Taxes and Tax Schemes in Turkey | What You Need to Know in 2025

Turkey, a country strategically positioned between Europe and Asia, operates a comprehensive tax system that affects both residents and non-residents. Located at the crossroads of multiple continents, Turkey has emerged as a significant economic power with a growing appeal to international investors and digital nomads.

Turkey's economy, the 19th largest in the world by nominal GDP, has shown remarkable growth over recent decades. The country has developed a sophisticated tax system that balances the need for revenue with attracting foreign investment and talent. This has resulted in a tax framework that offers various advantages for international professionals while maintaining compliance with global standards.

The expat community in Turkey continues to grow, particularly in cities like Istanbul, Ankara, and Izmir. Many are drawn by the country's relatively moderate tax rates, growing economy, and high quality of life. Major sectors such as technology, finance, and tourism provide numerous opportunities for foreign professionals seeking tax-efficient employment arrangements.

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Turkish Income Tax

Turkey employs a progressive income tax system with rates ranging from 15% to 40% as of 2025. The tax year follows the calendar year, and income is taxed in progressive bands. Residents are taxed on their worldwide income, while non-residents are only taxed on Turkish-source income.

Employment income is subject to withholding tax, which employers deduct monthly from salaries. This system ensures regular tax collection while simplifying compliance for employees. Self-employed individuals must make quarterly advance tax payments based on their estimated annual income.

If you want to have a better understanding of the taxes you should pay on personal income in Turkey, you can use the personal tax calculator in the Taxation section of the Turkey page.

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Turkish Tax on Overseas Income

Turkey's tax system follows the worldwide income principle for residents. However, the country has established double taxation agreements with numerous countries to prevent income from being taxed twice. These agreements provide relief through tax credits or exemptions for income already taxed abroad.

Tax residency applies to individuals who have their habitual residence in Turkey or spend more than six months (183 days) in the country during a calendar year. The presence of a permanent home in Turkey and the center of vital interests are also considered in determining residency status.

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Turkish Tax on Investments

Investment income in Turkey receives varied treatment depending on the type of investment. Interest from Turkish government bonds is typically taxed at lower rates than other investment income. Capital gains from the sale of property are subject to tax, with certain exemptions available for long-term holdings.

Dividend income is subject to withholding tax, though rates may be reduced under tax treaties. The investment landscape benefits from specific incentives designed to attract foreign capital, particularly in priority development regions.

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Turkish Corporate Taxation

Corporate income tax in Turkey currently stands at 20%, though this rate can vary based on government policies and economic conditions. Companies benefit from various incentives, particularly those operating in technology development zones, industrial zones, or engaging in research and development activities.

The corporate tax framework includes provisions for carrying forward losses, investment allowances for certain sectors, and special rates for specific types of income. Foreign companies can establish branches or subsidiaries in Turkey, each with its own tax implications.

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Special Tax Regimes

Turkey offers several special tax regimes designed to attract foreign investment and skilled professionals. The Turkish Blue Card program, while primarily a residency scheme, can have favorable tax implications for qualifying individuals. Technology Development Zones offer significant tax advantages for companies and employees working in these areas.

Remote workers and digital nomads can benefit from Turkey's tax residency rules and double taxation agreements, though careful planning is necessary to optimize tax positions.

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Regional Comparison

Tax Planning for Turkey

Effective tax planning in Turkey requires consideration of several key factors:

• Understanding residency rules and their implications
• Utilizing available exemptions and deductions
• Structuring investments to optimize tax efficiency
• Maintaining proper documentation for international income
• Considering timing of residency status changes

Professional tax advice is recommended, particularly for complex situations involving international income or investments.