Turkey: Angel Investment In Turkey

Angel investment is provision of financial capital to newly established or growing companies which have novel business models or technologies with high potential for growth and profit, but are unable to find eligible financing resources to realize their investments.

The concept of angel investment is relatively new to Turkish legal system as the Regulation on Angel Investment Regulation ("Regulation") was promulgated by the Undersecretariat of Treasury on February 15, 2013.

The rationale behind the Regulation is to promote financing of small enterprises and entrepreneurs through angel investment by providing tax incentives to the angel investors.


According to the Regulation, licensed angel investors may benefit from the following tax incentives: 75% Tax Deduction and 100% Tax Deduction.

Licensed angel investors are allowed to deduct 75% of the capital that they invest under the angel investment system, from their income and revenues subject to the annual tax return issued during the year in which the shares of the company they invested in, were acquired. 

Shares acquired through angel investment must however be held by the angel investor for at least 2 years. This 2-year period starts as of the date the capital is deposited in cash into the bank account opened on behalf of the company in which the investment is made.

In case the angel investment is made in companies that have research, development and innovations projects which have been supported by the Ministry of Science, Industry and Technology, Scientific and Technological Research Council of Turkey and Small and Medium Industry Development and Support Organization within the last 5 years, licensed angel investors may benefit from %100 tax deduction instead of %75.

The deduction made within the context of the above-mentioned tax incentives cannot exceed 1.000.000 TRY. 

However, the Council of Ministers has the authority to increase the deduction rate and maximum deduction amount by up to 50%.

The above-mentioned tax incentives will be applied until December 31, 2017. However, the Council of Ministers is authorized to extend this period for up to 5 more years.


Angel investors can benefit from the abovementioned tax incentives only if they invest in companies that are qualified under the Regulation. 

Companies that the angel investors desire to invest in must be established as a Joint Stock Company (A.S.) as per the Turkish Commercial Code and the total value of such companies' assets must not exceed 10.000.000 TRY prior to the date of investment.

Also, net selling amount of the company in which the investment is made cannot be higher than 5.000.000 TRY for 2 fiscal years prior to the investment. 

Employees of the target company must not be more than 50. 

In order to benefit from the above-mentioned tax incentives, the capital to be invested into each individual qualified company cannot be less than 20.000 TRY and more than 1.000.000 TRY annually. 

In case the investments are made in different companies, the above-mentioned maximum total investment amount of 1.000.000 TRY can be exceeded. However, in case of co-investments, the capital to be invested in each company can be 2.000.000 TRY at maximum.

As another condition to be able to benefit from the above-mentioned tax incentives, the angel investment must be made in certain sectors and business areas which are determined by the Treasury (such as agriculture, forestry, production of food products, textile products, chemical goods, etc.)

Finally, the target company must be a non-public company and must be not controlled by another legal entity.


Angel investors cannot directly/indirectly or separately/together be the controlling shareholder of the company which they invest in. 

Angel investors cannot invest in a company if such company is owned, supervised, audited, controlled by, or directly/indirectly dependent on the investors' spouses, or their descendants, ascendants or collateral relatives (including 3rd degree collateral relatives).

Subsequent to the realization of the angel investment, angel investors cannot be holding more than 50% of the voting rights in the company they invest in. 

Also, the angel investors cannot have the right to appoint more than 50% of the Board of Directors on their own or together with other angel investors, or their spouses, or their descendants, ascendants or collateral relatives (including third degree collateral relatives).

Angel investors are entitled to hold privileged shares which grant the right to be represented in the Board of Directors of the company they invest in. 

The participation of an angel investor in the management of the company is limited to participation in the General Assembly, the Board of Directors, the Advisory Board or the Advisory Committee.

The angel investor cannot hold any other executive or administrative position and cannot work as an employee of the company that the angel investor invests in.

Angel investor cannot receive any salary or other fees from the company. 

Non-compliance with these restrictions may result in the cancellation of the angel investor license.


Under the Regulation, angel investors are defined as real persons; therefore, legal entities are not qualified to become angel investors and benefit from the above-mentioned tax incentives.

For avoidance of doubt, angel investment and private equity in Turkey – as a rule - is not subject to any prior regulatory approval or licensing system. However, angel investors are required to meet certain criteria and obtain a license to be eligible to benefit from the tax incentives regulated under the Regulation.

According to the Regulation, an angel investor license must be obtained from the Treasury to be eligible to benefit from above-mentioned tax incentives. In order for investors to obtain an angel investor license, either of the following qualifications must be possessed: High Income and Experience

High income requirement:  In order to apply for an angel investor license, the investor must have an annual income of at least 200.000 TRY within the last 2 fiscal years prior to obtaining the license OR the total amount of personal wealth of the investor including all types of movable and immovable assets must at least be 1.000.000 TRY.  

Real priorities used as residence or acquired through mortgage or rights arising from insurance contracts, pension rights, life insurance payments are not taken into consideration while calculating the personal wealth.

Experience requirement: Investors who have at least 2 years of experience as a fund or portfolio manager in financial institutions or manager and/or in likewise position in SME finance department of a financial institution, or in private venture companies; OR investors who work for at least 2 years as deputy general manager/or in equivalent or a higher position in a company with the annual turnover of at least 25.000.000 TRY within the last 5 years prior to obtaining the license; OR investors who have been a member of an angel investor network for 1 year prior to applying for a license and who have been shareholders in non-public companies whose net sales in the last financial year is below 5.000.000 TRY, as angel investors are also entitled to apply for an angel investor license.


License applications are made to the Treasury through accredited angel investor networks with the required forms and documents evidencing that the requirements for obtaining a license are met (such as application form, resume, tax returns, payroll, reference letters, etc.)

Angel investors are required to become a member of an angel investor network.

Angel investor licenses are issued for 5 years maximum, however investors may apply for extension with the updated required documentation.

Angel investor licenses cannot be transferred. New licenses can be issued in case the licenses are lost or destroyed.

Angel investor licenses are cancelled in case of decease or loss of legal capacity of the angel investor or failure to maintain any of the requirements set forth under the Regulation.

The Treasury however first grants a grace period to the angel investor before cancelling the license in case invested capital is utilized for reasons that are not declared to the Treasury or the (below-mentioned) investment restrictions or limitations are not followed.


Angel investor networks are established by angel investors to gather the angel investors and the entrepreneurs.

The Treasury accredits and audits the angel investor networks. The accreditation period is 5 years. However, the Treasury may extend this period for periods of 5 more years. In order to be accredited by Treasury, the angel investor network must apply to the Treasury fulfilling the requirements set forth under the Regulation.

In case the accreditation of an angel investor network is withdrawn by the Treasury, angel investments made prior to the withdrawal date through such network will still benefit from the above-mentioned tax incentives. 

However, angel investments made by the angel investors which are members to the angel investor network of which accreditation is withdrawn, will not qualify for the above-mentioned tax incentives if the investment is made after withdrawal date.

Moreover, in the event that an angel investor makes a license application to the Treasury through an angel investor network and the network's accreditation is withdrawn after the investor's application, the Treasury will still complete the application procedure.

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.

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