FOREIGN CURRENCY PURCHASE CERTIFICATE

As is known, within the scope of the Regulation on the Implementation of the Turkish Citizenship Law enacted in 2018, it has been made possible for foreigners in our country to acquire Turkish citizenship exceptionally by purchasing immovable or immovables worth at least 400,000 USD (Four hundred thousand USD). At this point, banks play an important role in the registration of foreign currency coming from foreign countries. Namely, as of January 24, 2022, foreigners are obliged to exchange foreign currency with the Central Bank for transactions they are buyers of. Accordingly, persons who are not citizens of the Republic of Turkey are required to make the payments for the real estate to be purchased in foreign currency. This obligation applies to all purchases made by foreigners, whether they apply for citizenship or not. Real estate cannot be sold without this document.

 

This process is usually done by authorized real estate offices. However, the most important point to be considered in this transaction is that the document to be obtained must be from a bank operating in Turkey. This transaction cannot be made with foreign currency exchanged by foreign exchange offices or by hand. Those who want to sell real estate without obtaining this document will be warned by the Land Registry offices and the sales transactions will not be able to continue even for this reason alone.

 

In addition, the amount declared in the Land Registry and the amount written on the receipt must match each other. If this amount is different, sales transactions will not be realized.

Finally, it should be mentioned that the purchase of this foreign currency purchase document must be made before the sales transactions.

 

Some of the problems experienced at this point continue in practice. Since the document to be obtained must be from a bank operating in Turkey, foreign nationals who will make the purchase must have a residence permit in Turkey or have an account in these bank branches from their own country. It is not possible for those who want to complete these transactions in Turkey without doing this in their own country to obtain a foreign currency purchase document.

A. WHAT IS A FOREIGN CURRENCY PURCHASE CERTIFICATE?

The foreign currency purchase document is the document showing that the foreign currency was sold to a bank operating in Turkey to be sold to the central bank before the sale transaction is made by the foreign buyer at the land registry office. In the foreign currency purchase document, the name, surname, passport, or foreign identity number of the foreigner real person for whom the foreign currency is exchanged, the US dollar equivalent of the foreign currency purchased, and this transaction are subject to the application of the Turkish Citizenship Law within the scope of Article 13 of the Capital Movements Circular. It is obligatory to write the matters that are within the scope of the 10th paragraph of the 20th article of the related regulation. It is also possible to sell the foreign currency against the sales price with more than one foreign currency purchase document. In this case, the total foreign currency purchase documents are taken as the basis for the transaction.

B. INFORMATION THAT MUST BE INCLUDED IN THE FOREIGN CURRENCY PURCHASE CERTIFICATE

1. Name and surname of the foreigner who exchanged the currency
2. The passport number of the foreigner who exchanges the foreign currency, or the foreigner's identification number, if any.

3. TL price and the USD equivalent of the foreign currency bought in TL,

4. Statement stating that the transaction was carried out within the scope of “Article 13 of the Circular on Capital Movements”

C. IS THERE AN OBLIGATION TO EXCHANGE FOREIGN CURRENCY IN SALES TRANSACTIONS WHERE FOREIGNERS ARE BUYERS?

Article 13 of the Capital Movements Circular of the Central Bank of the Republic of Turkey, the Regulation on the Implementation of the Turkish Citizenship Law, and the Implementation Instructions for the Sales of Foreign Currency to the Central Bank of the Republic of Turkey have brought the Central Bank to exchange foreign currency in transactions where foreigners are buyers.

In this context, people who do not have citizenship ties with the Republic of Turkey must pay for the real estate they will buy in Turkey in foreign currency.

This foreign currency is sold to a bank, and by the bank to the Central Bank, by stating it's just before the title deed transactions. Payment is made in Turkish Lira to those concerned.

D. WHERE TO EXCHANGE FOREIGN CURRENCY?

Foreign currency must be exchanged to a bank operating in Turkey and to the Central Bank by the relevant bank. For this reason, it is not possible to use foreign exchange offices or foreign currency exchange by hand in real estate purchase transactions.

