Multi-Currency Accounting in Türkiye: What Foreign-Owned Companies Get Wrong

A foreign-owned company in Türkiye lives in at least two currencies at once. Local books, tax filings and statutory reports must be in Turkish Lira (TRY), while the parent group reports in EUR, USD, GBP or another currency. Bridging these two worlds correctly — handling exchange differences, choosing the right functional currency, reconciling at period end — is where many foreign finance teams stumble. This guide covers the practical essentials.

The two-currency reality

Your Turkish subsidiary must keep its statutory books in TRY. This is non-negotiable: tax returns, e-Ledger, VAT filings, payroll — all in Lira. At the same time, your parent needs the numbers in the group reporting currency for consolidation.

This creates a constant translation task. And because the Lira moves against major currencies, the translation isn't a fixed multiplier — it changes every day, and those changes have to be accounted for correctly.

Functional vs. reporting currency

A key concept many teams blur: functional currency is the currency of the primary economic environment in which the entity operates. For most Turkish subsidiaries that sell and buy primarily in TRY, the functional currency is TRY — even if the parent reports in EUR.

This matters because it determines how you account for foreign-currency transactions and how you translate for the group. Getting the functional currency assessment wrong cascades into incorrect exchange-difference treatment throughout the books.

Exchange differences — where the mistakes happen

When your TRY-functional subsidiary has a transaction or balance in foreign currency (say, a USD payable to the parent), exchange rate movements create gains or losses. Two categories matter:

Realised exchange differences — when the foreign-currency item is actually settled (you pay the USD invoice), the difference between the booking rate and the settlement rate is realised gain/loss, hitting the income statement.

Unrealised exchange differences — at period end, open foreign-currency balances must be revalued at the closing rate. The resulting gain/loss is recognised even though nothing was settled. Many teams forget this period-end revaluation, leaving foreign balances stuck at historical rates and producing wrong financials.

The common error: treating all foreign-currency movements the same way, or skipping the period-end revaluation entirely.

The inflation-accounting layer

Türkiye introduced inflation accounting (enflasyon muhasebesi) for the 2023 financial year, restating monetary and non-monetary items. Important current status: under Law No. 7571 (Official Gazette, 25 December 2025), inflation adjustment has been suspended for the 2025, 2026 and 2027 financial years for most taxpayers — with a narrow exception for businesses continuously dealing in processed gold and silver, who continue to apply it.

The practical takeaway for foreign teams: these rules switch on and off by legislation, so don't assume Turkish statutory accounting maps one-to-one to your group GAAP from year to year. In years when inflation restatement is in effect it can create significant gaps between the local statutory result and the figure your parent expects; in the currently suspended years (2025–2027) that particular gap closes, but exchange differences and GAAP differences remain. Always confirm the current-year status with your CPA and plan for a reconciliation, not a blind translation.

Period-end reconciliation discipline

At each close, a foreign-owned Turkish entity should produce:

1. Statutory TRY figures — for local tax and compliance.
2. Revalued foreign-currency balances — open items at the closing rate.
3. Group-currency translation — TRY figures converted for consolidation, with a documented rate policy (closing rate for balance sheet, average rate for income statement, per most group GAAPs).
4. A reconciliation bridge — explaining the difference between the statutory result and the group-reported result (exchange differences, inflation restatement, GAAP adjustments).

Without this bridge, the parent CFO sees two different profit numbers and can't tell which is right. The bridge is what makes both numbers trustworthy.

What to track all year

• Every foreign-currency transaction with its booking rate
• Open foreign-currency balances per currency
• A consistent source for exchange rates (typically the Central Bank of the Republic of Türkiye rates for statutory purposes)
• Related-party foreign-currency balances separately (these intersect with transfer pricing)

How Birasyo helps

Birasyo ERP handles multi-currency natively: transactions are booked in their original currency with the correct rate, open balances are revalued at period end automatically, and realised vs. unrealised differences are separated correctly. Statutory TRY books and group-currency translation run in parallel, and the system produces the reconciliation bridge your parent needs — so local compliance and group reporting stay consistent without manual spreadsheet gymnastics.

Explore Birasyo for foreign-owned operations →

Summary

Multi-currency accounting in Türkiye is less about the arithmetic of conversion and more about discipline: choosing the right functional currency, never skipping period-end revaluation, and always producing a reconciliation bridge between statutory and group figures. Inflation accounting can widen the gap further. Get these right, and your parent gets numbers it can trust; get them wrong, and every close becomes an argument about which profit figure is real.