Two separate taxes to check
Every payment abroad raises two questions:
Withholding tax (WHT): is this income taxable in Türkiye for the foreign recipient? If so, the Turkish payer withholds it.
Reverse-charge VAT: is this a service used or benefited from in Türkiye? If so, the Turkish buyer accounts for VAT on the supplier's behalf.
The answers are independent: a payment can attract one, both or neither.
Withholding tax rates
| Payment to a non-resident | Domestic rate | Typical treaty outcome |
|---|---|---|
| Royalties and licence fees | 20% | Often reduced to 10% |
| Service fees, including technical services | 20% | Often exempt if the supplier has no permanent establishment in Türkiye |
| Rent | 20% | Depends on the treaty |
| Interest on loans from non-financial lenders | 10% | Mostly 10–15% |
| Interest on loans from foreign banks | 0% | — |
| Dividends | 15% | Typically 5–15% |
Türkiye has more than 90 double tax treaties in force, so the treaty with the supplier's country usually decides the final rate.
How to apply a treaty rate
Obtain a certificate of tax residence from the supplier, issued by its home tax authority for the relevant year, with a sworn Turkish translation.
Check that the supplier is the beneficial owner of the income and meets any conditions in the treaty.
Keep the certificate on file; without it the domestic rate applies and the tax office can assess the difference with penalties.
Reverse-charge VAT
When a foreign supplier with no Turkish VAT registration provides services that are used in Türkiye — consulting, software, marketing, licences and similar — the Turkish buyer:
Calculates VAT at the applicable rate (generally 20%) on the payment.
Declares it on the reverse-charge VAT return (KDV-2) and pays it by the 25th of the following month.
Deducts the same amount as input VAT on its regular VAT return (KDV-1), but only once the KDV-2 has been paid. If the KDV-2 is paid on time, the deduction can be taken on the KDV-1 for the same month.
For a fully taxable business the net cost is usually zero, but the filing is mandatory and mistakes lead to penalties.
Timing and filing
Withholding tax is declared on the monthly withholding (muhtasar) return by the 26th of the following month.
Reverse-charge VAT is declared and paid on the KDV-2 return by the 25th of the following month; the regular VAT return (KDV-1), where it is deducted, is due by the 28th.
Stamp tax may also apply to the underlying contract.
Common mistakes
Paying the gross amount and forgetting to withhold.
Agreeing "net of tax" prices without grossing up the withholding base.
Applying a treaty rate without a valid residence certificate.
Treating software and cloud subscriptions as goods instead of services.
Frequently asked questions
Who pays the withholding tax?
Legally it is the foreign supplier's tax, but the Turkish payer is responsible for withholding and paying it. If it does not withhold, the tax office collects from the payer.
Can the supplier recover Turkish withholding tax?
Often yes, as a foreign tax credit in its home country, depending on its local rules and the treaty.
Does reverse-charge VAT apply to goods?
No. Imported goods pay import VAT at customs. Reverse charge applies to services from non-residents.
Paying abroad?
Our International Tax team reviews each cross-border payment and treaty position before you pay.
This page provides general information and is not legal or tax advice. Every situation is different; talk to us before you act.