1. What is the current legal landscape for Foreign Direct Investment Law in your jurisdiction?

Foreign direct investment in Türkiye is underpinned by a liberal statutory framework that actively welcomes foreign capital, but its practical application is shaped by a far broader regulatory landscape, and the effective structuring and operation of foreign investments are governed by a layered body of sectoral, regulatory and macroeconomic rules that extend well beyond the core investment statute.

At the core of the system lies Foreign Direct Investment Law No. 4875, which constitutes the principal statute governing foreign investment in Türkiye. Law No. 4875, together with its Implementing Regulation on Foreign Direct Investments, establishes the foundational principles of the regime, which are (i) freedom of investment, (ii) national treatment of foreign investors, and (iii) the right to freely transfer investment-related proceeds abroad.

Law No. 4875 deliberately abolished the former approval-based system and replaced it with a notification-oriented model, under which foreign investors are not required to obtain prior authorization merely by reason of their foreign status. Instead, investments are generally subject to post-establishment notification obligations administered through the Ministry of Industry and Technology’s electronic systems. This legal architecture reflects Türkiye’s alignment with OECD and international investment norms.

From a corporate law perspective, foreign investors operate within the same legal framework as domestic investors. Company formation, share acquisitions and capital increases are governed primarily by the Turkish Commercial Code No. 6102, which applies without distinction based on shareholder nationality. Joint stock companies and limited liability companies, the vehicles most commonly used by foreign investors, are subject to uniform rules on governance, capital, liability and corporate disclosures. There are no general local partner requirements or foreign-capital-specific minimum capital thresholds under Turkish company law.
As noted above, the FDI Law does not function as a self-contained investment code. Instead, it operates in conjunction with a series of mandatory regulatory regimes, each of which may significantly affect the structuring, timing and operation of foreign investments.

A first critical component is sector-specific legislation. Investments in regulated sectors are subject to specialized laws and supervisory authorities, including, by way of example; the Banking Law No. 5411 and related regulations (for banks and financial institutions), the Insurance Law No. 5684, the Capital Markets Law No. 6362 (for publicly held companies and capital market activities), the Electricity Market Law No. 6446 and Natural Gas Market Law No. 4646 (for energy investments), the Electronic Communications Law No. 5809 (for telecommunications), and sector-specific legislation governing civil aviation, ports, healthcare services, pharmaceuticals, media and education.

These regimes frequently impose licensing requirements, shareholding thresholds, change-of-control notifications, and fit-and-proper tests for shareholders and board members. While they apply formally to both domestic and foreign investors, they are often outcome-determinative in cross-border transactions and therefore form a central part of FDI legal planning.

A second key dimension is competition law, primarily governed by the Law on the Protection of Competition No. 4054 and the secondary legislation of the Turkish Competition Authority. Merger control rules apply to both domestic and foreign-to-foreign transactions that meet the relevant turnover thresholds and affect Turkish markets. As a result, competition clearance is frequently a mandatory condition precedent in FDI transactions and often the principal driver of transaction timelines and long-stop dates.

A third, increasingly significant component concerns foreign exchange and capital movement regulation. Although Law No. 4875 guarantees the free transfer of profits, dividends, liquidation proceeds and sale proceeds, the practical execution of these rights is governed by the Decree No. 32 on the Protection of the Value of the Turkish Currency and extensive secondary legislation issued thereunder. These rules regulate currency denomination, payment methods, cross-border transfers, intercompany transactions and banking procedures. In practice, FX regulation has a direct impact on contract drafting, pricing mechanisms, payment structures, shareholder loans, royalties, management fees and exit arrangements.

In parallel, investment incentives and state aid mechanisms form an integral part of the FDI landscape. These are primarily governed by presidential decrees and communiqués establishing investment incentive schemes, which provide tax reductions, customs exemptions, social security premium support, interest subsidies and land allocations for qualifying investments. Eligibility and scope depend on factors such as sector, region, investment size and strategic importance, making incentive planning a substantive legal and commercial consideration for many foreign investors.

