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Turkey's 2026 ESOP Turning Point: The Employee Share Exemption Cap Doubles
Law No. 7582 doubles the income-tax exemption cap on shares granted to tech-startup employees from one to two times annual gross salary; the real risk is that non-qualifying joint-stock companies tax the share as full salary under Income Tax Code Art. 61.
Regulatory Note: This article reflects the position as of 13 June 2026, based on Articles 17, 61 and repeating Article 80 of the Turkish Income Tax Code (GVK), Law No. 7524 (Official Gazette 02.08.2024), General Communiqué on Income Tax No. 326 (Official Gazette 27.09.2024, issue 32675), Law No. 7582 (Official Gazette 04.06.2026) and the share-certificate provisions of the Turkish Commercial Code (TTK). Law No. 7582 was published in the Official Gazette on 4 June 2026 and entered into force on the same date.
Turkey’s 2026 ESOP Turning Point: The Employee Share Exemption Cap Doubles — But Most Companies Walk Through the Wrong Door
60-Second Summary
- Under Law No. 7582, the income-tax exemption cap on shares granted to employees of qualifying tech-startups rises from one to two times the employee’s annual gross salary.
- The condition is strict: the company must hold tech-startup (“teknogirişim”) status certified by the Ministry of Industry and Technology. In any other joint-stock company, the share is fully taxable salary under GVK Art. 61.
- A clawback applies on early sale: 100% within 2 years, 75% in years 3-4, 25% in years 5-6, collected from the employer with late-payment interest.
- The exit is a separate gate: if the share certificate is physically issued and held for two full years, the sale gain is fully exempt under GVK rep. Art. 80; if not issued, no exemption.
- Law No. 7582 was published in the Official Gazette on 4 June 2026 and is now in force; the 2x cap and clawback tiers apply.
What ESOP Is, and How a Joint-Stock Company Can “Grant Shares”
An ESOP (Employee Stock Option Plan) retains scarce talent by tying them to the company’s upside rather than cash. In startups and tech firms — high cash burn, fierce talent competition — equity promises “future value” in place of salary today.
In Turkey, a joint-stock company can transfer value to an employee through three legal instruments — and this distinction is the heart of any structuring:
- Free or discounted share certificates — the employee becomes an actual shareholder (share certificate / interim certificate under the TTK).
- Share options — a contractual right to acquire shares later at a set price.
- Phantom shares — no ownership; only the economic return of the share is promised in cash.
On the tax side there are two regimes, and which one you sit in decides everything: a tech-startup company triggers the GVK Art. 17 salary exemption; a general joint-stock company treats the granted share as salary under GVK Art. 61, with no exemption.
By the Numbers: Old Cap, Post-7582 Cap, and the Two Regimes
Communiqué No. 326 gave its own example: tech-startup (A) Inc. granted employee (B) a share worth TRY 500,000 at fair value on 30.09.2024; B’s annual gross salary was TRY 600,000. Because the fair value did not exceed the gross salary, the entire benefit was exempt. Law No. 7582 doubles that cap.
Table 1 — Exemption cap: old (1x) vs. 7582 (2x)
| Scenario | Share fair value | Annual gross salary | Exemption (1x, old) | Exemption (2x, 7582) | Change in taxable salary |
|---|---|---|---|---|---|
| A — junior | 400,000 | 600,000 | 400,000 (full) | 400,000 (full) | None (already below cap) |
| B — mid | 1,200,000 | 800,000 | 800,000 | 1,200,000 (full) | 400,000 leaves the tax base |
| C — senior | 3,000,000 | 1,000,000 | 1,000,000 | 2,000,000 | 1,000,000 more becomes exempt |
Simulation notes: Fair value is set under VUK Art. 266 (ordinary purchase-sale value). Any amount above the cap is taxed as salary at grant. The increase mainly helps mid- and senior technical staff; if a junior package is already below the cap, the change is neutral.
Table 2 — The two regimes side by side
| Criterion | Tech-startup Inc. (GVK Art. 17) | General Inc. |
|---|---|---|
| At grant | Exempt up to the cap (2x) | Full salary (GVK Art. 61), no exemption |
| Clawback | Yes (2 / 3-4 / 5-6 year tiers) | No |
| At sale | GVK rep. Art. 80 (certificate + 2 years) | GVK rep. Art. 80 (certificate + 2 years) |
| Status requirement | Ministry of Industry & Technology certificate | None |
Risk Filter: Know Which Door You Came Through
The real money is lost not on the cap figure but in the wrong regime. The decision order should be:
1. Do you hold tech-startup status? If not, the GVK Art. 17 exemption is closed to you; the share is full salary, with payroll and withholding triggered at grant. An e-commerce, retail, logistics or service-led high-growth startup is often outside this door — unlike international models (the UK’s EMI test is not “being a tech company” but “an independent company below a certain size”).
2. Have you built the clawback schedule? If the employee sells early, the exempt tax is reclaimed from the employer with late interest: 100% within 2 years, 75% in years 3-4, 25% in years 5-6. When an employee leaves and sells of their own accord, that burden lands on the former employer. Without transfer restrictions and a buyback mechanism in the plan, this is a tax risk outside your control.
3. Have you issued the share certificate? The exit exemption is a separate gate. If the share certificate or interim certificate is issued and held for two full years, the sale gain is fully exempt under GVK rep. Art. 80/1. If not issued, there is no exemption; the gain is taxable whenever sold, climbing to brackets as high as ~40% on an early exit.
4. Is the structure foreign-owned? In cross-border plans, the OECD allocates the right to tax in proportion to the countries where the employee actually worked during vesting. An option granted in the US and vesting in Turkey carries double-taxation risk that must be modeled up front.
