Decree No. 32 on the Protection of the Value of Turkish Currency, together with the provisions of the Communiqué brought into force on the basis of that Decree, prohibits as a rule the agreement of the rent in a foreign currency or on a foreign-currency-indexed basis in lease relationships concluded between persons resident in Türkiye.
In practice, however, the picture is not as straightforward as it appears. Whether a foreign-currency rent may be agreed in leases of business premises, in relationships to which foreign-national tenants are party, or in leases specific to particular sectors, gives rise to regular debate. Once one adds the questions of the fate of foreign-currency contracts already in force, the legal consequence of arrangements contrary to the prohibition and how far the scope of the exceptions extends, serious disputes may arise between the parties.
In this briefing note we assess, by reference to the provisions of the legislation and to examples drawn from practice, the cases in which a foreign-currency rent may be agreed, the position of existing contracts and the consequences that a breach of the prohibition will produce.
The Legal Basis of the Prohibition
The Legislation on the Protection of the Value of Turkish Currency
The regime on the subject rests upon Act No. 1567 on the Protection of the Value of Turkish Currency, together with Decree No. 32 on the Protection of the Value of Turkish Currency issued on the basis of that Act and the relevant Communiqué. These texts set out the principles governing the conclusion of contracts in foreign currency by persons resident in Türkiye and impose restrictions in respect of certain types of contract.
Lease agreements too fall within the scope of that restriction; apart from the exceptions listed in the legislation, no rent may be agreed in a foreign currency or tied to an exchange rate. Whether the parties are to be regarded as resident persons, and the nature of the contract, are therefore the two fundamental criteria determining whether the prohibition applies in the particular case.
The Purpose of the Prohibition
The principal rationale behind the regime is the preservation of economic stability and the keeping of lease relationships clear of the uncertainties attaching to sharp movements in the exchange rate. The direct reflection of rapid changes in the exchange rate in the rent is capable of giving rise to financial burdens that the parties could not foresee at the outset.
For that reason the legislature, by restricting the setting of the rent in a foreign currency in lease relationships, has sought to safeguard the balance of the contract and the foreseeability of the parties’ obligations.
How the Prohibition Applies to Residential and Business Premises Leases
The prohibition is, as a rule, a general regime covering both residential leases and leases of business premises. It is therefore not possible to agree a rent in a foreign currency or indexed to a foreign currency in residential or business premises lease relationships concluded between persons resident in Türkiye.
Nevertheless, by virtue of certain exceptions provided for in the legislation, a rent in a foreign currency may in particular situations be agreed in leases of business premises. Contracts to which foreign-national tenants are party, and leases relating to particular fields of activity, are assessed within that framework. Whether the prohibition operates in the particular case must be determined having regard to the status of the parties and the nature of the contract together.
Is It Prohibited to Conclude a Lease Agreement in Foreign Currency?
In Türkiye the framework relating to a foreign-currency rent is drawn by Decree No. 32 on the Protection of the Value of Turkish Currency and by the provisions of the relevant Communiqué. Under those provisions, it is as a rule prohibited to set a rent in foreign currency or indexed to a foreign currency in lease agreements concluded between persons resident in Türkiye. Agreeing the rent in a foreign currency unit or by tying it to an exchange rate is not valid save for the exceptions listed in the legislation.
In practice the parties most often ask whether the contract retains its validity, in which currency the rent may be set and what result exchange-rate-linked arrangements will produce. A correct grasp of the scope of the prohibition is therefore of decisive importance for the fate of the contract.
Contracts Between Persons Resident in Türkiye
Decree No. 32 and the relevant Communiqué restrict the setting of a price in a foreign currency in certain contracts concluded between persons resident in Türkiye. Lease agreements are expressly included in that regime, and the agreement of a foreign-currency rent between resident persons is prohibited as a rule.
The decisive criterion here is whether the parties to the contract are to be regarded as resident in Türkiye. Where both parties are in the position of resident persons, no rent in a foreign currency or indexed to a foreign currency may be stipulated in the contract.
Agreeing the Rent Directly in a Foreign Currency
Expressing the rent directly in a foreign currency unit is not regarded as legally valid save for the exceptions in the legislation. Writing the rent into the contract as “USD 1,000” or “EUR 800” amounts to a breach of the prohibition where both parties are persons resident in Türkiye.
In such a case the provision concerning the rent in foreign currency is not applied and the rent must be set in Turkish lira. Contractual provisions contrary to the prohibition are regarded as invalid within the framework of the relevant legislation, or are treated as applying on the basis of Turkish lira.
