TÜRKIYE Law and Practice Contributed by: Serkan Gül, Nazım Kurt and Türkay Avanaş, Hergüner Bilgen Üçer Attorney Partnership
8.4 Income Tax Withholding for Foreign Investors Income generated by foreign investors that are not resident in Türkiye is subject to withholding tax (eg, 20% for rental income). Rental income is subject to income tax for real persons and corporate income tax for companies. The income tax applicable for real persons varies between 15% and 40% depending on the rental amount and TRY58,000 (applicable for year 2026) of the rental income from residences is exempt from income tax. Corporate income tax is paid on the rental income generated by limited liability compa - nies and corporations. General corporate income tax is currently 25%. There is no general tax exemption for income tax and corporate income tax accrued on rental income. However, if rental income is generated by a REIF or REIC, the relevant income is exempt from corporate income tax. 8.5 Tax Benefits Depreciation deductions may be made over buildings, facilities, etc, as per the method and rates determined under the legislation (eg, 2% of the building’s annual value). Moreover, expenses incurred for the respective real estate may also be deducted from the income subject to tax. Additionally, real persons can deduct a flat 15% of the income generated from the lease of real property.
The VAT rate applied to other sales of flats that are up to a net area of 150 square metres is 10% and to those that are 150 square metres or higher is 20%. VAT is paid by the purchaser. The sale of lands acquired before 15 July 2023 and held for over two years by limited liability companies and corporations is exempt from VAT. However, this exemption does not apply to limited liability compa - nies and corporations that conduct real estate busi - ness. 8.2 Mitigation of Tax Liability Methods such as division, mergers, share transfers, etc are used in order to benefit from mutual tax agree - ments and exemptions. Moreover, REIFs and REICs are exempt from corporate income tax. These struc - tures can also be used to mitigate tax liability. 8.3 Municipal Taxes There is no periodic tax applicable for the occupation of business premises. However, a fee determined by municipalities is paid to obtain and renew operation permits. There is no specific exemption for operation permit fees. Moreover, real property tax is paid to municipalities. The municipalities determine this tax according to the value of the respective lands. There are no significant exemptions for businesses with respect to real prop - erty tax.
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