E. MUCH FOREIGN CURRENCY SHOULD I EXCHANGE?

T.R. Following article (13) of the Central Bank's Circular on Capital Movements, a foreign currency should be exchanged equally to the entire sales price.

For the Foreign Exchange Purchase Document to be accepted by the Land Registry Directorate, information must be present as a minimum.

F. DOES THE FOREIGN BUYER NECESSARILY HAVE TO EXCHANGE THE FOREIGN CURRENCY AT THE BANK?

The foreign exchange sale does not necessarily have to be made by the foreign buyer. It is possible to be done by the buyer, seller of the relevant real estate, their proxies, or representatives.

G. CAN I EXCHANGE FOREIGN CURRENCY BEFORE THE SALE TRANSACTIONS?

It is not possible to exchange foreign currency after the sales transactions are made at the title deed.
The foreign currency must be exchanged before the title deed transactions and the foreign currency purchase document must be submitted to the title deed directorate before the sale.

H. IS THERE AN OBLIGATION TO EXCHANGE FOREIGN CURRENCY FOR CITIZENSHIP PROCEDURES?

In case the buyer is a foreigner, both for the acquisition of citizenship through real estate acquisition or for purchases that will not be subject to citizenship, it is obligatory to exchange the foreign currency with a bank operating in Turkey and with the Central Bank by the relevant bank.

İ. IS ANY OTHER DOCUMENT OTHER THAN THE FOREIGN CURRENCY PURCHASE CERTIFICATE REQUIRED FOR CITIZENSHIP PROCEDURES?

In the citizenship (certificate of conformity) transactions, the foreign exchange purchase document and the approved bank receipt showing that the said amount has been sent to the seller's account will be requested by the land registry directorates.

It is obligatory to submit the Foreign Exchange Purchase Document to the Land Registry Directorate before the sale. However, it is possible to present the immovable payment receipt (money transfer from the buyer to the seller) together with the "Currency Purchase Certificate" before the sale transaction, before the commitment transaction, and at the latest before the issuance of the conformity certificate.

J. CAN THE FOREIGN CURRENCY BE FIRST DEPOSITED IN THE SELLER'S ACCOUNT AND THEN CASHED AT THE BANK?

Currency may be sold first by the buyer to the seller's account and then by the seller to a bank for exchange to the central bank. The critical point here is that the foreign exchange purchase document must be made before the transaction.

For example, from the foreign bank account of foreign national J, the sales price of the independent section no. 5, parcel no. 101, Aydın province, Didim district, Çamlık mah, 270.000 USD, the sales price of the real estate seller, Turkish citizen B, Ziraat Bank Didim He made a transfer to the USD account in his branch. Then, the "Currency Purchase Certificate" showing that this amount (270,000 USD) was sold to the Central Bank by the real estate seller B on behalf of foreign national J, and the approved bank receipt for the foreign currency transfer sent by foreign national J must be submitted to the Land Registry.
When expressed briefly; Foreign Currency Purchase Document + approved TL payment receipt or approved (USD Currency) payment receipt + Foreign Currency Purchase Document; Foreign currency sales transaction and receipt date priorities may change.

K. ARE PAYMENTS MADE BEFORE THE EFFECTIVE DATE OF THE APPLICATION VALID?

Payment receipts made 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.

hand payment etc. Payments made by other methods cannot be accepted.

N. WILL THE PROVISIONS OF THIS CIRCULAR BE APPLIED TO THE APPLICATIONS WE MADE TO THE LAND REGISTRY OFFICE BEFORE THIS APPLICATION (JANUARY 24.2022)?

In cases where the sales price is deposited into the account of the buyer before the application comes into effect, 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 this case, the sales value to be stated in the official promissory note should not be lower 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.

