What is Foreigner Exchange Receipt?Wed, Feb 9, 2022 12:00 AM
The Turkish government is dealing with the serious economic recession in recent years. As a result, more and more foreigners are taking the advantage of Turkish Lira depreciation and investing in real estate in Turkey.
Though investing in real estate in Turkey is still logical and favorable, the Turkish Government released a new regulation, which requires foreigners to submit exchange receipts while acquiring any kind of asset in Turkey.
In this way, the government is encouraging foreign buyers and sellers to use the Turkish Lira in their trade. So, if you would like to learn more about this new regulation, here are the details. We have answered 14 frequently asked questions in this guide.
Is It Obligatory to Exchange Foreign Currency When a Foreigner Buys Real Estate in Turkey?
Foreigners who are not a citizen of the Republic of Turkey must use Turkish Lira while acquiring any real estate in Turkey. Any foreign currency should be sold to a bank or Turkish Central Bank by stating the reason as title deed transactions. The payment should be made in Turkish Lira.
Where Should the Currency Be Exchanged?
The foreign currency must be exchanged to a bank operating in Turkey and to the Central Bank by the relevant bank. This means that it is not possible to use foreign exchange offices, or the foreign currency exchanged by hand in real estate purchase transactions.
How Much Currency Should You Exchange?
Currency must be exchanged equally to the entire sale price. It is worth noting that you cannot submit two foreign exchange receipts for the same transaction. Thus, you need to pay great attention to making sure that you exchange the exact same amount you need to pay for the acquisition of your real estate.
What Is Foreigner Exchange Receipt?
The Foreigner Exchange Receipt is a document showing that the foreign currency was sold to a bank operating in Turkey to be sold to the central bank before the sale is made by the foreign buyer at the land registry office.
What Information Must Be Available on Foreigner Exchange Receipts?
In the Foreigner Exchange Receipt, the name, surname, passport number or foreign identity number of the person on whose behalf the foreign currency was exchanged, the US Dollar equivalent of the foreign currency bought (in any case, it is in TL), and that this transaction is carried out within the scope of "Circular on Capital Movements" must be available as a statement.
Does the Foreigner Himself Have to Exchange the Foreign Currency at the Bank?
Besides the foreigner himself, the trade can be done by the buyer, seller, their relatives, or representatives of the relevant real estate.
Can You Exchange the Currency Before the Trade?
Yes, you can, and you should. You cannot exchange it after the trade.
Is It Obligatory to Exchange Foreign Currency in Citizenship Application?
It is obligatory to exchange the foreign currency with a bank operating in Turkey and with the Central Bank by the relevant bank in both for the acquisition of citizenship through real estate acquisition or for purchases that will not be subject to citizenship.
Do You Need Any Other Document for Certificate of Conformity Other than Foreigner Exchange Receipt?
Land registry directorates will request the foreign exchange receipt document and the approved bank receipt showing that the said amount has been sent to the account of the seller including in citizenship applications.
Can the Seller Exchange the Foreign Currency After Receiving It in His Account?
Currency may be sold first by the buyer to the seller's account and then by the seller to a bank for exchange with the central bank. The critical point here is that the foreign exchange receipt document must be prepared before the transaction.
Is the New Regulation Valid for the Transactions Before Its Effective Date?
Payment receipts issued before the effective date of the application will continue to be accepted in transactions. There is no need to issue a foreign exchange purchase document for these transactions. However, for these payments, the approved bank receipt must be submitted to the land registry office. Payments made by other methods will not be accepted.
How Are the Foreigner Exchange Receipts Before the Effective Date Evaluated and How Is the Value Declared to the Title Deed Calculated?
In cases where the sales price is deposited into the account of the buyer before the effective date of the regulation, it will not be possible to exchange foreign currency in return for the price, and if this situation is documented with an approved bank receipt, there is no need to request a foreign currency purchase document.
In these cases, the sales value to be stated in the official promissory note should not be less than the value deposited in the buyer's account, and in cases where a payment is made in foreign currency to the buyer's account, the Turkish Lira value to be found at the effective selling rate of the Central Bank of the previous receipt should be taken as a basis.
Is the Base Value in the Deed Transaction Equals to Turkish Lira Value in Foreigner Exchange Receipt?
The buyer is obliged to submit the foreign currency receipt document to the land registry office, which shows that the foreign currency with the sales price has been sold to a bank in the application for title deed transactions. The Turkish lira amount registered in the foreign exchange receipt document is declared to the title deed as the sales price by the persons who are part of the transaction.
Will New Regulation Be Valid for Applications You Did to Land Registry Directorate Before January 22, 2022?
The provisions of this regulation will not be applied to the applications that have been processed by the Land Registry Directorate before January 24, 2022. This means that the procedures will be completed according to the current legislation at the time of application. In other words, you will be exempted from the new regulation while you are acquiring your real estate in Turkey.
If you have any other questions, please feel free to contact us or leave a comment on this article.