Mergers and Demergers in Turkey: Corporate Restructuring, Creditor Protection, Employee Rights and Tax-Neutral Transfers

Introduction

Companies operating in Turkey may use mergers and demergers to reorganise their ownership, separate business divisions, simplify group structures, transfer operations or prepare a company for investment or sale.

A corporate restructuring may be used to:

• Combine affiliated companies,
• Consolidate overlapping operations,
• Separate a risky business division,
• Transfer a production or service business,
• Establish sector-specific subsidiaries,
• Prepare part of a business for sale,
• Move intellectual property or shareholdings,
• Simplify group financing,
• Eliminate an inactive company.

A merger or demerger is not the same as an ordinary asset sale.

In a statutory merger, the assets and liabilities of the transferring company pass to the receiving company through universal succession. The transferring company ceases to exist without an ordinary liquidation process.

In a demerger, some or all of a company’s assets and liabilities are allocated to one or more existing or newly incorporated companies.

These transactions are regulated principally by:

• Turkish Commercial Code No. 6102,
• Corporate Tax Law No. 5520,
• Labour Law No. 4857,
• Competition Law No. 4054,
• Trade registry regulations,
• Sector-specific legislation.

A restructuring may be tax-neutral only where the statutory conditions are satisfied. A transaction that qualifies as a merger or demerger under company law does not automatically qualify for tax-neutral treatment under the Corporate Tax Law.

The corporate, tax, employment and competition aspects must therefore be planned together.

Main Forms of Corporate Merger

The Turkish Commercial Code recognises two principal merger structures:

1. Merger by acquisition,
2. Merger through the establishment of a new company.

In a merger by acquisition, one company absorbs another company.

In a merger through new incorporation, two or more companies combine within a newly established company.

Upon the legal effectiveness of the merger, the acquiring company receives the entire assets and liabilities of the transferring company. The transferring company terminates and is deleted from the trade registry. Its shareholders generally receive shares or rights in the acquiring company according to the agreed exchange ratio.

Merger by Acquisition

A merger by acquisition may be used where:

• A parent company absorbs a subsidiary,
• One group company absorbs another,
• An operating company absorbs a holding company,
• One competitor acquires and integrates another company,
• A surviving company must retain licences, contracts or market history.

The acquiring company continues to exist.

The transferring company terminates when the merger is registered.

Assets do not need to be sold separately through individual agreements merely because they pass from the transferring company to the acquiring company.

However, regulated licences, concessions and public-law permissions should still be reviewed because the relevant authority may require:

• Prior approval,
• Notification,
• Reissuance,
• Confirmation of continued validity.

Merger Through a New Company

In a new-company merger, the merging companies transfer their assets and liabilities to a newly incorporated company.

The original companies cease to exist after registration.

This structure may be useful where:

• Neither party wants to be legally absorbed by the other,
• A new brand and governance structure are required,
• The parties want a commercially neutral corporate platform,
• Existing shareholder arrangements must be replaced.

The new company must comply with the incorporation requirements applicable to its selected company form.

Which Companies May Merge?

The Turkish Commercial Code contains rules determining which types of companies may merge with one another.

The analysis depends on whether the companies are:

• Joint stock companies,
• Limited liability companies,
• Partnerships,
• Cooperatives,
• Companies in liquidation.

A company in liquidation may participate only where the statutory conditions are satisfied, including requirements relating to the commencement of asset distribution.

The legal compatibility of the company types should be checked before preparing the merger agreement.

Universal Succession

One of the principal advantages of a statutory merger is universal succession.

When the merger becomes legally effective:

• Assets transfer,
• Liabilities transfer,
• Contractual positions generally transfer,
• Receivables transfer,
• Pending legal relationships continue through the acquiring company.

The acquiring company becomes the legal successor of the transferring company.

This is different from an ordinary asset purchase, where separate transfer formalities and counterparty consent may be required for each asset or contract.

Universal succession does not remove every regulatory issue. The parties should still review:

• Change-of-control clauses,
• Public licences,
• Government concessions,
• Financing agreements,
• Intellectual property registrations,
• Foreign registrations.

