VAT in Turkey and how it is calculated

If you decide to reside in Turkey and buy real estate, there are many types of taxes that you must calculate and that you will have to pay and you must look at them before buying so that you are not surprised later by costs that are not among your accounts.

What is the value added tax and how much is it? In this article the full answer.

What is the value added tax in Turkey?

In Turkey, the value-added tax is 18 percent at the maximum and 1 percent as the minimum and this tax is levied on the sale of goods and services, as well as on imports.

In this context, it is necessary to point out a very important thing, which is that the foreigner does not need to worry about it, because in most cases it is only 1%, and the higher percentage is imposed only when buying commercial properties or luxury properties that exceed 15 square meters.

When are you exempt from the value added tax?

The good news is that you can be exempt from paying the value added tax in Turkey, but this is after you abide by a set of conditions set by the competent authorities, namely:

- The investor must not be residing in Turkey i.e. the person applying for the exemption has not resided more than 6 months in Turkey during the past year.

- The applicant does not have a valid residence permit in Turkey from last year.

- Funds paid must come from outside the country exclusively either by bank transfer or customs declaration document in the case of transferring money to Turkey in cash.

- There is no main headquarters for foreign legal entities in Turkey, and the value of the property is paid in foreign currency.

- Only the person applying does not have a registered address in Turkey.

- The property must be new - older properties are not covered by this exemption.

- This exemption does not include agricultural land and other types of real estate. Furthermore, property that benefits from this tax exemption cannot be sold for at least one year after purchase.

- The tax-exempt property is limited to residential buildings (villas, apartments, flats), as well as similar commercial properties (office spaces).

Other types of taxes in Turkey

There are many other types of taxes in Turkey that must be taken into consideration, the most important of which are:

1 - Real Estate Taxes

The amount of property tax you will pay in Turkey depends on the value of your property. The tax is calculated as a percentage of the total value of your property, and the rate ranges from 0.3% to 4%.

2 - car taxes

Car taxes in Turkey are calculated according to the size of the engine and the type of fuel for the vehicle. For example, a car with an engine volume of 1.6 liters or less that runs on gasoline will be taxed at 752.5 Turkish liras (about $140).

The tax for a diesel car with the same engine size will be 1005 TL (about 185 USD).

3 - Inheritance tax

Inheritance tax is a tax payable on the value of the estate inherited from a deceased person.

In Turkey, the inheritance tax is levied on the value of the estate inherited by each heir. The inheritance tax rate depends on the real estate itself or the things that have been inherited, its value, its features and how important it is.

4 - Income Tax

Turkish income tax rates range from 0% to 35%. The price you pay depends on how much you earn and your registration status.

If you reside in Turkey, you have to pay taxes on your worldwide income. Non-residents are taxed only on their income from a Turkish source.

There are three tax brackets in Turkey, with marginal rates of 15%, 20% and 35%.

5 - Wealth Tax

Wealth taxes are taxes levied on the value of an individual's assets. Turkey imposes a wealth tax on individuals whose wealth exceeds 20 million Turkish liras (about 3 million US dollars). The tax rate is 0.5%.

6 - Special consumption tax

A Special Consumption Tax (SCT) is imposed on some goods and services. GST is charged at different rates depending on the type of good or service.

Special consumption tax is generally levied at a rate of 18 percent, but the price may be reduced for some goods and services. For example, the SCT tax on food products is only 10 percent.

Advantages of buying real estate in Turkey through Binaa Real Estate Company

Binna Real Estate Company is one of the leading companies in the real estate sector in Turkey. We have a wide range of services and products that we offer to our clients including but not limited to investment advisory, property management, construction management and marketing. 

What do you know about tax incentives in Turkey?

Turkey offers a number of tax incentives to encourage foreign investment. These include:

- A reduced rate of corporate tax on companies engaged in production, provided that at least 25% of their profits are reinvested.

- Reduced rate of withholding tax on dividends paid to non-resident shareholders.

- A reduced rate of value-added tax on exports.

- Tax exemptions for up to eight years for companies investing in certain regions.

Some of the advantages of working with a real estate company include:

- As mentioned earlier, Binaa Real Estate offers its clients a wide range of services and this means that you can get all the help and advice you need under one roof, making the process of buying or selling real estate much easier.

-  We have a wide network of contacts in the Turkish real estate market and this means that the company can help you find the best real estate deals and opportunities and also connect you with the right people who can help with the buying or selling process.

- We have a team of experienced professionals who have a deep understanding of the Turkish real estate market and this means that you can be sure of getting expert advice.

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