A shareholder of a limited liability company is not fully protected from the company's tax debts merely because the company has a separate legal personality. Under Article 35 of Law No. 6183, a public receivable that cannot be collected in whole or in part from the company, or that is understood to be uncollectable, may be pursued against the shareholder in proportion to their capital share. However, personal collection cannot proceed without showing shareholder status, the relevant period, the share ratio and the conditions for collection from the company. 1
If a payment order has been served on a shareholder, the general rule for a tax claim is that an annulment action before the Tax Court should be assessed within 15 days of service. A transfer of shares does not by itself end all past tax debts. This article explains the liability arising from shareholder status, transfer situations and the set of documents that can be used in a defense.
Which debts is a limited liability company shareholder liable for?
Private law debts and public receivables must be distinguished. A claim held by a person who sold goods to a limited liability company is not subject to the same collection regime as the company's tax debt to the tax office. For public receivables, the special liability provision of Law No. 6183 applies. The statement "I paid my capital, so I am not liable for any of the company's debts" is therefore not, on its own, a sufficient defense in tax collection. For more detail, see tax obligations when setting up a business.
As a rule, liability is determined by the capital share ratio; it is not an upper limit tied to the nominal amount of capital the person contributed to the company. For example, where the conditions of liability are met and there is a public receivable of 1,000,000 TL, a shareholder holding 20% may be liable for an amount tied to that share, which is 200,000 TL. A lower capital commitment to the company does not by itself limit this calculation. The example cannot be used as a final debt calculation without taking into account accessory amounts (fer'iler), changes in the period and earlier collections.
Does the same rule apply to joint-stock company shareholders?
The shareholder liability in Article 35 of Law No. 6183 is specific to limited liability companies. In a joint-stock company, only shareholding and legal representation are kept separate. Similar commercial activity or the same person being involved in both types of company does not allow the limited-company rule to be transferred directly to the other.
Must collection from the company be attempted first?
The condition in the provision is that the public receivable cannot be collected in whole or in part from the company, or that it is understood that it cannot be collected. This condition is not identical to the mere statement that "the debt was not paid on time." The company's asset investigation, enforcement steps, the value of the assets available and the records on collection possibilities should be examined.
The shareholder may submit documents showing that the company holds assets that can be collected from, and may ask for the administrative enforcement file to be obtained. The administration may rely on the company's lack of assets, the results of attachment and sale, or concrete records showing that collection will not be possible. No absolute rule can be set that in every file all of the assets must actually be sold; the circumstances of the "understood to be uncollectable" condition in the law are assessed separately in each case.
Is it mandatory to pursue the company's manager first?
Under the decision of the Council of State Unification of Case-Law Board (Danıştay İçtihatları Birleştirme Kurulu) dated December 11, 2018, E.2013/1, K.2018/1, pursuing the legal representative before the shareholder is not mandatory. There is no order of priority between the shareholder and the representative in this sense. The decision does not remove the requirement to collect from the company, and it does not equalize the liability conditions of the two persons. 2
Does a share transfer end tax debt liability?
Under Article 35 of Law No. 6183, where a share is transferred, the transferor and the transferee are jointly and severally liable, within the framework of the law, for public receivables arising before the transfer. The provision also regulates situations where the shareholders at the time the public receivable arose differ from the shareholders at the time it had to be paid. Therefore, the fact that a payment order was sent to the former shareholder only after they had left the company does not by itself make the process unlawful. 1
The review on a transfer should cover the tax period to which the debt belongs, the event giving rise to the tax, the due date, the share ratio and the documents showing that the transfer was legally completed. A later filing of a return, or a debt that emerges years later after an audit, does not remove the question of which period the receivable belongs to.
Why are the transfer agreement and the trade registry reviewed together?
Under Article 595 of the Turkish Commercial Code No. 6102, the transfer agreement, the notarial certification of signatures and, where necessary, the approval of the general assembly are assessed. The provisions of the company agreement are also important. A conclusion on the effective date cannot be drawn in every dispute merely from a newspaper announcement or from a notarised agreement alone; the validity of the transfer and its effect on third parties are separate legal questions. 3
Adding to the transfer agreement that "the new shareholder pays all old debts" does not by itself remove the administration's statutory collection power. This clause may matter for the internal relationship between the parties and for recourse. The allocation of risk under the contract should not be confused with liability towards the administration.
If the share changes during the year, is the whole year assessed in the same way?
