Corporate Tax Law Article 19 allows companies to merge or spin-off without triggering capital gains or transaction taxes in 2026.
In the fast-moving global market of 2026, the ability to reorganize and consolidate operations is essential for corporate efficiency. Türkiye offers a highly favorable Preferential System for Mergers and De-mergers, primarily governed by Article 19 of the Corporate Tax Law. This system allows multinational groups to consolidate their Turkish operations or spin off specific business units into new legal entities without incurring heavy capital gains taxes, VAT, or stamp duties.
While a standard merger is generally treated as a taxable liquidation of the dissolved company, a “take-over” merger—conducted at book value—is entirely tax-free. To qualify, the absorbing company must be a resident of Türkiye, and the transfer of assets and liabilities must be recorded at their existing tax values. This ensure that the “tax continuity” is maintained, and no immediate tax liability is triggered by the restructuring process.
One of the most strategic advantages of this system is the transfer of tax losses. Under the 2025-2026 rules, the absorbing company can carry forward the dissolved entity’s losses for up to five years, provided that the business activity of the merged company continues for at least five years post-merger. This allows for significant tax optimization for firms looking to rescue or integrate underperforming subsidiaries. Furthermore, recent amendments in 2024 (Law No. 7524) have made it even easier to transfer the input VAT amount to the new company through a specialized tax inspection process, ensuring that liquidity is preserved during the transition.
For international investors, this restructuring flexibility is essential for optimizing their VAT positions and streamlining their regional management hubs. Whether it’s a Joint Stock Company (JSC) or a Limited Liability Company (LLC), share transfers are generally exempt from VAT, and if the shares have been held for more than two years, 75% of the capital gain is exempt from corporate tax for the selling company. As Türkiye moves toward becoming a top-10 global economy, these “Business Friendly” reorganization rules ensure that global firms can adapt their corporate structures to the needs of 2030 with minimal fiscal friction.
Citations & Sources:
- Legal Guide: Gün + Partners – Private Mergers and Acquisitions 2024/2026 in Turkey
- Legislative Update: Schindhelm Law – Law No. 7524 on the Amendment of Tax Laws
- Tax Intelligence: DLA Piper – Tax-Free Reorganizations in Turkey