Shareholder Continuity

A merger is generally based on the principle that the shareholders of the transferring company receive shares and rights in the acquiring company.

The merger agreement should determine:

• Share exchange ratio,
• New shares to be issued,
• Existing shares to be transferred,
• Voting rights,
• Privileges,
• Dividend rights,
• Equalisation payment.

The exchange ratio should reflect the relative value of the participating companies.

Valuation may take into account:

• Net asset value,
• Earnings,
• Cash flow,
• Market position,
• Intellectual property,
• Liabilities,
• Future business prospects.

A merger should not be used to transfer value unfairly from one shareholder group to another.

Cash Equalisation and Exit Payment

A merger agreement may provide a limited cash equalisation payment to address fractional or minor valuation differences.

It may also provide an exit payment instead of continued shareholding where the statutory requirements are satisfied.

The parties should distinguish between:

• Cash paid only to balance the exchange ratio,
• A genuine exit consideration offered instead of shares,
• Purchase of shares outside the merger.

The tax and corporate consequences may differ.

Merger Agreement

The management organs of the participating companies prepare a written merger agreement.

The agreement normally addresses:

• Participating companies,
• Merger structure,
• Share exchange ratio,
• Cash equalisation,
• Rights granted to shareholders,
• Special rights,
• Effective financial date,
• Consequences for employees,
• Treatment of privileged shares,
• Corporate amendments.

The agreement should be coordinated with:

• Valuation work,
• Closing balance sheets,
• Corporate approvals,
• Tax restructuring plan,
• Competition filing.

Merger Report

The management organs generally prepare a merger report explaining the transaction.

The report may address:

• Purpose of the merger,
• Legal and economic consequences,
• Exchange ratio,
• Valuation methods,
• Capital increase,
• Shareholder rights,
• Employee consequences,
• Creditor position.

Certain small and medium-sized companies may waive parts of the reporting process where the statutory conditions and shareholder approvals are satisfied.

Interim Balance Sheet

An interim balance sheet may be required where:

• A significant period has passed since the last annual balance sheet,
• Material changes have occurred in the company’s assets or financial position,
• The statutory timing conditions are met.

The interim balance sheet helps ensure that the merger is based on current financial information.

The parties should identify material events occurring after the balance-sheet date, including:

• Asset sales,
• New borrowing,
• Major litigation,
• Dividend distributions,
• Capital changes.

Inspection Rights

Shareholders generally receive an opportunity to examine key transaction documents before the merger is approved.

These may include:

• Merger agreement,
• Merger report,
• Financial statements,
• Annual reports,
• Interim balance sheet.

The inspection process should be documented carefully.

Failure to respect shareholder information rights may create a risk of challenge to the merger decision.

General Assembly Approval

The merger agreement must normally be approved by the general assemblies of the participating companies using the applicable statutory voting thresholds.

The required majority may depend on:

• Company type,
• Merger structure,
• Changes to shareholder obligations,
• Exit-payment mechanism,
• Privileged rights.

The board should not assume that the ordinary general assembly voting threshold will always be sufficient.

Simplified Merger

Certain intra-group mergers may be completed through a simplified process where the statutory ownership and control conditions are satisfied.

A simplified merger may reduce or eliminate requirements concerning:

• Detailed merger report,
• General assembly approval,
• Inspection procedures.

This route is particularly relevant to wholly owned or very highly controlled subsidiaries. The precise ownership structure must be reviewed before relying on the simplified procedure.

Registration and Legal Effect

After corporate approval, the merger is submitted to the competent trade registry.

The merger becomes legally effective through registration.

At registration:

• Assets and liabilities pass to the acquiring company,
• Shareholder rights are created,
• The transferring company terminates,
• The transferring company is deleted from the registry.

The parties should prepare a detailed registration file and coordinate filings among all participating trade registries.

Creditor Protection in a Merger

Creditors of the participating companies may request security for their receivables within three months after the merger becomes legally effective.

The participating companies must announce the creditors’ rights three times in the Turkish Trade Registry Gazette at seven-day intervals and also through the required company website announcement.

