💸 A founder transferred money to his loss-making company for three years to cover payroll and rent. The tax authorities treated these transfers as company income. Subject to tax.
The situation. A company founded in 2022 is running at a loss, but the owner does not want to shut it down. Every few months, the owner wires funds from his personal account to the company's account to cover salaries, rent, and SGK (social security). In the accounting records, this sits as "funds from partner," without any supporting documentation. Over three years, the sum grew significantly. Then comes a tax audit.
Where it breaks down. Under the law, partner funds injected to cover losses are not considered company income, but only if they are transferred based on a general assembly resolution on capital replenishment pursuant to Article 376 of the Turkish Commercial Code (TTK). If there is no resolution, the tax authority's guidance dated July 2026 explicitly states: these amounts are included in the company's profit. That means a 25% corporate tax on money the owner had already surrendered non-refundably. A double loss: you gave away your money and had to pay tax on it too.
Worse still, this cannot be documented retroactively. The proper procedure is strict: first, a calculation of what portion of the capital has been eroded by losses; next, a general assembly resolution specifying the exact amount and each partner's share; and only then, the bank transfer. Funds that arrived prior to the resolution do not enjoy legal protection.
What we did. For the past transfers, we challenged the assessment by relying on supreme court case law, which prior to 2022 sided with companies in similar disputes, successfully having part of the additional tax assessment overturned. Going forward, we structured the entire process: we calculated the loss of capital (the two-thirds loss threshold had just been breached, which legally obligates the general assembly to take action), drafted an Article 376 resolution with precise figures, created a capital replenishment fund as a separate sub-account in equity, and ensured all subsequent transfers were made strictly after the resolution was passed. No VAT, no corporate tax, no risk.
One critical nuance that we made sure to address with the owner: capital replenishment is non-refundable. This money is neither a loan nor an advance payment toward equity shares; it cannot be demanded back, and no new shares are issued against it. If treated as debt subject to repayment or interest, the tax protection vanishes.
Takeaway. In Türkiye, partner funding injected into a company is never a matter of "transfer and forget." The outcome is determined not by the payment reference, but by the legal document adopted before the transfer. A single meeting that takes a couple of hours versus losing a quarter of the entire sum in taxes.
Pumping personal funds into your loss-making company? Get in touch with us: we will review how your transfers are documented and establish a process so that every future transfer is fully compliant.