Stamp Tax Practices in Venture Capital Investment Trusts
Introduction
Venture capital is defined as investing in areas where no one has previously dared to invest[1] . In the guideline prepared by the Capital Markets Board (“CMB”), which has the authority to regulate and supervise the capital markets, venture capital is expressed as a form of financing that enables dynamic and creative entrepreneurs -who lack sufficient financial resources- to realize their investment ideas[2] .
In the Communiqué on the Principles Regarding Venture Capital Investment Trusts[3] , published in 2013, venture capital investments are not limited[4] solely to investments in creative ideas or newly established companies in their early stages. Instead, they also include[5] company acquisitions, restructurings, and expansion investments made in companies pursuing growth strategies[6] .
In Turkish law, venture capital investment trusts (“VCITs”) and venture capital investment funds operate under the strict supervision of the CMB. The Capital Markets Law No. 6362 (“CML”) generally regulates the establishment and operating conditions of investment trusts and funds in Turkey. Detailed regulations on the subject are provided in the Communiqué on the Principles Regarding Venture Capital Investment Trusts (III-48.3) and the Communiqué on the Principles Regarding Venture Capital Investment Funds (III-52.4), both published by the CMB.
There are also specific tax regulations governing the taxation of venture capital investment trusts and funds. The primary regulation on this matter is Article 5/1(d) of the Corporate Tax Law No. 5520 (“CTL”)[7] . According to this provision, the earnings of venture capital investment funds or trusts are exempt from corporate tax. In other words, venture capital investment trusts and funds benefit from an exemption and an incentive regarding their own earnings, which is technically considered a type of tax expenditure. In this context, whether this exemption may also be deducted from the domestic minimum corporate tax base should also be examined separately.
Although it is not the focus of this article, a very general summary may be made as follows: Pursuant to CTL Article 32/C and the explanations in Corporate Tax General Communiqué No. 1, one of the exemptions that may be deducted from the tax base in calculating the domestic minimum corporate tax -except for income derived from real estate- is the exemption under Article 5/1(d). For investment funds and trusts, only income derived from real estate would fall within the scope of the domestic minimum corporate tax. However, this is more relevant to real estate investment funds and trusts and, by its nature, is not directly applicable to venture capital investment trusts.
It is also worth briefly addressing the relationship between the exemption granted to venture capital investment trusts and funds under CTL Article 5/1(d) and the participation exemption regulated under CTL Article 5/1(a)[8]. Generally, although the earnings of funds and trusts benefiting from the special exemption under Article 5/1(d) may also fall within the scope of the participation exemption under Article 5/1(a), venture capital investment trusts and funds constitute an exception to this rule. Even though their earnings are exempt under Article 5/1(d), they may also benefit from the exemption under Article 5/1(a).
Thus, the fundamental features of the corporate tax exemption granted to venture capital investment trusts and funds may be summarized as above. The focus of this article, however, is the “stamp tax” exemption specific to venture capital investment trusts and funds, the legal basis of this exemption, and an administrative ruling issued on the matter, which are discussed in detail in the following section.
Stamp Tax Exemption Granted to Venture Capital Investment Trusts and Funds
Under Table (2) attached to the Stamp Tax Law No. 488 (“STL”), papers executed exclusively in relation to venture capital investments by venture capital investment trusts and venture capital investment funds, along with other documents issued in connection with such contracts, are exempt from stamp tax.
Therefore, unlike the corporate tax exemption -which does not impose a limitation based on “portfolio income”- the stamp tax exemption is limited by the “scope of activity” relevant to the documents.
This limitation naturally implies the need for careful consideration in applying the exemption: not every document executed by venture capital investment trusts and funds will qualify for the stamp tax exemption.
A Ruling of the Revenue Administration
In its ruling dated 14 November 2019 (No. 97895701-155[2017/287]-977747)[9], the Istanbul Tax Office Directorate evaluated the stamp tax exemption as follows:
- Article 21 of the Communiqué on the Principles Regarding Venture Capital Investment Trusts (III-48.3) and Article 18 of the Communiqué on the Principles Regarding Venture Capital Investment Funds (III-52.4) list the transactions that qualify as venture capital investments.
