Taxes in Turkey

Who counts as a Turkish tax resident

Article 4 of the Turkish Income Tax Law sets out two tests. The first is having a domicile (ikametgah) in Turkey under the Civil Code. The second is staying in the country continuously for more than six months in a calendar year, with temporary absences not breaking the count.

Most articles translate this into a 183-day rule, and for ordinary cases the shorthand works. The statute, however, talks about a continuous stay of more than half a year rather than an arithmetic sum of days. When a travel pattern is complicated, an argument with the tax office will be about continuity and about where your actual home is.

The centre of vital interests outweighs the calendar. A Turkish address, a family living in the country, children in a local school, a business run from Istanbul - taken together, these can establish residency even without a formal six months. The reverse also happens: someone spending half the year in Turkey while keeping a home, a job and a family abroad has arguments against residency.

Exceptions. Foreigners who come for study, medical treatment, a holiday or a specific work assignment are not treated as residents, even after more than six months. The carve-out holds only while the purpose is documented: a university contract, a clinic referral, a secondment letter. A freelancer simply living in Antalya and serving foreign clients does not qualify.

A permit or a passport does not create residency. An investor who obtained Turkish citizenship through property and still lives elsewhere remains a non-resident for tax purposes. The opposite is equally true: someone with no status at all who genuinely lives in Turkey becomes a tax resident.

Moving mid-year. Turkish law has no split-year treatment - status is determined for the whole calendar year. Move in May, stay past six months, and the entire year is residential, January to April included. Where your former country also claims you, the tie is broken by the treaty: permanent home, then centre of vital interests, habitual abode and nationality. We cover the mechanics in our guide to tax residency and the 183-day rule.

Personal income tax: 2026 rates and brackets

Income tax (gelir vergisi) is progressive at 15, 20, 27, 35 and 40 percent. There are two scales: the third and fourth brackets are wider for salaries, so an employee and a business owner with identical income pay different amounts.

Withholding is cumulative from the start of the year. For salaries this produces an effect newcomers rarely expect: 15% is withheld in January, and by autumn, as the cumulative base crosses the next threshold, withholding jumps to 27% or 35%. The gross stays flat while December take-home is visibly smaller than January.

The allowance comes as a minimum-wage exemption. Turkey has no conventional personal allowance. Instead, the portion of pay equal to the minimum wage is exempt from income tax and stamp duty for every employee, not only for those earning the minimum. In 2026 the gross minimum wage is TRY 33,030 a month and the net is TRY 28,075.50. Over a year the exemption is worth roughly TRY 58,000 of tax. For a high salary it is a fixed lira discount rather than a percentage, so its weight erodes quickly.

Stamp duty. Payroll carries an additional 0.759% damga vergisi, with the minimum-wage portion likewise exempt.

No local surcharges. Neither municipalities nor provinces levy income tax - the rate is identical across the country.

The uncomfortable part: bracket creep. Thresholds are revised annually, but by presidential decision rather than automatically with inflation. For 2026 they went up by roughly 20%, while the official revaluation rate for the same period was 25.49%. A salary indexed merely to inflation therefore climbs the scale on its own, and the real burden rises without any rate increase.

What a non-resident pays

A non-resident (dar mükellef) is taxed only on Turkish-source income. Foreign salary, dividends from foreign brokers and interest on accounts outside Turkey are out of scope entirely.

If all Turkish income has already been taxed at source, no annual return is due. A separate rule applies on departure: a non-resident leaving Turkey for good must settle their tax 15 days before leaving.

Withholding rates are not final. Treaties frequently reduce them, but never automatically - the payer needs a residence certificate (mukimlik belgesi) from the recipient's country before the payment is made. Recovering excess tax afterwards is possible but takes months.

Corporate tax and the new minimum tax

A Turkish company is taxed on worldwide profit; a foreign company only on the profit of a Turkish permanent establishment. The headline rate is 25% - one of the most common errors in older articles, which still quote 20% or 23%.

