Angel Investor (Individual Participation Investor)

An angel investor is an individual who invests personal funds in early-stage companies and often also supports the venture with knowledge, experience and connections. Angel investors usually take part in pre-seed and seed funding rounds and frequently invest through an angel investor network.

Regulation in Turkey

Angel investment in Turkey is governed by the Regulation on Individual Participation Capital. The new regulation, replacing the 2013 version, was published in the Official Gazette on 31 December 2024 and entered into force on 1 January 2025. In this system, a licensed angel investor is called an “individual participation investor” (BKY). The licence is issued by the Ministry of Treasury and Finance. The regulation allows people with a certain level of income or wealth, or investors experienced in finance and management, to obtain a licence.

Eligible Companies

To benefit from the tax incentive, the investee company must, in summary:

• Be a fully taxable joint stock company subject to the Turkish Commercial Code,
• Not have publicly offered shares,
• Be no more than ten years old,
• Have no more than fifty employees,
• Not be controlled by or dependent on the investor or their relatives,
• Operate in sectors determined by the Ministry.

There is a minimum investment amount per company, updated each year by the revaluation rate.

Tax Deduction

Under Provisional Article 82 of the Income Tax Law, licensed investors may deduct 75% of the price of the shares they acquire from the income declared in their annual returns. For investments in companies whose projects have been supported in the last five years by the Ministry of Industry and Technology, TÜBİTAK or KOSGEB, the rate is 100%. There is an annual cap on the deduction amount. If the shares are not held for at least two full years, the tax not assessed due to the deduction is collected together with late payment interest.

Angel investments are often made through instruments such as a SAFE or convertible note. However, since the tax deduction depends on the acquisition of shares, whether the instrument meets the licence conditions should be assessed before investing.