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Double Taxation Treaties

This guide was written by Burak Orkun, Managing Partner at Orkun & Orkun (info@orkunorkun.com) in collaboration with Guides.Global (office@guides.global).

It was written on 4 July 2017. The law and practice in Turkey change all the time. Our guides are updated as frequently as possible - typically every three years - but may be out of date.

Our guides are prepared by professionals from many countries. They are, of necessity, both brief and general and can take no account of your personal circumstances. They are intended to be a good introduction to the subject BUT ARE NO SUBSTITUTE FOR PROPER PROFESSIONAL ADVICE, which our contributors will usually be happy to provide upon request.

The advice and opinions contained in the guides are those of the author and are not necessarily those of Guides.Global.

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The scope of this guide

This guide briefly explains double taxation treaties, and lists the countries that Turkey is in a treaty with.

Introduction

Turkey has signed Double Taxation Treaties with 78 countries around the world.

It means that - if you are tax resident in or have to pay taxes in any of those countries and, under the rules of those countries, you are due to pay tax on any particular item of income, gain etc. in that country - where and how much you will actually end up paying and in which country will be decided by the treaty.

For official information about double taxation treaties, which goes into far more detail than this brief guide, see the Revenue Administration (Gelir İdaresi Başkanlığı) website. This page is in Turkish, but Google translate works quite well on it.

How will a double taxation treaty affect me?

Let us use an example of a person who is not resident in Turkey and who earns some income from renting out their home in Turkey.

If they are resident in (say) the US, that income will form part of their worldwide income and so it will (on the face of it) be taxable in the US.

However, under the law of Turkey, income generated by a non-resident from letting a house in Turkey is taxable in Turkey.

This could give rise to them having to pay tax twice on the same income. This is clearly unfair. This is where the Double Taxation Treaty helps.

Under the US-Turkey Double Taxation Treaty, it is agreed that any income arising from renting out real estate (a house or apartment) in Turkey is to be taxed first and foremost in Turkey.

Let's say that the tax you had to pay in Turkey was TRY3,000 (US$850). You would pay that tax to the Government of Turkey.

If the tax you would have owed in the US on the same income was, say, US$2,000 you will then be able to deduct the dollar equivalent of the tax you've already paid in Turkey from your tax obligation in the US. In this case, you would therefore have to pay a further US$1,150 of tax to the US Government.

In some cases, it could be that the tax you have to pay in Turkey is greater than the tax you would have to pay back home on the same item of income. In this case, you would pay the full amount of tax due in Turkey and this would eliminate your tax obligation in the other country. It would not usually mean that you would be entitled to a tax refund in that other country.

Although most of the Double Taxation Treaties contain similar provisions, there are a large number of detail variations between them and so you need to study the treaties concerned in any particular case to determine your tax liability.

Copies of the Double Taxation Treaties can be downloaded from the Turkey Tax Department website. In every case, they are available in both Turkish and the language of the country concerned.

Although I have used the example of someone renting out a property in Turkey, the Double Taxation Treaty (in almost all cases) will apply to all types of tax. In each case, it will tell you where any tax due will be payable.

Which countries is Turkey in a double taxation treaty with?

Conclusion

Check with your accountant back home or seek financial advice in Turkey if you are unsure about how much tax you will have to pay and where.

Other guides of interest

 Description Link 
Turkey Country Guide
Essential facts and figures about Turkey
Click to see this guide
The Tax System in Turkey
An overview
Click to see this guide
Choosing a Tax Adviser in Turkey
Things to consider
Click to see this guide
Taxes on companies in Turkey
Taxes on businesses
Click to see this guide
Taxes on property in Turkey
Taxes on real estate
Click to see this guide

Readers' Comments

 

Further information?

I hope you have found this guide useful. If you need any further help, please contact me.

Burak Orkun

4 July 2017


 

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