While paying employees in Turkey may initially seem straightforward, the process becomes significantly more complex when salaries are to be paid in foreign currencies such as US dollars or euros. Turkey enforces a stringent foreign-exchange regime that dictates whether salaries can be denominated and paid in foreign currency. For international companies entering the Turkish market, as well as for Employer of Record (EOR) partners, a thorough understanding of this regime is essential. Compliance with these regulations determines whether a foreign currency salary arrangement is lawful or exposes both the company and the employee to regulatory risk.
This article outlines the mechanisms of foreign currency salary payments in Turkey, the legal framework governing such payments, and the specific conditions an Employer of Record (EOR) must satisfy to provide compliant foreign currency payroll. It further examines why many EOR providers in Turkey are structurally unable to deliver this service and describes how Gini Talent is equipped to meet these requirements as a specialized Employer of Record and payroll partner.
Why Foreign Currency Salary Payments in Turkey Are a Specialized Matter
Turkey represents a highly attractive talent market within the Europe–Middle East region. The country offers a substantial pool of skilled professionals in technology, engineering, and multilingual fields, a strategic geographic position connecting continents, and competitive employment costs compared to Western Europe and North America. These factors have established Turkey as a priority destination for global recruitment.
However, employers must navigate a comprehensive framework of local regulations governing employment contracts, social security, taxation, and currency. Turkish labor and foreign exchange legislation is subject to frequent changes, with the currency aspect often presenting unexpected challenges for international employers. Companies accustomed to paying global teams in a single currency cannot replicate this practice in Turkey without first verifying its compliance with Turkish law.
This complexity arises from a specific body of foreign exchange legislation that generally requires salaries between parties resident in Turkey to be denominated and paid in Turkish Lira. Foreign currency salary payments are permitted only when a defined legal exception applies. Determining the applicability of an exception, structuring the employment relationship accordingly, and maintaining compliant foreign currency payroll operations require specialized expertise.
The Legal Framework Governing Foreign Currency Salaries in Turkey
Any discussion of foreign currency salary payments in Turkey must begin with the legislation that regulates the use of foreign currency in domestic contracts.
Decree No. 32 and the General Prohibition
The cornerstone instrument is the Decree on the Protection of the Value of Turkish Currency, commonly referred to as Decree No. 32. On 13 September 2018, Presidential Decree No. 85 amended Decree No. 32 to prohibit persons resident in Turkey from agreeing, between themselves, contract values and related payment obligations in foreign currency or indexed to foreign currency across a range of contract types. The prohibition covers sales of movable and immovable property, leasing arrangements, employment contracts, service contracts, and work (construction) contracts.
For salaries, the practical consequence is direct. As a general rule, where both the employer and the employee are considered residents of Turkey, the employment contract, including salary and other payment obligations, must be expressed and paid in Turkish Lira. Denominating that salary in foreign currency, or indexing it to a foreign currency, is not permitted unless a recognized exception applies.
The implementing rules and the catalog of exceptions were set out by the Ministry of Treasury and Finance through Communiqué No. 2008-32/34, which has been amended several times, including by Communiqués 2018-32/51 and 2018-32/52 and by later amendments in subsequent years. These instruments determine which contracts may lawfully be denominated in foreign currency.
Why the Rule Exists
The 2018 amendments were introduced during a period of significant volatility in the Turkish Lira. The objective was to reduce widespread foreign currency exposure in domestic transactions, support demand for the national currency, and protect parties resident in Turkey from exchange rate risk embedded in long-term contractual obligations. Understanding this policy purpose helps explain both the breadth of the general prohibition and the carefully delimited nature of the exceptions that follow.
Consequences of Non-Compliance
Compliance is a substantive requirement. Agreeing to a salary in a foreign currency without a valid exception places the arrangement outside the permitted legal framework and exposes the parties to administrative penalties. It also creates uncertainty regarding the contract’s enforceability and legal treatment. For international companies, the reputational and operational risks associated with non-compliant payroll arrangements can significantly outweigh any perceived convenience of foreign currency payments. Therefore, it is essential to structure such arrangements correctly from the outset.
When Foreign Currency Salary Payments Are Permitted
Turkish foreign exchange legislation does not impose a blanket ban. It establishes a default in favor of Turkish Lira, then carves out specific situations in which foreign-currency salary payments are permitted. The following exceptions are the most relevant for employment relationships.
Exception 1: Employees Who Are Not Turkish Citizens
Employment contracts to which a person who does not hold a citizenship bond with the Republic of Turkey is a party may be denominated and paid in foreign currency. In practice, this means that foreign nationals, often described as expatriates, working in Turkey can lawfully receive a salary denominated in foreign currency. This exception is widely used and comparatively simple to apply because it depends on the employee’s nationality rather than the employer’s structure.
