Turkey: Re-Financing Model For Angel Investment Permits

Currently, the process for obtaining angel investment permits in Turkey is strict and at times causes practical problems for parties seeking to make or receive investments. In theory, a re-financing model is possible within the existing legal framework for angel investments which would increase the flexibility of investment timelines. Such a model could allow investors to receive tax benefits for investments made into start-ups before the investor has received an angel investment permit from the Turkish Undersecreteriat of Treasury (the "Treasury").

The Treasury recently recognized and permitted the re-financing model in a particular application, allowing an investment to qualify for the angel investment tax advantages, despite the Treasury having not granted the investment permit yet. It is unclear though whether the Treasury will consistently accept such an interpretation or even amend the legislation to specifically contemplate investments which are initiated as loans to later be converted to capital.

If the Treasury recognizes the re-financing model as a permitted investment structure which qualifies for the associated tax advantages, this would be a significant step by the Treasury in supporting the Turkish angel investment ecosystem. It is likely that the increased flexibility would encourage investment volumes to increase accordingly.

The recently introduced angel investment regime is one of the most investment-mobilizing schemes in Turkey. The scheme might appear to be slightly rigid when compared to the real economic needs of start-ups. However, with flexible interpretation of the legislation, as well as certain other improvements, the process will be made easier for many prospective and ongoing investments in the short and mid-term.

Explanation of the full legal framework governing the Turkish angel investment system is outlined in this article, including an outline of the process for obtaining an angel investment permit.

The typical process for obtaining an angel investment permit

Typically, before making an investment into a start-up, an angel investor (holding an angel investor license) should apply to the Treasury to obtain an angel investment permit. To qualify for angel investment tax benefits, the investor must receive the investment permit before he or she makes the investment. The Treasury issues an investment permit if it is satisfied that the prospective investment, as well as the recipient (the start-up) meets the applicable legislative criteria. In practice, angel investment permits contain limited information, to the effect that the subject matter investment complies with the legislation and the investment must be completed within three months of the permit date.

Once the Treasury has issued the investment permit, the investor must complete the investment into the start-up in line with all of the information previously submitted to the Treasury. The investor must close the transaction within three months (the legislative timeframe for investment permits).

After completing the investment, the investor must submit a series of formal documents to the Treasury which show the investment has been made in line with the terms of the angel investment permit.

The typical process above requires the Treasury to grant the investment permit first, before the investor can complete the investment. Any amount which the investor pays into the start-up prior to receiving the investment permit would not qualify for the associated tax advantages. It can be challenging for parties in the Turkish angel investment ecosystem to satisfy such strict chronological requirements and navigate the associated procedural bureaucracy. For example, such a linear process raises obstacles for an investor who seeks to invest in a start-up at a given time, or a start-up which seeks cash injection for a time-sensitive purpose (such as continuing daily operations).

The re-financing model – An alternative interpretation

Under the re-financing model, investment amounts that were previously injected into the start-up for operational costs and expenses could be counted as a simple repayable loan in the business plan submitted to the Treasury.

Usually, in the business plan submitted to the Treasury with investment permit applications, the proposed investment amount is allocated to future expenses. These fall in the period after the investment permit is received and the investment has been completed. Under the re-financing model though, the amount is allocated to past expenses. Once the Treasury grants the investment permit, the investor would then invest into the start-up as re-financing in order for the start-up to re-pay the loan and for the capital increase process (registration with the Commercial Registry). Through this approach, investments made into a start-up before completing the Treasury's lengthy investment permit procedures may qualify for the associated tax benefits.

The re-financing model could potentially allow a more flexible process for realizing investments into start-ups, while still ensuring the investment is eligible for the tax benefits associated with investment permits. At this stage, while the re-financing model is theoretically possible within the existing legal framework and we have limited experience with the Treasury accepting such an approach, it is unclear whether the Treasury will be consistently accept such an approach.

In the documentation submitted to the Treasury during the subsequent investment permit application, it is essential to accurately indicate the start-up's expenses or costs which will be covered from the re-financing amounts. The business plan submitted to the Treasury must list the estimated purchase prices and purchase dates of equipment, raw materials, intermediate goods, salaries and other costs. The total of those estimated costs and expenses must equal the investment amount subject to the angel investment permit application.

Under the re-financing model, it is only the chronology of events that are switched and stretched slightly in order to allow a more flexible structure for realizing investments. It is clear that an investment permit must still be obtained from the Treasury in order for the investment to qualify as an angel investment. All other closing requirements will also still apply, such as the capital increase for the new investment and formal registration requirements with the commercial registry.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Dr. E. Seyfi Moroğlu, LL.M.
Pelin Oğuzer, LL.M.
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.