Opening an account for a holding company in Turkey: exemptions and dividends

The model of Turkey's large family holdings

A holding company in Turkey serves to receive subsidiaries' dividends, fund their needs and settle share sales, which sets it apart from an operating business, and it is usually an Anonim Şirket whose beneficial owners the bank identifies in full. The model comes from large family groups such as Koç or Sabancı, so Turkish banks know holding structures and centralised treasury needs well.

The Turkish economy is built around large family groups organised as holdings, such as Koç or Sabancı, which control banks, industry and retail. This model explains why Turkish banks know the holding structure and its centralised treasury needs well.

Why the Anonim Şirket suits a holding

The Turkish holding company is usually set up as an Anonim Şirket, as this form makes it easier to admit shareholders, transfer shares and possibly list on Borsa İstanbul. Its board appoints the bank signatories in the notarised signature circular.

Dividends received from Turkish subsidiaries

Dividends a Turkish company receives from resident subsidiaries are exempt from corporate tax under Turkish law, allowing profits to move upstream without further taxation. No withholding tax applies between two resident companies.

Foreign shareholdings and exemption conditions

Dividends from foreign subsidiaries can also be exempt if the holding has owned at least 10 percent of the capital for one year and the subsidiary has borne a minimum level of tax in its own country. Such dividends usually arrive in foreign currency on the holding company account.

Capital gains on the sale of shareholdings

Turkish law provides a partial exemption for gains on selling shareholdings held for at least two years, provided the gain is kept in a special reserve account. The sale price must be collected within the legal deadline.

Intragroup loans and thin capitalisation

Advances from the holding to subsidiaries, or loans received from foreign shareholders, are reviewed under Turkish thin capitalisation and transfer pricing rules. A written agreement stating the rate and maturity protects the position with both the bank and the tax authority.

How the bank identifies shareholders

Under MASAK rules, the bank identifies every individual holding directly or indirectly more than 25 percent of the holding, or controlling it by other means. An up-to-date chart down to the individuals is requested at onboarding.

Centralising group treasury with a Turkish bank

With Türkiye İş Bankası, a holding can organise dividend upstreaming, group foreign-currency accounts and subsidiary funding; ask whether a centralised cash management service is offered and how multi-currency flows between group entities are handled and priced.

A Turkish holding owned from France

Dividends paid by a Turkish holding to a French shareholder bear withholding tax that the France-Turkey tax treaty can limit. The shareholder provides a French tax residence certificate to benefit from the treaty.

CRS and duties of the French shareholder

Turkey exchanges financial information under the CRS standard, including entity accounts and their controlling persons. A French-resident shareholder reports shares and income, and files form 3916 when holding a personal account in Turkey.

Setting up a holding company in Turkey and preparing the account

Before contacting the bank, the holding must exist legally: articles of association, trade register entry, tax number and composition of the board. A wording that is too vague or unrelated to the group's real activity prompts questions from the compliance department.

Next, prepare the full group chart: shareholders of the holding, percentages held, Turkish and foreign subsidiaries, with the individuals who control the chain. Add the notarised record of authorised signatures and, for a foreign shareholder, registration documents that are apostilled and translated into Turkish. These items determine how the file proceeds and how quickly it is reviewed.

Write a short note on the group: activities, countries of operation, source of the capital contributed and flows expected on the account, such as dividends, loans to subsidiaries or share disposals. In practice, review times vary by bank and by the complexity of the structure; a clear file at the first meeting avoids a string of requests for additional documents.

Holding company bank account in Turkey: questions to ask the bank

Not every bank has the same experience of group structures, so ask about it directly. Ask whether the holding company account can be linked to those of the subsidiaries, whether lira, euro and dollar accounts are offered under one agreement and whether transfers between group companies receive simplified handling or special pricing.

Ask the bank about account governance: signature levels, transaction ceilings, two-person approval for large transfers and online access for several users. A holding often handles large amounts; it is better to set clear rules at opening, which protect the company against errors and against use that a manager or employee has not been authorised to make.

Finally, compare costs: account fees, international transfer commissions, exchange margins and the price of treasury services. A gap of a few basis points on conversions can add up to a significant sum for a holding that regularly receives dividends in foreign currency.

Common mistakes with a holding company in Turkey

Loans, advances, recharged costs and guarantees must be documented, with the rate, maturity and purpose of each operation. This discipline protects the company during bank or tax reviews and makes year-end reconciliation easier.

A third mistake is neglecting updates. A shareholder joining or leaving, a change of manager or an amendment of the articles must be reported to the bank and recorded in the register. Also keep shareholders' resolutions, disposal evidence and proof of payment: they help demonstrate compliance with the conditions of the exemptions the holding benefits from.

Annual follow-up of a Turkish holding company

A Turkish holding company must approve its accounts every year, keep its registers up to date and file its tax returns on time. The bank may ask for the latest financial statements and the minutes of the shareholders' meeting during its periodic customer reviews.

Automatic exchange of information such as CRS, and the American FATCA rules, lead the bank to collect a tax self-certification from the company and its beneficial owners. The information declared must remain consistent from one year to the next and with each shareholder's tax return in his or her country of residence.

Before any significant transaction, such as a sale of a stake or an intragroup loan, check the applicable rule with the bank and a Turkish tax adviser. Exemptions, holding thresholds and time conditions change; a recent written confirmation is worth more than a memory of the position on an earlier transaction.

Share disposals: the special reserve and the collection deadline

Before selling a shareholding, check the exact acquisition date in the share register: the partial exemption presupposes two full years of ownership, otherwise the gain loses its favourable treatment. Then open the special reserve account where the gain has to stay, and ask the bank how it identifies that account in its records, because the deadline for collecting the sale price keeps running in the meantime. If the price is paid in foreign currency, keep the credit advice showing the date it was received, since the collection deadline is checked against it.

For a partner resident in France, the France-Turkey treaty limits the withholding on dividends paid by the Turkish company only if the tax residence certificate comes with the request. Have that document issued before the decision to distribute, because obtaining it from the French administration takes time, then keep the shareholders’ minutes next to the transfer order given to Türkiye İş Bankası or to any other bank used by the group, so that the file for the distribution is complete if either authority asks for it later.