Turkey: Income Tax - Taxation Of International Executives

Last Updated: 2 August 2016
Article by KPMG Turkey

All income tax information is summarized by KPMG Yetkin Yeminli Mali Musavirlik AS, the Turkish member firm of KPMG International, based on the Turkish Income Tax Code (The Code 193).

Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

25 March.

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Turkey?


Residents are not generally required to file income tax returns if they have only been income taxed through a withholding mechanism at source. Salaries paid to resident employees are taxed at source through a withholding mechanism and there is no filing requirement for this income.


Non-residents are not generally required to file income tax returns if they have only been income taxed through a withholding mechanism at source. Salaries paid to non-resident employees are taxed at source through a withholding mechanism and there is no filing requirement for this income. However, if an employee is paid by two employers in a calendar year and the payment made by the second employer exceeds a certain limit (TRY30,000 for year 2016, the employment income should be subjected to declaration regardless of the fact of whether it is already subjected to withholding or not. Taxes withheld will be credited against the taxes payable with respect to the tax return.

Tax rates

What are the current income tax rates for residents and non-residents in Turkey?

Residents and non-residents

For employment income:

Taxable income bracket Tax rate on income in bracket
From TRY To TRY Percent
1 12,600 15
12,001 30,000 20
30,001 110,000 27
110,001 Over 35

For other types of income:

Taxable income bracket Tax rate on income in bracket
From TRY To TRY Percent
1 12,600 15
12,001 30,000 20
30,001 69,000 27
69,001 Over 35

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Turkey?

A resident is defined as an individual who has his/her domicile in Turkey, or whose presence in Turkey is for more than six months in a calendar year.

Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can't come back to the host country for more than 10 days after their assignment is over and they repatriate.

Not applicable.

What if the assignee enters the country before their assignment begins?

No special rules apply.

Termination of residence

Are there any tax compliance requirements when leaving Turkey?

An income tax may be required to be filed within 15 days before final departure from Turkey.

What if the assignee comes back for a trip after residency has terminated?

The assignee is not regarded as a resident.

Communication between immigration and taxation authorities

Do the immigration authorities in Turkey provide information to the local taxation authorities regarding when a person enters or leaves Turkey?

No special rules apply.

Filing requirements

Will an assignee have a filing requirement in the host country after they leave the country and repatriate?

The assignees should file special tax returns within 15 days before their departure.

Economic employer approach

Do the taxation authorities in Turkey adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Turkey considering the adoption of this interpretation of economic employer in the future?1

The taxation authorities in Turkey adopt the economic employer approach to interpreting Article 15 of the OECD treaty.

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?2

Not applicable.

Types of taxable compensation

What categories are subject to income tax in general situations?

As a rule, it can be stated that all types of compensation and benefits received by an employee for services rendered constitute taxable income regardless of where paid.

Typical items of an expatriate compensation package, which are fully taxable unless otherwise indicated, are as follows:

  • reimbursements of foreign and/or home country taxes
  • school tuition reimbursements
  • cost-of-living allowances
  • housing allowances and housing provided
  • employer's contributions to a foreign pension plan
  • reimbursement of moving expenses
  • the benefit of loans at reduced or zero interest rates provided by the employer
  • round sum expenses allowances
  • home leave
  • share option exercises: Turkish legislation taxes the exercise of an option but not the grant or vest of an option.

Tax-exempt income

Are there any areas of income that are exempt from taxation in your country? If so, please provide a general definition of these areas.

The following are not subject to tax:

  • the provision of a company car provided that the car is used for business purposes
  • premiums to a Turkish company for medical, dental, sickness, and disability plans up to a specified limit
  • contributions to social security scheme in the home country within the upper limit applied in Turkey, if there is a totalization agreement between Turkey and the home country
  • luncheon vouchers provided to employees, up to a certain daily limit and meals provided to the employees in the premises of the enterprise
  • lodging provided to laborers working in mines and factories and residences provided to the employees, whose gross areas do not exceed 100m2
  • the salaries paid by a non-resident employer from sources outside of Turkey. This exemption is specifically applicable for salaries of representative office (liaison office) employees.

Auto allowance

Taxable, if paid in-cash or personal use of a company car.

Premiums for medical, dental, sickness, and disability plans


Incentive compensation plan


Food allowance

Luncheon vouchers provided to employees, up to a certain daily limit. Meals provided to the employees in the premises of the enterprise.

Expatriate concessions

Are there any concessions made for expatriates in Turkey?


Salary earned from working abroad

Is salary earned from working abroad taxed in Turkey? If so, how?