A further practical component concerns real estate acquisition by companies incorporated in Türkiye that are subject to foreign shareholding or control. Following the Constitutional Court’s 2008 annulment of former Article 3(d) of Law No. 4875, this area is now primarily governed by Article 36 of the Land Registry Law No. 2644 and its implementing regulation. Under this regime, Turkish-incorporated companies deemed to be foreign-controlled, typically where foreign individuals or foreign legal entities hold, directly or indirectly, 50% or more of the share capital or otherwise exercise control over management, may acquire immovable property or limited real rights only to the extent required for their stated business activities. Such acquisitions may also be subject to a prior permission process coordinated through the relevant governorate and remain subject to location-based restrictions, particularly in areas designated as sensitive for security or strategic reasons.

Finally, foreign investments are also subject to cross-cutting legislation that applies irrespective of sector, including Tax legislation (corporate income tax, withholding tax, VAT and transfer pricing rules), Employment and immigration laws (work permits for foreign personnel), Data protection law, notably the Law on the Protection of Personal Data No. 6698, and Anti-money laundering and sanctions compliance, administered under financial crime legislation.

Viewed as a whole, the legal landscape for FDI in Türkiye is characterized by a liberal entry regime under Law No. 4875, combined with a highly structured regulatory environment governed by corporate, competition, FX, sectoral and incentive-related legislation. Foreign investment is not restricted as a matter of principle, but it requires careful coordination across multiple legal regimes to ensure that investments are not only legally valid, but also operationally viable and economically sustainable.

2. What three essential pieces of advice would you give to clients involved in Foreign Direct Investment matters?

Foreign direct investment into Türkiye is shaped less by formal barriers to entry and more by the way regulatory, financial and institutional factors interact in practice. Experience in the Turkish market shows that the success of an investment is rarely determined by a single legal issue, but by how effectively investors anticipate and manage a small number of structurally decisive considerations. These considerations are grounded in the practical realities of how foreign investments are assessed by authorities, implemented through the banking and regulatory system, and operated on a day-to-day basis in Türkiye, rather than in abstract or generic investment principles.
From a transactional perspective, experience in Türkiye suggests that three interrelated issues require particular attention at the outset of any foreign investment.

a) Foreign investors should approach regulatory mapping in Türkiye as a transaction-structuring exercise rather than a post-signing compliance task.

In the Turkish market, investment risk almost never arises from a formal prohibition on foreign ownership. Instead, it typically results from the cumulative effect of parallel regulatory regimes that apply simultaneously and often interact in practice. Sector-specific licensing and shareholding rules, merger control filings before the Turkish Competition Authority, foreign exchange compliance requirements applied by banks, data protection obligations enforced in practice, and eligibility criteria for investment incentives can each influence transaction structure, timing and feasibility. In Türkiye, these matters frequently become relevant not sequentially, but concurrently, and delays in one area often affect the entire transaction timetable. Mapping these regulatory touchpoints at the outset—before valuation assumptions, consideration mechanics and long-stop dates are finalized—allows investors to structure acquisitions realistically, sequence approvals correctly and allocate regulatory risk contractually. Investors who defer this exercise until after signing often encounter avoidable delays or structural adjustments that could have been addressed far more efficiently at an earlier stage.

b) Foreign exchange regulation, merger control and tax implementation should be treated as value-critical elements of Turkish investments, rather than technical implementation details.

Although Turkish law formally guarantees the free transfer of investment-related proceeds, the practical execution of dividend distributions, management fees, royalties, shareholder loans, earn-outs and exit proceeds is governed by detailed foreign exchange regulations and banking practice. Similarly, Turkish merger control frequently determines the critical path of FDI transactions, including foreign-to-foreign deals, and tax outcomes depend not only on treaty availability but also on transfer pricing, substance and audit practice. Investors who address these issues only at the implementation stage often find that legally sound structures are difficult to operate in practice. In contrast, those who integrate FX, competition and tax considerations into the core transaction architecture are far better positioned to preserve value and execution certainty.

c) Governance and post-closing integration should be designed with Turkish regulatory and institutional realities firmly in mind.

