As of 31 July 2026, one of the most significant legislative amendments affecting financial obligations under Turkish law has entered into force. With the amendment to the legal interest regime, the long-standing fixed legal interest rate has been replaced by a variable rate linked to the rediscount rate announced by the Central Bank of the Republic of Türkiye.
This reform reflects the Turkish legislature’s intention to align legal regulations with current economic developments and official financial indicators, thereby ensuring a fairer balance between creditors and debtors in financial and contractual relationships.
The amendment is not only relevant to lawyers and judges, but also directly affects investors, companies, merchants, and all natural and legal persons engaged in financial or contractual relationships in Türkiye. The calculation of legal interest is now based on entirely new principles compared to the previous system.
What Is Legal Interest?
Legal interest is the interest rate prescribed by law and applied when the parties to a contract have not expressly agreed on a specific interest rate.
It is commonly applied in situations involving:
- Monetary claims,
- Compensation claims,
- Enforcement of court judgments,
- Civil and commercial disputes,
- Other cases where the law provides for the application of legal interest.
Accordingly, any change in the method of calculating legal interest has a direct impact on the amount recoverable by creditors and the financial obligations imposed on debtors.
How Did the Previous System Work?
Before this amendment, Law No. 3095 on Legal Interest and Default Interest provided that, where the parties had not agreed upon an interest rate, a fixed annual legal interest rate of 24% would apply.
Although this system was simple and practical, it did not always reflect changing economic conditions, inflation rates, or monetary policies.
Why Was This Amendment Introduced?
In recent years, Türkiye has experienced significant changes in inflation, interest rates, and monetary policy.
As a result, maintaining a fixed legal interest rate for extended periods could, in some cases, undermine creditors’ rights, while in others it could impose an excessive financial burden on debtors.
The new system was therefore introduced to establish a more flexible mechanism capable of adapting to economic developments and maintaining a fair balance between the interests of both parties.
What Changed After 31 July 2026?
Pursuant to Article 10 of Law No. 7589, Article 1 of Law No. 3095 on Legal Interest and Default Interest has been amended.
Under the new rules, where the parties have not agreed on a different interest rate, the annual legal interest shall be calculated as:
80% of the rediscount rate applied by the Central Bank of the Republic of Türkiye to short-term credit transactions.
Consequently, legal interest is no longer a fixed statutory percentage but has become a variable rate linked to the rediscount rate announced by the Central Bank.
What Is the Rediscount Rate?
The rediscount rate is one of the principal financial indicators determined by the Central Bank of the Republic of Türkiye as part of its monetary policy framework.
This rate may change in response to economic conditions, inflation, market developments, and monetary policy decisions.
By linking legal interest to the rediscount rate, the legislature aims to ensure that the legal framework remains consistent with economic realities.
Mid-Year Adjustment Rule
The legislature has not limited updates to an annual basis.
If the rediscount rate applicable on 30 June differs from the rate in force on 31 December of the previous year by five percentage points or more, the legal interest applicable from 1 July shall be recalculated as 80% of the new rediscount rate.
Accordingly, legal interest may be adjusted twice within the same calendar year if the statutory conditions are met.
Does This System Apply to Every Contract?
No.
If the parties have validly agreed upon a specific contractual interest rate, that agreed rate shall continue to apply.
The new legal interest system applies only where the parties have not agreed on an interest rate or where the law expressly requires the application of legal interest.
Legal Interest vs. Contractual Interest
One of the most frequently misunderstood issues is the distinction between legal interest and contractual interest.
Contractual interest is the rate agreed upon by the parties and incorporated into their contract through mutual consent.
Legal interest, on the other hand, is imposed by law where no contractual interest has been agreed upon.
Accordingly, the new amendment does not affect valid contractual interest clauses but governs only situations where legal interest is applicable.
Why Has the Date the Debt Arises Become More Important?
Under the new system, both the date on which the debt arises and the date on which interest begins to accrue have become crucial factors.
This is because the applicable interest rate may vary depending on the rediscount rate in force at the relevant time.
For this reason, documents establishing the date the debt arose and the date it became due have become increasingly important in legal proceedings and financial claims.
Impact on Judicial Proceedings
This amendment is expected to have a significant impact on civil and commercial litigation.
Claiming legal interest will no longer be sufficient on its own; parties will also need to demonstrate the legal and financial basis upon which the interest calculation has been made.
In complex disputes, expert financial reports may be required to ensure the accurate calculation of legal interest.
The Importance of Reviewing Contracts
This legislative change highlights the importance of carefully reviewing contractual provisions, particularly those relating to interest and financial obligations.
Where legally permissible, parties may wish to expressly regulate the applicable interest mechanism in order to reduce the likelihood of future disputes.
Long-term contracts should also be reviewed periodically to ensure compliance with legislative amendments that may affect the parties’ rights and obligations.
Implications for Companies and Investors
The effects of this amendment extend beyond court proceedings and into everyday commercial life.
Companies, investors, entrepreneurs, and all individuals conducting business activities in Türkiye should closely monitor changes in the rediscount rate, as these changes may directly affect delayed payment costs, financial liabilities, damage calculations, and litigation risks.
Obtaining legal advice before concluding contracts or initiating legal proceedings has therefore become more important than ever.
Practical Recommendations
In light of this amendment, parties engaged in financial or contractual transactions in Türkiye are advised to:
- Carefully review contractual interest provisions.
- Preserve all documents establishing the date on which financial obligations arise.
- Avoid relying on the former fixed legal interest rate.
- Regularly monitor rediscount rates announced by the Central Bank of the Republic of Türkiye.
- Seek professional legal advice when calculating legal interest in litigation or financial claims to avoid costly errors.
Conclusion
This amendment represents a significant development in Turkish law and demonstrates the legislature’s commitment to aligning legal rules with prevailing economic conditions.
Legal interest is no longer a fixed statutory rate but has become a dynamic mechanism linked to official economic indicators.
Accordingly, the accurate calculation of legal interest now requires careful consideration not only of the relevant legal provisions but also of the applicable rediscount rate, the date on which the debt arose, and the date from which interest begins to accrue.
Even a minor error in calculating legal interest may substantially affect the value of a financial claim or the outcome of judicial proceedings.
If you wish to understand how this legislative amendment applies to your case, contract, or financial claim, obtaining professional legal advice from qualified practitioners is essential to safeguarding your rights and ensuring that legal interest is calculated in accordance with the latest Turkish legislation.