Key facts
The statutes, the timing, and the practical structures.
- Statutory frame
- Code of Obligations No. 6098 governs contractual phantom plans. Income Tax Law No. 193 governs the taxation of the payout. Turkish Commercial Code No. 6102 governs true share-based awards at the Turkish-entity level. Capital Markets Law No. 6362 sets the foreign-securities-offering boundary that phantom plans deliberately avoid.
- Why phantom dominates
- Phantom plans avoid a regulated foreign-securities offering in Türkiye, sit cleanly inside Turkish contract law, and land at a known tax destination (employment income at payout). True options on a foreign parent are possible but heavier on documentation, securities filings, and withholding mechanics.
- Tax timing on phantom
- Nothing at grant. Nothing at vesting (the right is contingent on settlement). At payout: treated as employment income, subject to progressive income tax (15 to 40%), SGK up to the ceiling, and stamp tax on the underlying agreement. Withheld at source by the Turkish employer and remitted via MUHSGK.
- Tax timing on true options
- Nothing at grant. At vesting or exercise: employment income on the spread (market value minus exercise price) under Income Tax Law No. 193. At sale of the shares: capital gains under separate rules. Withholding obligations of the Turkish employer apply where the parent is in the group.
- Treaty interaction
- Where the topco is in a double-taxation treaty jurisdiction, source-and-residence allocation rules can shift the tax outcome for cross-border employees who spend time in multiple jurisdictions during the vesting period. We model the split and apply the treaty rate.
- Standard vesting and cliff
- Industry standard: 4-year vest with 1-year cliff (25% vests at month 12, then monthly for the remaining 36 months). Variants used: 3-year vest with 6-month cliff, performance-vesting, double-trigger acceleration on change of control. Leaver rules differentiate good leaver (vested awards survive) from bad leaver (forfeiture).
- Pool sizing for studios
- Growth-stage game and app studios typically reserve 8 to 15% of the cap table for ESOP / phantom pool, refreshed at financing rounds. The pool is a parent-level commitment; the Turkish entity issues phantom against the same economic pool through intercompany allocation.
- Documentation language
- Drafted bilingually with Turkish controlling. Turkish courts apply Turkish law and read Turkish text; the English column lets the parent's counsel and the cap-table provider work without translation. The bilingual format is what makes the plan defensible at exit.
