Tax Risks for Foreign Property Owners in Turkey: Key Factors to Know

For many foreign property owners, tax exposure in Turkey arises not because of deliberate decisions but because of underestimation of how long they spend in the country, misinterpretation of their residency status, or the structure of their assets, which unintentionally shifts their tax obligations. The result can be significant: full liability for worldwide income, including foreign rental earnings, investment returns, dividends, royalties, and cross-border transfers.

In Turkey, tax planning should be approached with the same discipline as selecting a property or analysing a neighborhood. A clear understanding of residency criteria, reporting obligations, and international rules is essential for protecting capital and maintaining financial predictability. This article outlines the key principles of tax residency in Turkey, explains how foreign income is treated, examines the role of double taxation treaties, and highlights strategies property investors can use to minimise risk and avoid unnecessary liabilities.

When and Why Foreign Nationals Become Tax Residents of Turkey

Turkey’s Income Tax Law No. 193 classifies individuals into two categories with entirely different tax obligations:

• tax residents, who are liable for worldwide income

• non-residents, whose liability is limited to income generated within Turkey.

Many foreign property owners fall into the first category unintentionally, simply by spending more time in the country than they realise.

The 183-Day Rule

Under Turkish tax law, anyone who is physically present in the country for more than 183 days within a calendar year becomes a tax resident. The rule is automatic — the authorities assess actual presence, not visa type or immigration status.

This means that even those who enter Turkey as tourists may acquire tax residency if they spend several months in spring and autumn, and their total stay exceeds the six-month threshold.

What Tax Residency Means in Practice

Once an individual becomes a Turkish tax resident, all global income becomes declarable, including:

• rental income from property abroad

• salaries and earnings from remote or freelance work

• dividends, interest, and investment income

• royalties and similar intellectual-property income

Non-residents declare and pay tax only on income sourced inside Turkey.

Does Buying Property in Turkey Trigger Tax Residency?

Owning real estate in Turkey does not automatically make a foreigner a tax resident.

However, a property that effectively becomes the person’s main home, combined with extended stays, may lead the tax administration to conclude that the individual’s center of vital interests has shifted to Turkey.

If this coincides with more than 183 days spent in the country, residency status arises without any formal application and brings with it full liability for worldwide income.

Which Foreign-Sourced Income is Taxed in Turkey

Once an individual acquires tax residency in Turkey, almost all income generated abroad becomes declarable. For many foreign property owners and investors, this is the point at which obligations become significantly broader than expected.

Income From Foreign Real Estate and Rental Activities

If a Turkish tax resident owns property abroad and generates rental income from it, that income must be reported in Turkey. Whether it is an apartment in London, Dubai, Berlin, or any other market, the earnings form part of the Turkish tax base, even when the funds never enter a Turkish bank account.

A double-taxation treaty, if one exists between Turkey and the relevant country, may reduce the final liability through a tax credit mechanism. However, the obligation to report the income always remains.

Dividends, Interest, Royalties, and Remote-Work Income

Tax residents must also declare a wide range of financial and professional income earned abroad, including:

• dividends and interest from foreign accounts or portfolios

• royalty payments and author’s remuneration

• freelance, consulting, and remote-work income

• payments from foreign corporations or financial institutions

As a result, digital nomads, investors with diversified international portfolios, and entrepreneurs who work with foreign clients often become subject to Turkey’s tax system as soon as they cross the 183-day threshold.

Financial Monitoring and Cross-Border Transparency

Turkey participates in global financial information exchange frameworks such as the Common Reporting Standard (CRS). These mechanisms give Turkish tax authorities access to data on foreign-held accounts and financial transactions. In practice, this means:

• foreign bank accounts may be visible to the Turkish administration

• large transfers into Turkish accounts attract attention

• concealed income increases the likelihood of penalties and reassessments

For individuals who hold tax residency status, attempts to hide foreign income are both ineffective and high-risk.

Double Taxation for Foreign Income in Turkey

How foreign income is ultimately taxed in Turkey depends largely on whether a double-taxation treaty (DTT) exists between Turkey and the country where the income originates. With more than 85 such agreements in force, Turkey uses international frameworks to determine whether income will be taxed twice or whether foreign tax already paid can be credited against Turkish liability.

The Tax Credit Mechanism

Most treaties operate on a tax-credit basis. If an individual has already paid tax abroad, that amount can normally be credited when calculating Turkish income tax. To benefit from the credit, two conditions must be met:

1. the income must be reported in Turkey;

2. the foreign tax paid must be documented, typically through an official certificate issued by the tax authority in the other country.
   

Turkey applies the credit only up to the level of its own tax rate. This means:

• if the foreign tax rate is lower, the difference is payable in Turkey

• if the foreign tax rate is higher, the foreign tax covers the entire liability, and Turkey does not require additional payment.

Common Situations Where Double Taxation Arises

Double taxation most frequently affects:

• rental income from foreign property

• dividends

• interest

• royalties

• investment returns

Below are examples illustrating how the tax-credit system works in practice.

Examples of Tax Credit Application

Principle:

• The lower the tax withheld abroad, the larger the top-up required in Turkey.

• The higher the foreign tax, the smaller the remaining liability owed to Turkey.

