ERDEM-NEWSLETTER-2018-metin

Transfer of Real Estate through Partial Spin-Off* Att. Canan Doksat Introduction According to Article 19 of Corporate Tax Code No. 5520 (“CTC”), real estate, participation shares held for more than two years, and manufacturing or service business lines that are recorded in the balance sheet of a full liable equity company, or a non-resident equity company’s work place or permanent establishment in Turkey, may be transferred to an existing or a newly established full liable equity com- pany through partial spin-off transaction over their net book values. Partial spin-off transactions conducted in line with CTC provi- sions benefit from the corporate tax, value added tax, stamp tax and title deed fees exemptions envisaged in the relevant tax codes. The referred provision of the CTC lists assets that may be subject to partial spin-off as real estate, participation shares held for more than two years, and manufacturing or service business lines in a restrictive manner. Additionally, Corporate Tax Communiqué Serial No. 1 (“CT Communiqué No. 1”) refers to Article 704 of Turkish Civil Code No. 4721 (“Civil Code”) in order to define “real estate.” Accordingly, the subject of immovable property (real estate) is comprised of lands, independent and imprescriptible rights indicated on a separate page in the land register, and independent sections in the condominium regime. Within this scope, it may be concluded that assets defined as “immovable property/real estate” as per to the provisions of the Civil Code may be subject to a partial spin-off in line with the CTC rules without any other restrictions. * Article of November 2018