NEWSLETTER-2020-metin

315 TAX LAW Taxation of Capital Decrease in Partial Spin-Off* Att. Özge Kısacık Nowadays, many companies are frequently resorting to company restructuring transactions to increase their market value, to make the company more competitive, to overcome the already negative eco- nomic environment, to concentrate and specialize on new businesses in certain areas, to increase their financial performance, and to provide efficiency to the company. In addition to achieving these goals, with developing technology and increasingly competitive environment, company restructuring has become a necessity for many institutions, from international organizations to the nuclear family, in order to sur- vive in this new era. One of the methods frequently preferred by companies from amongst company restructuring transactions is a partial spin-off. A partial spin-off is a process that is directly related to both commercial law and tax law, and regulated both in Turkish Commercial Code num- bered 6102 (“TCC”), Corporate Tax Law numbered 5520 (“CTL”), and Corporate Tax General Communiqué No. 1 (“Communique No.1”). A partial spin-off is the legal process to transfer of some of the assets of the transferor company to another company based on their registered values (although it is stated as capital in kind in accordance with the letter of the CTL; a partial division is not in-kind capital in accordance with the provisions of the TCC) and is the purchase of participation shares in return. 1 As a result of a partial spin-off, the shares issued by the newly established company, and/or the assets that were put into the existing company through the partial spin-off, can be either given to (i) the transferor company (ii) or to the shareholders of the transferor company. If the newly issued shares are given to the shareholders of the transferor company, the capital decrease comes * Article of May, 2020 1 Doksat, Ayşe Cânan; Öcal, Öykü : “İşletmeler kısmi bölünmeye konu edilebil- ecek mi?,” Vergide Gündem, May, 2017.