Registration Tax: Enunciation and Shareholder Financing

published on 12 December 2024 | reading time approx. 3 minutes

Article 22 of Presidential Decree No. 131 of April 26, 1986 (TUR)¹ establishes the rules on the enunciation of unregistered acts.

By “enunciation”, we mean a reference to one act (the "declared" act, which may even be a verbal contract) made within another act (the "declaring" act).

This rule aims to prevent tax evasion by ensuring that parties cannot simply enter into a contract, leave it unregistered, and later confirm its existence in a subsequent contract, thereby avoiding taxation of the declared contract.

Requirements for the taxation (registration) of a enunciation:

The enunciation must be included in an act subject to registration;
The declared act must involve the same parties as the declaring act;
The declaring act must include sufficient details to clearly identify the declared act, including its parties, content, and scope;
For verbal contracts, the effects of the declared act must still be in force.

Shareholder Financing and Possible Waivers

The rules on registration tax for financing provided by shareholders to their companies vary depending on the nature of the financing and the form in which it is made.

Type of shareholder financing	Registration	Tax rate
Formalized by public deed or private writing (authenticated or not) and outside VAT scope	Fixed-term	3 percent
Formalized by correspondence and outside VAT scope	On use	3 percent
Exempt from VAT and formalized by public deed or authenticated private writing	Fixed-term	200 euro
Exempt from VAT and formalized by unauthenticated private writing	On use	200 euro

Shareholder financing can also be made orally; in this case, registration is required only on use. The "on-use" condition arises when the act/contract must be submitted to judicial offices or public administrations.

Shareholders' resolutions to increase share capital are common, often aimed at covering losses, and are implemented through the shareholders' waiver of loans owed by the company, with these loans subsequently allocated to share capital. In such cases, the loan agreement is often referenced in the minutes of the extraordinary shareholders' meeting, falling under the typical scenario of a enunciation.

According to consistent and recent Supreme Court case law, shareholder loans made verbally are not subject to registration tax, even if declared, as their allocation to share capital terminates their effects, invoking the non-taxability clause under Article 22, paragraph 2 of Presidential Decree No. 131/86.

However, the Revenue Agency, the Supreme Court, and part of the legal doctrine agree that if a written loan agreement is declared in a shareholders' resolution subject to registration (e.g., an extraordinary resolution to increase capital), this triggers the fixed-term registration obligation and proportional 3 percent tax rate for the declared contract, even if the original written contract would have been subject to registration only on use.

[1] Article 22 - Enunciation of unregistered acts:

In the case of enunciation in a deed of provisions contained in unregistered written deeds or verbal contracts between the same parties as those involved in the deed containing the enunciation, the tax shall also apply to the enunciated provisions. If the act enunciated was subject to registration in a fixed term, the pecuniary penalty provided for in Art. 69 is additionally due.
The enunciation of oral contracts not subject to registration within a fixed period of time shall not give rise to the imposition of tax when the effects of the provisions enunciated have already ceased or are ceasing by virtue of the act containing the enunciation.
Where the enunciation of an act not subject to registration within a fixed period of time is contained in one of the acts of a judicial authority referred to in Article 37, the tax shall be charged on that part of the act enunciated which has not yet been performed.