How interest on unpaid debts works in Turkish law
In cross-border business with Türkiye, an unpaid invoice or contractual default does not remain static. Under Turkish law, statutory interest accrues automatically once the debtor is placed in formal default (mütemerrit). The legal framework governing interest is set out in Law No. 3095 on Legal Interest and Default Interest, the Turkish Code of Obligations (TBK No. 6098), and the Turkish Commercial Code (TTK No. 6102).
Statutory Legal Interest vs. Commercial Advance Interest
Turkish law draws a fundamental distinction based on the nature of the parties and the underlying transaction:
- Statutory Legal Interest (Kanuni Faiz): Governed by Article 1 of Law No. 3095, this is the baseline statutory rate for civil claims, tort damages, and non-commercial contracts.
- Commercial Advance Rate (Avans / Ticari Temerrüt Faizi): Governed by Article 2/2 of Law No. 3095 and TTK Article 1530. When both parties are commercial merchants (tacir) or the debt arises from a commercial transaction, the creditor has the statutory right to claim the higher commercial advance interest rate set by the Central Bank of the Republic of Türkiye (TCMB).
Foreign Currency Debts in Türkiye (USD, EUR, GBP)
Under Article 4/a of Law No. 3095, where a monetary debt is denominated in a foreign currency (such as USD, EUR, or GBP), the creditor is entitled to demand default interest calculated at the highest interest rate paid by Turkish state banks on one-year foreign currency deposits for that specific currency.
This rule protects international suppliers and creditors against Turkish Lira inflation while ensuring that unpaid hard-currency receivables accumulate realistic commercial yields throughout the recovery process.
Starting the Clock: Notice of Default (İhtarname) vs. Payment Orders
Under Turkish Code of Obligations Article 117, interest does not begin running simply because an invoice was sent, unless a specific calendar due date was established by contract. To trigger statutory default interest, the creditor must usually serve a formal notarial notice of default (ihtarname) or initiate formal enforcement proceedings (icra takibi) through the Turkish execution offices.
Precautionary Attachment (İhtiyati Haciz): Freezing Assets Early
The biggest risk in commercial recovery is not proving the debt, but having the debtor empty its bank accounts or transfer real estate while litigation is pending. Under Execution and Bankruptcy Law (İİK) Article 257, foreign creditors can apply to Turkish commercial courts for a precautionary attachment order (ihtiyati haciz) to freeze the debtor's Turkish bank accounts, trade receivables, vehicles, and real estate within 24–48 hours before the debtor receives formal notice.