The Decree on the Amendments to the Decree No. 32 on Protection of the Value of Turkish Currency, about how to make foreign currency indexed movable, immovable, labor and service agreements, has been published in the Official Gazette on 13 September 2018.

The new regulation covers not only lease agreements, but also purchase and sale of movables and immovables, leasing of movables and immovables, financial leasing agreements, labor, service and work contracts.

How will the contracts concerning immovables be affected by this decision?

• Residents in Turkey, except under certain circumstances to be determined by the Ministry, shall not agree contract price in lease of all kinds of movable and immovable properties including purchase and sale of movable and immovable, vehicle and financial leasing, leasing, and employment agreements, service agreements and contracts of work and, any other payment liabilities arisen from the foregoing agreements executed between Turkish residents, in foreign currency or indexed to foreign currency.
• One of the exceptions to this article is that if Turkish Armed Forces Foundation companies or state institutions and organizations are one of the contracting parties, except for sales and lease agreements of immovable, contract value and other additional contractual payments can be determined in foreign currency or indexed foreign currency.
• If residents of Turkey who are not citizens of the Republic of Turkey or people specified in the law are parties as buyer or tenant for sales and lease agreements of immovable, contract value and other additional contractual payments can be determined in foreign currency or indexed foreign currency.
• With the regulation, if one of the party companies;
• belongs to the outside residents who have branch offices in Turkey,
• has a direct or indirect share of fifty percent or more,
• is in free trade area,

companies can determine contract value and other additional contractual payments in foreign currency or indexed foreign currency for service agreements and contracts of work.

• For tenders, contracts in foreign currency or indexed foreign currency which public institutions and organizations are parties and projects within the scope of implementation of international treaties, contract value and other additional contractual payments can be determined in foreign currency or indexed foreign currency except for sales agreements of immovable and labor agreements. Leasing agreements of immovable are excluded.
• In contracts other than those mentioned above, which are not possible to be determined in foreign currency or indexed foreign currency, contracted price will be determined in Turkish currency. The parties can agree on different prices. If the parties do not agree; the prices in the contracts signed before January 2, 2018, will be in Turkish currency based on the effective exchange rate determined by the Central Bank of Turkey. In the contracts which will be signed after January 2, 2018, the prices will be based on the date which the contract will be signed.
• According to the new regulation, residents of Turkey must make all kinds of sales and leasing of movables and immovables in Turkish currency. Those who do not comply with this obligation will be punished under the regulation.