What is Capital gains?
Capital gains are the profits realized when a capital asset (shares, real estate, intellectual property, partnership interests) is sold for more than its cost basis. Capital-gains taxation is a structural axis of international tax planning: the rate, holding-period requirements, treaty entitlements, and stepping-up of basis at various structural points materially affect after-tax returns for founders, employees, and investors across the equity life cycle.
U.S. capital-gains taxation distinguishes short-term gains (assets held ≤1 year, taxed at ordinary-income rates up to 37%) from long-term gains (assets held >1 year, taxed at preferential rates of 0%/15%/20% plus 3.8% NIIT for high earners). Specialized regimes include: Qualified Small Business Stock (Section 1202): exclusion of up to $10M ($15M for stock issued after 4 July 2025) or 10x basis (whichever greater) on gain from QSBS held >5 years (for stock issued after 4 July 2025, a partial exclusion is available after 3 years); 1031 like-kind exchange: deferral of real-estate capital gains; and Opportunity Zone deferral: deferral and partial exclusion through OZ investment.
Turkish capital-gains treatment varies significantly by holding form: individual Turkish residents generally pay 0% on share-sale gains held >2 years (with certain restrictions); Turkish corporate residents benefit from a 50% exemption on qualifying share-sale gains under Article 5(1)(e) of the Corporate Tax Code (the statutory 75% was reduced to 50% by Presidential Decision No. 9160 of 27 November 2024) (assuming 2-year holding period, share sale, and qualifying-corporate-asset status); non-resident shareholders in Turkish companies face withholding/capital-gains tax that may be reduced or eliminated by applicable DTTs; and secondary share sales by non-Turkish investors in Turkish-domiciled holding companies may receive different treatment depending on entity classification and treaty positioning.
In cross-border M&A and venture-financing contexts, capital-gains structuring focuses on several leverage points: (i) entity-jurisdiction selection (Delaware/Cayman/BVI holdings frequently avoid Turkish capital-gains exposure on secondary transactions); (ii) holding-period planning (extending hold periods to qualify for QSBS, Turkish Article 5(1)(e) exemption, or treaty benefits); (iii) step-up structures (creating tax basis at strategic structural points to reduce ultimate capital-gains exposure); (iv) treaty positioning (residency planning to access favorable DTT capital-gains articles); and (v) installment-sale and earn-out treatment (timing recognition of gains across multiple tax years).
For Turkish founders, employees, and investors structuring equity-based wealth across international and Turkish ownership, capital-gains optimization is a high-leverage discipline. Common scenarios requiring sophisticated analysis include: founder secondary sales during late-stage rounds, employee equity exercises and stock-option dispositions, exit-transaction structuring for company sales, and international wealth-relocation planning for founders considering jurisdictional moves.