For example; In case the sales price of the real estate is deposited with receipts of 1.000.000 ₺ dated 11.11.2021 and 500.000 ₺ dated 15.12.2021, the official bill will be 1.500.000 ₺, whereas for the deposited with 100.000 USD dated 11.11.2021 and 50,000 USD dated 15.12.2021 receipts, 100,000 x 9, 8135 (the Central Bank Rate dated 10.11.2021) = 981.350 + 50.000 x 14.2213 (the Central Bank Rate dated 14.12.2021) = 711.065 ₺, which will be 1.692.415 ₺ in total.

M. IS THE VALUE OF THE TITLE DEED BASED ON THE TURKISH LIRA VALUE IN THE FOREIGN CURRENCY PURCHASE CERTIFICATE?

Those concerned are obliged to submit the foreign exchange purchase document proving that the foreign exchange, which is the sales price, has been sold to a bank, to the title deed administration. The Turkish lira amount registered in the foreign exchange purchase document is declared to the title deed as the sales price by the persons concerned.

N. WILL THE PROVISIONS OF THIS CIRCULAR BE APPLIED TO THE APPLICATIONS WE MADE TO THE LAND REGISTRY OFFICE BEFORE THIS APPLICATION (JANUARY 24.2022)?

The provisions of this circular will not be applied to the applications that have been processed by the Land Registry Directorate before 24 January 2022, in other words, the procedures will be completed according to the current legislation at the time of application.

O. IF THE FOREIGN CURRENCY PURCHASE CERTIFICATE CONTAINS THE PHRASE "WITHIN THE SCOPE OF THE TENTH PARAGRAPH OF ARTICLE 20 OF THE REGULATION ON THE IMPLEMENTATION OF THE TURKISH CITIZENSHIP LAW" IN THE FOREIGN CURRENCY PURCHASE CERTIFICATE IN TRANSACTIONS WHERE NO CITIZENSHIP (ELIGIBILITY CERTIFICATE) APPLICATION IS MADE, CAN A SALE TRANSACTION THAT IS NOT SUBJECT TO CITIZENSHIP BE MADE WITH THIS DOCUMENT?

As it is known, foreigners can use the immovables they buy by applying for citizenship at the same time, or they may not apply for citizenship by making a purchase. In addition, after the sale, the foreign person will be able to apply for citizenship later on. For this reason, regardless of the transaction request to be met in the foreign currency purchase documents, if any of the phrases "Article 13 of the Circular on Capital Movements" or "the tenth paragraph of the Article 20 of the Regulation on the Implementation of the Turkish Citizenship Law" are present and other mandatory elements are included in the document, this request must be met.

Ö. CAN THE RECEIPTS ISSUED BY BANKS HAVE DIFFERENT FORMATS OR FORMS? WHAT SHOULD BE DONE IN CASE OF ENCOUNTERING THESE DIFFERENT DOCUMENTS?

Until uniformity is achieved in the creation of documents, the minimum information required by the instructions should be included. However, the approved receipt or similar approved documents should also be deemed sufficient for the transaction, and in cases where mandatory information is additionally added to the document, the added parts must also be approved by the bank officials.

 

Relevant Legislation

1- Circular on Capital Movements
2- Implementation Instruction on Foreign Exchange Sales to the Central Bank of the Republic of Turkey within the scope of Article 13 of the Circular on Capital Movements
3-Implementation Instruction Regarding the Sales of Foreign Exchange to the Central Bank of the Republic of Turkey within the Scope of the Regulation on the Implementation of the Turkish Citizenship Law
4- Circular No. 4-2022/1 on 'Foreign Currency Purchase Certificate in Foreign Natural Person Acquisitions'
5- Additional Instruction to Circular No. 5-2022/1

 

As U&T Law, we provide reliable service to foreigners who want to acquire Turkish citizenship through the purchase of real estate with our expert lawyer staff. You can reach us at the following contact addresses and get legal and procedural support in these processes.