Foreign Currency Clauses in Turkish Commercial Contracts: Validity and Enforcement in 2026

Are foreign currency clauses valid in Turkish commercial contracts in 2026? Learn the rules for foreign companies, commercial sales, services, construction, leases, payments, exchange-rate clauses and enforcement.

Foreign currency clauses are common in international commercial transactions involving Turkish companies. Purchase prices may be denominated in euros or US dollars, service fees may be indexed to a foreign currency, and international supply agreements frequently allocate exchange-rate risk between the parties. However, the validity and enforceability of a foreign currency clause in Turkey cannot be determined merely by looking at the currency written in the contract. The analysis depends on the residence of the parties, type of contract, subject matter, applicable exemptions and current foreign-exchange legislation.

The main regulatory framework remains Decree No. 32 on the Protection of the Value of Turkish Currency and the implementing Communiqué No. 2008-32/34. The rules contain restrictions for certain contracts between persons resident in Turkey, together with important exceptions. A significant amendment effective from 6 March 2025 also permits foreign-currency or foreign-currency-indexed pricing and payment obligations in movable-property sales contracts between Turkish residents, except vehicle sales.

Why Foreign Currency Clauses Require Contract-Specific Analysis

A clause stating that “all payments shall be made in USD” may be enforceable in one commercial contract but restricted in another. Before drafting or enforcing the provision, the parties should determine whether they are resident in Turkey for purposes of the foreign-exchange rules and classify the agreement correctly.

Commercial contracts should therefore not use a standard foreign currency clause copied from another transaction without analyzing the underlying agreement.

The Basic Regulatory Framework

Decree No. 32 regulates foreign-exchange transactions and provides the underlying framework for restrictions concerning foreign-currency obligations. Detailed rules and exceptions are principally established through implementing legislation.

For commercial-contract purposes, Article 8 of Communiqué No. 2008-32/34 is particularly important because it addresses contracts denominated in or indexed to foreign currencies.

Are All Foreign Currency Contracts Prohibited?

No. Turkish law does not impose a universal prohibition on commercial contracts denominated in foreign currency.

Restrictions primarily require analysis where persons resident in Turkey contract with each other in specified categories. Numerous exceptions exist, and some transactions can lawfully be denominated in foreign currency.

First Question: Where Are the Parties Resident?

The parties’ status is fundamental.

A transaction between two Turkish-resident companies may be treated differently from an agreement between a Turkish company and a foreign company established outside Turkey.

Accordingly, foreign investors should not assume that rules applicable to purely domestic transactions automatically apply to an international supply agreement.

Foreign Companies Contracting With Turkish Companies

Where one party is genuinely resident outside Turkey, the restrictions applicable specifically to contracts between Turkish residents may not operate in the same way.

Nevertheless, the complete transaction should be examined, particularly where the foreign company operates through a Turkish subsidiary, branch or other local structure.

A Turkish Subsidiary Is Not Automatically the Same as Its Foreign Parent

A Turkish-incorporated company and its foreign parent are separate legal entities. A contract signed by the Turkish subsidiary should not automatically be analyzed as though the foreign parent were the contracting party.

This distinction can materially affect foreign-currency analysis.

The Type of Contract Is Critical

Foreign-exchange legislation distinguishes among different contractual categories. The rules applicable to a sale of movable goods may differ from those concerning real estate, leases, services, employment, construction or other agreements.

Correct characterization of the agreement is therefore essential.

Major 2025 Change for Movable-Property Sales

An important amendment effective from 6 March 2025 changed the rules for movable-property sales between persons resident in Turkey. Under the amended Article 8(9), parties may agree on both the contract price and other payment obligations in foreign currency or indexed to foreign currency for movable-property sales other than vehicle sales.

This change remains highly relevant to commercial contracting in 2026.

Payment in Foreign Currency Is Also Important

The 2025 amendment is commercially significant because the previous regime had created a distinction between denominating certain movable sales in foreign currency and actually satisfying payment obligations in foreign currency.

Following the amendment, non-vehicle movable sales between Turkish residents can generally provide for the relevant price and payment obligations in foreign currency or on a foreign-currency-indexed basis.

Vehicle Sales Remain Different

Vehicle sales are specifically excluded from the liberalized movable-property rule.

Businesses dealing with commercial fleets, automobiles or other vehicles should therefore not assume that the rule applicable to ordinary machinery, equipment or goods applies equally to vehicle transactions.

Machinery and Equipment Sales

For commercial transactions involving machinery, industrial equipment, raw materials and other movable goods, the 2025 amendment substantially changed the practical position between Turkish-resident parties.

Nevertheless, businesses should still verify that the transaction is genuinely characterized as a movable-property sale rather than another contractual type.

Mixed Commercial Agreements Need Special Attention

Many commercial contracts combine several obligations.

For example, a machinery agreement may include equipment supply, installation, engineering, commissioning, training and long-term maintenance. Calling the entire agreement a “sales contract” does not necessarily resolve how each obligation should be analyzed.