Are Foreign-Currency-Indexed Arrangements Possible?
The scope of the prohibition is not confined to expressing the rent directly in a foreign currency; tying the rent to an exchange rate is subject to the same restriction. Accordingly, even where the rent has been set in Turkish lira, indexing that sum to a particular exchange rate is as a rule not possible.
Providing in the contract that the rent “shall be paid in Turkish lira but shall be increased according to the US dollar exchange rate”, or tying the rate of increase to an exchange rate, is not regarded as valid save for the exceptions in the legislation. Whether a foreign-currency-indexed clause breaches the prohibition is assessed having regard to the features of the particular case.
Cases in Which a Foreign-Currency Rent May Be Agreed
Decree No. 32 on the Protection of the Value of Turkish Currency and the Communiqué issued on the basis of that Decree, while prohibiting a foreign-currency rent as a rule in lease relationships between persons resident in Türkiye, have introduced derogations from that rule in respect of particular groups of persons and activities.
In these cases, which are expressly set out in the legislation, a rent in foreign currency may be agreed. The exceptions are limited in number and are not open to broad interpretation. Whether a foreign-currency contract may be concluded in the particular case is therefore determined by considering whether the conditions in the relevant provision have materialised.
Relationships Established with Persons Not Resident in Türkiye
The legislation permits a rent in foreign currency to be set in lease relationships established with persons not resident in Türkiye. For that exception to operate, at least one of the parties to the contract must not be in the position of a resident person.
In other words, where the tenant or the landlord is a foreign natural person or a foreign company, agreeing the rent in a foreign currency is not regarded as a breach of the prohibition. For the purposes of applying the exception, whether the person concerned is to be regarded as resident is determined according to the definition in the legislation.
Leases by Those Operating in Free Zones
Persons carrying on business in free zones may set a rent in foreign currency in the lease relationships they establish within the scope of those activities. That privilege derives from the special status which free zones enjoy in respect of foreign trade and foreign-currency-earning activities.
The scope of the exception is, however, bounded by the limits of the free zone; it does not extend to lease relationships established outside the zone. Where an undertaking operating in a free zone leases an immovable property outside the zone, the application of the general rule may arise.
Foreign-Currency-Earning Services and Activities
The legislation also permits foreign-currency lease agreements in respect of undertakings operating in particular sectors and producing foreign-currency-earning services. The activities capable of being assessed within that scope are as follows:
- Export activities and production directed towards export,
- Services provided in the field of civil aviation and air transport,
- Cross-border freight and passenger transport operations,
- Software, consultancy, maintenance and repair and similar services directed towards persons resident abroad,
- Services provided to nationals of foreign countries in the field of tourism and accommodation,
- Operations supported by, or brought within the scope of incentives by, the relevant public authorities by reason of their character as foreign-currency-earning services and activities.
In order to benefit from the exception, the activity of the undertaking must genuinely bear a foreign-currency-earning character and must satisfy the conditions required by the legislation. Merely working with foreign clients or deriving income in foreign currency does not in itself constitute a sufficient basis.
Leases Subject to Special Legislation
Certain types of lease fall among the cases in which a foreign-currency rent is permitted, by reason of legislative provisions particular to them. In those situations the foreign-currency rent has been kept outside the general prohibition, and the availability of the option depends upon there being an express provision in the relevant special regime. The special legislation applicable in each case must therefore be examined separately.
The following examples may be given of leases capable of being assessed within that scope:
- Lease relationships established with foreign diplomatic missions or international organisations,
- Leases relating to duty-free shops,
- Leases made by undertakings operating in a free zone within the scope of those activities,
- Certain leases relating to accommodation facilities holding a culture and tourism investment or operating certificate,
- Leases effected at international points of transit such as airports, ports and border gates.
In relationships of this kind, agreeing a foreign-currency rent is conditional upon this being expressly permitted in the relevant special regime. A conclusion should therefore not be reached by looking to the type of activity alone; the assessment must be made on the basis of the provisions of the special legislation to be applied.
The Consequences of an Arrangement Contrary to the Prohibition
Where a rent is agreed in a foreign currency or indexed to a foreign currency contrary to the provisions of Decree No. 32 on the Protection of the Value of Turkish Currency and of the relevant Communiqué, provisions of that kind in the contract are not regarded as legally valid. Beyond that, a foreign-currency lease relationship contrary to the legislation does not merely produce contractual consequences; it may also bring administrative sanctions in its train.