Where the company proves that the creditor is not exposed to loss, security may not be required. The company may also pay the debt instead of providing security where the other creditors will not be prejudiced.

Does a Merger Cancel Existing Debt?

No.

A merger does not eliminate the debts of the transferring company.

Those debts pass to the acquiring company through universal succession.

Creditors should identify:

• Acquiring company,
• Merger registration date,
• New payment details,
• Security rights,
• Any applicable creditor-protection period.

Existing mortgages, pledges and guarantees should be reviewed to determine how they continue after the merger.

Personal Liability of Shareholders

Where shareholders were personally liable for company debts before the merger, that responsibility may continue for qualifying pre-merger debts.

The Turkish Commercial Code provides a specific limitation period for such personal liability following announcement of the merger.

This issue is particularly important for:

• Partnerships,
• Unlimited partners,
• Structures involving personal liability.

It is usually less relevant to ordinary shareholders of a joint stock company whose liability is limited to their subscribed capital.

Employee Rights in a Merger

The Turkish Commercial Code applies the employee-transfer rules used for demergers to mergers.

Employment relationships generally continue with the acquiring company.

Employees retain rights connected with:

• Service period,
• Salary,
• Annual leave,
• Benefits,
• Seniority.

The Ministry of Labour also confirms that workplace transfer does not itself cause loss of employees’ legal rights and does not, by itself, constitute a justified reason for an employee to terminate and claim severance.

Can Employees Be Dismissed Because of the Merger?

The merger itself should not be treated automatically as a valid reason to terminate employees.

Post-merger redundancies may nevertheless be possible where genuine:

• Economic reasons,
• Technological reasons,
• Organisational reasons

exist and the ordinary employment-termination requirements are satisfied.

The acquiring company should review:

• Duplicate positions,
• Management structure,
• Workplace locations,
• Collective bargaining agreements,
• Foreign employee work permits,
• Change-of-control bonuses.

What Is a Demerger?

A demerger separates some or all of a company’s assets and liabilities into one or more companies.

The Turkish Commercial Code recognises:

• Full demerger,
• Partial demerger.

A demerger may be used to:

• Separate business lines,
• Isolate liabilities,
• Establish independent subsidiaries,
• prepare a division for sale,
• Divide family-owned businesses,
• Separate regulated and unregulated operations.

Full Demerger

In a full demerger, the entire assets and liabilities of the demerging company are divided and transferred to at least two receiving companies.

The shareholders of the demerging company receive shares or rights in the receiving companies.

The demerging company terminates and is deleted from the trade registry.

A full demerger differs from a merger because the assets are divided among multiple companies rather than transferred to one successor.

Partial Demerger

In a partial demerger, one or more parts of the company’s assets and liabilities are transferred to another company.

The demerging company continues to exist.

The shares in the receiving company may, depending on the structure, be granted to:

• The demerging company, or
• The shareholders of the demerging company.

A partial demerger is commonly used for:

• Separating a production division,
• Transferring a service business,
• Moving long-held participation shares,
• Creating a new subsidiary,
• Preparing a business unit for investment.

Symmetrical and Asymmetrical Demerger

In a symmetrical demerger, shareholders maintain proportionate ownership across the receiving companies.

For example, shareholders owning 60% and 40% of the demerging company receive the same relative percentages in the receiving companies.

In an asymmetrical demerger, the ownership ratios differ.

An asymmetrical structure may be used to separate shareholder groups or family branches.

Because it changes the proportional rights of shareholders, it requires enhanced approval. The Turkish Commercial Code requires at least 90% of shareholders with voting rights in the transferring company to approve a demerger that does not preserve the ownership ratio.

Demerger Agreement or Plan

Where assets are transferred to existing companies, the parties prepare a demerger agreement.

Where a company divides assets into companies it will establish itself, a demerger plan may be used.

The document should identify:

• Assets transferred,
• Liabilities transferred,
• Allocation of contracts,
• Employee allocation,
• Share exchange,
• Corporate capital changes,
• Effective financial date,
• Assets not expressly allocated.

The asset and liability schedules must be detailed.

