New Amendments Regarding the Foreign Currency Restrictions in Contracts
“The Communiqué on the Amendments to the Communiqué Regarding the Decree numbered 32 on the Protection of the Value of Turkish Currency (Communiqué No. 2018-32/34)” (the “Amending Communiqué”) has been published in the Official Gazette dated 16 November 2018 and numbered 30597, and entered into force as of its publication date.
The scope of restriction regarding the determination of agreement values and other contractual financial obligations in foreign currency or as indexed to foreign currency introduced by the Presidential Decree numbered 85 entered into force as of its publication in the Official Gazette dated 13 September 2018 and numbered 30534 has been amended as follows:
The Amending Communiqué provides that the agreement values and other contractual financial obligations of below-mentioned agreements may be determined in foreign currency or as indexed to foreign currency:
- Real property sale and rental agreements where one of its parties are foreigner or the Turkish resident real persons and/or legal entities operating in free zones as the buyer or the tenant,
- Agreements regarding the lease of the accommodation facilities certified by the Ministry of Culture and Tourism on the purpose of business,
- Rental agreements regarding the duty-free shops,
- Employment agreements to be executed abroad and employment agreements of seamen executed by and between the real and/or legal entities residing in Turkey,
- Construction agreements containing the cost in foreign currency executed by and between the real and/or legal entities residing in Turkey,
- Service agreements regarding by and between the real and/or legal entities residing in Turkey which are commenced in Turkey and concluded abroad or vice versa,
- Service and license agreements regarding the hardware and software developed abroad,
Additionally, the Amending Communiqué introduces several regulations on the real property rental agreements signed by the governmental institutions and organizations.
The Amending Communiqué further regulates that the agreement value and other contractual financial obligations of the vehicle rental agreements and commercial vehicle sales agreements with the purpose of passenger transportation and financial leasing agreements regarding real properties and movables that have been signed before the date of 13 September 2018 shall be excluded from the restriction and values in such agreements may be determined in foreign currency or as indexed to foreign currency and it is not required to re-determine the agreement values in Turkish Lira.
Finally, it has been indicated in Amending Communiqué that the foreign currency prohibition and the requirement for the re-determination of contract values in Turkish Lira shall not be applicable for the collected and/or defaulted receivables arising from those agreements and that it is prohibited to set agreement value and other contractual financial obligations in foreign currency or indexed to foreign currency, the deposits within the scope of the real property rental agreements and securities issued as for the execution and enforcement of the agreements.
In order to access the full text of the Amending Communiqué in Turkish, please click here.
Karaca Kacar, Senior Associate
Asu Motur, Associate
İlayda Gönlügür, Trainee Lawyer
Sevgi Kılıç, Trainee Lawyer