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  • Alper Işıkal

THE VAT EXEMPTION FOR FOREIGNERS AND TURKISH CITIZENS WHO LIVE ABROAD

Updated: Mar 31, 2022


Turkish citizens who live abroad, foreign real persons who do not reside in Turkey, and institutions which do not have an official office in Turkey and do not generate earnings in Turkey, can benefit from the VAT exemption on the condition that they bring the sale price of the residence or workplace as foreign currency in Turkey at the first transfer and do not sell the independent section within one year of the date of transfer. Buyers who are eligible for the exemption may buy more than one residence or workplace within the scope of this exemption. This exemption is regulated by the sub-paragraph i added to paragraph 1 of Article 13 of the VAT Law No. 3065, with Article 7 of the Law numbered 6824 published in the Official Gazette dated 08 March 2017 and numbered 30001.


The cases which cannot be deemed as the first transfer:

- A residence or workplace transfer in which the house or office is sold to a third person, buying from the person who has constructed the house or office.

- The transfer of the residence or workplace that is purchased from the builder and sold to another person.

- The transfer of residence or workplace to the landowner in return for a land share


THE CONDITIONS TO BENEFIT FROM THE VAT EXEMPTION


1- Who can benefit from the exemption?

a. Turkish citizens who live abroad (However, Turkish citizens who work for institutions, establishments, and organizations based on Turkey and reside in foreign countries due to the bond with these institutions, establishments, and organizations, cannot benefit from this exemption.)

b. Foreign real persons who do not reside in Turkey.

c. Institutions which do not have an official office in Turkey and do not generate earnings in Turkey.


2- What conditions are required for Turkish citizens who can benefit from the exemption?

Turkish citizens who can benefit from the exemption should fulfill all of the following requirements:

a. As of the transfer date, to have a valid work or residence permit in foreign countries,

b. To have obtained work or residence permit at least six months before the date of the transfer within the scope of the exemption.

c. To have been abroad for at least 6 months between the date of obtaining the work or residence permit and the date of transfer that is made within the scope of the exemption.


3- Which immovable properties are in the scope of this exemption?

The exemption stipulated under the Article 13/I of the Law numbered 3065 covers;

a. Residences and

b. Buildings constructed as workplace

- Residences or workplaces that are identified as a residence, shop, office, bureau, time share property, etc. in their building licenses are considered within the scope the exemption.

- The scope of the exemption is limited to residences or workplaces. Therefore, the exemption shall not be applied to the transfer of immovable properties such as land and fields.


4- What kind of specifications are required for the buildings which are constructed as residence or workplace?

a. A building license,

b. An actual transfer in a condition ready to use by the purchaser,

c. Establishment of a construction servitude for the residence or workplace that is eligible for it.

d. At the time of the transfer of residences or workplaces whose condominium ownership have been created, proving the actual transfer by a document is not necessary. However, for residences and workplaces that are eligible for creating a construction servitude, the actual transfer should be proved by a document.


5- From which date can the transferred immovable properties benefit from this exemption?

Residence or workplace transfers made from the date of 1 April 2017 are exempted from VAT.

6- What conditions are required for residences or workplaces with the above-mentioned specifications, so that they can be transferred within the scope of the exemption?

a. Sale price should be brought to Turkey as foreign currency, and

b. The transferred immovable property should not be re-sold within 1 year of a period.


7- What documents should purchaser provide to benefit from the exemption?


i. Required documents for Turkish citizens

1. A residence permit or an equivalent document issued by official authorities of the country where the citizen resides or a document evidencing that the citizen has a work permit issued by official authorities of that country,

2. Documents evidencing that the citizen has been in foreign countries for at least six months from the date when work or residence permit is obtained,

3. The document issued by the Turkish embassy or consulate located in the foreign country, evidencing that the citizen is not within the scope of sub-paragraph 2 of paragraph 1 of Article 3 of the Income Tax Law (to be abroad due to affairs of official or private organizations).


ii. Required documents for foreigners

1. A copy of the passport issued by the country of the foreigner (or a copy of the blue card for persons who have lost Turkish citizenship by ceasing to be Turkish citizen.)

2.The document issued by the tax office where the residence or workplace is located or the police office, evidencing that the foreign real person does not reside in Turkey.


iii. Required documents for legal entities

1. The document issued by official authorities of the country where the registered office of the institution is located, evidencing that the institution is established, and its operations are ongoing.

2. The document issued by the tax office where the residence or workplace is located, evidencing that the institutions does not have an official office in Turkey and does not generate earnings through an office or a permanent representative.


The above-mentioned documents shall be obtained before the transfer of the immovable property to benefit from the exemption.

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