Dynamic Statutory Interest System Introduced by the 12th Judicial Reform Package in the Face of High Inflation and Additional (Excess) Damages

For many years, statutory interest in our legal system was applied at a fixed rate. In the face of high inflation in Türkiye, this fixed rate caused significant losses of rights for creditors. For this reason, creditors filed numerous lawsuits based on claims for additional (excess) damages (munzam zarar), arguing that statutory interest did not compensate for the damages caused by high inflation.

For a period, the Court of Cassation accepted that inflation was unforeseeable and that the statutory interest rate was insufficient to compensate for such damages, and therefore awarded compensation for additional damages. However, it subsequently changed its case law, holding that inflation had become foreseeable in our country and therefore would not give rise to additional (excess) damages. This approach resulted in creditors' receivables losing value against inflation for every day they remained unpaid and, due to the gap in the legislation, caused significant grievances in practice.

With the regulation introduced by Law No. 7589 (the 12th Judicial Reform Package), the legislator expressly acknowledged that a fixed statutory interest rate could not protect creditors against inflation and established a dynamic statutory interest system designed to protect creditors from inflation.

Fundamental Structure of the New Statutory Interest System and the Indexation Principle

As explained above, the legislator acknowledged that, due to the high inflation in Türkiye, a fixed statutory interest rate was insufficient to balance the interests of creditors and debtors. Therefore, by virtue of Law No. 7589, the statutory interest rate has been indexed to the rediscount rate applied by the Central Bank of the Republic of Türkiye in short-term lending transactions.

Through this regulation, the interest rate is automatically updated twice a year in the event of an increase or decrease in inflation, thereby ensuring a fair balance between the interests of debtors and creditors. Accordingly, the loss of value caused by the fixed-rate system has been eliminated, and a dynamic statutory interest system compatible with economic conditions has been established.

Method of Calculating Statutory Interest and Determination of the Rates

Law No. 3095 on Statutory Interest and Default Interest

Statutory Interest – Former TextStatutory Interest – New TextArticle 1 – Statutory Interest (Amended by Law No. 5335, Article 14, dated 21/4/2005) Where interest is payable under the Code of Obligations and the Turkish Commercial Code, and the rate has not been determined by agreement, such interest shall be calculated at an annual rate of twelve percent (12%).Article 1 – Statutory Interest (Amended by Law No. 5335, Article 14, dated 21/4/2005) Where interest is payable pursuant to the Turkish Code of Obligations No. 6098 dated 11/1/2011 and the Turkish Commercial Code No. 6102 dated 13/1/2011, and the rate has not been determined by agreement, such interest shall be calculated annually at eighty percent (80%) of the rediscount rate applied by the Central Bank of the Republic of Türkiye to short-term lending transactions as of 31 December of the previous year. If the rediscount rate applicable on 30 June differs by five percentage points or more from the rediscount rate applicable on 31 December of the previous year, then eighty percent (80%) of the rate determined on 30 June shall apply during the second half of the year.The President is authorized to determine this rate on a monthly basis, reduce it by up to ten percentage points, or increase it by up to one hundred percent.

As can clearly be seen from the wording of the article, whereas the increase or decrease of the statutory interest rate was previously left solely to the discretion of the President, under the new regulation the statutory interest rate has been indexed to the rediscount rate applied by the Central Bank of the Republic of Türkiye to short-term lending transactions, thereby reinforcing the principles of legal certainty and justice. This regulation introduces an automatic updating mechanism by dividing the statutory interest into two periods of the year.

Statutory Interest Applicable During the First Six-Month Period of the Year (1 January – 30 June)

➢ The applicable statutory interest rate is always calculated as 80% of the rediscount rate announced on 31 December of the previous year.

➢ Example: For 2026, the rediscount rate announced on 31 December 2025 is 38.75% → 38.75% × 80% = 31.00%, and therefore a statutory interest rate of 31.00% applies during the first half of the year.

Statutory Interest Applicable During the Second Six-Month Period of the Year (1 July – 31 December)

➢ If there is a difference of five percentage points or more between the rediscount rate announced in June and the rediscount rate announced in December, 80% of the June rediscount rate shall apply during the second half of the year.

➢ If the difference is less than five percentage points, the December rate shall continue to apply during the second half of the year. To clarify the calculation method with examples:

December: 38.75% → June: 43.75% → Difference: 5 → 43.75% × 80% = 35.00% → Statutory interest applicable during the second half of the year: 35.00%

December: 38.75% → June: 44.75% → Difference: 6 → 44.75% × 80% = 35.8% → Statutory interest applicable during the second half of the year: 35.8%

December: 38.75% → June: 32.75% → Difference: 6 → 32.75% × 80% = 26.2% → Statutory interest applicable during the second half of the year: 26.2%

December: 38.75% → June: 37.75% → Difference: 1 → <5 → The statutory interest rate remains 31.00% during the second half of the year.

December: 38.75% → June: 42.75% → Difference: 4 → <5 → The statutory interest rate remains 31.00% during the second half of the year.

Consequences of the New Statutory Interest Regulation and Current Application (2026)

The new statutory interest system has balanced the interests of creditors and debtors against inflation, and we anticipate that it will substantially eliminate claims for additional (excess) damages that have frequently arisen in practice. This is because the statutory interest rate has been directly indexed to the rediscount rate applied by the Central Bank of the Republic of Türkiye to short-term lending transactions.

Since the rediscount rate changes depending on economic conditions and the course of inflation, the statutory interest rate also increases when inflation rises and decreases when inflation falls. Thus, the system has eliminated the loss of value created by the fixed-rate regime and has become compatible with economic realities.

Although the calculation method has been explained above in detail, practitioners are not required to perform any calculations in practice. This is because statutory interest calculations are automatically performed through the integrated UYAP system. As of the date on which Law No. 7589 was published in the Official Gazette, the relevant algorithm was incorporated into the system, and currently, for the year 2026, the statutory interest rate is applied automatically at 31%.