The 10% minimum tax is the structural change. Since 2025 every company runs two calculations: the ordinary one at 25%, and a parallel one at 10% of profit computed before a list of reliefs and exemptions. The higher figure is payable. The intent is blunt - to close arrangements where incentives brought tax to zero. Companies in technoparks or on investment incentives that used to pay nothing now have to model their position again.

There is no small-business regime. The 25% rate applies to a billion-lira group and to a small limited company alike. Turnover-based reduced rates of the Polish or Lithuanian kind do not exist in Turkey.

Payments abroad. Dividends 15%, royalties 20%, interest usually 10%, professional services 20%. Treaties reduce these; under the Russian treaty dividends, interest and royalties are all 10%.

What genuinely reduces the burden. Profit from software development, R&D and design inside technology development zones (Teknokent) is exempt from corporate tax until the end of 2028, qualifying staff salaries are exempt from income tax, and half of the employer social security share for them is covered by the Treasury. R&D centres under Law 5746 add an extra deduction of eligible spend. Free zones exempt manufacturing profit. Transit trade and qualified service centres of the Istanbul Financial Centre benefit from a 95% deduction. Separately, an 80% deduction applies to income from exporting services - software, engineering, design, call centres, data processing - but only where the proceeds are actually remitted to Turkey.

Before you rely on any effective rate, test how the relief survives the 10% minimum tax. Setting up the structure and choosing the regime is part of our company registration service.

VAT in Turkey: 20, 10 and 1 percent

The standard VAT (KDV) rate is 20%, in force since July 2023. The previous 18% still circulates widely online and is simply wrong.

Reduced rates: 10% covers basic foodstuffs, part of agricultural output and a range of services including hotels; 1% applies to staple food items, certain publications and a listed set of goods. Exports of goods and services are zero-rated with a right to recover input VAT.

There is no registration threshold. This is the key difference from Europe: no turnover level below which you can stay unregistered. Anyone carrying on commercial, industrial, agricultural or professional activity is a VAT taxpayer from the first transaction. Returns are monthly, generally due by the 28th of the following month.

Reverse charge. When a Turkish company pays a foreign supplier for services, it self-assesses VAT (KDV-2), remits it and deducts it in the same month. Neutral in theory, extra filings and a source of assessments in practice.

Refunds are the weak point. Exporters and businesses on reduced rates accumulate recoverable VAT, and repayment is slow, audited and often conditional on a sworn accountant's report. Do not build working capital plans around fast refunds.

Financial and insurance transactions sit outside VAT - banks and insurers pay banking and insurance transaction tax (BITT) at 5% instead. Turkey also levies special consumption tax (ÖTV) on fuel, vehicles, alcohol and tobacco, and a 7.5% digital services tax on large digital platforms. ÖTV on passenger cars depends on engine size and price and exceeds 100% at the top - which is why cars cost considerably more in Turkey than in Europe.

Social security: employee and employer

Contributions to SGK are charged on salary within a fixed band and paid monthly together with withheld income tax.

The ceiling exists, and it is high. From 2026 the maximum base rose from 7.5 to 9 times the gross minimum wage, reaching TRY 297,270 a month, while the employer share went up by a full point from 20.75% to 21.75%. Both changes made hiring materially more expensive - worth budgeting for if you are relocating a team.

Employer discounts. The headline 23.75% is usually reduced in practice: manufacturers meeting the conditions get a 5-point reduction, other employers 2 points. Separate incentives apply to technoparks and R&D centres.

Foreign nationals. An employee who remains insured at home can be exempt from Turkish contributions for up to three months on presentation of a coverage certificate. Anything longer requires a bilateral social security agreement between Turkey and that country; the list is limited and must be checked case by case.

Self-employed and owners. Sole traders and company partners contribute through Bağ-Kur (4/b) on a self-declared base within the same TRY 33,030 to 297,270 band. The rate and the discount for paying on time change periodically and are confirmed with SGK at registration.

Capital taxes: dividends, gains, property, inheritance

Dividends. A Turkish company withholds 15% on distribution. For a resident individual, half of the gross dividend is exempt, and the remaining half must be declared if it exceeds TRY 400,000 (the 2026 threshold). The 15% withheld is fully creditable - and because credit is given on the whole amount while only half is taxed, the calculation frequently ends in a refund.