Foreign investors often seek extensive governance rights to mitigate perceived local risk. While such protections are understandable, overly rigid or intrusive control mechanisms can paralyze decision-making and complicate regulatory relationships. In Türkiye, governance frameworks that clearly distinguish between strategic oversight and day-to-day management tend to function more effectively, particularly in regulated sectors. Equally important is early planning for post-closing compliance and integration. Ongoing adherence to sectoral regulation, FX rules, tax obligations, employment law and data protection requirements is critical to preserving investment value. Investors who combine balanced governance structures with strong local institutional insight and well-defined compliance responsibilities are far more likely to achieve stable and predictable outcomes.

As a whole, these three pieces of advice reflect a broader reality of the Turkish FDI environment: foreign investment in Türkiye rewards early integration of regulatory, financial and operational planning, and penalizes approaches that treat local compliance as a secondary or purely technical exercise. Investors who adopt a holistic, Turkey-specific strategy are significantly better positioned to navigate complexity and capture long-term value.

3. What are the greatest threats and opportunities in Foreign Direct Investment law in the next 12 months?

Over the next 12 months, the foreign direct investment (FDI) environment in Türkiye is likely to be shaped less by formal changes to the legal framework and more by the way in which existing laws interact with macroeconomic conditions, regulatory practice and global investment trends. This dynamic is further influenced by the broader political climate, including heightened public sensitivity around economic governance, regulatory enforcement and state oversight. The principal risks and opportunities therefore arise primarily from execution dynamics and external variables, rather than from any fundamental departure from Türkiye’s long-standing policy of openness to foreign investment.

One of the most tangible sources of risk for foreign investors is the continued volatility in macroeconomic indicators, including inflation, interest rates and currency valuation. While these factors do not alter the legal permissibility of foreign investment, they have a direct and sometimes decisive impact on valuation models, financing costs and exit assumptions. In practice, this environment often results in longer negotiation cycles, wider valuation gaps between buyers and sellers, and an increased reliance on deferred consideration mechanisms such as earn-outs, staggered payments or vendor financing. From a legal standpoint, this places heightened importance on SPA drafting, pricing adjustment mechanisms and the careful allocation of financial and operational risk between the parties.

Another recurring risk scenario involves investments that are legally sound in principle but become operationally constrained by foreign exchange regulations. Even where dividend distributions and profit repatriation are permitted under Turkish law, practical difficulties may arise in relation to currency denomination, payment timing, documentation standards and banking procedures. Investors who structure pricing, shareholder loans or intercompany arrangements without sufficient alignment to current FX rules may encounter delays or compliance challenges after closing. This risk is particularly pronounced in leveraged acquisitions, infrastructure projects and investment models involving complex intercompany service or financing structures. Recent practice also shows increased scrutiny by banks and regulators in politically sensitive periods, resulting in more conservative interpretations of FX compliance requirements and longer execution timelines.

Competition law represents a further area where execution risk can materialize if not properly anticipated. Turkish merger control review has, in recent years, demonstrated an increasing level of substantive scrutiny, particularly in concentrated markets or sectors considered strategically important. Transactions that appear unproblematic from a global perspective may nonetheless attract close examination due to their effects on Turkish markets. In some cases, this can result in extended review periods or approvals subject to conditions. For foreign investors operating under tight timelines or financing constraints, merger control therefore has the potential to become a critical path issue if not factored into transaction planning at an early stage.

Investments in regulated or sensitive industries present an additional layer of risk stemming from sector-specific oversight. Transactions in areas such as financial services, energy, telecommunications, healthcare or transportation may trigger heightened regulatory review, particularly where changes of control are involved. Regulators may scrutinize shareholder structures, funding sources, governance arrangements and historical compliance records more closely than in less regulated sectors. While such scrutiny does not amount to a restriction on foreign investment, it can introduce uncertainty into approval timelines and lead to additional compliance obligations that affect transaction economics and operational flexibility.

