Foreign companies can engage independent contractors in Turkey without establishing a Turkish legal entity. Independent contractors in Turkey commonly provide services through business-to-business (B2B) service agreements, issuing invoices to overseas clients and receiving international payments. However, the relationship must be structured as a genuine independent business arrangement rather than disguised employment.
The foreign company does not normally place the contractor on a Turkish payroll merely because it purchases services from that person. However, the arrangement must be genuinely independent in practice. Calling someone a “contractor” in an agreement does not settle their legal status if the actual working relationship resembles employment.
For suitable projects and genuinely independent professionals, this can be a practical way to obtain services from Turkey. The contract, invoicing process, payment structure and day-to-day working model should all support the intended B2B relationship.
What Are Independent Contractors in Turkey?
An independent contractor is a person or business that provides services on its own commercial account rather than working as an employee under the direction and control of a client.
In a typical arrangement, the contractor:
- operates an independently registered business or professional activity;
- determines how the agreed services will be performed;
- invoices the foreign company for completed services;
- maintains their own accounting and tax records;
- pays their own Turkish taxes and social security contributions;
- supplies their own equipment unless the project requires otherwise; and
- bears responsibility for delivering the agreed result.
Independence must exist in practice, not only in the contract.
A relationship becomes more difficult to defend as an independent service arrangement when the individual is integrated into the client’s organisation, works under continuous managerial supervision, follows employee-style working hours and depends economically on the client in the same manner as an employee.
No single factor automatically determines the classification. The entire relationship must be considered.
Can a Foreign Company Engage Independent Contractors in Turkey?
Yes. A foreign company may purchase services from a contractor established in Turkey even when the foreign company has no subsidiary, branch or other legal entity in the country.
The commercial flow is generally straightforward:
- The foreign company and the contractor sign a service agreement.
- The contractor performs the agreed services from Turkey.
- The contractor issues a Turkish invoice or other legally appropriate service document.
- The foreign company pays the invoiced amount to the contractor’s bank account.
- The contractor records the income and handles the applicable Turkish tax and social security obligations.
The foreign company should still consider whether its broader activities could create a taxable presence or another registration obligation in Turkey. Hiring one contractor does not automatically create such a presence, but the risk may increase if the contractor negotiates or concludes contracts, represents the company locally, maintains a fixed place for the company or performs functions extending beyond ordinary independent services.
Does the Contractor Need a Sole Proprietorship?
For recurring commercial or professional services, the individual will normally need an appropriate Turkish tax registration.
A sole proprietorship is a common structure because it allows an individual to:
- register with the Turkish tax authorities;
- issue electronic invoices or other compliant documents;
- deduct eligible business expenses;
- file periodic and annual tax returns; and
- register for the applicable social security system.
However, “sole proprietorship” is a practical general description rather than the only possible legal form.
Depending on the nature of the activity, the person may be registered as a commercial enterprise, a self-employed professional or another recognised taxpayer category. Some contractors may instead provide services through a Turkish limited company.
Before signing the agreement, the foreign client should confirm:
- the contractor’s registered legal or trade name;
- Turkish tax identification details;
- registered address;
- invoice type;
- bank account ownership; and
- whether the registered business activity covers the services being purchased.
A private individual who receives recurring service payments without an appropriate tax registration may create documentation and compliance problems for both parties.
How Do Independent Contractors in Turkey Work in Practice?
A properly structured engagement normally consists of four connected elements: a service agreement, documented service delivery, compliant invoicing and traceable payment.
Service Agreement
The agreement should describe a commercial service relationship rather than reproduce an employment contract under a different title.
A practical contractor agreement should normally address:
- the scope of services and deliverables;
- project milestones or service periods;
- fees and invoicing frequency;
- payment currency and payment deadline;
- acceptance procedures;
- confidentiality;
- intellectual property ownership or licensing;
- data protection and information security;
- permitted subcontracting;
- expenses;
- liability;
- termination rights;
- governing law and dispute resolution; and
- the contractor’s responsibility for local tax and business compliance.
The agreement should not rely solely on a general statement that the person is an independent contractor. Its operational terms should be consistent with genuine independence.
Before signing a contractor agreement, the parties should also decide whether the foreign company requires ownership of all project output or merely a licence to use it. Intellectual property should not be left to assumptions.
Issuing Invoices
The Turkish contractor issues an invoice or other applicable Turkish service document to the foreign company.
The document will generally include:
- the contractor’s registered information;
- the foreign company’s legal name and address;
- the invoice date and number;
- a clear description of the service;
- the service period or project reference;
- the fee and currency;
- the applicable VAT treatment; and
- payment details.
In practice, many foreign companies are unaware that an emailed payment request or informal receipt is not a substitute for a document issued through the contractor’s Turkish tax registration.
The service description should match both the agreement and the work actually performed. Generic descriptions such as “consulting” may be insufficient where the exact nature of the service affects its tax treatment.
Receiving Payments From Abroad
The parties may agree on fees in Turkish lira or a foreign currency such as euros, US dollars or pounds sterling.
