Primetax Guide: Share Deal vs Asset Deal in Türkiye

Introduction

The distinction between a share deal and an asset deal is fundamentally a question of legal and tax continuity.

In a share deal, the shareholder changes but the target company remains the same legal entity. Its assets, liabilities, contracts, employees, licences and tax history remain within the company. The buyer therefore acquires the business together with its historical risk profile.

In an asset deal, the buyer acquires an agreed package of assets, rights and business components. This may provide greater control over the transaction perimeter and create a new tax basis for the acquired assets. However, the intended ring-fencing of liabilities may be weakened where the transferred package constitutes a commercial enterprise or workplace under Turkish law.

The legal form selected by the parties is relevant, but it is not conclusive. The substance of what is transferred and whether the business can continue as an operating whole are equally important.

1. Historical liabilities

In a share deal, the target company remains responsible for its existing tax, commercial, employment and regulatory liabilities. The buyer does not ordinarily assume those liabilities in its own name merely by becoming a shareholder, but their economic impact remains within the acquired company.

Tax due diligence, contractual indemnities, purchase-price adjustments, escrow arrangements and warranty protection therefore play a central role. These protections allocate risk between the parties but do not prevent the tax authorities or other creditors from pursuing the target company.

An additional issue arises where the target is a Turkish limited liability company. Under Article 35 of Law No. 6183, shareholders may be held liable, in proportion to their shareholding, for public receivables that cannot be collected or are considered uncollectible from the company.

In a transfer of limited liability company interests, the statutory provisions may also result in the transferor and transferee being pursued jointly for qualifying public receivables relating to the period before the transfer. The administrative guidance explains the transfer-date rule by reference to debts that were due but remained unpaid on that date. A separate provision addresses cases in which the shareholders at the time the receivable arose and at the time it became due are different persons.

The interaction between these rules is not always straightforward. In particular, the determination of when a public receivable arose may be disputed where the relevant tax period, assessment, accrual and payment due date fall at different times. The potential exposure should therefore be reviewed receivable by receivable rather than treated as a mechanical cut-off based solely on the completion date.

Any contractual indemnity obtained from the seller remains an arrangement between the parties and does not restrict the collection rights of the tax authorities.

An asset deal may allow the buyer to exclude specified liabilities contractually. This distinction is commercially significant, but it is not an absolute shield. Statutory liability may arise if the transaction constitutes the transfer of a commercial enterprise, business or workplace. Tax and other public-law risks also require a separate analysis and cannot be eliminated solely through the liability perimeter agreed in the asset purchase agreement.

2. Risk of a commercial enterprise transfer

Article 11/3 of the Turkish Commercial Code permits a commercial enterprise to be transferred as a whole without requiring separate disposal formalities for each included asset. Unless otherwise agreed, the statutory transfer perimeter may include fixed assets, enterprise value, tenancy rights, the trade name, intellectual property rights and other assets permanently allocated to the business.

Whether an asset deal falls within this provision depends on the substance of the transferred package. Relevant factors may include whether the essential operating assets, employees, premises, customer relationships, intellectual property and contractual infrastructure are transferred in a manner that enables the business to continue its activities.

The description used in the transaction documents is not decisive. Dividing the transaction among several agreements or stating that only selected assets are being sold may not prevent commercial enterprise transfer consequences if the transferred elements form an operational whole.

A commercial enterprise transfer under Article 11/3 must be documented in writing and registered and announced through the trade registry. The provision facilitates the transfer of the assets included in the enterprise, but its interaction with contractual restrictions, registered rights and sector-specific licences must still be considered separately.

Where the conditions of Article 202 of the Turkish Code of Obligations are met, the buyer becomes liable towards creditors for the debts of the transferred business following the relevant notification or announcement. The seller remains jointly liable with the buyer for two years. For debts already due, the period begins with notification or announcement; for debts becoming due later, it begins on the relevant due date. If the required notification or announcement is not made, the two-year period does not begin.

The liability analysis is not confined to private-law debts. Tax, social-security and other public receivables are governed by mandatory public-law provisions which operate independently of the allocation agreed between the buyer and seller.

In particular, Article 89 of the Social Insurance and General Health Insurance Law provides that, where a workplace in which insured employees are employed is taken over with its assets or liabilities, the new employer becomes jointly and severally liable for the former employer’s outstanding social-security premiums, late-payment penalties, late-payment interest and related amounts. This exposure is separate from the two-year liability period applicable to certain employee receivables under the Labour Law.

Historical tax exposure may also arise under the statutory succession rules applicable to the particular form of the transaction. Article 36 of Law No. 6183 provides for public-debt succession in qualifying mergers, demergers, statutory transfers and changes of legal form. These concepts should not automatically be equated with every commercial enterprise transfer under Article 11/3, but they become relevant where the transaction also falls within the applicable corporate or tax reorganisation regime.