Exception 2: Foreign-Owned or Foreign-Controlled Companies
This exception is the most consequential for the Employer of Record model and deserves close attention. Under the relevant provision of Communiqué No. 2008-32/34, companies located in Turkey that are branches, representative offices, liaison offices of non-resident persons, or companies in which non-resident persons hold, directly or indirectly, fifty percent or more of the shares, or otherwise hold control or joint control, may denominate the values and related payment obligations of the employment and service contracts to which they are a party, as employer or as recipient of services, in foreign currency or indexed to foreign currency.
In plain terms, if the employing entity in Turkey is sufficiently owned or controlled by a foreign party, it may lawfully pay salaries in foreign currency, including to employees who are Turkish citizens. This is the legal mechanism that allows foreign-capital companies operating in Turkey to run foreign-currency payroll for their local workforce, and it is what distinguishes EOR providers that can offer this service from those that cannot.
What “Control” Means Under the Exception
The threshold is not limited to a simple majority shareholding. The legislation and the Ministry’s interpretive guidance treat an entity as qualifying where there is direct or indirect ownership of fifty percent or more of the shares, or, even in the absence of such a shareholding, where control or joint control exists through other means.
Examples include holding privileged shares that confer majority voting rights, controlling the majority of votes through shareholder agreements, or holding the power to appoint or remove the decisive majority of board members. The assessment is therefore substantive, focusing on actual control rather than merely a headline shareholding percentage.
Exception 3: Companies Operating in Free Zones
Companies established in Turkish free zones may, within the scope of their free zone activities, denominate employment contracts in foreign currency. Free zones occupy a distinct position within the regime, and employment relationships connected to free zone activities benefit from this specific allowance.
Exception 4: Work Performed Abroad
Where the employee performs the work abroad, the employment contract may be denominated in foreign currency. This addresses the situation of staff employed by a Turkey-resident entity but who carry out their duties outside Turkey, for whom a Turkish Lira-denominated payment would be impractical.
Exception 5: Foreign Currency Earning Service Activities
Beyond employment contracts, the regime also recognizes that certain service activities are oriented toward earning foreign currency. Service contracts concluded within the scope of exports, transit trade, deemed-export sales and deliveries, and foreign currency earning services and activities may be denominated in foreign currency, as may service contracts for activities carried out abroad. This category is particularly relevant to the commercial relationship between an EOR and its overseas client, where the EOR provides services that bring foreign currency into the country.
How Foreign Currency Payroll Works in Practice
The initial step is to confirm that a relevant exception applies. Ongoing operation of compliant foreign currency payroll requires careful attention to multiple practical and statutory considerations.
Currency of Denomination Versus Currency of Calculation
A frequent misconception is that all payroll calculations are conducted in the foreign currency once a salary is denominated as such. In practice, statutory obligations, including income tax and social security, are administered in Turkish Lira. When a salary is denominated in foreign currency, its Turkish Lira equivalent is typically calculated using the Central Bank of the Republic of Turkey’s exchange rate on the relevant date, and statutory deductions are based on this amount. Accurate and transparent currency conversion is therefore essential for compliant foreign currency payroll.
Income Tax Withholding
Turkey applies a progressive income tax to employment income, and employers are responsible for withholding the correct amount and remitting it to the tax authority. A foreign currency salary does not remove this obligation; the withholding is calculated on the Turkish Lira equivalent of the salary. Payroll must therefore translate the foreign currency figure correctly into the local tax base, apply the appropriate cumulative brackets, and report accordingly.
It is worth noting that a separate income tax exemption exists for salaries paid by certain foreign employers that have no legal or business center in Turkey and that pay from their foreign-source earnings; this is a distinct arrangement and should not be assumed to apply automatically to a standard EOR engagement, where the employing entity is established in Turkey.
Social Security Contributions
Both employer and employee contribute to the Social Security Institution, known by its Turkish abbreviation SGK, covering pension, health, unemployment, and work accident components. These contributions are calculated on the Turkish Lira equivalent of the salary, subject to the applicable contribution floor and ceiling. The employer is responsible for registering the employee with the SGK, calculating contributions correctly, and meeting monthly filing and remittance deadlines.
Severance and Other Entitlements
Turkish labor law provides for severance pay, known as kıdem tazminatı, and other statutory entitlements that accrue over the course of employment. Where a salary is denominated in foreign currency, the treatment of these entitlements must be handled carefully and consistently with prevailing case law and the applicable statutory ceiling. Severance accrual, notice periods, annual leave, and overtime all interact with the salary figure and must be administered correctly.
