When purchasing real estate, foreigners are asked to bring a Foreign Currency Purchase Certificate to Turkey. This document shows that the currency was sold first to a bank operating in Turkey and then to the Central Bank. This obligation also applies to the Turkish citizenship process, provided it also covers purchasing all types of real estate in the country.
What are the Transactions in Foreign Currency?
A transaction in foreign currency occurs when a company conducts a transaction in a currency other than the company's functional currency. A company's functional currency is the money of the principal economic environment in which the business works. In other words, a foreign currency transaction is commerce denominated in a currency other than an entity's functional currency.
An organization must measure a foreign currency transaction in its functional currency to include it in its financial statements. The most usual transactions would consist of purchasing or selling products or services and related accounts due and receivable.
Two Types of Transactions in a Foreign Exchange Market
When it comes to the foreign exchange market, there are two types of transactions. These transactions are:
- Spot Market Transactions
- Forward Market
Spot market transactions refer to a price valid only for 48 hours. The forward market, on the other hand, refers to a fee ranging from a month to six months. While the spot market transactions are not subject to change because of their short range, the latter might be a discount price. In this case, the forward market rate will be less than the spot market transaction rate.
The Documents Required for Foreign Exchange
It is vital to note that the document required for Foreign Exchange should be obtained from a bank operating in Turkey. Furthermore, to get a Currency Purchase Document in Turkey, some information has to be provided by foreigners who want to make a real estate purchase. This information includes:
- Full name of the buyer First and last names are required.
- Passport number If a passport number is not possible, an identification number is required.
- Total price in Turkish Liras It has to be the equivalent of the amount bought in a foreign currency.
- Statement regarding Article 13 of the Circular on Capital Movements the documentation has to clarify that the document has been carried out within the understanding of this article.
If you want to find out about the complete process of documents, you can contact Istanbul Lawyer Firm. We are always at your service with our experienced and knowledgeable lawyers.
How Do You Record Transactions in Foreign Currency?
To record transactions in foreign currency, there are a few accounting rules that need to be taken into consideration. The first rule to consider is to decide on a functional currency. This means that the currency the company uses the most should be determined. This is because all the documentation and transactions will be done considering the functional currency.
The exchange rate is another factor to take into consideration. To make correct calculations, the exchange rate is a piece of important information. Another aspect of reporting is the amount of gain as well as loss. Every profit or loss that occurs during the transaction must be adequately documented. Everything that proves the transaction is supposed to be recorded in a way that can be accounted for, if necessary.
What Do the Circular and the Instruction State?
Here are the main points that the Circular and the Instruction make:
- Before the exchange, the foreign currency has to be sold to a bank that operates in Turkey.
- The property purchase must be reported in a detailed manner according to real estate laws in Turkey.
- A Currency Purchase Document must be obtained.
- The currencies that can be used for this process are Euros, Pounds, and USD.
- After the foreign currency purchase procedure is completed, no parties can step away from the agreement.
You can obtain the most precise information by contacting Istanbul Lawyer Firm. With our expert lawyers, we aim to give you advice every step of the way.
You can read our previous article at /blog/legal-characteristics-of-physician-and-patient-relationship