Vague descriptions may create disputes about whether a particular:

• Receivable,
• Debt,
• Contract,
• Licence,
• Lawsuit,
• Tax liability

transferred to a receiving company.

Unallocated Assets and Liabilities

The demerger documents should deal expressly with assets and liabilities that are discovered after registration.

The agreement should include rules governing:

• Omitted assets,
• Contingent liabilities,
• Unknown tax claims,
• Pending litigation,
• Shared guarantees,
• Customer deposits.

The statutory allocation rules may apply where an asset or liability is not assigned clearly, but relying on default rules creates avoidable uncertainty.

Demerger Report and Inspection

The management organs generally prepare a report explaining:

• Purpose of the demerger,
• Asset allocation,
• Share allocation,
• Valuation,
• Effects on shareholders,
• Creditor protection,
• Employee consequences.

Shareholders should be given the required opportunity to inspect the transaction documents before approval.

Certain simplifications may be available to qualifying small and medium-sized companies.

Creditor Call in a Demerger

Before approval of the demerger, creditors are invited through three announcements in the Turkish Trade Registry Gazette made at seven-day intervals and, for capital companies, through the required website announcement.

Creditors may request security within three months following publication.

The participating companies must provide security unless they prove that the demerger does not endanger the receivable. They may pay the receivable instead where this will not prejudice other creditors.

Secondary Liability of Receiving Companies

The company to which a liability is allocated is primarily responsible for that liability.

If that company fails to pay under the statutory circumstances, the other companies participating in the demerger may become secondarily and jointly liable.

Secondary liability may arise where the primarily liable company:

• Becomes bankrupt,
• Receives a concordat moratorium,
• Is subject to conditions for a definitive certificate of insolvency,
• Moves abroad and can no longer be pursued effectively,
• Makes legal enforcement materially more difficult through relocation.

This protection prevents the demerger from leaving a creditor dependent entirely on an undercapitalised receiving company.

Employee Rights in a Demerger

In a full or partial demerger, employment contracts pass to the receiving company with their existing rights and obligations unless the employee objects.

If the employee objects, the employment contract ends at the end of the statutory notice period. The employee and receiving employer remain responsible for performance until that date.

The former employer and receiving company may be jointly liable for employee receivables that became due before the demerger and for qualifying amounts becoming due until the employment relationship ends. Employees may also request security for existing and protected future receivables.

Allocation of Employees

The demerger plan should identify which employees transfer with each business division.

The allocation should reflect:

• Actual workplace,
• Business activity,
• Reporting line,
• Function,
• Assets transferred.

The parties should avoid transferring employees arbitrarily to an entity that does not carry on their original business activity.

Employee communication should cover:

• Receiving employer,
• Effective date,
• Continuation of service,
• Payroll,
• Benefits,
• Workplace,
• Objection rights where applicable.

Contracts and Licences in a Demerger

Contracts allocated to a receiving company may transfer through the statutory succession mechanism.

However, the parties should still review:

• Anti-transfer clauses,
• Change-of-control provisions,
• Public procurement restrictions,
• Bank financing,
• Regulatory permissions,
• Concessions.

Public-law licences may not follow a private-law asset allocation automatically.

Sector-specific approval may be required for:

• Energy licences,
• Banking permissions,
• Insurance operations,
• Broadcasting licences,
• Payment services,
• Mining rights.

Tax-Neutral Merger

Company-law merger and tax-neutral merger are separate concepts.

Under Corporate Tax Law Articles 19 and 20, a qualifying merger may be treated as a tax-neutral transfer where the statutory conditions are met.

In general:

• The participating corporations must satisfy Turkish tax residence requirements,
• The transferring company’s balance-sheet values must be transferred as a whole,
• The acquiring company must record the transferred assets and liabilities at their existing book values,
• Required tax declarations and undertakings must be submitted.

Where the conditions are satisfied, only the transferring company’s profit earned up to the transfer date is taxed; profit arising merely from the merger is not calculated or taxed. The transfer date is the date on which the competent corporate decision is registered. The joint return must generally be filed within 30 days following announcement in the Turkish Trade Registry Gazette.