Payment is normally made by bank transfer to an account belonging to the registered contractor or contractor company. The agreement should specify:
- who bears intermediary and receiving bank charges;
- whether the invoice must be paid in full;
- the exchange-rate mechanism if payment is made in another currency;
- the consequences of late payment; and
- what information must appear in the bank transfer reference.
Payments should be traceable and reconcilable with the relevant invoices.
This is especially important where the contractor intends to claim a Turkish tax deduction connected with exported services. For certain income tax deductions, the law requires the relevant income to be transferred to Turkey by the deadline for filing the annual return for the year in which it was earned.
Tax and Accounting Responsibilities
The contractor is generally responsible for their Turkish:
- bookkeeping;
- invoice issuance;
- income or corporate tax;
- VAT filings;
- social security contributions; and
- other business declarations.
The foreign company should not assume that paying a gross invoice amount means no compliance review is necessary. The company should obtain basic evidence that the contractor is operating through a registered business and issuing valid documents.
Likewise, the agreement should not attempt to transfer every commercial risk to the contractor while the foreign company retains employee-level control over the person’s daily work.
Which Services Can Independent Contractors in Turkey Provide?
A Turkish contractor may provide a broad range of lawful professional and commercial services to foreign clients.
Common examples include:
- software development;
- graphic and digital design;
- engineering;
- accounting record-keeping;
- data processing and analysis;
- translation;
- market research;
- content production;
- business consulting;
- customer support;
- testing and certification;
- architecture; and
- technical reporting.
The fact that a service can be supplied under a B2B agreement does not automatically mean it qualifies for a specific tax incentive. The contractor’s general ability to invoice a foreign client and eligibility for Turkey’s service export income tax deduction are separate questions.
Can the Contractor Benefit From Turkey’s Service Export Tax Deduction?
Some Turkish contractors providing specified services to foreign clients may qualify for a deduction from their taxable business income.
For tax periods beginning on or after 1 January 2026, Presidential Decision No. 11257 set the applicable deduction rate under Article 89/13 of the Turkish Income Tax Law at 100%. This is a deduction in calculating taxable income, subject to all statutory conditions. It should not be described as a blanket exemption for every freelancer working with an overseas client.
The supporting material provided for this article also highlights the distinction between qualifying listed services and activities such as general consulting or digital advertising, which may fall outside the statutory categories.
It is also important to distinguish this incentive from other Turkish tax relief provisions that may apply in different cross-border situations. For example, Turkey also provides a separate income tax exemption for certain employees working in Turkey for qualifying foreign employers (non-resident) under Article 23(14)(a) of the Turkish Income Tax Law. That exemption applies to employment relationships rather than independent contractor arrangements and is subject to its own statutory conditions. You can read more in our guide on the Foreign Employer Income Tax Exemption in Turkey.
Eligible Services
The statutory list covers income from specified services, including:
- architecture;
- engineering;
- design;
- software;
- medical reporting;
- accounting record-keeping;
- call centre services;
- product testing;
- certification;
- data storage;
- data processing; and
- data analysis.
Eligibility depends on the actual service performed. A broad label in the agreement or invoice cannot convert a non-qualifying activity into a qualifying one.
For example, software development may qualify where the contractor genuinely develops software. General commercial consulting provided to the same technology company does not necessarily become a software service merely because the client operates in the technology sector.
General Eligibility Requirements
The principal requirements generally include:
- the service provider must perform a service specifically covered by the legislation;
- the customer must be resident or established outside Turkey;
- the invoice must be issued to the foreign customer;
- the service must be performed from Turkey;
- the service must be used exclusively outside Turkey;
- the service must relate to the customer’s activities outside Turkey rather than its Turkish operations; and
- the full relevant income must be transferred to Turkey by the statutory deadline.
Each condition must be reviewed separately.
One common misconception is that any income received from abroad qualifies as service export income. It does not. The location of the client and the source of payment are important, but the nature of the service and where it is used are also decisive.
The deduction applies to qualifying net profit rather than automatically to the gross invoice amount. Its application must be calculated and documented through the contractor’s Turkish tax records.
VAT Treatment of Exported Services
A service supplied from Turkey to a foreign customer may also qualify for Turkey’s VAT exemption for exported services where the legal conditions are met.
In broad terms, the customer must be abroad and the benefit of the service must arise abroad. The VAT treatment should be reviewed separately from the income tax deduction because the two rules are not identical. A service may require its own VAT analysis even where it does not fall within the specific list of services eligible for the income tax deduction.
The contractor should not simply omit VAT because the customer has a foreign address. The contract, invoice, project records and actual use of the service should support the treatment adopted.
Examples of Working With Independent Contractors in Turkey
US Software Company and Turkish Developer
A US software company engages a developer in Turkey to build a defined application module.
The developer operates through a registered sole proprietorship, signs a development agreement, issues monthly invoices and receives US-dollar payments by bank transfer. The agreement addresses source-code ownership, confidentiality, security standards and project acceptance.
Because software is one of the listed service categories, the developer may examine eligibility for the service export income tax deduction. Qualification still depends on satisfying all statutory requirements.
UK Consulting Company and Turkish Accountant
A UK consulting company engages a Turkish professional to maintain accounting records for the UK company’s overseas operations.