Beyond these transaction-specific risks, there is also a broader trend toward increased emphasis on compliance, transparency and enforcement. Expectations around anti-money laundering controls, sanctions screening, beneficial ownership disclosure and corporate governance standards have risen steadily. Foreign investors acquiring Turkish assets may inherit legacy compliance issues that were previously tolerated but are no longer overlooked by regulators or financial institutions. This development underscores the growing importance of robust legal and compliance due diligence, particularly in sectors with frequent regulatory interaction or public-interest sensitivity.
Against this backdrop of risk, the opportunity landscape for foreign investors in Türkiye remains substantial and, in some respects, increasingly differentiated. A key source of opportunity lies in investments that align with Türkiye’s strategic priorities and benefit from its redesigned investment incentive framework. Projects in advanced manufacturing, technology development, renewable energy, energy efficiency, defence-adjacent production and export-oriented industries are likely to continue attracting state support. Investors who structure their projects to meet incentive criteria, such as minimum investment thresholds, localization components or R&D elements, may gain access to tax reductions, social security support and financing incentives that can materially enhance project economics. This dynamic is further influenced by the broader political climate, including heightened public sensitivity around economic governance, regulatory enforcement and state oversight.

In parallel, global trends toward nearshoring and supply-chain diversification continue to strengthen Türkiye’s position as a manufacturing and logistics hub. Its geographic proximity to Europe, combined with a diversified industrial base and established customs arrangements, makes Türkiye an attractive alternative for investors seeking to reduce dependence on distant production centers. From an FDI perspective, this has translated into sustained interest in greenfield manufacturing projects, platform acquisitions and regional hub structures serving multiple markets.

Macroeconomic pressure and tighter financing conditions may also give rise to distressed or restructuring-driven investment opportunities, particularly in capital-intensive sectors. For well-prepared foreign investors with a higher risk appetite, such situations can offer the possibility of acquiring quality assets at attractive valuations. These transactions, however, require careful legal structuring to address creditor rights, regulatory approvals and potential legacy liabilities, and therefore tend to favor investors with strong local advisory support and restructuring experience.

Türkiye’s expanding technology ecosystem represents another important area of opportunity. Foreign capital continues to flow into software, fintech, e-commerce, logistics technology and digital services, sectors that typically benefit from lighter asset structures and faster scalability. While regulatory compliance—especially in relation to data protection and financial regulation—remains an important consideration, the overall investment climate for technology-driven FDI remains favorable, particularly for investors with a long-term growth perspective.

Finally, infrastructure, energy transition and sustainability-linked projects continue to offer compelling opportunities for foreign investors. Renewable energy, grid modernization, energy efficiency and sustainability-focused infrastructure remain key policy priorities, and Türkiye’s regulatory framework continues to encourage private and foreign participation in these areas. Such investments often benefit from long-term revenue visibility, incentive support and alignment with the investment criteria of international financing institutions.

Taken together, the coming 12 months are likely to favor investors who combine strategic selectivity with technical preparedness. The most significant risks do not arise from formal restrictions on foreign investment, but from misalignment between legal structures and operational reality. Conversely, the most compelling opportunities emerge where investors are able to integrate legal, regulatory, financial and incentive considerations into a coherent and well-sequenced investment strategy. Foreign investors who approach Türkiye with a scenario-based mindset, robust due diligence and flexible structuring tools are therefore well positioned to navigate risk and capitalize on opportunity in an evolving FDI landscape.

4. How do you ensure high client satisfaction levels are maintained by your practice?

Maintaining consistently high client satisfaction in foreign direct investment matters requires more than legal precision. In complex transactions, clients place particular value on predictability of process, transparency of risk and control over execution. Our practice is therefore structured around practical tools designed to translate legal analysis into reliable outcomes.

At the outset of each FDI engagement, we prepare a transaction-specific critical path and milestone roadmap identifying regulatory approvals, merger control filings, sectoral consents and foreign exchange, tax and corporate implementation steps. This roadmap is shared with the client and refined as the transaction evolves, enabling decision-makers to manage dependencies, anticipate timing sensitivities and address potential bottlenecks before they affect execution.