Service Contracts Remain a Separate Category

The foreign-currency rules applicable to service contracts should be reviewed separately. The current regulatory framework continues to contain restrictions on certain service agreements between Turkish residents, subject to specified exceptions.

Foreign companies should therefore avoid applying the movable-sale amendment automatically to consultancy, management, brokerage or similar services.

Cross-Border Services May Fall Within Exceptions

The implementing framework contains exceptions involving certain services with an international element, including specified services beginning or ending outside Turkey.

The precise service flow should therefore be documented when relying on an exception.

Construction and Works Contracts

Works contracts require their own analysis. The current Communiqué provides an exception allowing foreign-currency or foreign-currency-indexed pricing for works contracts between Turkish residents where the contract involves foreign-currency costs.

The underlying costs and contractual structure should be documented rather than merely inserting a foreign-currency clause.

Real Estate Transactions Require Particular Care

Real estate contracts are subject to more restrictive rules. The Communiqué provides restrictions for certain real estate sales and leases concerning property located in Turkey between Turkish residents.

Foreign investors should therefore distinguish real estate transactions from ordinary commercial sales.

Employment Contracts Are Also Different

Employment relationships have their own regulatory treatment and exceptions. A foreign-owned Turkish company should not assume that the international ownership of the employer automatically permits every employee salary to be denominated in foreign currency.

The employee’s status, employer structure and applicable exception should be examined separately.

Foreign Currency and Foreign-Currency-Indexed Clauses

The rules do not concern only contracts directly stating a price in USD or EUR.

A clause stating a Turkish-lira amount but automatically adjusting it according to a foreign currency can also constitute a foreign-currency-indexed obligation for regulatory purposes.

Exchange-Rate Adjustment Clauses

Businesses often attempt to manage currency risk through adjustment mechanisms rather than direct foreign-currency pricing.

Such clauses should identify the reference currency, relevant exchange rate, calculation date, source of the rate, adjustment frequency and treatment of extraordinary currency movements.

Avoid Ambiguous Currency Clauses

A contract should not merely state that payment will be calculated “according to the current exchange rate.”

The parties should specify exactly which rate applies and on which date it will be determined.

Contract Currency and Payment Currency Should Be Distinguished

The currency used to calculate the contractual price and the currency actually used for payment can raise separate issues.

A properly drafted agreement should address both.

What Happens If a Foreign Currency Clause Violates Mandatory Rules?

A regulatory problem affecting the currency clause does not necessarily mean that every provision of the commercial relationship automatically disappears.

The consequences should be analyzed under the applicable foreign-exchange rules, contract law and facts of the transaction.

This makes a severability clause particularly useful.

Include a Currency-Law Compliance Clause

International agreements involving Turkey can include a provision stating that payment obligations will be performed consistently with mandatory Turkish foreign-exchange legislation and that the parties will cooperate in implementing any legally required adjustment.

This can reduce uncertainty if the regulatory framework changes.

Exchange-Rate Risk Should Be Allocated Expressly

Parties should determine who bears currency fluctuations between contract signature, invoicing, delivery and payment.

Without an express mechanism, major exchange-rate movements can create substantial disputes.

Long-Term Supply Agreements Need Adjustment Mechanisms

A multi-year supply agreement should consider whether the price remains fixed in foreign currency or whether renegotiation is triggered by extraordinary changes.

Thresholds, review dates and objective calculation formulas can reduce later disagreements.

Hardship and Currency Fluctuation Are Not the Same Thing

A significant currency movement does not automatically mean that a party can disregard the agreed contract price.

Whether adaptation, renegotiation or another remedy is available requires separate analysis of the contract and applicable Turkish law.

Payment Clauses Should Address Bank Restrictions

International payments can also be affected by banking compliance, sanctions screening and correspondent-bank restrictions.

The agreement should distinguish between a legal prohibition and a particular bank’s refusal to process a transaction.

Alternative Payment Arrangements

Where commercially appropriate and legally permissible, contracts can address alternative banking channels, replacement accounts and procedures if the nominated bank cannot process a payment.

Such clauses should never be drafted to circumvent sanctions or mandatory financial regulations.

Invoicing Should Match the Contract

Contract price, invoice currency and payment records should remain consistent.

A contract denominated in one currency combined with invoices issued under an inconsistent structure can create evidentiary, accounting and commercial problems.

Foreign Currency Clauses in Distribution Agreements

Distribution agreements frequently combine goods sales with marketing, service, exclusivity and rebate obligations.

Each payment obligation should be identified and analyzed rather than assuming that the entire relationship receives one regulatory classification.

Agency and Commission Agreements

Commission payments and agency services can raise different issues from the underlying goods transaction.

Where the principal is foreign and the agent is Turkish, the cross-border structure should be examined together with applicable foreign-exchange rules.

Licensing and Royalty Agreements

Technology, trademark, software and intellectual-property arrangements can involve foreign-currency royalties.

