Some Important Information for Foreign Individuals in Turkey

Buying Property

The Turkish property market is growing very rapidly. Foreign investors are one of the significant reasons of this growth. Foreign individuals are allowed to buy properties in Turkey and procedures are quite easy. A foreign individual can buy a property within one day if the property’s title deed is ready to sell.

Foreigners must have following documents in addition to documents required by local citizens:

• Potential tax number which is taken from tax office,

• Translated copy of valid passport.

Points should be considered by foreign individuals who are planning to buy a property in Turkey:

• Detailed check should be done in directorate of land registry offices if there is any hypothec, confiscation or restrictions on properties.

• Work with expert and trustable companies.

• Foreigners are not obliged to get residence permit in order to buy a property.

• The Republic of Turkey’s courts are always open to foreigners in any case of a conflict.

• Be sure that the property you are planning to buy is not within the boundary of a military district. Foreigners are not allowed to buy a property which is within the boundaries of “special security area”. You can check the situation of the property from directorate of land registry offices.

Increment value of the property subjects to income tax if it is sold within 5 years after the acquisition date.

Taxation of Individuals

Income tax is taken from the net total of income earned by any individual (real person) in a calendar year. According to Turkish Income Tax Law, the source of income defined in 7 categories:

1. Income from commercial activities,

2. Income from agricultural activities,

3. Income from employment services (wages & salaries),

4. Income from self-employment,

5. Income from immovable properties (rent income),

6. Income from capital investments (interest, dividend and etc.),

7. Other income and earnings (capital gains and gains from appreciation).

A general residency criterion is employed in determining tax liability for individuals. This criterion requires that an individual whose place of residence is in Turkey must pay tax on their worldwide income (unlimited liability). On the other hand, limited taxpayers are taxed on their Turkish source income.

Unlimited liability tax payers are the ones who are;

1. Resident in Turkey or,

2. Living in Turkey more than 183 days in one calendar year or,

3. Living in foreign countries but assigned by government authorities or companies which their headquarter in Turkey.

However, foreigners who stay in Turkey for ≤6 months for a specific job or business, or for particular purposes specified in the Income Tax Law, are not treated as resident and are not subject to unlimited tax liability. Non-residents are only liable to pay tax on income derived from sources in Turkey (limited liability).

Banking and Finance

Turkey has very advance banking system which is already adapted to globally recognized regulations. Monetary and exchange rate policies have been managed independently by the Central Bank of the Republic of Turkey which is founded on 3 October 1931.

Basically, there are 3 different kinds of banks in Turkey. Conventional deposit banks, development or investment banks and participation (Islamic) banks.

Banks are allowed to give different kinds of loans to individuals and legal entities both in local and foreign currencies. However, according to recent regulations, the government put some limits to both legal entities and real persons in case of using foreign currency loans.

There are many different types of financing methods apart from banks such as leasing and factoring.

There is not any prohibition to transfer profit to shareholders’ residence countries.

Opening Bank Account

Foreigners can open a bank account in Turkey. Although each bank has slightly different procedure for opening a bank account, generally following documents will be asked from individuals:

For a foreign individual who is resident in Turkey:

• Residence or work permit or temporary protection ID,

• Address document (utility bill, rent contract or ID register copy).

For a foreign individual who is not resident in Turkey:

• Potential tax number taken from tax office,

• Valid passport,

• Translated copy of an official document shows the address (utility bill or rent contract).