Tax Neutrality Is a Deferral

A tax-neutral restructuring does not erase hidden gains permanently.

Assets generally transfer at their registered book values rather than being stepped up to market value.

When the receiving company later sells the asset, taxable gain is calculated by reference to the carried-over historical value.

The transaction therefore generally defers taxation rather than eliminating the underlying gain.

Tax-Neutral Full Demerger

For Corporate Tax Law purposes, a qualifying full demerger generally requires a fully tax-resident capital company to transfer all assets, receivables and liabilities at registered values to two or more existing or newly incorporated fully tax-resident capital companies.

The shareholders of the demerging company receive shares in the receiving companies.

The demerging company terminates without liquidation.

When the statutory requirements are satisfied, gain arising solely from the full demerger is not calculated and taxed.

Tax-Neutral Partial Demerger in 2026

The scope of tax-neutral partial demerger changed significantly.

As of 2026, a qualifying partial demerger may generally concern:

• Participation shares held for at least two complete years,
• One or more production businesses,
• One or more service businesses.

Standalone real estate was removed from the tax-neutral partial demerger provision with effect from 1 January 2024.

Accordingly, a company can no longer assume that a building or land may be transferred alone through a tax-neutral partial demerger.

Real estate that forms part of a production or service business may still be transferred as part of that business where the applicable business-integrity rules are satisfied.

Business Integrity Requirement

Where a production or service business is transferred through a tax-neutral partial demerger, the business must generally preserve operational integrity.

Assets and liabilities required for the continuation of the business should be transferred together.

Depending on the operation, this may include:

• Machinery,
• Equipment,
• Inventory,
• Intellectual property,
• Vehicles,
• Receivables,
• Related liabilities.

A company cannot generally select only the most valuable assets of a production line and claim that it transferred an operational business.

The current Corporate Tax General Communiqué states that a separable division capable of independently continuing commercial activity may qualify, but an incomplete collection of machinery or assets that does not preserve business integrity will not.

Single Production or Service Business Risk

Where a company has only one production or service business, transferring that only business through partial demerger may conflict with the requirement that both the demerging and receiving companies continue their activities.

The restructuring should therefore be reviewed carefully where:

• The company has only one factory,
• The company provides only one service,
• Almost all operating assets will transfer,
• The remaining company will become an empty shell.

A transaction called a partial demerger commercially may fail to qualify for tax neutrality if the Corporate Tax Law requirements are not satisfied.

Tax Liabilities After a Full Demerger

The receiving companies must generally undertake responsibility for tax liabilities of the demerging company in accordance with Corporate Tax Law Article 20.

The demerger return is submitted jointly within the statutory period.

The receiving companies may be jointly responsible for tax obligations accrued or to accrue up to the demerger date, subject to the statutory framework.

Tax due diligence therefore remains necessary even where the restructuring is described as tax-neutral.

Tax Losses

Under the applicable conditions, tax losses of a transferring company may be carried to the acquiring company in a qualifying transfer or full demerger.

Limitations may depend on:

• Equity of the transferred company,
• Filing history,
• Continuation of business activity,
• Statutory loss carry-forward rules.

Partial demerger does not provide the same general transfer of tax losses. Current GİB guidance states that there is no statutory loss-transfer mechanism for partial demergers.

Minimum Corporate Tax

Tax-neutral treatment does not remove every current tax calculation obligation.

Current GİB guidance states that taxpayers filing returns because of liquidation, merger, transfer or full demerger must also calculate domestic minimum corporate tax under the applicable rules.

The restructuring should therefore be modelled using the tax legislation in force on the registration and filing dates.

VAT, Stamp Tax and Fees

Transactions satisfying Corporate Tax Law restructuring conditions may benefit from exemptions concerning transaction documents and certain fees.

The Stamp Tax Law exempts documents prepared because of qualifying mergers, transfers and demergers under the Corporate Tax Law.

The Fees Law also contains exemptions for qualifying corporate merger, transfer, demerger and type-conversion procedures.

These exemptions should not be applied automatically to a restructuring that fails the statutory tax conditions.

Merger Control

A merger or demerger may require Turkish Competition Authority approval where it creates a lasting change of control and the applicable turnover thresholds are met.

