Turkey has signed double tax agreements (DTA) or "conventions for the avoidance of double taxation" with all OECD members and many other countries. Turkey's purpose with these agreements is to attract foreign investors, but such agreements can have an interesting side effect on retired foreign residents in Turkey (as well as on Turks who returned to their home country after retiring in a foreign country and, of course, on Dual Nationality Citizens).
While pensioners normally pay income tax on their pensions in their home country, this income may be considered as non-taxable in Turkey. In other words: as a resident (and taxpayer) of Turkey it is possible to claim back income tax from your home country and possibly not pay tax on the pension in Turkey instead. If you present a 'Certificate of Residence' (in Turkish Mukimlik Belgesi) to your home country's tax authorities, it is even possible to receive pension payments without any previous tax deduction.
The decision on whether a pension is considered as non-taxable income in Turkey depends mainly on the kind of pension you receive - state pension or private pension. While state pensions are generally non-taxable, private pensions may be considered as taxable. But we know of pensioners who have never been asked for any tax payment, even for their private pensions.
Who decides whether I'm a taxpayer in Turkey or abroad?
We must differentiate between limited and full tax liability. Even if your residence is in another country, Turkey is entitled to take tax on income generated in Turkey, for example from renting out properties.
If you have a residence permit in Turkey and stay in Turkey for more than half of the calendar year (minimum 183 days), you are considered a full taxpayer in Turkey. This means, Turkey has the right to tax all your income from Turkey and abroad (except for income subject to tax in the country of part-time residence/ citizenship, which depends on the legislation of the country in question)
Which countries have a double tax treaty with Turkey?
Turkey has signed double tax treaties with 82 countries. For a list please click here
How do I get a Certificate of Residence (Mukimlik Belgesi)
As mentioned above, for full-time residents of Turkey it is possible to obtain a Mukimlik Belgesi from the
Gelir İdaresi Başkanlığı Avrupa Birliği ve Dış İlişkiler Daire Başkanlığı Çifte Vergilendirmeyi Önleme Anlaşmaları Şube Müdürlüğü (The Presidency of Revenue Administration, Department of EU&Foreign Affairs
DTA Section) in order to benefit from the double taxation treaty with your country of passport. As an individual, you must send by post or courier a copy of your (valid) residence permit together with two completed forms
Gelir İdaresi Başkanlığı
Avrupa Birliği ve Dış İlişkiler Daire Başkanlığı
Çifte Vergilendirmeyi Önleme Anlaşmaları Şube Müdürlüğü
İlkadım Cd. 06450
T: 00 90 (312) 415 34 67
F: 00 90 (312) 415 28 31
Form EK4 is bilingual (both English and Turkish), so you may be able to complete it without the help of a translator, but you will certainly need assistance with EK3 (only in Turkish) On the second page of EK3 you are required to indicate all income for a certain year.
If you have lived in Turkey for many years and want to claim back income tax for previous years, you must complete one form for each year. (It is possible to get a Certificate of Residence retroactively for four years, provided you can prove your residence status).
You will be informed by the Presidency that a file is opened and may be requested to provide additional information. The delivery of the Certificate of Residence takes a couple of weeks maximum.
The Certificate of Residence is issued in Turkish and English in 3 copies - one for the applicant, one for the tax office the foreign taxpayer is attached to and one copy stays at the Presidency of Revenue Administration.
How do I find out whether my income from abroad is liable to tax in Turkey?
We suggest that you figure out the reply to this most crucial question before applying for a Certificate of Residence. A good Turkish tax advisor/mali müşavir should be able to research this (and also tell you the tax rates for other income you may have to declare). Alternatively it is possible to directly contact the Department of EU and Foreign Affairs (see contact details above)
How do I claim back tax in my home country?
Obviously we cannot give comprehensive replies to this question, as every country's legislation is different. Speak to a tax advisor in your country to find out whether the DTA is in place and how to proceed with the claim. Your residence permit may be sufficient to claim back tax you already paid, and if you submit the Certificate of Residence you will get your payments without deduction.
Certificates of Residence are issued for the current year or previous years. There is no rule that a new certificate must be requested the following year, it is up to the other country's tax authority to ask for a renewed one.
As tax investigations get ever tighter all around the world, a Certificate of Residence will also serve foreign residents of Turkey, whose home countries (or countries where they generate a revenue) want to see evidence of where they are liable to tax.
If you are a full taxpayer in Turkey, you must make your income tax declaration for the previous year until the 25th of March of the following year.
Note: All information in this article is believed to be correct at the moment of publication. As the matter is complex and legislation changes quickly, please doublecheck before going ahead with any important tax procedure.
If you need help with obtaining a Certificate of Residence or require further information, YellAli will be happy to assist.
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