How to Manage Tax Residency in Turkey

Although Turkey’s tax rules are clear and consistently applied, investors have several legitimate ways to structure their presence in the country and avoid becoming tax residents unintentionally. Effective planning is often the difference between predictable obligations and unexpected worldwide tax exposure.

Tracking Days Spent in Turkey

The most direct way to avoid tax residency is to monitor the number of days spent in the country. Residency is assigned automatically once an individual exceeds the 183-day threshold in a calendar year.

Maintaining a travel log, distributing visits over different years, and keeping precise records of entries and exits all help ensure that the total stay does not cross the limit inadvertently.

When Holding Property Through a Company Makes Sense

Tax outcomes depend not only on where assets are located, but also on who owns them. In some cases, purchasing property in Turkey through a foreign company — for example, a Cypriot, British, or Russian entity — allows investors to structure ownership in a way that may lead to more favourable tax treatment.

Some investors also use trusts or foundations as part of broader estate and asset-planning strategies, particularly when aiming to avoid excessive taxation in Turkey or to ensure flexibility in cross-border succession planning.

Using Double-Taxation Treaties to Reduce Exposure

If a double-taxation treaty exists between Turkey and the investor’s home country, the tax-credit mechanism can significantly reduce the final liability. Proper documentation confirming foreign tax paid allows individuals to offset that amount against their Turkish tax calculation.

What Foreign Property Owners Should Not Do When Declaring Income

Turkey’s tax administration is built around transparency and systematic data exchange. For individuals who have become tax residents — intentionally or unintentionally — attempts to conceal foreign income or minimise reporting obligations are rarely successful and often counterproductive.

Concealing Foreign Income

With Turkey participating in international financial information exchange networks, including CRS, the tax authorities have access to data on foreign-held accounts, international transfers, rental payments, and investment income.

If an income stream appears abroad but is missing from a Turkish tax declaration, the discrepancy is treated as a potential violation.

Even small amounts must be reported. Failure to do so raises questions, increases the likelihood of penalties, and may trigger a full audit.

Incorrect Calculations and Failure to Declare Small Amounts

Tax allowances and exemptions in Turkey apply only after an income item is declared. They do not replace the obligation to file. This means that even income below taxable thresholds must appear in the declaration.

When figures are omitted entirely, the tax administration may interpret this as an attempt to hide information, which often leads to additional checks and monitoring.

How Property Ownership in Turkey Affects Tax Residency

Buying a home in Turkey does not automatically confer tax residency. However, property ownership combined with extended periods of stay can create conditions under which the tax administration concludes that an individual’s center of life interests has shifted to Turkey, and with that comes full liability for worldwide income.

Property as an Indicator of a Permanent Place of Living

When a purchased home becomes a person’s primary address, and they spend long, continuous periods living there, this pattern may be viewed as establishing permanence. In such situations, the authorities may determine that Turkey has effectively become the individual’s habitual residence and economic base.

Crossing the 183-Day Threshold

Once the total time spent in Turkey exceeds 183 days within a calendar year, tax residency arises automatically.

The system relies on actual physical presence, not the individual’s stated plans or the type of residence permit held.

Frequently Asked Questions About Taxes in Turkey

What happens if income is not declared in Turkey?

Turkey’s tax system is built on individual responsibility.

A tax resident must report all worldwide income; failure to do so, whether intentional or accidental, can lead to audits, administrative penalties, and, in cases of proven intent, criminal liability. The threshold for triggering a review is low, and discrepancies between foreign records and Turkish filings are taken seriously.

Are foreign-sourced incomes taxed in Turkey?

Yes. Once an individual is classified as a tax resident, all income earned abroad, including rental earnings, dividends, interest, royalties, and payments from remote work, must be included in the Turkish tax base.

Non-residents report only Turkish-sourced income.

Who qualifies as a tax resident of Turkey?

Any individual who spends more than 183 days in Turkey within a calendar year becomes a tax resident. There is no separate application process; residency arises automatically based on physical presence.

Does Turkey apply double taxation?

Turkey seeks to prevent double taxation through a large network of treaties — more than 85 in total. If a treaty exists with the relevant country, tax paid abroad is credited against the individual’s Turkish liability.

If no treaty exists, the same income may be taxed fully both abroad and in Turkey, with no available relief.

How do foreigners pay taxes in Turkey?

Foreign nationals must obtain a Turkish tax number (Vergi Kimlik Numarası) and file an annual tax declaration. Rental income, business income, and interest earnings must be reported by the end of March of the following year.

Declarations can be submitted online or through a local tax office, and Turkey applies a progressive tax rate of 15–40%.

Employees whose employers withhold income tax at the source are typically exempt from filing. Property owners, freelancers, and entrepreneurs must file individually. All payments, including potential refunds, are processed through Turkey’s central tax administration system.

Reliable Property Investment in Turkey With Luxury Estate Turkey

As a licensed real estate agency, Luxury Estate Turkey integrates tax considerations directly into the property investment process. Our advisory approach extends beyond selecting a location or analysing market value: we help clients understand how residency rules, ownership structures, and international tax principles may affect their long-term financial position.

We curate properties based on each client’s goals, personal circumstances, and expected time spent in Turkey, and we build a long-term tax outlook alongside the acquisition strategy. 

This material is provided for informational purposes only and does not constitute tax advice. Luxury Estate Turkey works with qualified lawyers and tax advisers to support clients throughout the entire investment process.