Gökay GÜL’s Note: The mistake I see most often in the field is option plans built on the assumption “we’re a tech company, so the exemption applies” — without the tech-startup certificate. No certificate, no exemption; the share enters payroll as full salary and inflates income tax, stamp tax and the social-security base. Before building the plan, answer one question: is your tech-startup status certified before the Ministry of Industry and Technology? If “no,” we fix that door first; if “yes,” we talk about certificate issuance and the two-year rule.
Field Case (Anonymized)
The Istanbul subsidiary of a Scandinavian-origin software group came to us in autumn 2025, right after a Series B round. The trigger was clear: two of four key engineers had received offers from abroad, and the parent wanted to “set up an option plan like ours so they stay.” The draft on the table was Stockholm’s familiar model — discounted shares today, three-year vesting, and the assumption “we’re a software company, so there must be an exemption in Turkey too.”
In the first meeting I asked a single question: is your tech-startup status certified before the Ministry of Industry and Technology? The answer, as expected, was “probably not, we’ll check.” The subsidiary only developed software; that did not confer tech-startup status automatically. A plan built without the certificate would have created, on each share transfer, a six-figure salary base per employee, plus income-tax withholding, stamp tax and social security. For the first tranche of four people, we put the early tax burden on the company at roughly TRY 2,400,000 — meaning that if they had signed the plan “as is,” the cost of retaining an engineer would have gone to the treasury before any value reached the engineer.
We rebuilt the structure in two steps. First: we paused the share transfer until the status application concluded and replaced it with a vesting-based option contract, deferring the taxable moment to the later date of actual grant, so the engineers saw their rights “on paper.” Second: once the tech-startup application was completed, the share certificates were issued, and the plan tied each employee’s two-year holding period to the clawback tiers (2 / 3-4 / 5-6 years), with a buyback clause keyed to the departure-and-sale scenario. The result: the roughly TRY 2,400,000 of early salary tax was moved into the exemption, both engineers stayed, and the taxpayer rolled out the plan on a controlled schedule. The lesson is not in the numbers but in the order: status door first, then instrument, and the spreadsheet last.
The International Window: What Turkey Does Differently
To see the structural weakness, look outward. Mature ecosystems trigger tax not at “grant” but at “sale/exit” — when the employee actually realizes cash — and classify the income as capital gain rather than salary:
- UK (EMI): If the exercise price is at or above market value at grant, there is no income tax or social-security charge at exercise; on sale, Business Asset Disposal Relief applies a single low rate (~10%). The test is company size and independence, not being a “tech” company.
- US (ISO): No ordinary income tax at grant or exercise for qualifying options; if the holding period is met, the sale gain is taxed as long-term capital gain. An NSO, by contrast, taxes the spread at exercise as ordinary salary.
- France (BSPCE): Employees of young companies below a value threshold pay no tax at acquisition; tax arises only at sale, at a flat rate.
The OECD framework backs this logic: the system should not artificially steer a company between paying cash salary and granting options (tax neutrality); the portion up to exercise is employment income, the value increase thereafter is capital gain.
Turkey instead treats the share directly as salary, exempt up to a cap, tying tax to the grant rather than deferring it to sale, and locks the exemption behind a narrow status test (the tech-startup certificate). The 2x cap under 7582 is monetary relief; but the “salary regime + clawback + narrow scope” core of the architecture remains. That is exactly where the competitive gap sits.
FAQ
1. Who benefits from the exemption? Only employees of companies certified as tech-startups by the Ministry of Industry and Technology. In a general joint-stock company, the granted share is full salary under GVK Art. 61.
2. Is there tax again when the share is sold? If the certificate is issued and held for two full years, the sale gain is exempt under GVK rep. Art. 80. If not issued, or sold before two years, a capital gain arises.
3. No tech-startup status — no path at all? There is a path, just without the exemption. You design the share/option within the salary regime and manage the taxable moment and cash flow by contract. Timing and instrument choice replace the exemption.
4. Option vs. phantom — what’s the difference? An option grants a future right to become a shareholder; a phantom creates no ownership, only a cash-settled economic return. A phantom is also taxed as salary under GVK Art. 61.
5. When does 7582 take effect? It was adopted by the Grand National Assembly on 21.05.2026, published in the Official Gazette on 4 June 2026, and entered into force on the same date. The 2x cap and clawback tiers now apply.
Action List and Sources
- Today: Certify your tech-startup status or start the application timeline — it determines which regime you are in.
- Before plan design: Decide on share/interim-certificate issuance; it is the precondition for the exit exemption.
- In the contract: Write the clawback tiers (2 / 3-4 / 5-6 years) and a buyback mechanism keyed to the employee-departure scenario.
- 7582 in force: The new 2x cap and clawback periods apply from 4 June 2026; align existing plans with the gazetted text.
- In foreign-owned structures: Model country-by-country taxing rights and double taxation across the vesting period from the outset.
Sources: GVK Arts. 17, 61, rep. 80; Law No. 7524 (OG 02.08.2024); Income Tax General Communiqué No. 326 (OG 27.09.2024, issue 32675); Law No. 7582 (OG 04.06.2026); TTK share-certificate provisions; OECD — The Taxation of Employee Stock Options; for comparison: UK EMI (HMRC), US ISO/NSO (IRC §422), France BSPCE (CGI Art. 163 bis G).
Gökay GÜL Certified Public Accountant (SMMM) | Director-Partner, Sistem Global Danışmanlık Field experience in foreign-investor, RHQ and startup structuring; builds taxpayers a roadmap on ESOP and share-exemption matters from regime selection to contract. For ESOP structuring, book via gokaygul.com / info@gokaygul.com. Response within 48 hours.