Existing tax liens, attachments and other enforcement measures over the transferred assets must also be taken into account. A transfer that prevents or prejudices the collection of public receivables may be challenged under the avoidance provisions of Articles 24 to 31 of Law No. 6183.

Article 8/3 of the Tax Procedure Law further provides that private agreements concerning tax liability or tax responsibility do not bind the tax administration unless permitted by tax law. Accordingly, an agreement under which the seller retains all historical tax liabilities may create a contractual recovery right for the buyer but does not override any statutory liability that may attach to the buyer or the transferred assets.

A commercial enterprise transfer does not, by itself, convert an ordinary asset sale into a tax-neutral transaction. The seller’s taxable gain, VAT treatment, stamp duty exposure, allocation of consideration and the buyer’s depreciation or amortisation basis remain subject to the ordinary tax rules unless the transaction separately qualifies under a specific reorganisation regime.

The transfer may also constitute a workplace transfer under Article 6 of the Labour Law. In that case, existing employment contracts pass to the buyer with their rights and obligations, and employee service periods are preserved. The seller and buyer are jointly liable for certain employee receivables arising before the transfer and due on the transfer date, with the seller’s liability generally continuing for two years.

Consequently, an asset deal intended to exclude historical liabilities may produce a materially different outcome if the transferred assets collectively constitute an operating business or workplace.

3. Tax profile of the transaction

In a share deal, taxation generally arises at shareholder level. The target company does not recognise a gain merely because its shares change hands, and the tax bases of its underlying assets remain unchanged.

Where the seller is a Turkish-resident company and the statutory conditions are met, 50% of the gain from the sale of participation interests held for at least two full years may currently qualify for the corporate participation exemption.[1] The remaining gain is included in the ordinary corporate income tax base.

The exempt portion is nevertheless taken into account in calculating Türkiye’s domestic minimum corporate income tax. The practical benefit of the participation exemption must therefore be assessed together with the minimum tax position of the seller.

For individual sellers, the distinction between joint stock company shares and limited liability company interests can be significant. Gains from qualifying share certificates of a Turkish joint stock company held for more than two years may fall outside taxable capital gains, subject to the detailed statutory conditions. Gains from the disposal of limited liability company interests do not benefit from an equivalent two-year holding exemption and may remain taxable regardless of the holding period.

The VAT treatment also depends on the legal nature of the participation. Transfers of qualifying share certificates fall within the exemption under Article 17/4-g of the VAT Law without a minimum holding period. Transfers of other participation interests may qualify under Article 17/4-r where they have been held in the assets of a corporate seller for at least two full years and the other statutory conditions are satisfied.

Share transfer agreements relating to joint stock and limited liability companies are exempt from stamp duty. The corresponding share transfer transactions are also covered by the exemption from fees under Article 123/3 of the Fees Law, including applicable notarial fees.

In an asset deal, the seller generally recognises taxable business income equal to the difference between the sale proceeds allocated to each asset and the relevant tax book value. VAT is assessed separately according to the nature and VAT treatment of each transferred asset or right.

Transfers of real estate may additionally give rise to title deed fees. The former general corporate income tax and VAT exemptions for real estate disposals have largely been abolished for properties recorded in the balance sheet on or after 15 July 2023. Transitional rules may remain relevant for properties recorded before that date.

An ordinary sale of a business or asset package does not automatically qualify as a tax-neutral transaction. The “devir” regime under Articles 19 and 20 of the Corporate Income Tax Law is a separate statutory reorganisation regime with its own conditions. Only qualifying reorganisations benefit from the associated corporate income tax and VAT neutrality under Article 17/4-c of the VAT Law.

4. Tax basis and tax attributes

A share deal does not create a step-up in the tax bases of the target company’s assets. The buyer records the acquisition cost in the shares, while the target continues to depreciate or amortise its assets using their existing tax values. Any goodwill recognised at consolidated financial statement level does not, by itself, create a deductible tax asset in the target company.

The target’s existing tax losses, carried-forward VAT and other tax attributes remain within the same legal entity. Their future use remains subject to the ordinary statutory requirements and to any findings arising from tax due diligence.

In an asset deal, the buyer generally records the acquired assets at their allocated acquisition values. Those values may provide a new basis for future depreciation, amortisation and gain calculations, subject to the applicable valuation rules.

Where part of the consideration represents acquired goodwill, capitalised goodwill is amortised in equal amounts over five years under Article 326 of the Tax Procedure Law.

Tax losses and other entity-level tax attributes of the seller do not ordinarily transfer with the assets. In qualifying mergers, demergers or statutory transfers, the use of transferred losses is governed by Article 9 of the Corporate Income Tax Law and the specific conditions applicable to the reorganisation.

5. Contracts, licences and employees

A share deal generally preserves contractual continuity because the target remains the same contracting party. Contracts may nevertheless contain change-of-control provisions requiring notification, consent or renegotiation. Regulatory licences and permits may similarly require approval even though the licence holder itself does not change.

