Double Taxation Agreements in Turkey are crucial for individuals and companies operating internationally. These treaties help avoid being taxed twice on the same income by clearly defining which country has the taxing rights. In this guide, we explore how Turkey’s tax treaty network works and who can benefit.
What Are Double Taxation Agreements in Turkey?
Double taxation occurs when the same income is taxed by more than one jurisdiction. This often happens when a taxpayer resides in one country but earns income in another. Both countries may claim the right to tax the same income—leading to a situation of double taxation unless a treaty prevents it.
Why Double Taxation Matters for International Taxpayers
Double taxation increases the cost of cross-border economic activity, discourages investment, and disrupts fair international tax competition. While it may provide short-term revenue for governments, it ultimately restricts trade and reduces long-term taxable bases.
How Double Taxation Agreements in Turkey Prevent Tax Duplication
Turkey prevents double taxation using internationally accepted methods:
Exemption Method in Double Taxation Agreements in Turkey
Income earned and taxed in a foreign country is exempt from Turkish taxation.
Credit Method in Double Taxation Agreements in Turkey
Taxes paid abroad are credited against Turkish tax liability, reducing the tax owed in Turkey.
Deduction Method under Turkey’s Double Taxation Agreements
Foreign taxes are deducted from gross income before calculating Turkish tax. This is less commonly used.
Legal Principles Behind Tax Treaties in Turkey
Turkey’s tax treaties are based on internationally accepted legal frameworks:
Residence Principle
Taxation is based on where the person or entity is resident, regardless of where the income is earned.
Source Principle
Taxation is based on where the income is generated, regardless of the taxpayer’s residence.
Nationality Principle
In rare cases, tax rights are granted based on citizenship.
Model Conventions
- OECD Model: Prioritizes residence-based taxation. Common in treaties with developed countries.
- UN Model: Gives more taxing rights to the source country. Common in treaties with developing countries.
Who Can Benefit from Double Taxation Agreements in Turkey?
Only residents (mukim) of a contracting state can benefit from treaty provisions. Residency is determined by:
- Permanent home or habitual residence
- Place of incorporation (for companies)
- Center of vital interests or citizenship (in dual-residency cases)
A residency certificate must be submitted to the Turkish tax authorities to claim treaty benefits.
Types of Income Covered by Double Taxation Agreements in Turkey
Each treaty allocates taxing rights over various income types between the source country and the country of residence.
Real Estate Income
Taxed in the country where the property is located.
Business Profits
Taxed in the country where a permanent establishment (PE) exists.
International Transport
Usually taxed in the country of residence. Some treaties limit tax in the source country to 50% of normal rates.
Dividends, Interest, and Royalties
Taxed in both countries, but the source country’s tax rate is limited by treaty (e.g., 5%-15%).
Capital Gains
Depending on the asset type and location, either the source country or the residence country has taxing rights.
Independent Personal Services
Taxed in the other country if the individual has a fixed base or stays more than 183 days.
Employment Income
Taxed where the employment is carried out, unless:
- Stay is less than 183 days
- Employer is not a resident of the host country
- Payment is not from a permanent establishment there
Pensions
- Private pensions: Generally taxed in the country of residence
- Public pensions: Typically taxed in the paying country
Directors, Artists, and Athletes
Usually taxed in the source country.
Teachers and Students
Generally exempt for a limited period (often two years) if funded from abroad.
Other Income
Handled on a case-by-case basis, depending on the treaty.
List of Countries with Double Taxation Agreements with Turkey
Turkey currently has double taxation agreements with 84 countries. These include:
| Albania | Gambia | Malaysia | Slovakia | Algeria |
| Georgia | Malta | Slovenia | Australia | Germany |
| Mexico | South Africa | Austria | Greece | Moldova |
| Spain | Azerbaijan | Hungary | Mongolia | Sri Lanka |
| Bahrain | India | Montenegro | Sudan | Bangladesh |
| Indonesia | Morocco | Sweden | Belarus | Iran |
| Netherlands | Switzerland | Belgium | Ireland | New Zealand |
| Syria | Bosnia & Herzegovina | Israel | Northern Cyprus | Tajikistan |
| Brazil | Italy | Norway | Thailand | Bulgaria |
| Japan | Oman | Tunisia | Canada | Jordan |
| Pakistan | Turkmenistan | Chad | Kazakhstan | Philippines |
| Ukraine | China | Korea | Poland | UAE |
| Croatia | Kosovo | Portugal | United Kingdom | Czech Republic |
| Kuwait | Qatar | United States | Denmark | Kyrgyzstan |
| Romania | Uzbekistan | Egypt | Latvia | Russia |
| Venezuela | Estonia | Lebanon | Rwanda | Vietnam |
| Ethiopia | Lithuania | Saudi Arabia | Yemen | Finland |
| Luxembourg | Serbia | France | Macedonia | Singapore |
This list is available and regularly updated by the Turkish Revenue Administration.
Non-Discrimination and Equal Tax Treatment
Turkey’s DTAs include non-discrimination clauses to ensure foreign individuals or businesses are not taxed more heavily than local counterparts under similar circumstances. This principle applies to:
- Individuals providing services abroad
- Companies with foreign ownership
- Permanent establishments of foreign enterprises
Resolving Disputes Through Mutual Agreement Procedure (MAP)
If a taxpayer believes a treaty has been misapplied, they may initiate a Mutual Agreement Procedure.
- Start with the competent authority in the country of residence.
- Both authorities attempt to resolve the dispute amicably.
- If unresolved, the matter may proceed to tax court.
Information Exchange Between Treaty Countries
DTAs support tax transparency by allowing:
- Exchange of information on income, assets, and transfer pricing
- Prevention of tax evasion and avoidance
- Enforcement of accurate tax reporting
Information shared under DTAs is strictly confidential and limited to relevant authorities.
Tax Treatment of Diplomats and Consular Officials
Tax treaties do not override privileges under international law. Diplomats and consular staff continue to benefit from exemptions under the Vienna Convention on Diplomatic Relations.
Conclusion: Why DTAs Support Investment in Turkey
Double taxation agreements are essential for promoting cross-border trade, investment, and compliance. Turkey’s wide treaty network ensures fair taxation, legal certainty, and reduced fiscal risk for both local and foreign taxpayers.
For tailored guidance on applying DTAs, obtaining residency certificates, or determining treaty eligibility, contact Metropol CPA.
If your company operates in Turkey or you’re interested in local employment regulations, you may also want to read our guide on Disability Employment Obligations in Turkey. It covers mandatory quotas, government incentives, and penalties applicable to employers.