Stamp Tax Exemption for Cross-Border Loan-Related Security Documents

Under Turkish law, stamp tax is imposed on a wide range of documents, as outlined in Article 1 of the Stamp Tax Law No. 488 (“Law”). Pursuant to the annexed Table (1) of the Law, agreements relating to surety, guarantee, and pledge are expressly subject to stamp tax at a rate of 0.948%. However, the Law also provides an important exemption regime for security documents related to certain types of loan transactions.

Specifically, Table (2) of the Law, which lists documents exempt from stamp tax, includes in Paragraph 23 of Section IV an exemption for documents concerning loans extended by banks, foreign credit institutions, and international organizations. This exemption covers not only the loan agreements themselves but also documents relating to their security.

While the scope of this exemption is relatively clear when it comes to loans extended directly to Turkish borrowers and the related security documents issued within Türkiye, practical uncertainty arises in cross border lending transactions involving group companies. A frequently encountered scenario involves a non resident group company obtaining a loan from a foreign financial institution, with its Turkish affiliate providing a guarantee or other form of security for the borrower’s obligations under the loan.

In practice, tax authorities have generally taken a narrow view of the exemption. In their interpretation, the exemption applies only when the Turkish company is the ultimate beneficiary of the financing. As such, in cases where the loan is provided to a non-resident entity and the security is offered by a Turkish company solely due to group affiliation, tax authorities may assert that the exemption is not applicable and stamp tax should be levied on relevant documents.

On the other hand, there is judicial precedent indicating a broader interpretation of the exemption provision. 9th Chamber of Council of State, in its decision numbered E. 2019/6937 K. 2022/403, emphasized that the Law does not introduce any explicit residency requirement for the borrower or the lender, nor does it impose a condition that the loan must be disbursed or used in Türkiye, in order for the stamp tax exemption to become applicable. According to this line of reasoning, what matters is the nature of the loan and its relation to a qualifying lender as defined under Paragraph 23. Consequently, documents executed by a Turkish security or guarantee provider in support of a loan extended by a qualifying lender to a non-resident group company could, in principle, fall within the scope of the stamp tax exemption.

While the court decision is a positive move in the direction of facilitating lending transactions, the divergence in interpretation between the tax authority and the judiciary is still at the stage of creating potential legal uncertainty and implications. In the absence of a harmonized and authoritative clarification, companies involved in such transactions may face a material risk of stamp tax assessment in Türkiye.

Given the current state of practice, it may be advisable for companies to adopt a cautious and protective approach. In cases where the applicability of the exemption is arguable, filing stamp tax declarations under reservation and pursuing judicial remedies following an assessment could be a prudent course of action.

As cross-border financial transactions and intra-group credit arrangements continue to evolve, aligning the interpretation of stamp tax exemptions with commercial realities becomes increasingly important.