The employees remain employed by the target in a share deal. The share transfer does not, by itself, constitute a workplace transfer under Article 6 of the Labour Law.

In an asset deal, contracts and rights may need to be assigned individually, depending on their terms and the legal structure of the transfer. Counterparty consent may be required, and certain regulatory licences or public-law permits may be non-transferable.

A commercial enterprise transfer under Article 11/3 may simplify the transfer of assets forming part of the enterprise, but it does not make every contractual right, licence or regulatory approval freely transferable. Sector-specific rules and contractual restrictions continue to require separate consideration.

Where the transferred assets constitute a workplace or part of a workplace, employment contracts pass to the buyer automatically under Article 6 of the Labour Law. This consequence may arise even if the parties have not expressly included the employees in the asset transfer documentation.

6. Acquisition financing

In a share deal, the acquisition debt is often incurred by the buyer or a special-purpose acquisition company, while the operating income remains in the target. Since Türkiye does not apply a general tax consolidation regime, the financing expenses and operating profits may initially arise in different legal entities.

Article 5/3 of the Corporate Income Tax Law permits the deduction of financing expenses relating to the acquisition of participation interests, subject to the general deduction limitations. Following the amendments introduced by Law No. 7440, qualifying acquisition financing expenses may continue to be deductible after a tax-neutral merger under Article 19, whether the target merges into the acquisition company or the acquisition company merges into the target.

This treatment does not provide an unrestricted debt push-down safe harbour. The merger must independently satisfy the statutory reorganisation conditions, and the financing remains subject to thin capitalisation, transfer pricing, financial expense restriction, domestic minimum corporate income tax and general deductibility requirements.

An asset deal often places the acquisition debt and the income-generating assets in the same legal entity. This may provide a more direct connection between financing costs and operating income, although capitalisation requirements and the general interest deduction restrictions remain applicable.

7. Transaction execution

A share deal is generally simpler from an asset-transfer perspective because title to the target’s underlying assets does not change. The required corporate formalities depend on the legal form of the target and the characteristics of the shares.

Transfers of joint stock company shares are generally more flexible, although the applicable mechanics differ between bearer and registered shares. Article 489 of the Turkish Commercial Code governs the transfer of bearer share certificates, while Articles 490 to 494 govern registered-share transfers and the related statutory or articles-of-association-based restrictions. Article 499 applies to registration in the company’s share ledger.

Transfers of limited liability company interests require a written agreement with notarised signatures and the relevant corporate and registry procedures under Article 595 of the Turkish Commercial Code.

An asset deal may require separate transfer formalities for real estate, vehicles, intellectual property, permits and other registered assets. Where the transaction constitutes a commercial enterprise transfer under Article 11/3, the written agreement must instead be registered and announced through the trade registry, without eliminating asset-specific regulatory requirements.

Both structures may require Turkish Competition Authority approval where the transaction results in a lasting change of control and the applicable turnover thresholds are met. Sector-specific approvals may also apply.

8. Selecting the structure

A seller will often prefer a share deal because it offers a cleaner exit and may provide more favourable taxation of the disposal gain. A buyer may prefer an asset deal because it permits greater control over the acquired perimeter and may provide a step-up in the tax basis of the acquired assets.

Those general preferences do not determine the outcome in Türkiye. In a share deal, historical exposure can be managed through due diligence, contractual protection and purchase-price mechanisms, although these measures do not remove liabilities from the target. For limited liability companies, potential shareholder exposure for public receivables under Article 35 of Law No. 6183 requires particular attention.

In an asset deal, the intended exclusion of liabilities must be tested against the commercial enterprise, public-debt, social-security and workplace transfer rules. If the transferred package enables the business to continue as an operating whole, the buyer may acquire broader liabilities than the asset purchase agreement suggests.

The appropriate structure therefore depends on the interaction between the transaction perimeter, the target’s historical risk profile, the seller’s tax position, the buyer’s need for tax basis, financing arrangements, contractual consents and regulatory requirements.

Conclusion

The practical distinction between a share deal and an asset deal is not simply whether shares or assets are transferred.

A share deal preserves the legal and tax continuity of the target, including its historical exposures and existing tax bases. An asset deal allows greater selection and may create depreciable or amortisable tax basis, but it may also trigger commercial enterprise, public-debt, social-security, creditor succession and workplace transfer rules.

The transaction documents should reflect the commercial substance of the deal. In particular, an asset transfer cannot be assumed to ring-fence historical liabilities solely because the agreement describes the transaction as a sale of selected assets or allocates tax liabilities to the seller.

[1] Article 5/1-e of the Corporate Income Tax Law states a statutory exemption rate of 75%. Presidential Decision No. 9160, published in the Official Gazette dated 27 November 2024 and numbered 32735, set the applicable rate at 50%. The rate stated in this guide is the rate in force as of September 2026 and should be reconfirmed at the time of the transaction.