Not every tax arises in the same way. A debt subject to monthly periods and an annual tax cannot be reduced to the same date schedule for the purposes of the effect of a change in the share ratio. Each item in dispute should be shown on a separate line: tax type, period, due date, start and end of shareholding, the relevant share ratio, payment and remaining amount. Statements such as "I was a shareholder that year" or "I left before the year ended" are not sufficient on their own.
The position of a person who is both shareholder and manager
A person can hold both capacities. Liability arising from shareholding under Article 35 is assessed by the share ratio, while liability arising from legal representation under Article 10 of the Tax Procedure Law No. 213 (VUK) is assessed under its own conditions. A collection based on the managerial role cannot be said to automatically set the share ratio as a limit. Conversely, it is also incorrect to treat a person as the legal representative merely because they are a shareholder. 1 4
The legal basis and capacity stated in each payment order should be identified. If the administration demands the entire debt in a single document and the reasoning and the liability calculation are not clear, the objection on that point should be made specific. Pursuing the same receivable from the company, a shareholder and the representative cannot permit duplicate collection; payments must be tracked across all of the accounts.
How to object to a payment order issued in the shareholder's name
For a tax receivable, an annulment action against a payment order issued in the shareholder's name is generally filed before the Tax Court within 15 days of service. An action brought by the company in its own name does not in every case cover the shareholder's separate personal transaction, so the need to sue against that transaction must be assessed separately. Electronic and physical service records should be checked separately. 1 5
The defense should not be left general, such as "the company's debt does not concern me." It may be argued that there was no shareholding, that the period or share ratio was wrong, that the transfer provisions were misapplied, that the condition of collection from the company was not met, that payment was made, or that the limitation period for collection has expired. Each claim must be supported by evidence.
- Company agreement, share ledger and trade registry records.
- Notarised share transfer agreement and general assembly resolutions.
- Breakdown of the debt by tax type and period.
- Company assets and records of enforcement steps.
- Payment and offset records, and earlier court decisions.
- The payment order, all of its annexes and proof of service.
How can attachment of personal assets be prevented?
Filing an action against a payment order does not by itself stop collection. A request for a stay of execution can be made by explaining both a clear illegality and damage that is difficult or impossible to repair. An incorrect application of the share ratio can be specified as the illegality, and the blocking of essential income can be specified as the damage. The court assesses the two conditions separately. If an attachment has been carried out, it is examined whether that act also needs to be made the subject of a separate action. 5 For more detail, see deferral and instalment payment of tax debts.
Conclusion
The tax liability of a limited liability company shareholder is assessed through the condition of collection from the company, the share ratio and the debt period. A transfer of shares alone does not erase past liability. A sound defense compares the shareholding dates and the debt dates in the same schedule, and separately protects the deadline for an action against a personal payment order.
Frequently Asked Questions
Is a limited liability company shareholder liable only up to the capital they contributed?
No. For public receivables, Article 35 of Law No. 6183 provides for liability based on the capital share ratio, not a ceiling equal to the nominal capital. See the calculation example in the first section. Return to the related explanation
Does the old tax debt end for someone who transferred their company shares?
Not automatically. Receivables arising before the transfer and the joint and several liability provisions of the law are examined. See the section "Does a share transfer end tax debt liability?" Return to the related explanation
Must the tax office pursue the manager first?
No, pursuing the manager before the shareholder is not mandatory. The conditions for collection from the company are preserved. See the section on the Council of State decision. Return to the related explanation
Can a shareholder who is not a manager also be pursued?
Yes, where the conditions of Article 35 are met, pursuit in the capacity of shareholder is possible. The distinction between the shareholder and the managerial role is explained in the relevant section. Return to the related explanation
Does a lawsuit filed by the company also cover my payment order?
This result is not automatic. The deadline for a separate action against the shareholder must be protected separately. See the section "How to object to a payment order issued in the shareholder's name." Return to the related explanation
Sources and legal bases
- Law No. 6183 on the Procedure for Collecting Public Receivables (6183 sayılı Kanun), Arts. 3, 35, 55, 58 and 102–104. Source text
- Council of State Unification of Case-Law Board (Danıştay İçtihatları Birleştirme Kurulu), December 11, 2018, E.2013/1, K.2018/1; Official Gazette (Resmî Gazete), June 20, 2019, No. 30807. Case commentary: İlknur Kaya, Anadolu University Faculty of Law Journal (Anadolu Üniversitesi Hukuk Fakültesi Dergisi), 2020. Source text
- Turkish Commercial Code No. 6102, Arts. 595, 598 and 623. Source text
- Tax Procedure Law No. 213, Art. 10. Source text
- Administrative Procedure Law No. 2577, Arts. 3, 7–8 and 27. Source text