Foreign dividends and interest of a resident. Taxed on the general scale. Income that suffered no Turkish withholding has a filing allowance of TRY 22,000 for 2026; once exceeded, the whole amount is declared, not just the excess. Half of a foreign dividend can be exempt where the holding is at least 50% and the funds are remitted to Turkey by the filing deadline.

Capital gains. Property gains are not taxed at all once an individual has held the asset for more than five years. On an earlier sale, the gain is the difference between sale price and acquisition cost, with the cost indexed by the producer price index where it has risen by 10% or more. Given Turkish inflation, indexation often erases most of the nominal gain - a detail routinely overlooked. For shares in Turkish companies, relief depends on the type of share, how it is held and the holding period, so the treatment of a specific deal should be checked in advance.

The annual property tax really is low - a few thousand lira a year for an ordinary flat. Expensive housing is carved out into a separate tax with bands of 0.3% to 1%, starting at a 2026 cadastral value of TRY 17,711,000.

Inheritance and gifts. The scale applies to the net value of each share. The 2026 allowances are TRY 2,907,136 per child or spouse and TRY 5,817,845 for a spouse where there are no children; gifts have an allowance of TRY 66,935. Inheritance rates are moderate at 1-10%, but lifetime gifts are taxed three times as heavily at 10-30% - passing assets to children early is economically unattractive in Turkey.

To put these numbers in context, see our country-by-country tax overview and our comparison of European taxes for 2026.

The 20-year exemption for foreign income: Law 7582

This is the most significant change to Turkish tax in years and the reason Turkey re-entered relocation conversations in 2026. Law No. 7582, gazetted on 4 June 2026, inserted article 20/D into the Income Tax Law: new tax residents are exempt from Turkish tax on foreign-source income for 20 years.

Conditions. You must become a Turkish tax resident on or after 1 January 2026 and have had neither a domicile nor a tax liability in Turkey during the three full calendar years before that. The test looks at calendar years, not a rolling 36 months. Nationality is irrelevant - the regime is open to foreigners and to returning Turkish citizens. Past Turkish tax connected only with rent, securities or capital gains does not disqualify you; what blocks the relief is business or employment activity in Turkey during the lookback.

What is exempt. Income and gains arising outside Turkey: foreign dividends, interest, capital gains, rent from foreign property, foreign pensions and fees for work genuinely performed abroad. No return is filed for this income at all, and where a return is filed on other grounds, the exempt amounts stay out of it.

What is not. Everything Turkish: salary for work in Turkey, rent from local property, income from a Turkish business, gains on Turkish assets. VAT, property tax, motor vehicle tax and stamp duty apply as normal.

Three points the marketing leaves out. First, no foreign tax credit is available on exempt income. If the source country withholds, that money is lost for good, so income from high-withholding countries benefits less than it appears. Second, expenses related to exempt income cannot be deducted. Third, and most contested: remote work physically performed from Turkey may be characterised as Turkish-source regardless of where the client sits. That makes the regime far cleaner for investors and portfolio owners than for freelancers.

Procedure. You must obtain an exemption certificate (istisna belgesi) from your tax office, applying before the end of the calendar year in which you became resident; those who arrive in November or December have until the end of February. Missing the deadline forfeits the relief permanently. The Ministry's implementing communiqué on documentary evidence of the three-year absence was still awaited when this page was written, so requirements should be confirmed immediately before filing. If the conditions later prove unmet, the tax is assessed retroactively with penalties and interest.

Companion measures. Beneficiaries of the exemption pay inheritance tax at a flat 1% instead of the progressive scale up to 10%. The same law opened another asset amnesty (varlık barışı), allowing foreign assets to be declared at 5%, reducible to zero where holding conditions in Turkey are met.

Compliance: deadlines, penalties and audit

The Turkish tax year is the calendar year. The core deadlines are as follows.

A fixed stamp duty applies to the individual return - TRY 1,189.50 in 2026. A non-resident leaving the country permanently must settle 15 days before departure.

