Asset transfer is defined as the action of transferring a good/group of goods or a property of an establishment by any natural person or legal entity to another natural person or legal entity. Subject of asset transfer is not regulated specifically in the Turkish Law System; however, there are direct or indirect provisions related to this matter in various laws. The articles of 202 and 203 of Turkish Code of Obligations No. 6098 on the transfer of assets and establishment, and the articles of 134-158 of Turkish Commercial Code No. 6102 on company merges are the primary ones within this scope.

According to the article of 202 of Turkish Code of Obligations, “Transferee of an asset of establishment with its current assets and liabilities shall be liable for the debt of the asset or within the establishment following the date of the notification to the creditors or announcement in Trade Registry Gazette for commercial establishments and a gazette which will be distributed throughout Turkey for others. Also the previous debtor shall be considered as joint debtor with the transferee for two years. This term starts to operate following the date of notification of announcement for due debts and it starts to operate as of the maturities date for the debts to become due later. Results of undertaking the debts by this way is equal to the results born by the external undertaking contract. Unless the liability of notification or announcement is not realized by the transferee, two-year-term specified in the second article shall not start.” And according to the article of 203 of the same law, “If an establishment merges with another by transferring the current assets and liabilities reciprocally or by merging of one into another, creditors of both establishments shall have the right born by the transfer of the asset and they can receive the total amount of their dues from the new establishment.” Establishment transfer was regulated again in the article of 11 of Turkish Commercial Code and in case of the transfer of an establishment, the scope and method of the transfer resolved; and in the articles of 134-158, company merges are regulated specifically.

To obtain the results intended for the operations such as merges and purchases, especially Turkish Commercial Code, Turkish Code of Obligations and the legislation provisions to which the companies to merge are subject and which specify the legal ground should be examined.

According to the articles specified hereinabove, when a legal entity is transferred with an establishment (company) with its assets and liabilities, the legal entity shall be liable for the debts and liens of this company. As understood from the articles of 202 and 203 of Turkish Commercial Code, transferor and transferee shall be liable jointly for the payment of the debts for two years following the notification or announcement of the creditors.

The relation between the transferor and transferee depends on the contact signed for the transfer of the assets and debts of the establishment. However, under the article of 7 of Law on the Protection of Competition No. 4054, merges and transfer which might result in prevalence in a particular market or strengthen a current prevalence are prohibited and the transfers over a particular value which might be considered within this scope are subject to the consent of Competition Authority. Legal approval of the transfer should be announced by the communication tools specified in the regulation.

Since asset transfer might be considered as the income of the company which sold it, it can be taxed. Therefore, corporate income tax is considered as obligation. Asset transfer is subject to VAT over the selling value of the assets generally. Even if the VAT rate varies to the assets (1%, 8%, 18%), general VAT rate is 18%. VAT liability can be reduced by various methods via investment incentive documents.

Important articles on asset transfer:

Turkish Code of Obligations: Article 202 and 203
Turkish Commercial Code: Article 134-158
Bankruptcy and Enforcement Law: Article 280
Law on Collection Procedure of Assets Article 30
Law on Competition: Article 7