Updated: Aug 14
Everyone who earns an income in Turkey is liable to pay tax, and that includes income on your Turkish property.
Taxes in Turkey are divided into three different categories:
Taxes on expenditures
Taxes on wealth Income taxes in Turkey
Income tax in Turkey is progressive, meaning that the higher your income, the higher the tax rate will generally be. Income tax rates in Turkey vary from 15% up to 35% in total.
Non-residents are only required to pay income tax on all income and earnings earned in Turkey – including employment, rental income of your property in Turkey, and if you are running a business in Turkey. So for example, if you purchase a holiday home in Turkey and you rent out the home during the peak months of the summer, you will have to pay taxes in the income you make from renting your home.
If you are an investor and you earn interest on your investments in Turkey, you are liable to pay tax on these too. Tax rate explained based on your income in Turkey
0-10,000 Turkish lira is taxed at 15%
10,001-25,000 lira is taxed at 20%
25,001-58,000 lira is taxed at 27%
58,001 lira and above is taxed at 35% Business tax for holiday rentals
In 2018, new rules were rolled out for property owners who rented their holiday homes. In short, all private owners who rent out their Turkish homes must now have a business licence to operate, and pay business taxes. The licence (Vergi Levhasi) shows you are a rental business, rather than a sole trader.
As with income tax, the business tax is progressive, with an annual exemption. You may also deduct expenses such as management fees, repairs and insurance. It’s an easy and pretty painless process, especially if you hire a local Turkish accountant to file returns for you on a monthly basis. Deductions on Turkish income tax
You can deduct certain expenses from your rental property income. Maintenance and some wear and tear, insurance and property management fees, can be deducted from your taxable amount. Taxes on expenditures
These include Value Added Taxes (VAT) – this is known as KDV in Turkish. These are paid on imports and exports to and from Turkey.
If you are planning on setting up a business in Turkey that brings in foreign items to sell, for example, then you will have to pay VAT on those items. Similar to other countries around the world, there is also a special consumption tax that falls under this category, and there are four key product types that are affected under this:
Petroleum and gas products
Automobiles and motor vehicles, including boats.
Tobacco and alcohol
For most people who are simply looking to buy a home in Turkey, however, this won’t affect their life in Turkey and they won’t need to worry about this.