Assets transfer is defined as the transfer of the ownership of a property/group of properties or a business from a natural or legal person to another natural or legal person. Although the issue of assets transfer is not specifically regulated in the Turkish Legal System, various laws have provisions directly or indirectly related to this issue. The articles 202 and 203 of Turkish Code of Obligations numbered 6098 on transfers of properties and business, and articles 134-158 of the Turkish Commercial Code nr. 6102 on mergers are the primary provisions related to this matter.

According to the Code of Obligations article 202, ''the transferee who takes over a property or business together with its assets and liabilities shall be liable to the payees for the liabilities within these assets or the business, starting from the date he notified the payees of this transfer or the date he announced it on Trade Registry Gazette for commercial businesses and in any newspaper which is distributed widely in Turkey for others. However, the previous debtor remains liable as a joint debtor for a period of two years. This period starts from the date of notice or announcement for debts, and as of the due date for debts that will be due later. The consequences of undertaking debts in this way are identical to the results of the external undertaking contract. The two-year period stipulated in the second paragraph shall not commence unless the obligation of notification or announcement is fulfilled by the transferee.’’ According to article 203 of the aforementioned law, "If a business is merged with another business through mutual acquisition of one another's assets and liabilities or by joining one to the other, the creditors of both businesses shall have the rights arising from the acquisition of a property and may take all their receivables from the new business.’’ In Article 11 of the Turkish Commercial Code, business transfer was specifically revised and the scope and form of this transfer is stipulated in case of a business transfer, and the mergers were specifically regulated in articles 134-158.

In order to obtain the desired results from the activities of merger and purchase, firstly it is necessary to examine the provisions of the Turkish Commercial Code, the Code of Obligations and in particular, the legislation that determines the legal basis which the companies to be merged are subject to.

According to the abovementioned articles, when a legal entity takes over a business with its assets and debts, it also becomes liable for the debts and receivables of that company. As also understood from the articles 202 and 203 of the Turkish Code of Obligations, the transferor and the transferee are held jointly liable for the payment of debts for two years from the date of notification or announcement to creditors.

The relationship between the transferor and the transferee depends on the contract made for the transfer of assets and liabilities of a business. However, pursuant to Article 7 of the Law on the Protection of Competition nr. 4054, mergers and acquisitions which would create a dominant position in a particular market or which would strengthen a current dominant position are prohibited and the transfers over a certain value are that may fall into this scope are subject to the permission of the Competition Board. Legal approval of the transfer must be announced through means of communication stipulated in the legislation.

Asset transfer is taxable as it can be considered as the revenue of the selling company and therefore corporate tax liability is in question. Asset transfer is generally subject to VAT on the sales value of assets. Although the VAT rate varies according to different assets (1%, 8% and 18%), general VAT rate is 18%. VAT liability can be reduced by various methods such as investment incentive certificates.

Important articles related to the transfer of assets:

Turkish Code of Obligations: Article 202 and Article 203
Turkish Commercial Code: Article 134-158Bankruptcy and Enforcement Law: Article 280Law on the Collection Procedure of Public Receivables: Article 30 Competition Law: Article 7