The consequences of a breach must therefore be addressed separately both from the standpoint of private law (invalidity and restitution) and from that of public law (administrative fines).
Invalidity and the Legal Consequences Arising
In cases where the prohibition applies, the contractual provisions setting the rent in a foreign currency or indexed to a foreign currency are regarded as invalid. That result does not do away with the contract as a whole; only the clause concerned is left out of application and the rent must be set in Turkish lira.
Put differently, the lease agreement continues to stand; in place of the rent provision stipulated in foreign currency, however, the contract is applied on the basis of Turkish lira in accordance with the legislation.
Claims for Restitution Where Payment Has Been Made in Foreign Currency
Where rent has been paid in foreign currency contrary to the prohibition, the return of those unlawfully made payments may be sought. Particularly in cases where the rent has been collected in a foreign currency, the party making the payment may claim restitution of the sum transferred in excess or without cause.
If the parties cannot agree on the matter, the claim for restitution may be pursued by way of enforcement proceedings or an action for debt.
Recovery of the Rent Overpaid
Where payments made on the basis of a foreign-currency lease agreement are contrary to the legislation, the portion exceeding the rent which ought to have been set in Turkish lira bears the character of an overpayment. Recovery of the excess sum is therefore possible.
Once the existence of an overpayment has been established, restitution of that sum may be claimed within the framework of the general provisions.
Administrative Fines and Other Sanctions
Where the prohibition on foreign-currency lease agreements is breached, an administrative fine may be imposed under Act No. 1567 on the Protection of the Value of Turkish Currency. The fine may be imposed separately upon each of the parties to the contract; where the breach continues, a fresh sanction may arise in respect of each finding.
The legal basis of the sanction to be applied is Article 3 of Act No. 1567. Under that provision, an administrative fine is imposed upon those who act contrary to the obligations laid down in Presidential decisions and in the regulations issued on the basis of those decisions.
As at 2026, the amount of the administrative fine that may be imposed for a breach of the foreign-exchange legislation has been increased in accordance with the revaluation rate and falls approximately within the following range:
Administrative fine for 2026: approximately TRY 72,000 – TRY 600,000
The fine may be imposed independently in respect of each party to the contract. For as long as the state of breach continues, a fresh fine may be imposed in respect of each finding made.
Related Topics
The practical repercussions of the prohibition on foreign-currency rents and of its exceptions are decisive for the setting of the rent and for whether the contractual provisions will stand. The following topics may also be examined in connection with the subject:
- Penalty Clauses Stipulated Against the Tenant
- How Is the Rent Increase Rate Determined? (Art. 344 of the Turkish Code of Obligations)
- Action for the Adaptation of the Rent: Conditions and Proceedings (Art. 138 of the Turkish Code of Obligations)
- What Is a Lease Agreement? Its Types and Legal Character
- The Prohibition on Contracting Against the Tenant (Art. 354 of the Turkish Code of Obligations)
The Independent Legal Assessment
The error most frequently encountered in disputes concerning the foreign-currency prohibition is the assumption that the exceptions may be interpreted broadly. The notion that a company with foreign shareholders, or an undertaking with foreign-currency income, automatically falls within the scope of an exception leads both to the contractual provision being regarded as invalid and to a position exposed to administrative sanction. Determining residence status according to the definition in the legislation, and ensuring that the foreign-currency-earning character of the activity is capable of being documented, are the two fundamental matters to be clarified before the contract is concluded.
As regards foreign-currency contracts already in force, the problem most often centres on payments made in the past. Where restitution of collections exceeding the Turkish lira equivalent comes into question, the exchange rate and the date to be taken as the basis of the calculation become a matter of dispute in their own right. In a particular file we recommend that priority be given to the following matters:
- Documenting, by reference to the definition in the legislation, whether the parties are to be regarded as resident in Türkiye
- Where an exception is asserted, showing in concrete terms which provision of which regime is relied upon
- Checking whether the increase clauses contained in the contract constitute an indirect exchange-rate index
- Stipulating in the contract the Turkish lira sum, and the basis of conversion, to be applied in place of a rent provision liable to be regarded as invalid
- Agreeing at the outset the exchange rate and the date to be taken as the basis in calculating past overpayments
- Assessing the risk of an administrative fine separately in respect of each of the parties
Independent Legal provides advisory services and conducts litigation across the whole of the process, from reviewing lease agreements for compliance with the foreign-exchange legislation to pursuing restitution and invalidity disputes arising from a breach of the prohibition.