- Portfolio custody services are not included in these lists.
- Accordingly, the “Portfolio Custody Agreement Relating to Venture Capital Investment Funds” executed between the applicant company and the relevant bank’s Capital Markets Department cannot be evaluated within the scope of Paragraph IV/50 of Table (2) of the STL and therefore cannot benefit from the stamp tax exemption.
Thus, while the Revenue Administration based its assessment of the exemption on the definition of “venture capital investments” under Article 21 of Communiqué III-48.3 and Article 18 of Communiqué III-52.4, the criteria it applied in interpreting these definitions are not clearly understood from the ruling summarized above.
In this context, it may be beneficial for venture capital investment trusts and funds to explicitly identify in their contracts, for stamp tax exemption purposes, which type of venture capital investment as defined under Communiqué III-48.3 and/or Communiqué III-52.4 the relevant document pertains to. Although such a clause may not eliminate the risk of criticism from the Revenue Administration entirely, it may strengthen the taxpayer’s defense in the event of an assessment.
Conclusion
A special exemption is granted to venture capital investment trusts and funds under CTL. This exemption may be characterized as a “tax expenditure.” Considering that they may also benefit from the exemption under CTL Article 5/1(a), it may be argued that they are subject to a different regime compared to other investment funds.
As for stamp tax exemption, unlike the exemption in the CTL, it is not granted directly to the entity (i.e., venture capital investment trusts and funds). Instead, the exemption is limited to contracts executed exclusively in relation to venture capital investments, as defined under the capital markets regulations.
However, this limitation should not preclude the application of other stamp tax exemptions applicable under the STL to documents executed by venture capital investment trusts and funds. For example, the stamp tax exemption granted for share transfer agreements or documents relating to mergers or demergers conducted under CTL Article 19 should, in our view, also apply to venture capital investment trusts and funds.
Nevertheless, the application of such exemptions must be evaluated carefully for each component of the relevant document, and contractual provisions should be drafted with stamp tax implications in mind.
- The definition is made by General Georges Doriot. Alexander Haislip, Essentials of Venture Capital, Wiley, 2011, p. 1.
- Sermaye Piyasası Kurulu, Girişim Sermayesi Yatırım Ortaklıkları, Yatırım Bilgilendirme Kitapçıkları, 2024, p. 4.
- Girişim Sermayesi Yatırım Ortaklıklarına İlişkin Esaslar Tebliği (III-48.3), Official Gazette, 9 October 2013, No. 28790.
- Namely “venture capital”
- Namely “private equity”
- Salih Tayfun İnce, Girişim Sermayesi Yatırım Ortaklıkları ve Paysahipleri Sözleşmesi, On İki Levha Yayıncılık, 2019, p. 9-10.
- As regards the disposal of participation shares of venture capital investment funds and shares of venture capital investment trusts, the taxation must be examined separately within the framework of ‘capital gains’. This matter, however, falls outside the scope of the present article.
- As the scope of this article is limited to stamp tax, only a concise and general overview of corporate tax implications has been provided.
- B.07.1.GİB.4.34.18.01-155 [2017/287] Private Ruling”, retrieved November 24 2025 from https://www.lexpera.com.tr/resmi-gazete/metin/b-07-1-gib-4-34-18-01-155-2017-287-977747-sayili-ozelge-2
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Other Contents
The digitalization process in Turkish commercial life has gained momentum with the widespread adoption of practices that enable commercial ledgers to be kept electronically. In this context, the Communiqué on the Keeping of Non-Accounting Commercial Ledgers of Enterprises in Electronic Form (“Communiqué”)...
The share buyback by a joint stock company is regulated under Articles 379 to 389 of the Turkish Commercial Code No. 6102 (“TCC”). However, in cases where the company subsequently sells these repurchased shares, there is no specific provision in the tax legislation addressing whether the “participation exemption...
Through Articles 4, 33 and 34 of Law No. 7524 on the Amendment of Tax Laws and Certain Laws and Decree-Law No. 375 ("Law No. 7524"), by adding subparagraphs to Article 94 of the Income Tax Law No. 193 and Articles 15 and 30 of the Corporate Tax Law No. 5520, payments made by intermediary...