The 2026 framework increased the main turnover figures to:

• TRY 3 billion aggregate Turkish turnover,
• TRY 1 billion individual Turkish turnover,
• TRY 9 billion worldwide turnover,

under the applicable alternative tests.

The technology-undertaking regime was also revised and limited to qualifying technology undertakings established in Turkey.

Internal Group Restructurings

A restructuring that produces no lasting change in ultimate control may fall outside merger notification.

For example, transferring a subsidiary between companies controlled by the same ultimate parent may not create a new change of control.

However, the analysis should examine:

• Current controlling entity,
• Post-transaction control,
• Joint-control rights,
• Minority veto rights,
• Changes in ultimate ownership.

A transaction described as an internal restructuring may still be notifiable if the control structure changes materially.

No Implementation Before Approval

Where Competition Authority approval is required, the merger or demerger should not be implemented before clearance.

The companies should avoid:

• Early operational integration,
• Transferring management control,
• Coordinating prices,
• Combining customer negotiations,
• Exchanging unnecessary competitively sensitive information.

The restructuring documents should make registration and closing conditional upon required competition approval.

Due Diligence Before a Merger

The acquiring company should conduct legal, financial and tax due diligence because it will receive the transferring company’s liabilities through universal succession.

The review should cover:

• Corporate records,
• Tax,
• Employment,
• Litigation,
• Financing,
• Security,
• Intellectual property,
• Data protection,
• Regulatory licences,
• Environmental risks.

A merger is not a method for eliminating undisclosed liabilities.

Due Diligence Before a Demerger

A demerger requires additional attention to allocation.

The parties should determine where each item will go, including:

• Loans,
• Guarantees,
• Litigation,
• Employees,
• Tax liabilities,
• Contracts,
• Intellectual property,
• Personal data,
• Environmental obligations.

Shared liabilities should be addressed expressly.

Practical Merger Checklist

A merger project should address:

1. Corporate and tax objectives.
2. Compatible company types.
3. Valuation.
4. Share exchange ratio.
5. Merger agreement.
6. Merger report.
7. Interim balance sheet.
8. Shareholder inspection.
9. Corporate approvals.
10. Creditor announcements.
11. Employee transfer.
12. Contract and licence review.
13. Competition clearance.
14. Tax-neutrality conditions.
15. Tax declarations.
16. Trade registry registration.
17. Post-registration integration.

Practical Demerger Checklist

A demerger project should address:

1. Full or partial demerger.
2. Symmetrical or asymmetrical ownership.
3. Receiving companies.
4. Asset allocation.
5. Liability allocation.
6. Employee allocation.
7. Contract allocation.
8. Licence transfers.
9. Business-integrity requirements.
10. Share allocation.
11. Creditor security.
12. Secondary liability.
13. Competition approval.
14. Corporate Tax Law eligibility.
15. Registration and post-closing actions.

Frequently Asked Questions

What are the two types of merger in Turkey?

Companies may merge by acquisition or by establishing a new company.

What happens to the transferring company?

It ceases to exist and is deleted from the trade registry when the merger becomes effective.

Do assets need to be transferred individually?

A statutory merger generally transfers assets and liabilities through universal succession.

Do the transferring company’s debts disappear?

No. They pass to the acquiring company.

Do shareholders receive shares in the acquiring company?

Generally yes, according to the agreed exchange ratio.

Can shareholders receive cash instead?

A limited equalisation payment or a statutory exit consideration may be structured under the applicable conditions.

Is general assembly approval required?

Generally yes, unless a qualifying simplified merger procedure applies.

What is a simplified merger?

It is a reduced procedure available to certain companies satisfying statutory ownership and control conditions.

Can a parent company absorb a wholly owned subsidiary?

Yes. This is a common use of the simplified merger framework where the statutory requirements are met.

Can creditors request security?

Yes. Merger creditors may request security within three months after the merger becomes legally effective.

Must creditor announcements be made?

Yes. The statutory procedure generally requires three Trade Registry Gazette announcements at seven-day intervals and the required website announcement.

