is therefore not simply whether interest is linked to exempt dividend income. The legal source of the debt, the identity and status of the lender, the debt-to-equity profile, the arm’s-length interest rate, foreign-exchange exposure and the cash available for debt service after withholding taxes should all be included in the financing model.

10. CFC, treaty and Pillar Two considerations

Controlled foreign corporation rules

A Turkish holding company can be taxed on certain profits of a foreign subsidiary before any dividend is declared. Under Article 7, the Turkish CFC rules can apply where Turkish-resident persons collectively control at least 50% of the foreign company and the passive-income, low-tax and minimum-revenue conditions are also met. A holding structure that relies on low-tax financing, investment or IP subsidiaries should therefore be reviewed for CFC exposure separately from the participation exemption.

Treaty residence and substance

Türkiye’s participation exemptions are domestic-law provisions and do not require treaty access. Treaties become particularly important for source-country withholding on dividends received by the Turkish holding company and for withholding on distributions made by the Turkish company to its foreign shareholder. The commercial substance of the Turkish holding company, the location of decision-making, beneficial ownership and treaty anti-abuse provisions should therefore be considered when the structure depends on treaty reductions.

Pillar Two

For multinational groups within the EUR 750 million consolidated-revenue threshold, Türkiye’s local and global minimum top-up tax rules add a further layer. A domestic participation exemption or a low Turkish withholding rate does not itself determine the Pillar Two outcome. Dividends, excluded equity gains, covered taxes, CFC taxes and the position of the Turkish holding company within the group’s ownership chain need to be mapped under the separate GloBE rules.

11. Practical structuring and documentation

A Turkish holding structure should be designed by working backwards from the expected cash flows and exit routes rather than by focusing on one exemption in isolation. The following review sequence is generally the most useful.

• Choose the legal form deliberately. An A.Ş. should normally be considered where the group expects to rely on the Article 5/1-c foreign participation disposal exemption or the related special outbound dividend withholding rule.

• Map each foreign subsidiary separately. Confirm legal form, legal and business centre, Turkish ownership percentage, acquisition date, activity, effective tax burden and expected dividend timing.

• For each dividend, test the full Article 5/1-b exemption first. If the one-year or foreign tax-burden condition is not satisfied, test the 2026 80% exemption route from the 20% ownership threshold.

• Model foreign tax credits together with the exemption choice. Pay particular attention to the 25% ownership or voting-right threshold for the underlying foreign corporate-tax credit in Article 33/3.

• If a future share sale is expected, monitor the Article 5/1-c 75% non-cash asset test continuously and preserve evidence that each qualifying foreign participation meets the 10% and legal-form conditions.

• Separate the Turkish company’s profit pools for distribution purposes. The special 7.5% domestic withholding rate is source- and company-specific and should not be assumed for the entire distributable profit of a group holding company.

• Run the domestic minimum corporate tax computation before describing any foreign dividend or exit as tax-free. For foreign income, include the actual foreign tax burden in the model.

• Review acquisition financing separately under transfer pricing, thin capitalisation, financing-expense limitation and cross-border financing taxes.

• Screen low-tax foreign subsidiaries for Turkish CFC exposure, even where no dividend is planned.

• For treaty-dependent structures, maintain contemporaneous substance and beneficial-ownership evidence and consider the MLI principal purpose test where relevant.

• For groups within Pillar Two, reconcile the Turkish holding-company model with the group’s GloBE and top-up tax calculations before implementation.

A holding structure can satisfy the legal conditions for one exemption while producing an inefficient overall result because of minimum tax, foreign withholding taxes, unavailable credits or outbound distribution taxes. The analysis should therefore be performed on an end-to-end basis: acquisition, annual income, financing, exit and final repatriation to the ultimate shareholder.