The Borsa İstanbul (BIST) stock market has been attracting increasing interest from foreign investors, offering diverse investment opportunities within a well-regulated legal framework. But can foreigners freely invest in Turkish stocks? What are the legal requirements? Here’s everything you need to know according to Turkish law 🇹🇷⚖️.
✅ 1- Foreigners’ Right to Invest in the Turkish Stock Market
According to the Foreign Direct Investment Law No. 4875, foreign investors have the same rights and obligations as local investors in Turkey. In other words, there are no restrictions on foreigners owning shares listed on Borsa İstanbul.
Additionally, the Turkish Capital Markets Law No. 6362 states that foreigners can freely buy and sell Turkish stocks, provided they comply with financial regulations.
✅ 2- How Can Foreigners Enter the Turkish Stock Market?
To invest in Borsa İstanbul, foreigners must follow these legal steps:
🔹 Open an investment account with a licensed bank or brokerage firm registered with the Capital Markets Board of Turkey (SPK – Sermaye Piyasası Kurulu).
🔹 Obtain a foreign tax identification number from the Turkish tax office.
🔹 Submit valid identification documents and a notarized passport to the brokerage firm.
🔹 Convert funds into Turkish Lira or invest directly in stocks and funds available in USD.
✅ 3- Taxes on Foreign Investors 📑
Foreign investors in the Turkish stock market are subject to several taxes, including:
🔸 Capital Gains Tax: A 10% tax is imposed on profits from the sale of stocks, in accordance with Article 94 of the Income Tax Law No. 193.
🔸 Dividend Tax: A 15% tax is applied to dividend payments to foreign shareholders unless reduced by a double taxation agreement between Turkey and the investor’s home country.
💡 Note: Foreign investors can benefit from double taxation agreements that Turkey has signed with over 80 countries.
✅ 4- Restrictions and Regulatory Compliance 📜
While the Turkish stock market is open to foreigners, certain regulations and restrictions apply:
🔹 Reporting large investments: If a foreign investor owns more than 5% of a listed company’s shares, they must notify the Capital Markets Board of Turkey, as per Article 18 of Law No. 6362.
🔹 Investment in strategic sectors: Some sectors, such as defense and energy, require special government approvals for foreign ownership.
✅ 5- Benefits and Risks of Investing in the Turkish Stock Market 📊
🔹 Benefits:
✔️ A dynamic economy and a fast-growing market.
✔️ Higher returns compared to European markets.
✔️ Opportunities to invest in major companies, including financial, technology, and industrial sectors.
🔹 Risks:
⚠️ Turkish Lira fluctuations, which can affect profits when converting to USD or EUR.
⚠️ Potential changes in tax and financial regulations that may impact investments.
Foreign investors can freely invest in the Turkish stock market under clear regulations that provide legal protection. However, it is essential to consult a legal expert or financial advisor before investing to ensure compliance with Turkish laws and maximize opportunities while minimizing risks.
📌 Do you have legal inquiries about investing in Turkey? Contact us now! 💼
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