The contractor invoices the UK entity and delivers the records electronically. Accounting record-keeping is among the listed service categories, but the exact work must genuinely constitute qualifying record-keeping services.
Broader financial advice, management consulting or tax strategy should not automatically be treated as the same activity.
German Engineering Company and Engineering Consultant
A German engineering company appoints a Turkey-based engineer to prepare technical calculations and design reports for projects located outside Turkey.
The contract defines each deliverable, professional standards, liability and review procedures. The engineer invoices the German company after completing agreed milestones.
Engineering is a listed activity, but the benefit of the work must arise abroad. Work connected with a construction or installation project in Turkey would require a different assessment.
Design Agency and Turkish Graphic Designer
A foreign design agency commissions brand assets from a Turkish graphic designer.
The designer operates independently, uses their own tools, invoices per project and assigns the agreed intellectual property rights upon payment. The agreement allows the designer to work for other clients and focuses on deliverables rather than fixed daily working hours.
Design is included in the statutory service categories, although the designer must still satisfy the customer, invoicing, use-abroad and payment-transfer conditions.
Common Misunderstandings
“The foreign company must establish a Turkish subsidiary.”
Not necessarily. A foreign company can generally purchase independent services from a registered contractor in Turkey.
“Every person working remotely is a contractor.”
No. Remote work describes where the work is performed. It does not determine whether the relationship is independent or employment-based.
“A contractor agreement prevents reclassification.”
No. The written agreement is relevant, but the actual working conditions are more important.
“Any foreign payment is tax-free in Turkey.”
No. Contractors in Turkey are generally taxable in Turkey. A specific deduction may apply only when its detailed conditions are satisfied.
“All services supplied to foreign companies qualify for the service export deduction.”
No. The income tax provision applies to a defined list of services.
“No VAT is charged whenever the invoice is issued abroad.”
Not automatically. The place where the service is used and the applicable VAT conditions must also be considered.
Best Practices Before Hiring Independent Contractors in Turkey
Before engaging a contractor in Turkey, a foreign company should:
- verify the contractor’s tax registration and invoice capability;
- define the services and deliverables precisely;
- confirm who will own intellectual property;
- avoid unnecessary control over working hours and daily methods;
- distinguish project supervision from managerial control;
- agree on currency, bank charges and payment deadlines;
- review confidentiality and data protection obligations;
- consider whether the contractor will represent the company in Turkey;
- assess whether the work may create a permanent establishment risk;
- confirm the expected VAT treatment;
- avoid describing non-qualifying services as software, design or engineering solely for tax purposes; and
- maintain contracts, invoices, payment records and evidence of completed work.
The strongest contractor arrangement is one in which the written agreement, commercial documentation and actual behaviour all tell the same story.
Frequently Asked Questions About Independent Contractors in Turkey
1. Can a foreign company pay a Turkish contractor directly?
Yes. Payment can generally be made directly to the contractor’s Turkish business bank account against a valid invoice or other applicable service document.
2. Does the foreign company need a Turkish tax number?
Not normally merely to purchase services from an independent Turkish contractor. A separate analysis may be required if the company has broader taxable activities or a business presence in Turkey.
3. Can the contractor invoice in euros or US dollars?
Yes. Commercial fees may generally be agreed and invoiced in a foreign currency, subject to applicable Turkish rules and proper accounting conversion.
4. Must the contractor have more than one client?
There is no universal rule requiring a contractor to have a specific number of clients. However, complete economic dependence on one client may be relevant when evaluating whether the relationship is genuinely independent.
5. Can the foreign company provide a laptop?
It can, particularly where security or system access requires company-controlled equipment. However, providing equipment is one factor among many and should be considered together with control, integration and the overall working model.
6. Can the company set deadlines and quality standards?
Yes. A client may define deliverables, deadlines, technical specifications and acceptance standards. The risk increases when the client controls the individual’s daily working methods in the manner of an employer.
7. Is the foreign company responsible for the contractor’s Turkish taxes?
The contractor is normally responsible for their own Turkish tax and social security obligations. The foreign company should nevertheless verify that it is contracting with a properly registered business and receiving valid invoices.
8. Does every Turkish contractor qualify for the service export tax deduction?
No. The deduction is limited to specified services and requires all statutory conditions to be met. The contractor should obtain a service-specific assessment based on the actual work, customer, invoice, place of use and payment flow.
Conclusion
A foreign company can engage an independent contractor in Turkey without first establishing a Turkish legal entity. The arrangement usually operates through a B2B service agreement, Turkish invoicing and international bank payments.
The main issue is not whether the parties use the word “contractor.” The relationship must function as an independent commercial engagement in practice.
The contractor should have the correct Turkish tax registration, issue compliant documents and manage local tax and social security obligations. The foreign company should define deliverables carefully, protect intellectual property and confidential information, and avoid operating the relationship as undeclared employment.
Certain contractors providing listed services to overseas customers may benefit from Turkey’s service export income tax deduction and VAT rules for exported services. These incentives are conditional and should be assessed separately from the basic legality of the contractor arrangement.