Do employees lose their service periods?

No. Employment relationships generally continue with accumulated rights and service periods.

Can an employee claim severance merely because of the merger?

The workplace transfer itself does not ordinarily create an automatic severance entitlement.

What is a full demerger?

All assets and liabilities are allocated to at least two receiving companies, and the demerging company terminates.

What is a partial demerger?

Only part of the assets and liabilities is transferred, and the demerging company continues.

What is a symmetrical demerger?

Shareholders retain proportionate ownership in the receiving companies.

What is an asymmetrical demerger?

Shareholders receive different proportional rights in the receiving companies.

Which majority is required for a non-proportional demerger?

The Turkish Commercial Code requires approval by at least 90% of shareholders holding voting rights in the transferring company.

Can demerger creditors request security?

Yes. The creditor-call and security procedure applies before approval of the demerger.

Are all receiving companies liable for every debt?

The company allocated the debt is primarily liable. Other participating companies may become secondarily liable under the statutory conditions.

Can an employee object to transfer in a demerger?

Yes. Under Article 178, an objecting employee’s contract ends at the end of the statutory notice period.

Is every company-law merger tax-neutral?

No. Corporate Tax Law Articles 19 and 20 contain separate requirements.

What is the principal tax-neutral merger condition?

The transferring company’s balance-sheet values must generally be transferred as a whole and recorded by the acquiring company at their existing values.

Is merger gain taxed immediately?

Where the statutory conditions are satisfied, gain arising solely from the merger is not calculated or taxed.

Is tax neutrality a permanent exemption?

It generally functions as tax deferral because the receiving company continues using the historical book values.

Can real estate be transferred alone through tax-neutral partial demerger?

Not under the current general partial demerger scope. Standalone real estate was removed with effect from 1 January 2024.

Can real estate transfer with a production business?

Potentially yes, where it forms part of the operational business and the statutory business-integrity conditions are satisfied.

Can participation shares be partially demerged?

Qualifying participation shares held for at least two complete years may be transferred under the current statutory conditions.

Can a production business be partially demerged?

Yes, provided that it is transferred as an operational whole and the other tax requirements are satisfied.

Do tax losses pass in a partial demerger?

There is no general statutory transfer of losses in a partial demerger.

Does a tax-neutral restructuring require tax filings?

Yes. Special returns, declarations and liability undertakings must be filed within the statutory periods.

Is Competition Authority approval required?

It may be required where the transaction creates a lasting change of control and the current turnover thresholds are met.

Can the restructuring be registered before competition approval?

A transaction requiring clearance should not be implemented before approval.

Conclusion

Mergers and demergers provide powerful corporate restructuring tools in Turkey.

A merger may occur through:

• Acquisition by an existing company,
• Establishment of a new company.

Once registered, the acquiring company receives the transferring company’s assets and liabilities through universal succession. The transferring company terminates without ordinary liquidation.

A demerger may be:

• Full,
• Partial,
• Symmetrical,
• Asymmetrical.

In a full demerger, the transferring company terminates. In a partial demerger, it continues with its remaining assets and business.

Shareholders, creditors and employees receive specific statutory protection.

Creditors may request security. In a demerger, participating companies may also face secondary liability where the company allocated a debt cannot pay.

Employment relationships generally continue with preserved rights. In a demerger, employees may object under the specific Turkish Commercial Code procedure.

Tax neutrality requires a separate analysis.

Corporate Tax Law Articles 19 and 20 generally require registered values to be carried over and impose specific corporate residence, asset-transfer, filing and liability conditions.

Standalone real estate is no longer generally eligible for tax-neutral partial demerger. The current scope principally covers qualifying long-held participation shares and complete production or service businesses.

A company-law restructuring should never be implemented on the assumption that it is automatically tax-free.

Before registration, the parties should complete:

• Corporate review,
• Tax modelling,
• Employee planning,
• Creditor analysis,
• Contract and licence review,
• Competition assessment.

The most successful restructuring is not simply the one that receives trade registry approval. It is the one that also preserves business continuity, protects stakeholder rights and satisfies the tax and regulatory conditions applicable on the transaction date.