Tax Reporting Rules for Expats in Turkey
10.09.2024
Expats living and working in Turkey are subject to the country’s tax regulations, whether they are temporary visitors or have become residents. Understanding these tax rules is essential for expats to remain compliant and avoid potential penalties. This article will cover the general tax reporting rules for all expats in Turkey.
Who are required to File Taxes in Turkey?
Turkey requires both residents and non-residents to pay income tax, but the scope of income subject to taxation depends on the individual’s residency status.
Residents: If you are a tax resident in Turkey, you are required to pay income tax on your global income, including both Turkish-sourced and foreign-sourced earnings.
Non-residents: If you are not a tax resident, you will only be taxed on income earned in Turkey. Non-residents are not subject to tax on foreign income.
It is important to note that not all expats have to file a tax return. If your income is from an employer that withholds taxes on your behalf, you are not required to file a personal tax return. However, self-employed individuals and business owners must file an annual tax return.
Tax Residency in Turkey
Tax residency in Turkey is determined by the amount of time spent in the country. You are considered a resident for tax purposes if:
– If you have lived in Turkey for 183 days or more in a calendar year.
– If you are a Turkish national with tax residency in another country but have significant ties to Turkey.
Non-residents are those who stay in Turkey for less than 183 days in a year and do not have significant economic or social ties to the country. They will only be taxed on income earned within Turkey.
Income Tax Rates in Turkey
Turkey uses a progressive tax system for residents, meaning the more you earn, the higher your tax rate. The following income tax rates apply for residents in Turkey:
| Income Bracket (TRY)₺ | Tax Rate |
| 0 – 70,000 | 15% |
| 70,000.01 – 150,000 | 20% |
| 150,000.01 – 550,000 | 27% |
| 550,000.01 – 1,900,000 | 35% |
| Over 1,900,000 | 40% |
For non-employment income (such as investments), the rates are similar but vary slightly. Expats who are self-employed or receive other non-wage income must follow these tax brackets.
Additional Taxes for Expats in Turkey
Value-Added Tax (VAT): In Turkey, VAT is levied on goods and services at a standard rate of 18%, though certain goods may have reduced rates ranging from 1% to 18%.
Corporate Tax: For those operating businesses, the corporate tax rate is a flat 20% of taxable profits.
Inheritance and Gift Tax: Expats receiving an inheritance or gift are subject to a tax rate ranging from 1% to 30%, payable over three years.
Property Tax: Property owners must pay an annual tax to the Ministry of Finance. Rates depend on location, typically ranging between 0.01% and 0.03%.
Social Security and Self-Employment
Self-employed expats in Turkey do not have to contribute to the social security system, as there is no self-employment tax. However, Turkish employees and their employers contribute to social security, with employees paying 14% and employers contributing between 15.5% to 20.5% of an employee’s salary.
Filing Deadlines and Forms
The Turkish tax year follows the calendar year, running from January 1 to December 31. Tax returns must be filed by March 31 of the following year for those required to submit them.
Expats should ensure they understand their tax residency status and whether they are required to file a return. Seeking assistance from a qualified tax professional can help expats avoid mistakes and stay compliant with Turkish tax law.
Track your tax residency days with Tax Resident app.
