Whether income tax falls due on the sale of shares in a Turkish joint stock company turns on two things: whether the shareholding is embodied in an instrument, and how long that instrument has been held. Both are settled before the sale.
Whether a shareholder pays income tax on selling their shares in a Turkish joint stock company is usually settled not on the day negotiations open, but by a board resolution taken — or not taken — years earlier. On a mid-sized transfer the difference is substantial.
Why the instrument matters
Shares in a Turkish joint stock company can be transferred without being embodied in any negotiable instrument, and nothing about the shareholder's status suffers for it. For tax purposes, however, the picture changes: the exemption attaches not to the shareholding but to the share certificate representing it.
Where no share certificate has been printed, the gain on a transfer may be treated as a capital gain regardless of how long the shares were held. A shareholder of ten years and one of six months face the same outcome if there is no certificate.
The two-year holding period
Turkish income tax legislation excludes from capital gains the disposal of share certificates in a fully liable resident company that have been held for more than two years.
In practice: a shareholding embodied in a share certificate and held for more than two years is, as a rule, not subject to income tax when sold by an individual shareholder.
The critical point is when the clock starts. It runs from the date the certificate was acquired, not the date the shareholding was acquired. A shareholder who joined the company in 2015 but printed certificates only in 2025 has not completed two years by 2026.
Interim certificates start the clock early
Printing share certificates takes preparation. The practical way to start the clock in the meantime is the interim certificate (ilmühaber).
An interim certificate is a provisional document issued until share certificates are printed. It is issued by board resolution, in registered form, and delivered to the shareholders.
Under the tax administration's settled practice, transferring interim certificates counts as transferring share certificates. More importantly, when interim certificates are later exchanged for share certificates, the start of the holding period is taken to be the date the interim certificate was acquired; the exchange does not interrupt it.
That makes the interim certificate a step of almost no cost whose consequence, two years later, is decisive.
What to do, and in what order
- Pass a board resolution to issue interim certificates, or share certificates directly.
- Issue the documents in registered form and deliver them to shareholders against signature.
- Bring the share ledger into line with the documents.
- When share certificates are printed, call in the interim certificates, exchange them and minute the exchange.
None of these steps can be taken retrospectively after a transfer. A certificate printed once a sale is on the table confers no backdated holding period.
Frequently missed points
- Shares from a bonus capital increase. How the acquisition date is determined for these needs separate analysis.
- Limited company shares. These cannot be embodied in negotiable instruments, so no certificate can be issued and the two-year exemption is unavailable.
- Corporate shareholders. The exemption available to corporate taxpayers has its own conditions and should not be conflated with the rule for individuals.
- Transfer mechanics. Registered share certificates are transferred by endorsement and delivery of possession. Signing a sale agreement alone does not complete the transfer.
Conclusion
Issuing share certificates and interim certificates is a matter of a short resolution. Failing to do so produces a tax outcome that cannot be repaired afterwards. The point to raise it is when the shareholding is structured, or at the latest when a sale becomes a realistic medium-term prospect.
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Share Transfer and Taxation
This article is provided for general information only. It is not legal advice and should not be acted on without an assessment of your particular circumstances.