As a general rule, under Article 80 of the Repetitive Income Tax Law No. 193 ("ITL"), capital gains derived from the disposal of securities, except for exemptions, are subject to income tax as capital appreciation gains...
Article 2 of Law No. 7524 on the Amendment of Tax Laws and Certain Laws and Decree-Law No. 375 ("Law No. 7524") and the income tax exemption for the benefits provided to employees by issuing share certificates, which is regulated under Article 17 of Income Tax Law No. 193 ("ITL"), entered into force as of...
While tax systems introduce general regulations to prevent the abuse of laws, special regulations are introduced as tax security institutions within the scope of tax laws for situations where general regulations do not fulfill the expected function in practice...
It is known that legislative amendments have been made for the acquisition of Turkish citizenship by foreigners within the scope of the Turkish Citizenship Law No. 5901 in order to encourage the sale of residences and workplaces to foreigners...
Through its decision dated 30 November 2023 and No. E. 2023/105 K. 2023/208 ("Decision"), the Constitutional Court of the Republic of Türkiye ("Constitutional Court") annulled the regulation stating that inflation adjustment will not be made for 2021 as stipulated under Provisional Article 33 of Turkish Tax...
Law No. 7456 on Additional Motor Vehicle Tax for Compensation of Economic Losses Caused by the Earthquake on 6/2/2023 and on Amendments to Certain Laws and Decree-Law No. 375 (“Law No. 7456”) was published in the Official Gazette dated 15.07.2023 and No. 32249. Law No. 7456 introduced significant...
In order to determine the procedures and principles regarding the implementation of certain articles of the Misdemeanor Law No. 5326 (“Law”), which is the general procedural law for administrative fines, the Ministry of Treasury and Finance (“Revenue Administration”) has published the General...
Through Article 20 of Law No. 7440 on Restructuring of Certain Receivables and Amending Certain Laws (“Law No. 7440”), published in the Official Gazette dated 12 March 2023 and No. 32130, significant and new tax regulations regarding debt push down financing structure for merger transactions are introduced...
Provisional Article 32 was added to Banking Law numbered 5411 (“BL”) through Article 17 of the Law No. 7186 on Amendments to the Income Tax Law and Certain Laws ("Law No. 7186") in the Official Gazette on 19.07.2019. This law enables companies that are experiencing financial difficulties, but which are...
Law No. 7420 on the Amendment of Income Tax Law and Certain Laws and Decrees (“Law No. 7420“) which was published in the Official Gazette dated 09.11.2022 introduced important amendments and regulations in the tax legislation. The addition of Article 32/B, entitled "Taxation in Capital Decrease" to...
Free Zones are zones that are established to promote export-oriented investment and production, accelerate foreign direct investment and technology access, direct enterprises towards export, and develop international trade. There are many tax advantages provided to taxpayers operating in...
Through the promulgation of Law No. 7394 on the Amendments of Treasury-Owned Immovable Property Valuation and the Value Added Tax Law and on the Amendments of Certain Other Laws and Decrees, published in the Official Gazette dated 15 April 2022 and No. 31810, significant amendments...
In recent years, many new business models have emerged and traditional business models have changed greatly, within the increasing digitalization in the economy. Along with said change, challenges arose for taxing the international business income of...
Through the promulgation of the Law No. 7351, published in the Official Gazette dated 22.01.2022 and no. 31727, essential amendments are introduced to Turkish tax legislation. Apart from the tax amendments, a new provision has been added to...
Social media has emerged with the development of the digital world and internet technology and has greatly influenced the world today. One of the main categories of actors in social media is social media content producers. These people earn through social networks in...
Law No. 7326 on the Restructuring of Certain Receivables and Amendments to Certain Laws ("Law No. 7326") entered into force by being published in the Official Gazette dated 9 June 2021. In Law No. 7326, provisions regarding (i) the restructuring of finalized tax receivables, (ii) tax receivables that are not...
The 1990’s hold significant importance by means of the developments that took place in the global economy. During the transition to the second half of the 1900’s, the Federal Reserve increased interest rates, and the hot money flow changed its direction from East Asian countries to the West...