Banking, Transfer, and Treasury
Operational capability is also critical for compliant foreign currency payroll. The provider must be able to receive client funding in foreign currency, manage those funds appropriately, perform necessary currency conversions, and disburse net salaries to the relevant bank accounts. This requires robust foreign currency banking relationships, disciplined treasury management, and strict adherence to regulations governing capital movements.
Documentation and Payslips
Finally, the arrangement must be documented to a standard that withstands scrutiny. Employment contracts must comply with Turkish labor law requirements and be issued in Turkish; payslips must accurately reflect the salary and statutory deductions; and records must be maintained in an audit-ready manner. Denominating in foreign currency introduces additional documentation considerations, particularly regarding the conversion methodology applied for statutory purposes.
The Conditions an Employer of Record Must Satisfy to Pay Foreign Currency Salaries
An Employer of Record acts as the legal employer of a company’s workforce in Turkey, assuming responsibility for contracts, payroll, tax withholding, social security, and compliance, while the client company directs the employee’s day-to-day work. For an EOR to offer compliant foreign-currency salary payments rather than merely Turkish Lira payroll, it must meet a demanding set of conditions.
The Correct Corporate Structure
The single most important condition is corporate structure. Because the EOR is the legal employer, the employment contract is concluded between the EOR’s Turkish entity and the employee. For that contract to be lawfully denominated in foreign currency for a Turkish citizen employee, the EOR’s employing entity must itself fall within a recognized exception, most reliably the exception for companies in Turkey that are owned or controlled, directly or indirectly, at the fifty percent level or above, by a non-resident party.
An EOR whose Turkish entity is wholly domestically owned and controlled generally cannot denominate a Turkish national’s salary in foreign currency, because it falls under the default Turkish Lira rule. Where the employee is a foreign national, the position is different, since the nationality-based exception applies regardless of the employer’s structure.
Foreign Currency Capable Banking and Treasury Infrastructure
Structure alone is not sufficient. The EOR must possess the banking and treasury infrastructure to operate in foreign currency: the ability to receive client payments in foreign currency, manage currency conversion in a controlled and transparent manner, and disburse salaries reliably and on time. Providers that operate exclusively in Turkish Lira are not equipped to deliver this, regardless of their other strengths.
A Compliant Payroll and Tax Engine
The provider must run a payroll and tax function capable of handling foreign currency denominations correctly. This includes applying the appropriate exchange rate for statutory purposes, calculating income tax and social security on the correct Turkish Lira basis, producing accurate payslips, and meeting all filing and remittance deadlines. Errors in conversion or calculation translate directly into compliance exposure.
Multi-Currency Contracting Capability
Employment contracts, addenda, and supporting documentation must correctly express the foreign currency denomination while remaining fully compliant with Turkish labor law. The provider must be able to draft and maintain multi-currency contractual arrangements that are legally sound and that clearly set out the relationship between the foreign currency salary and its Turkish Lira treatment for statutory purposes.
Deep and Current Regulatory Expertise
The foreign exchange regime, labor law, social security rules, tax legislation, and data protection requirements all bear on foreign currency payroll, and several of these are frequently amended. An EOR offering this service must maintain genuine, current expertise across Decree No. 32 and its communiqués, Labor Law No. 4857, SGK obligations, the tax framework administered by the Revenue Administration, and the personal data protection regime. The ability to monitor and respond to legislative changes is essential, as the catalog of exceptions and the surrounding rules have been revised multiple times.
Audit-Ready Governance
Finally, the provider must operate with documentation and governance robust enough to demonstrate compliance if questioned. This includes clear records of the legal basis for each foreign currency arrangement, the conversion methodology applied, and the statutory filings made.
Why Most Employer of Record Providers in Turkey Cannot Offer Foreign Currency Payroll
The conditions above explain why foreign currency salary payments are a genuine point of differentiation among EOR providers in Turkey, rather than a standard feature.
The Domestic Entity Limitation
Many EOR and payroll providers operating in Turkey employ staff through wholly domestically owned local entities. For employees who are Turkish citizens, such entities fall under the default rule requiring Turkish Lira denomination, because they do not qualify under the foreign ownership or control exception. As a result, these providers can lawfully run Turkish Lira payroll, and can pay foreign nationals in foreign currency under the nationality-based exception, but they are not in a position to denominate a Turkish citizen’s salary in foreign currency. This is a structural limitation that cannot be overcome simply by a client request. Indeed, a number of providers explicitly describe their Turkish payroll service in Turkish Lira.
The Operational and Compliance Gap
Even where a provider is connected to a foreign group, it may lack the foreign-currency-capable banking and treasury infrastructure, the multi-currency contracting capability, or the depth of regulatory expertise required to operate foreign-currency payroll compliantly and at scale. Offering foreign currency salaries is not only a question of whether it is permitted in a given case, but also of whether the provider can administer it correctly, consistently, and in an audit-ready manner over time.
