VAT Exemption on Turkish Real Estate Investment

Investing in foreign property generally comes with a slew of added expenses and taxes. Fortunately, for people buying real estate in Turkey, VAT is not one of them. Value Added Tax (VAT - known in Turkey as Katma Deger Vergisi) can be a considerable expense for foreign investors. However, as of May 2020, there is a concession in place to exempt foreign investors from paying VAT on their Turkish property investments. The concession is one of the many moves the Turkish government has made to make investing in property in Turkey more attractive. It’s important to note that this concession might be revoked at any time. Please speak with one of our advisors about the current situation.

Who is Eligible for VAT Exemption in Turkey?

• Turkish Citizens Abroad: Turkish citizens who have lived abroad for more than six months with their work and residence permits.
• Foreign Investors: Foreigners who are not resident in Turkey.
• Foreign Organizations: Organizations that have not made any profits in Turkey or do not have a Turkish office or business operation.

Note: Turkish citizens who reside in foreign countries or work for institutions based in Turkey will not be able to benefit from VAT exemption. The payment must be made in foreign currency and transferred from overseas.

Conditions for VAT Exemption Application

1. New Build Purchases Only: VAT exemption is only applied to new real estate properties purchased in Turkey from construction companies. However, second-hand and resale properties are generally VAT exempt anyway.
2. Payment in Foreign Currency: The purchase price must be paid in foreign currency.
3. Property Holding Period: Buyers will not be able to sell their property for a year. If the property is sold within the first year, sellers will need to pay the exempt VAT.

Types of VAT Levied in Turkey

• Residential Real Estate < 150m²: 1% VAT applicable
• Residential Real Estate > 150m²: 8% VAT applicable
• Commercial Real Estate and Dual-Use Residential Properties: 18% VAT applicable

Required Documents for Turkish Citizens Living Abroad

• Work Permit: Or equivalent documents from the official embassies or consulates of Turkey.
• Proof of Residency: Showing that the citizen was resident overseas for at least six months prior to the property purchase.

Required Documents for Foreign Investors

• Notarised Passport Copy
• Document from Turkish Tax Office: Stating that the buyer is not resident in Turkey, including:
1. Notarised passport translation
2. Notarised proof of foreign address
3. Passport transactions from the Turkish Police Department
4. Letter from the General Directorate of Immigration office showing the applicant is not resident in Turkey.

SEO Considerations for VAT Exemption on Turkish Real Estate Investment

1. Keywords: Use relevant keywords such as "VAT exemption Turkey real estate," "foreign investors Turkish property," and "Turkish real estate investment benefits."
2. Meta Description: Create a compelling meta description to attract clicks. Example: "Discover how foreign investors can benefit from VAT exemption on Turkish real estate investments. Learn about eligibility, conditions, and required documents."
3. Header Tags: Use header tags (H1, H2, H3) to structure the content for better readability and SEO.
4. Internal Links: Include internal links to related articles about Turkish real estate investment, benefits, and legal considerations.
5. External Links: Link to credible sources such as official Turkish government websites or real estate advisory services for more detailed information.

By following these guidelines, foreign investors can navigate the VAT exemption process for Turkish real estate investments more effectively.