Private foundations and fiduciary agreements are better options when thinking of creating trusts in Turkey. As the legislation does not recognize the establishment of trusts in this country, it is good that there are various alternatives. The following lines provide information about alternative trusts in Turkey and how to set one up, specifying that you have the assistance and advice of our agents experienced in opening a business in Turkey.
Trusts and private foundations in Turkey
Turkey does not acknowledge trusts or have any legislation that provides this type of establishment. The private foundation is similar to a trust in Turkey because it can be set up for the same purpose. Just like a trust, a private foundation can be opened in Turkey for the following purposes:
- charity;
- public services;
- estate planning.
The establishment of a foundation in Turkey can be carried out by preparing a set of documents which must be signed by the settlor and the trustee. The documents, which can be a deed of trust or a will, must be notarized by a public notary.
What is a fiduciary agreement?
A fiduciary agreement is one of the alternatives for trusts in Turkey. Businessmen, wealthy individuals, families, foreign investors, and company owners established in Turkey can opt for fiduciary agreements instead of a trust. Here is what it is about:
- a fiduciary agreement can be established to manage assets on behalf of beneficiaries;
- legal assets transfers can be made through fiduciary agreements signed by a settlor and a trustee, as is the case with international trusts;
- the fiduciary agreement, as an alternative to trusts, can have nominated beneficiaries, as well as information about their rights to the distribution/transfer of assets;
- a fiduciary agreement can involve both Turkish citizens and foreigners. However, foreigners are advised to establish trusts in their country of origin if the law allows it;
- estate plans through fiduciary agreements can also be established by dual citizens living in Turkey.
We recommend our fiduciary services in Turkey and the assistance of our specialists. If you want to create a trust in Turkey, we remind you that there are better alternatives and that they are valid in this country.
Holding assets through LLCs in Turkey
Since there is no specific law for creating trusts in Turkey, individuals prefer business structures like limited liability companies(LTDs) to hold and protect their assets. It is known that the founding members of an LLC are not personally liable for company debts, which is why assets benefit from protection in case of financial risks. If you are planning to set up a company in Turkey to manage your assets, you can choose the services of our local agents. We can guide you through all the formalities and provide the assistance you need in your plans.
Taxation of trusts in Turkey
Considering trusts are not recognized as legal entities in Turkey, the taxation system applicable will not have any negative impact on the settlor or beneficiaries of a trust. Considering trusts are used for estate planning reasons in most jurisdictions, the Turkish Tax Code provides for the levy of a tax on real estate transfer and of the value added tax.
Assets and wealthy individuals in Turkey, in numbers
Turkey is one of the preferred business destinations and also of millionaires who benefit from asset protection and a great taxation system, among others. Here is some information about the number of millionaires living in Turkey:
- Over 2.3 million individuals have at least TRY 1 million worth of assets.
- In 2024, around 785,000 new millionaires emerged in Turkey.
- Over 6,000 persons living in Turkey have over USD 10 million in owned assets.
Considering this information about trusts and their alternatives, we invite you to also collaborate with our accountants in Turkey. You can find out more about the taxation of trusts or alternatives here. Please explore this topic and get in touch with our specialists in company incorporation in Turkey.