Value Added Tax (VAT)
Foreign investors not residing in Türkiye are subject to taxation as limited taxpayers for the rental income and sales of their real estate. The sale or rental of a property may be subject to VAT in some cases. Branches opened or companies established by foreigners are taxed in accordance with Turkish Tax Legislation without any special condition. Renting out real estate owned by foreigners who do not engage in any commercial activity or are not part of a commercial enterprise is not subject to VAT.
Title Deed Fee
This fee, paid by both the buyer and the seller, is calculated based on the sale price and the rate does not change whether the buyer is a foreign individual or legal entity. The title deed fee applies to all real estate including residential properties, workplaces, and land.
Property Tax
In Türkiye, every residence, workplace, or plot of land is subject to property tax. The taxpayer is the owner of the property; hence, foreigners who purchase property must pay property tax. The applicable rates are one per thousand for residential properties in normal zones, two per thousand for workplaces, three per thousand for plots, and one per thousand for agricultural land. In metropolitan municipalities and adjacent areas, these rates are two per thousand for residences, four per thousand for workplaces, six per thousand for plots, and two per thousand for agricultural land.
Corporate Tax
When foreign-capital individuals or institutions open branches or establish companies in Türkiye, there is no special case in terms of taxation; they are taxed on the profits and incomes they generate in Türkiye like a Turkish company. The real estate sales revenues obtained by foreign companies are subject to corporate tax.
Income Tax Withholding
According to the Income Tax Law, individuals settled in Türkiye are taxed on all their earnings and income generated both inside and outside Türkiye. Individuals whose domicile is in Türkiye or who stay in Türkiye continuously for more than six months within a calendar year are considered settled in Türkiye. If the foreign personnel working in the branch or company to be established in Türkiye are considered settled, income tax will be withheld from their wages; otherwise, no deduction will be made.
Individuals not settled in Türkiye are taxed only on their earnings and income generated in Türkiye. For commercial profits: If the owner of the profit has a workplace in Türkiye or maintains a permanent representative, and the profit is generated through these locations or representatives, the earnings and income are considered to be generated in Türkiye.
Specialists, officers, press correspondents, and others who come to Türkiye for a specific and temporary task or work, as well as those who come for education, treatment, rest, or travel purposes, are not considered settled in Türkiye even if they stay for more than six months.
Renting out real estate and generating rental income create income tax obligations for foreigners. Foreign companies operating in Türkiye are classified as limited taxpayers. They are taxed through withholding only on the rental income generated within the borders of Türkiye, for the workplaces or buildings they own.
