You will encounter tax residency in Turkey for digital nomads if you spend time in the country or become a resident there.
Turkey is having it’s problems lately but nonetheless it remains an interesting country to spend some time in. For some people, it’s still even that attractive that they want to set up (tax) residency there. The fact that the Turkish Lira, the local currency, got a hit in the recent past is also something that could benefit people earning money from a foreign source.
Living in Turkey
If you plan to stay in Turkey for more than 90 days you will need to apply for a residence permit or Ikamet. These are normally granted for a period of one year and can be renewed afterwards.
Turkish tax rules
Tax residency in Turkey
Turkey will see you as a tax resident if you have your legal residence in the country or plan to settle there. In addition, you are also a tax resident if you live more than six months in the country during a year.
Tax residency in Turkey for digital nomads: tax rates
Personal income tax rates for professional income in Turkey start from 15% and go up to 40% from an income of around TRY 1.900.000 (currently around €65.000; however the Turkish Lira fluctuates a lot).
Some basic exemptions apply for the taxation of investment income. Yet, the excess is taxed at the general tax rates.
However, like with everything in Turkey, there is a difference between the theoretical law and the application of it. This was confirmed by many people on the ground, including advisors. They confirm that in practice you only pay tax on local Turkish income. Any income received from abroad isn’t taxed. This is, of course, a nice fact for digital nomads who want to optimise their tax situation while enjoying everything that Turkey has to offer. Nevertheless, the application of the law can always change in the future.
Tax residency in Turkey for digital nomads: social contributions
If you only receive foreign sourced income (cfr. supra) you won’t be liable to social contributions in Turkey.
Setting up a company in Turkey
If you set up a company in Turkey you will in principle be liable to Turkish corporate income tax. The general tax rate amounts to 20%.
Furthermore, a withholding tax of 10% applies to the pay out of a dividend. However, as mentioned, the final tax due will be calculated on the total amount of your income.
Tax residency in Turkey for digital nomads: conclusion
Turkey is a nice country from a lifestyle perspective and also quite affordable. If you don’t mind the fact that the theory and the application of the law can differ, you can use it to your benefit in order to limit the tax burden on your foreign income.
If you want more information or want to discuss your personal situation, you can always reach out.