If an individual is not resident in Turkey for tax purposes, the salary payments for working abroad are not taxable in Turkey, where the Turkish nationals are deemed a resident taxpayer, but work outside Turkey, their salaries attributable to their service outside Turkey is tax exempt provided that the salary is subject to income tax in the source country and the Turkish nationals work there with work and residence permit.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Turkey? If so, how?

Capital gains of resident individuals are taxed as ordinary income. Non-Turkish investment income is taxable in Turkey, if the individual is resident in a calendar year. Certain exemptions may be relevant depending on certain circumstances including a holding period, type of the asset disposed of, and so on.

Immovable capital revenues: The immovable shall be situated in Turkey and goods and rights of this category shall be used and assessed in Turkey.

Movable capital revenues: The capital should be invested in Turkey.

Capital gains: The business or transaction having created this revenue or earning should be concluded or assessed in Turkey.

The term of assessment refers to the payment that has been made in Turkey or that has been transferred to the account of or deducted from the profit of the persons having made the payment or of the persons on whose behalf or account the payment has been in Turkey even if it has been made abroad.

The taxable amount is determined by indexing the capital gains with the producer price index announced by State Institute of Statistics. The month that the share is disposed will not be taken into account. In order to apply indexing, the rate of increment should be at least 10 percent.

Dividends, interest, and rental income


Taxable if dividends are paid by a resident company.


Taxable if the interest is derived from a source (that is capital, principal, and so on) invested in Turkey.

Rental income

The immovable from which the rental income is derived shall be situated in Turkey and goods and rights of this category shall be used and assessed in Turkey.

Gains from stock option exercises

Residency status Taxable at:
Grant Vest Exercise
Resident N N Y
Non-resident N N Y/N
Other (if applicable) N N Y/N

Foreign exchange gains and losses


Principal residence gains and losses


Capital losses

The capital losses would not be offset from your other individual income.

Personal use items

If the employer provides such items to an employee, they will be regarded as benefit-in-kind and taxable as an employment income.


Subject to inheritance tax.

Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Turkey? If so, please discuss?


Are there capital gains tax exceptions in Turkey? If so, please discuss?

Pre-CGT assets?

For the year 2016, TRY11,000 of the capital gains derived from disposal of immovable assets is exempt from income tax.

Also, depending on the holding periods of the immovable assets and shares the capital gains might be tax exempt.

Deemed disposal and acquisition?

Information is not available.

General deductions from income

What are the general deductions from income allowed in Turkey?

The following items of expenditure may be deducted from taxable income:

  • pension contributions
  • charitable contributions up to certain limits.

Effective from 1 January 2008, minimum subsistence allowance has been applied. Accordingly, the amount is calculated by multiplying the rate applying to the first income tax bracket of the income tax tariff with 50 percent for the taxpayer, 10 percent for his/her spouse not working or not having any income, 7.5 percent for the first two children and 5 percent for each of the children remaining, of the annual gross amount of the minimum wage amount when the wage is earned, for the employees who are above 16 and working in the industrial sector; then this amount shall be deducted from the income tax to be calculated over the wage.

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Turkey?

The following are the normal methods of recognizing tax reimbursements paid by the employer:

  • current year gross-up
  • current year reimbursement
  • loan/bonus.

Payment in-cash is deducted from withholding tax liability.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in Turkey? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

Withholdings are applied at the prevailing rates when the salary is accrued or paid.

Pay-as-you-go (PAYG) withholding?

Not applicable in Turkey.

PAYG installments?

Not applicable in Turkey.

When are estimates/prepayments/withholding of tax due in Turkey? For example: monthly, annually, both, and so on.

Employers file withholding tax return and pay the tax due monthly basis. However, if an employer has 10 or less employees, he/she can file the withholding tax return quarterly.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in Turkey? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Other than the provisions stated in the double tax treaties, Turkish tax legislation also provides a foreign tax credit for residents where Turkey taxes foreign-sourced income up to the Turkish tax due on the same source of income if the certain requirements are satisfied.

General tax credits

What are the general tax credits that may be claimed in your country? Please list below.

  • Withholding tax.
  • Foreign taxes under certain conditions.
  • Social security contributions.
  • Contributions to private health/pension/life insurances within certain limits.
  • Certain donations (depending on the nature of the donations, there might be certain limits or without limits).
  • Up to 10 percent of the income declared, the health and education expenses incurred for the taxpayers, their spouses and dependent children provided that they expenses should be substantiated by means of invoice or receipt received from Turkish resident suppliers.


1 Certain tax authorities adopt an "economic employer" approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country employer but the employee's salary and costs are recharged to the host entity, then the host country tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country.

2 For example, an employee can be physically present in the country for up to 60 days before the tax authorities will apply the 'economic employer' approach.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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