DAB Certificate explained
In an attempt to protect the Turkish Lira and the economy, Turkey has introduced a new legislation for all foreign buyers purchasing property in Turkey. When making the final payment prior to the title deed transfer, the foreign buyer needs to pay the amount declared on the property deeds (TAPU) in Turkish Lira (TL). Previously the purchase could be made in any currency. For example, a UK Buyer and a UK Seller used to be able to complete the whole transaction in GBP. This new legislation has made the process a little more complex.
Now a foreign buyer/buyers must pay the amount declared on the TAPU in TL. The Buyer will need to exchange their foreign currency to TL on the day of the title deeds transfer. When exchanging the money, TCH will advise the bank that the transaction is for the purchase of a property and the bank will issue a DAB certificate to confirm the foreign currency exchange has taken place in relation to the property being purchased. This DAB certificate is now part of the paperwork required by the deeds (TAPU) office. Please note if you are purchasing in more than one number the amount will need to divided and shown on an individual DAB certificate for each person .
If the Seller is Turkish, they may be happy to receive all of the final payment in TL or at least the TAPU value in TL and the remaining amount in a foreign currency. However, when the Seller is a foreigner, they may require the whole amount to be paid in a foreign currency. These details should be confirmed in the Sales Purchase Contract issued by TCH.
When the Seller requires the whole amount to be paid in a foreign currency, the Buyer will need to make a second foreign currency exchange to convert the TL they bought to obtain the DAB certificate to the foreign currency specified by the Seller. It is important to note that buying and selling exchange rates differ. The buying rate is always lower than the selling rate and this is standard worldwide. Due to the difference in the buying and selling exchange rates the buyer will inevitably lose money over the two transactions.
Exchange rates are impossible to predict, therefore the amount of loss on the day of the two foreign currency exchange transactions is also impossible to predict. It has become common practice and seems only fair that the loss on the day is shared between the Seller and Buyer. Again, these details should be confirmed in the Sales Purchase Contract issued by TCH.
- The Buyer is using GBP to purchase a property.
- The Seller is wanting to receive all of the final payment in GBP.
- Exchange rates as of 02.05.23:
- Bank in Turkey buys GBP @ 24.2787 TL
- Bank in Turkey Sells GBP @ 25.8257 TL
- The amount declared on the TAPU is 2,000,000 TL.
- The Buyer will need to exchange 82,376.73 GBP to receive 2,000,000 TL.
- (2,000,000 TL divided by 24.2787 TL = 82,376.73 GBP)
- After the DAB certificate has been received, the Buyer will need to buy GBP with the 2,000,000 TL. 2,000,000 TL will buy 77,442.24 GBP.
- (2,000,000 TL divided by 25.8257 TL = 77,442.24 GBP)
- Over the two transactions the Buyer has lost 4,934.49 GBP.
- (82,376.73 GBP minus 77,442.24 GBP = 4934.49 GBP)