Under the Interreg IPA Bulgaria–Türkiye Cross-Border Cooperation Programme implemented in Türkiye, 21 SMEs operating in the provinces of Edirne and Kırklareli have been awarded funding to implement joint projects with their Bulgarian partners, under the “Environmentally Friendly Cross-Border Cooperation” call for proposals.
Following consultations with the Ministry of Industry and Technology and the Ministry of Treasury and Finance of R. Türkiye, to clarify the legal framework regarding the grant supports and incentives for the SMEs, it has been determined that there are several important considerations to be taken into account by SMEs holding incentive certificates when carrying out expenditures under the project.
SMEs supported under the Interreg Bulgaria-Türkiye Interreg IPA (VI-A) 2021-2027 Programme have added the investment expenditures incurred under this support — such as the purchase of machinery and equipment, construction of buildings, and similar project-related costs — to the total fixed investment amount declared under their investment incentive certificates (if any), any support received in excess shall be subject to recovery from the beneficiary in accordance with the applicable legislation.
Since there is no VAT exemption applicable to expenditures made under the Interreg Bulgaria-Türkiye Interreg IPA (VI-A) 2021-2027 Programme, all project expenditures must be made including VAT.
All invoices related to the procurement of goods and services financed under the Programme must include the following statement (either in Turkish or English language) in order to get reimbursement: “This product/service/construction work has been purchased with grant support provided under the Bulgaria-Türkiye Interreg IPA (VI-A) 2021-2027 Programme.”
A legal assessment on this matter is provided below:
The Interreg Programmes are implemented in accordance with Regulation (EU) 2021/1059. Pursuant to Programme rules, VAT expenditures are considered eligible costs for the 2021–2027 period and may be financed from the project budget. On the other hand, investment incentive practices in Türkiye are governed by Presidential Decree No. 9903 on "State Aids for Investments," which entered into force upon publication in the Official Gazette No. 32915 dated 30 May 2025. Article 14 of the Decree, titled “VAT Exemption,” states: “In accordance with the Value Added Tax Law No. 3065 of 25 October 1984, the import and domestic delivery of machinery and equipment as well as the sales and leases of software and intangible rights to investors holding investment incentive certificates may be exempt from VAT within the scope of the certificate. The same provision applies to partial deliveries of goods listed as sets, units, teams, or similar on the machinery and equipment lists, as well as to transfers of the investments covered by the certificate.” In the first sentence of Provisional Article 1 of the same Decree, titled “Pending Applications,” it is stipulated that: “Applications pending as of the date this Decree enters into force shall be finalized in accordance with the provisions in force on the date of application.” Likewise, Provisional Article 2, titled “Implementation of Previous Decrees,” states: “Practices related to incentive certificates issued under the previous decrees shall continue within the framework of the decree under which the certificate was granted and other relevant regulations.” In this context, Article 29 of the repealed Decree No. 2012/3305, which was replaced by the current Decree No. 9903, included the following provision under the title “Use of Other Supports”: “Investment expenditures benefiting from the support elements under this Decree may not benefit from other supports provided by public institutions and organizations. For investment expenditures that have already benefited or will benefit from other such supports, no application for support under this Decree may be made to the Ministry. In the event of any breach of this provision, the support received under this Decree shall be recovered in accordance with the relevant legislation.” As is evident, under national legislation, enterprises benefiting from one form of state aid may not receive any additional tax exemptions, grants, or interest support for the same investment from other public institutions or support schemes. |