The Risk of Getting It Wrong
These factors indicate that establishing a foreign currency salary arrangement without the appropriate structure and infrastructure can result in significant risks, including administrative penalties, uncertainty regarding contract treatment, and operational disruptions if restructuring becomes necessary. For international companies, it is prudent to engage a partner capable of confirming and administering the correct compliant approach, rather than one that attempts to accommodate requests beyond its operational capacity.
How Gini Talent Meets the Requirements for Foreign Currency Payroll in Turkey
Gini Talent is a specialized Employer of Record, payroll, and workforce solutions partner with a focus on the Turkish market, offering international hiring experience and comprehensive service capabilities. Its combination of local employment expertise and robust operational infrastructure enables Gini Talent to address foreign currency salary requirements that many providers are unable to meet.
Structure and Compliance Capability
Gini Talent operates within the framework established by Decree No. 32 and the implementing communiqués, and aligns each engagement with the applicable rules under Turkish labor, tax, and social security legislation. For arrangements involving foreign currency-denominated payments, Gini Talent determines the appropriate compliant basis for each case and structures the employment relationship accordingly, rather than applying a one-size-fits-all approach. This is the essential foundation for offering foreign currency payroll that withstands scrutiny.
Multi-Currency Payroll Capability
When legal conditions are satisfied, Gini Talent is able to administer salaries denominated in foreign currency in addition to the standard Turkish Lira payroll required for most engagements. This includes accurate calculation of income tax withholding and SGK contributions on the appropriate Turkish Lira basis, precise payslip generation, and strict adherence to filing and remittance deadlines. The ability to operate beyond Turkish Lira payroll distinguishes providers equipped for foreign currency payroll.
End-to-End Employment Administration
As a full-service partner, Gini Talent manages the complete employment lifecycle: compliant Turkish-language employment contracts, SGK registration, monthly payroll, tax deductions, statutory benefits, and ongoing compliance, in addition to recruitment and onboarding support. Because foreign currency payroll touches contracts, banking, tax, and social security simultaneously, an integrated provider is far better placed to administer it correctly than one that addresses these functions in isolation.
Local Expertise Combined With International Experience
Gini Talent pairs detailed knowledge of the Turkish regulatory environment with experience supporting international companies expanding across borders. This dual perspective allows the team to translate a global company’s intentions into a locally compliant structure and keep that structure aligned with a regulatory framework that is frequently revised.
Choosing the Right EOR Partner for Foreign Currency Payroll in Turkey
For companies that specifically require foreign-currency salary capability in Turkey, the selection of an EOR partner should be guided by a focused set of questions.
Questions Worth Asking a Prospective Provider
Does the provider’s employing entity satisfy a recognized exception under Decree No. 32 that permits foreign currency denomination for the employees you intend to hire, including Turkish nationals, where relevant? Does the provider have foreign currency capable banking and treasury arrangements to receive funding and disburse salaries reliably? Can the provider demonstrate a compliant payroll and tax process that handles foreign currency denomination correctly, including conversion methodology and statutory deductions? Can the provider produce contracts and payslips that accurately reflect the arrangement and satisfy Turkish labor law? And does the provider maintain current expertise across the foreign exchange, labor, tax, social security, and data protection frameworks, with the ability to respond to legislative change?
A provider capable of addressing these questions comprehensively is equipped to deliver compliant foreign currency payroll. Providers unable to do so are generally restricted to offering Turkish Lira payroll for Turkish nationals, regardless of other strengths.
Conclusion
Foreign currency salary payments in Turkey sit at the intersection of foreign exchange legislation, labor law, taxation, and social security. The default position under Decree No. 32 favors Turkish Lira, and foreign currency salaries are permitted only where a defined exception applies, most significantly the exception for companies in Turkey that are owned or controlled by a non-resident party. Operating a compliant foreign currency payroll then requires the right corporate structure, foreign currency capable infrastructure, a precise payroll and tax function, sound multi-currency contracting, and current regulatory expertise.
These requirements clarify why many Employer of Record providers in Turkey are unable to offer foreign-currency salaries to Turkish nationals: their organizational structure, infrastructure, or compliance expertise is insufficient. Gini Talent is positioned to meet these requirements as a specialized, full-service EOR and payroll partner in Turkey, determining the correct compliant approach for each engagement and administering it comprehensively. For international companies seeking both access to Turkish talent and the ability to pay in foreign currency where permitted, this capability provides a significant advantage.
To explore compliant Employer of Record and foreign currency payroll solutions for your team in Turkey, contact Gini Talent for a tailored assessment of your requirements.