These contracts should be reviewed not only for currency validity but also for tax, withholding, customs valuation and transfer-pricing consequences where applicable.

Share Purchase Agreements

M&A agreements can involve foreign-currency purchase prices, escrow arrangements, earn-outs and post-closing adjustments.

The residence of the parties and nature of the underlying transaction should be examined before selecting the payment currency.

Foreign Loans Are a Separate Regulatory Area

A foreign-currency commercial contract should not be confused with a foreign-currency loan.

Foreign currency borrowing is governed by additional provisions of Turkey’s foreign-exchange framework and requires separate analysis.

Governing Law Does Not Automatically Eliminate Mandatory Turkish Rules

Choosing foreign law in an international contract does not necessarily remove every mandatory Turkish regulatory issue where the transaction has a sufficient connection with Turkey.

The governing-law and dispute-resolution provisions should therefore be coordinated with mandatory regulatory requirements.

Arbitration Clauses Can Be Used in International Commercial Contracts

Foreign currency disputes may be subject to arbitration where the parties have a valid arbitration agreement and the dispute is arbitrable.

The arbitration clause should identify the institution or rules, seat, language and scope clearly.

Turkish Courts and Foreign Currency Claims

Where litigation occurs in Turkey, the manner in which a foreign-currency receivable is claimed, converted or enforced can materially affect the financial result.

The contract should preserve clear evidence of the original currency obligation, due date and default.

Default Interest Should Be Drafted Carefully

The agreement should specify the consequences of late payment.

Interest provisions should be reviewed under the applicable governing law and mandatory limitations rather than simply copying an interest rate from a foreign contract template.

Existing Contracts Should Be Reviewed After Regulatory Changes

The 6 March 2025 amendment demonstrates why companies should periodically review long-term Turkish contracts. It changed the treatment of payment obligations for non-vehicle movable-property sales between Turkish residents.

Contracts drafted under an older regulatory environment may therefore no longer reflect the current position.

2026 Contract Review Checklist

Foreign investors and businesses should identify the residence of every contracting party, classify the agreement correctly, determine whether a foreign-currency restriction or exception applies, distinguish pricing currency from payment currency, examine mixed obligations separately, define the exchange-rate mechanism, allocate currency risk, review invoices and banking arrangements, and ensure that governing-law and dispute-resolution clauses are consistent with mandatory Turkish rules.

Frequently Asked Questions

Can Turkish companies sign contracts in euros or US dollars?

Potentially, yes. The answer depends on the parties, contractual category and applicable exceptions. There is no universal prohibition covering every commercial agreement.

Can two Turkish companies sell goods to each other in foreign currency in 2026?

For movable-property sales other than vehicle sales, the amended Article 8(9) permits the contract price and related payment obligations to be agreed in foreign currency or indexed to foreign currency.

Can payment also be made in foreign currency?

For the non-vehicle movable-property sales covered by the 2025 amendment, the current wording permits the relevant payment obligations to be agreed in foreign currency or on a foreign-currency-indexed basis.

Are vehicle sales covered by the same rule?

No. Vehicle sales are expressly excluded from the liberalized rule for movable-property sales.

Can service contracts between Turkish companies always be denominated in foreign currency?

No. Service contracts require separate analysis because restrictions continue to apply to certain contracts, subject to specific exceptions.

What about contracts with a foreign company?

Contracts involving a party resident outside Turkey require a different analysis from purely domestic contracts. The actual contracting entities and transaction structure should be identified first.

Can a contract use a Turkish-lira price indexed to the euro?

A foreign-currency-indexed clause can itself fall within the regulatory framework. Using Turkish lira as the nominal payment currency does not automatically avoid the rules.

Does an invalid foreign currency clause make the whole contract invalid?

Not necessarily. The legal consequences depend on the specific mandatory rule, contract structure and circumstances. Severability and regulatory-compliance clauses can become important.

Can the parties choose foreign law to avoid Turkish currency restrictions?

A foreign governing-law clause does not necessarily eliminate mandatory Turkish regulatory provisions applicable to the transaction.

What should foreign companies check before signing?

First identify the actual contracting parties and their residence status, then classify the contract. Only after those questions are answered should the company decide whether the price and payment obligations can lawfully be denominated in or indexed to foreign currency.

Client-Focused Legal Support for Foreign Currency and Commercial Contract Disputes

Foreign currency provisions can affect international supply contracts, machinery sales, distribution agreements, services, construction projects, licensing arrangements, shareholder transactions, payment defaults and commercial litigation. Fırat Fesih Kaya Law Office assists foreign investors, international companies and businesses entering into or enforcing commercial agreements subject to Turkish law. Lawyer Fırat Fesih Kaya provides legal assistance in reviewing foreign-currency clauses, restructuring payment provisions, allocating exchange-rate risk, evaluating existing contracts after regulatory changes and resolving disputes concerning foreign-currency receivables.

Phone:
+90 312 434 22 22

Mobile:
+90 532 769 22 22

Email:
info@firatfesihkaya.av.tr

Address:
Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey