Regulatory Note: This article reflects the position as of 3 July 2026, based on the Income Tax Code No. 193 (Arts. 61/4, 23/18, 94, 103), the Corporate Tax Code No. 5520 (Arts. 8, 13), Law No. 5510 (Art. 4/b), the Turkish Commercial Code No. 6102 (Art. 394), the Stamp Tax Code No. 488, and — for 2026 parameters — Income Tax General Communiqué No. 332 (Official Gazette 31.12.2025, issue 33124 repeating). Thresholds and rates may change with revaluation and new legislation.

Director’s Fee 2026: The Legal Way a Partner Draws Up to TRY 33,030 a Month From the Company Almost Tax-Free — and Its Limit

The company made a profit, there is cash in the till, and the partner wants to take that money home. The reflex is to distribute a dividend — and it is usually the most expensive route. There is a way to move the same money into the partner’s pocket that also lowers the company’s tax base: the director’s fee (“huzur hakkı”). Below you will first see why this route is cheaper than a dividend, then how the first TRY 33,030 is drawn almost tax-free in 2026, and finally exactly where the advantage ends and turns into a penalty.

60-Second Summary: A director’s fee paid to a managing partner is, under Art. 61/4 of the Income Tax Code (GVK), salary — not a dividend. Two consequences follow: it is booked as a deductible expense at the company (Corporate Tax Code Art. 8), lowering the corporate-tax base; and for the individual, the minimum-wage exemption under GVK Art. 23/18 applies — in 2026, the portion of a monthly gross payment of TRY 33,030 that corresponds to the minimum wage is exempt from income tax, and the whole amount is exempt from stamp tax (condition: no salary from another employer that month). If the partner is insured under 4/b (Bağ-Kur), no extra social-security premium is withheld from the director’s fee. Drawing TRY 1,000,000 as a dividend costs 36.25%; as a director’s fee, 17.9%. The limit: as the cumulative tariff climbs toward 40% and the arm’s-length line of Corporate Tax Code Art. 13 is crossed, the advantage erodes.

What a Director’s Fee Is — and Why Being “Salary” Changes Everything

A director’s fee is the amount paid to a person who takes part in the management of the company — in a joint-stock company, a board member (TTK Art. 394); in a limited company, a managing partner — in return for that role. The critical point is its legal nature: GVK Art. 61 expressly treats a director’s fee as salary — the article states that a payment made under the name “huzur hakkı” does not change this character; amounts and benefits paid to board and audit-committee members by reason of those capacities are also salary under Art. 61/4. Not a dividend — salary.

This distinction looks like a technicality but it drives the entire tax result. A dividend is a distribution of corporate earnings on which tax has already been paid; it is not an expense for the company. A director’s fee, by contrast, is a salary payment and is deducted in determining corporate earnings under Corporate Tax Code Art. 8. So for every TRY 100 of director’s fee it pays, the company reduces its corporate-tax base by TRY 100 — an immediate TRY 25 corporate-tax saving at the 2026 rate of 25%.

The second half plays out on the individual side. Because it is salary, all the advantages of the salary regime apply to the director’s fee — first among them the minimum-wage exemption.

Why the First TRY 33,030 Is Almost Untaxed: the GVK 23/18 Exemption

Since 2022 there has been a rule: the income tax corresponding to the gross minimum wage is exempt for everyone (GVK Art. 23/18). Does this exemption also apply to a director’s fee? The Revenue Administration answered clearly by ruling: both the GVK Art. 23/18 income-tax exemption and the stamp-tax exemption in Table (2) annexed to the Stamp Tax Code apply to director’s-fee payments that fall within the scope of salary.

Let’s put numbers to it. In 2026 the gross monthly minimum wage is TRY 33,030. If a director’s fee is paid to the partner in that amount:

• Income-tax exemption: the income tax corresponding to the minimum wage is exempt — in 2026 this exemption is TRY 4,211.33/month for January–June and TRY 5,615.10 after July.
• Stamp-tax exemption: the entire gross amount is exempt from stamp tax.
• Social-security advantage: if the partner is insured under 4/b (Bağ-Kur), there is no extra premium — because they are already a Bağ-Kur member, the director’s fee does not enter the premium base.

There is a single condition; skip it and the exemption is lost: that month the partner must not receive salary from another employer. If there is salary from more than one employer, the exemption applies only to the highest. For a partner who also draws a salary from their own company, this is a fine but expensive distinction.

The Same TRY 1,000,000: Dividend or Director’s Fee?

Theory ends here, numbers begin. Suppose the company has pre-tax earnings of TRY 1,000,000 and the partner wants to take that money home. Two routes, two bills:

Item	A: Dividend	B: Director’s Fee
Company earnings (pre-tax)	1,000,000	1,000,000
Corporate tax (25%)	250,000	0 — booked as expense
Gross payment to partner	750,000	1,000,000
Income tax (cumulative, after 23/18)	—	174,619
Dividend withholding (15%)	112,500	—
Stamp tax (0.759%, after exemption)	—	4,582
Social-security premium (4/b partner)	0	0
Net in hand	637,500	820,800
Total tax burden	362,500 (36.25%)	179,200 (17.9%)

The difference — TRY 183,300 — goes into the partner’s pocket. The logic of the two routes is diametrically opposed: with a dividend, the money is taxed twice, first by corporate tax (25%), then by distribution withholding (15%). With a director’s fee, the payment becomes an expense at the company — no corporate tax arises at all — and only progressive income tax remains for the individual, itself pared down in the first bracket by the minimum-wage exemption.

Simulation notes: income tax is calculated cumulatively on the 2026 salary tariff — 15% (up to 190,000), 20% (up to 400,000), 27% (up to 1,500,000); gross tax is TRY 232,500, and after deducting the annual minimum-wage exemption of TRY 57,881 (the exemption rises in steps mid-year because the minimum wage’s cumulative base crosses into the 20% bracket in July), the net is TRY 174,619. The dividend side is modelled at the withholding level to keep the comparison clean (25% corporate + 15% distribution withholding = an effective 36.25%). This is a conservative floor for the dividend: once the gross dividend exceeds the annual filing threshold, the remaining amount (even though half the dividend is exempt under GVK Art. 22) is re-taxed on the progressive tariff, and after offset the total burden exceeds 36.25% in most scenarios. In other words, filing-based modelling makes the dividend even more expensive — it works to widen the director’s fee’s advantage, not narrow it. So the gap here is the lower bound of the gap that would actually arise.

Does the domestic minimum corporate tax undo this advantage? Since 2025, companies pay corporate tax of at least 10% of profit measured before deductions and exemptions (Corporate Tax Code Art. 32/C, added by Law No. 7524). This rule does not undo the director’s-fee advantage: a director’s fee is not an exemption or a deduction but an expense that reduces commercial profit at the source — so it lowers the base on which the minimum tax is computed as well. In the dividend scenario above, the minimum corporate tax is TRY 100,000 (1,000,000 × 10%), which stays below the ordinary TRY 250,000 corporate tax and therefore does not bite; in the director’s-fee scenario the expense zeroes out the profit, so no minimum tax arises either.

The Optimum Point: In a Profitable Company, the Extra Tax Falls to Zero

The real power of the director’s fee sits in a single number: TRY 169,152.65/month (TRY 2,029,832/year). At this level the individual tax burden on the director’s fee is exactly 25% — precisely equal to the corporate-tax rate the company saves when it books the payment as an expense.

In figures: the income tax plus stamp tax on TRY 2,029,832 of annual gross director’s fee is TRY 507,458 (an effective 25.00%). When the company books the same amount as an expense, its corporate-tax base falls by TRY 2,029,832; the corporate tax saved is 25% × 2,029,832 = TRY 507,458. The two figures are equal. So the income tax the partner pays out of pocket is recouped by the company through its corporate-tax saving — the movement of money from company to partner creates no additional tax cost.

For a profitable business the conclusion is clean: that profit was already going to face at least 25% corporate tax. On the director’s-fee route this 25% remains, but the second layer of a dividend — the 15% distribution withholding — never arises. And for every amount below this threshold the effective burden falls below 25% too; so the optimum is really a ceiling, the upper edge of the “no additional tax” zone. (This figure was confirmed by two independent sources: a cumulative calculation on the 2026 salary tariff and the optimum output of the ATC Universe director’s-fee calculator — both yield the same TRY 507,458 / 25.00%.)

Tax is only one face of it. The same move has three further benefits:

• Legal cash outflow: instead of an undocumented withdrawal from the till or a debit to the partners’ current account, the money passes from company to partner through an official, payrolled, deductible channel.
• A clean balance sheet: the “receivables from partners” line does not swell; there is no deemed-interest (“adat”) computation burden and no disguised-profit-distribution risk.
• Bank creditworthiness: the item that credit analysts read most negatively — the company lending to its partner — does not appear on the balance sheet; the financial statements look more suitable for financing.

See your own number. Enter your monthly director’s fee into the calculator and let it compute the net tax burden, the corporate-tax saving, and the advantage over a dividend in 30 seconds: Director’s Fee Optimisation Calculator (interface in Turkish; the figures are universal).

Where the Advantage Ends: Tariff, Arm’s Length and the Filing Threshold

A director’s fee is not an unlimited exemption but a sloping ramp. Three points call for care.

The cumulative tariff. The income-tax base accumulates over the year. A partner in the 15% bracket in the early months climbs to 27%, then to 35% (above TRY 1,500,000), and in the top bracket to 40% (above TRY 5,300,000) as the director’s fee grows. The dividend’s effective burden at the withholding level is a constant 36.25%; the director’s fee’s marginal rate exceeds this threshold only in the 40% bracket — that is, only after annual TRY 5,300,000 is passed. From that point on, drawing each additional lira as a dividend is cheaper. So the director’s fee wins clearly across a wide range and only approaches the dividend at very high amounts.

Arm’s length (Corporate Tax Code Art. 13). The expense advantage has a price: the payment must correspond to a genuine role. Paying a high director’s fee to a partner who does not actually work and contributes nothing to management is treated as a disguised distribution of profit. The consequence is heavy: the expense is disallowed, and a tax-loss penalty plus late-payment interest are added on top. The decisive test here is not a fixed ratio but arm’s-length conformity: the Council of State’s leading ruling on the point (3rd Chamber, 26.09.1990, E.1988/1544, K.1990/2716) holds that a director’s fee exceeding some percentage of the period’s profit is not, on its own, enough to treat it as a disguised distribution — but once it rises above the comparable amounts paid by similar companies, it can be classified as hidden profit distribution. The decision must have been taken at the general assembly / partners’ meeting, the amount must be reasonable, and the role must be real.

The filing threshold. A director’s fee received from a single employer and subject to withholding usually does not require an annual return. But if the partner receives a director’s fee from more than one company and the total exceeds the second tariff bracket (TRY 400,000 in 2026), the entire salary is subject to an annual return; the taxes withheld are offset. For partners with multiple companies this is the most frequently missed point.

Gökay GÜL’s Note: The most expensive mistake I see in the field is holding the director’s fee flat all year and not tracking the cumulative base. The partner is in the 15% bracket in January and, without noticing, has moved to 27% by October; the payment they thought was “tax-free” produces an unexpected tax at year-end. The right method: set the target net amount at the start of the year, plan the monthly director’s fee against the minimum-wage exemption and the first-bracket limit, and leave the rest to dividends. I put this into a table for every client not in December but at the start of the year — director’s-fee planning does not work in hindsight.

Field Case: Escaping a Swollen Till With a Deemed-Interest Bill

A limited company manufacturing in Anatolia, two partners. For years they had not distributed profit; the partners occasionally drew cash from the till, and no document was ever issued in return. The result: the partners’ current account showed a debit balance of millions of lira. When we opened the picture during the handover of the accountancy engagement, the risk was clear — this balance requires a deemed-interest (“adat”) computation within the scope of disguised profit distribution via transfer pricing; that is, the company is assumed to have lent money interest-free to the partner, income is imputed on it, and — together with VAT — an assessment risk arises.

The solution was built on two legs. First, forward-looking: the partners’ regular need for cash was tied to an official director’s fee by a partners’ resolution — the monthly amount set with the minimum-wage exemption and the first tariff bracket in mind, with payroll and withholding declarations established. Thus, instead of an undocumented withdrawal from the till, a deductible, low-tax payment channel was opened. Second, backward-looking: the existing current-account debt was eroded period by period with a partial director’s fee and planned dividend distribution. The result: the deemed-interest risk was brought under control, the net amount reaching the partners rose, and the till record returned to reality. The lesson: a director’s fee is not only a tax optimisation but also a tool of till discipline — an undocumented withdrawal is the most expensive way to take money out.

Frequently Asked Questions

Is a social-security premium withheld from a director’s fee? If the partner is insured under 4/b (Bağ-Kur), no — the director’s fee is not included in the premium base. But if a director’s fee is paid to a manager working under an employment contract (4/a) in the company, that payment is subject to premium. The determining factor is the person’s insurance status.

How much director’s fee can be paid to a partner tax-free in 2026? There is no “wholly tax-free” amount; the portion corresponding to the minimum wage (TRY 33,030 gross per month in 2026) is exempt from income tax and the whole amount is exempt from stamp tax. As this ceiling is exceeded, the excess is taxed on the progressive tariff.

Which is more advantageous, a dividend or a director’s fee? Across a wide range of amounts the director’s fee is clearly more advantageous, because it is booked as an expense at the company and benefits from the exemption in the first bracket. On tariff grounds alone, the advantage erodes only in the 40% bracket (above TRY 5,300,000), where the director’s fee’s marginal rate exceeds the dividend’s effective 36.25% burden; in practice the real limit is the Corporate Tax Code Art. 13 arm’s-length line and the cumulative tariff. For most SMEs the optimum is a blended structure that keeps the director’s fee at a reasonable, arm’s-length level and leaves the rest to dividends.

Can a director’s fee be paid to a partner who does not actually work? Paying it is risky. To be accepted as an expense, the payment must correspond to a genuine management role; otherwise it is treated as a disguised distribution under Corporate Tax Code Art. 13, the expense is disallowed, and a penalty is applied.

Is an annual return required for a director’s fee? If it is received from a single employer and withholding was applied, generally not. If salary is received from more than one employer and the total exceeds the second tariff bracket (TRY 400,000 in 2026), the entire salary is subject to an annual return and the taxes withheld are offset.

Action List

1. Determine the status: Is the partner 4/a or 4/b? This directly affects the social-security burden and how the exemption works.
2. Formalise the decision: Tie the director’s fee to a partners’ meeting / general-assembly resolution, and register the amount and period in writing (TTK Art. 394).
3. Compute the optimum amount at the start of the year: Plan the monthly director’s fee taking the minimum-wage exemption and the first tariff bracket into account, leaving the rest to dividends.
4. Preserve the arm’s-length line: Document that the role is real and the amount reasonable — close the disguised-distribution risk.
5. Track the cumulative base: Monitor bracket jumps during the year; see the surprise at the planning stage, not in December.

Sources: Income Tax Code No. 193 (Arts. 61, 61/4, 23/18, 103); Corporate Tax Code No. 5520 (Arts. 8, 13, 32/C); Law No. 5510 (Art. 4/b); Turkish Commercial Code No. 6102 (Art. 394); Stamp Tax Code No. 488 (Table 2); Income Tax General Communiqué No. 332 (Official Gazette 31.12.2025, issue 33124 repeating); for dividend withholding, Presidential Decision No. 9286 (Official Gazette 22.12.2024, 15%); for arm’s-length / disguised distribution, Council of State 3rd Chamber 26.09.1990, E.1988/1544, K.1990/2716; Revenue Administration rulings; TÜRMOB legislative circulars.

Gökay GÜL Certified Public Accountant (SMMM) | Director-Partner, Sistem Global Danışmanlık For nearly twenty years I have worked on tax planning and the structuring of partner–company relationships in SMEs and foreign-capital companies. For director’s-fee and dividend-distribution optimisation, book via gokaygul.com / info@gokaygul.com. Reply within 48 hours.