Penalties. Understated tax (vergi ziyaı) attracts a penalty equal to the tax itself, and a multiple of it where evasion is found. Missing or defective documentation triggers separate irregularity fines. Late payment carries monthly interest at a rate the government revises periodically - at Turkish rate levels it bites, so paying late costs far more than filing late.

Audit is not universal. For accounting periods beginning on or after 1 January 2026, a statutory audit is required where a company exceeds at least two of three thresholds in two consecutive years: TRY 500m in assets, TRY 1bn in net sales, 150 employees. The first two were raised from TRY 300m and TRY 600m, taking a number of companies out of scope. Banks, insurers and listed companies are audited regardless of size.

Practical points. E-invoicing and electronic ledgers become mandatory above turnover thresholds, and company accounts must be maintained through a licensed professional (SMMM or YMM) - a company cannot self-file. High inflation also brings inflation adjustment of financial statements into play; whether it applies in a given year is confirmed by your accountant. Where you need independent control over the quality of the books, see our audit and reporting service.

Double taxation and information exchange

Turkey has more than 80 double tax treaties in force. The treaty with Russia was signed in 1997 and has applied since 2000; the 2023 Russian suspension of certain treaty articles targeted other countries and did not touch Turkey, so the agreement operates in full. Its rates are 10% on dividends, interest and royalties alike.

Treaties also cover practically all CIS states - Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan and Ukraine. The existence and exact rates for a given pair of countries must be read off the specific treaty text, as they differ.

How relief works. A Turkish resident declares worldwide income and credits foreign tax against Turkish tax. The credit is capped at the Turkish tax on that same income: if the foreign country took more, the difference is not refunded. Proof of payment must be certified through consular channels or apostilled, otherwise the tax office will not accept it.

An important consequence of the new regime. Anyone using the 20-year relief under article 20/D receives no foreign tax credit at all - exempt income never enters the Turkish return, so there is nothing to credit against. What remains available is presenting a Turkish residence certificate in the source country to reduce withholding there under a treaty. That is exactly how the structure has to be assembled; otherwise the saving stays theoretical.

Information exchange. Turkey participates in automatic exchange under CRS, so data on residents' foreign accounts reaches the tax administration. Assuming a foreign portfolio stays invisible is not a workable plan, whether or not the exemption applies to it.

What it adds up to: two worked examples

An employee on TRY 100,000 gross a month. Well above the national average and typical for a skilled professional in Istanbul. Annual figures.

The employee loses about 30.5% of gross. Measured against the full cost of employment, however, the state takes TRY 651,000 out of TRY 1,485,000 - a 43.8% wedge. That is German and Italian territory, not a low-tax jurisdiction, and it belongs in the budget before you move a team to Turkey. Sector discounts on employer contributions shave the number but do not change its order of magnitude.

A company owner with TRY 3,000,000 of profit. The Turkish limited company pays 25% corporate tax, or TRY 750,000. Distributing the remaining 2,250,000 triggers 15% dividend withholding, another 337,500. The owner receives 1,912,500.

Then a mechanism most summaries skip kicks in. The resident individual declares only half the gross dividend - 1,125,000. Tax on the non-salary scale comes to 276,250, while the full 337,500 withheld is creditable. The result is an overpayment of 61,250 available as a refund or offset. Total burden: 750,000 plus 337,500 less 61,250, or 1,026,250 - 34.2% of profit.

For comparison, a sole trader with the same activity and TRY 1,500,000 of profit pays 407,500 in income tax on the scale, about 27.2%, plus Bağ-Kur contributions. At modest profit the unincorporated form usually wins; at higher profit the company does, because the scale reaches 35 and 40 percent quickly.

The honest conclusion. For income earned inside Turkey the country is not cheap: a 43.8% wedge on salary, 34-36% on an owner's profit, 20% VAT. Turkey's real advantage in 2026 is not its rates but the new 20-year exemption on foreign income for first-time residents. If your capital and clients sit outside the country, the structure can be among the strongest in the region. If the income is generated in Turkey, there is no tax saving here.

What to know about taxes in Turkey

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