We complement this with risk-tiered reporting, which distinguishes between issues based on their likelihood, impact and mitigation options. By focusing client attention on matters that are genuinely outcome-determinative, particularly at board or investment committee level, we avoid diluting decision-making with low-impact or purely theoretical risks.

Predictability of scope and cost is addressed through clearly defined work streams covering regulatory structuring, due diligence, transaction documentation, filings and post-closing implementation. This framework provides clarity as to responsibilities and change-management, reducing friction in transactions that develop over time.

Our advisory approach also places strong emphasis on post-closing operability. Alongside transaction execution, we address foreign exchange compliance, governance implementation, regulatory reporting, employment and data protection requirements to ensure that legal structures function effectively once the investment is operational.

This work is informed by institutional knowledge built through repeated interaction with regulators and market participants, allowing us to advise not only on formal legal requirements, but on how regulatory discretion is exercised in practice, an aspect clients consistently value in regulated or approval-driven transactions.

Finally, we deploy technology selectively to enhance execution, including transaction trackers, structured data rooms, AI-assisted due diligence and compliance monitoring tools. Used in support of legal judgment, these tools improve transparency, shorten review cycles and support predictable delivery.
Viewed as a whole, our approach reflects a simple principle: client satisfaction in FDI matters is driven by disciplined execution, informed risk prioritization and operational realism, rather than by legal analysis in isolation.

5. What technological advancements are reshaping Foreign Direct Investment law and how can clients benefit from them?

Digital transformation is increasingly influencing foreign direct investment (FDI) practice not by redefining applicable legal standards, but by reshaping the methods through which regulatory exposure is evaluated, controlled and managed on an ongoing basis. In markets such as Türkiye, where the statutory framework for foreign investment is open, yet day-to-day compliance is dense and procedural, technology now plays a central role in determining how efficiently investments are executed and sustained over time.

One of the most impactful changes has been the widespread adoption of advanced analytics and artificial intelligence in legal review processes. In the context of FDI transactions, these technologies are used to examine extensive sets of contracts, permits and corporate documents, enabling the early detection of regulatory consent requirements, control-change restrictions and contractual vulnerabilities. This allows investors to identify transaction-critical risks at an earlier stage, refine deal structures more effectively and reduce the likelihood of unforeseen complications after signing.

At the same time, regulatory technology solutions have become essential tools for managing compliance obligations throughout the life of an investment. Automated systems now support functions such as counterparty screening, ownership transparency checks, sanctions monitoring and regulatory filing oversight. For foreign investors with operations in Türkiye, particularly those active in regulated sectors or operating through multiple entities, these systems reduce reliance on manual processes, lower the risk of compliance lapses and facilitate scalable growth without a corresponding increase in internal compliance burden.

Another important development is the increasing digitization of corporate and administrative interactions. Key corporate actions, including company formations, share transfers, governance resolutions and regulatory notifications, are progressively handled through electronic platforms supported by digital authentication and centralized registries. This shift has streamlined procedural steps, reduced administrative delays and improved the traceability of corporate actions, offering foreign investors greater clarity and confidence when navigating local formalities.

Technology has also enhanced how competition law exposure and regulatory filing thresholds are assessed. Data-based analytical tools are now commonly used to evaluate turnover figures, market presence and concentration levels, allowing investors to identify merger control or sector-specific filing requirements at an early stage. In Türkiye, where regulatory clearance can be decisive for transaction timing, this capability supports more accurate planning and reduces uncertainty around closing conditions.

Finally, the management of complex transactions has been significantly improved through integrated digital deal-management platforms. Secure virtual workspaces that combine document repositories, issue tracking and progress monitoring have become standard in multi-party FDI transactions, enabling investors and advisors to operate with greater transparency and coordination.

Collectively, these developments reflect a broader shift in FDI practice toward structured, technology-enabled decision-making and continuous compliance oversight. For foreign investors entering or expanding in Türkiye, technology has evolved into a practical enabler of regulatory confidence, operational efficiency and sustainable investment execution in an increasingly competitive global environment.