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VAT Exemption For Foreign Investments In Turkey

Making a property investment in a foreign country generally entails a slew of additional costs and taxes. Known as Katma Deger Vergisi in Turkey, VAT can be a significant expense when buying real estate but good news for foreigners looking forward to making property investment in Turkey is the VAT exemption. 

To boost the real estate market and to make buying property in Turkey more attractive for foreign nationals, the government has made changes to taxation laws and procedures. In 2017, a concession was made to exempt foreign buyers from paying VAT. Before the enactment of the VAT exemption law, foreign investor used to pay VAT when purchasing a commercial or residential property at rates ranging from 1-18%. The VAT exemption is especially attractive for investors who buy commercial properties in Turkey on which 18% value added tax is applied.

Eligibility For VAT Exemption

You’re eligible for VAT exemption if you qualify as a:

  • Foreigner who is not living in Turkey i.e. is not a resident
  • Turkish national who is living in a foreign country on work or residency visa for more than six months
  • Institution that do not have any established business center or legal residence in Turkey

You’re not eligible for VAT exemption if you’re a Turkish citizen residing in a foreign country and work for a Turkish institution.

Conditions For Foreign Buyers To Avail VAT Exemption

  • VAT exemption applies on the purchase on first-hand properties bought from a construction company. Buyers who invest in a second-hand property aren’t charged VAT.
  • The price for the property must be made in foreign currency.
  • VAT exemption applies only if you will hold the property for one year. If you do decide to sell your property within one year, you’ll have to pay the VAT exempted at the time of purchase.

VAT Rates In Turkey

VAT rates in Turkey vary from 1% to 18% depending on the type of property and also the location of the project you’re investing in.

  • 1% for residential property that is less than 150 sqm
  • 8% for residential property that is over 150 sqm
  • 18% for commercial property

At Property Hub, VAT exemption is one of the legal services we offer our clients. To start the process, get in touch with our team.

For Further Information Contact Us.

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