income received through Solar Staff by themselves.
To carry on tax accounting in Turkey for your Solar Staff income, you need to:
be a tax resident
obtain a tax ID number
choose a form of doing business
Tax residence in Turkey
The following persons are recognized as tax residents:
persons whose legal residence is in Turkey or who intend to settle in the country
persons who have lived in Turkey uninterruptedly for more than 6 months* in one calendar year
* Foreign individuals who have to remain in Turkey for more than 6 months due to force majeure (illness, arrest, etc.) or for the purposes of education, tourism, or a specific assignment (e.g., a business project) are considered non-residents of Turkey.
Turkey taxes its residents on their worldwide income, while non-residents are taxed on Turkish-source earnings only.
The tax ID (Vergi Kimlik Numarası) in Turkey is a unique 10-digit number needed to declare and pay taxes, receive remuneration, and open a bank account. There are two ways to obtain it:
Online application (requires a Turkish phone number)
In-person application at a tax office (requires a valid passport and its photocopy)
After your application is processed, you get a document where T.C. Vergi Kimlik Numarası / Potansiyel Vergi Kimlik Numarası is your Turkish tax ID number.
Freelancer in Turkey: taxes, deductions, and contributions
Tax liabilities in Turkey depend on the freelancer's status and/or fulfillment of certain conditions. Read on for more details.
SELF-EMPLOYED INDIVIDUAL
In this status, freelancers pay income tax and can apply tax deductions. Tax liabilities:
Calculated in Turkish lira (TRY), income tax is levied on taxable income at progressive rates (as at 2022):
Taxable income, TRY | Tax rate*, % |
Up to 32,000 | 15 |
32,000–70,000 | 20 |
70,000–250,000 | 27 |
250,000–880,000 | 35 |
Above 880,000 | 40 |
* The rate only applies to the excess amount. For example, for TRY 40,000 in income the tax calculation is as follows: (32,000 * 15%) + (8,000 * 20%) = TRY 6,400.
The taxable period for income tax is a calendar year. The tax return is filed on paper or online before March 31 of the year succeeding the reporting one. The tax is paid in 2 stages: at the time of filing the return and before the end of July (during the 4th month after the tax return is submitted).
This status affords the following deductions:
Сharitable contributions
Expenses on education (including for family members) not exceeding 10% of the tax base
Insurance premiums (for self and family) not exceeding 15% of the individual's monthly gross income and annual minimum wage
Advertising expenses, rent on premises used for carrying on business
Official employment only: social security contributions, income tax, stamp duty, insurance premiums, and unemployment insurance contributions
Social contributions: Turkey doesn't have a comprehensive social security system, with contributions payable only by those working under formal employment arrangements. Both the employer and the employee must make social security contributions.
The self-employed are required to keep a book of income and expenditures, as well as issue electronic receipts for incoming payments.
There are no special tax regimes and/or other taxes for non-residents, but there are several caveats:
Non-residents leaving Turkey are required to pay their taxes within 15 days before their departure
Foreigners paying social contributions in another country are exempt from paying contributions in Turkey for 3 months
A foreigner wanting to obtain the self-employed status must get what's called an independent work permit, which is only issued to those who have legally and uninterruptedly resided in Turkey for at least 5 years There are several other conditions that must be met, including as regards the education level, relevant experience, and prospective contribution to the Turkish economy. Once all the requirements are met, it's time to submit an application to the Ministry of Labor and Social Security.
SOLE PROPRIETORSHIP
To set up as a sole trader, you must have Turkish citizenship or a permanent residence permit (if you have a work permit / work visa, one of the conditions is having 5 Turkish employees). The tax liabilities are as follows:
Income tax – a lot like the self-employment one, but there are timing differences when it comes to reporting and payment: the tax return must be submitted before April 30 of the year following the reporting one, and there is a so-called “temporary tax” – an advance income tax calculated as 15% of gross income at the end of each quarter during the calendar year:
The taxable income is declared before the 17th day of the second month following the reporting quarter, and the corresponding tax is payable before the 17th day of the same period
The tax paid in advance is offset against the income tax calculated in the annual tax return
VAT (Katma Değer Vergisi, KDV) is 18% (there are also lower rates in the 1–18% range). Turkey has no VAT benefits or special regimes, meaning all sole traders must pay this tax. A VAT tax return must be submitted by the 26th day of the month following the reporting one, with the tax to be paid within the same period.
There is also sole trader insurance – formerly Bağ-Kur, and currently residing within the full purview of the Social Security Institution (Sosyal Güvenlik Kurumu), which provides health and pension services to sole traders (learn more). Sole traders are considered insured the moment their tax obligations arise.
Provided certain conditions are met, TRY 75,000 of a young entrepreneur’s income can be exempt from income tax over the next three annual tax periods, and they don't have to pay social contributions for 1 year. The main conditions for the exemption are the person being from 18 to 29 years of age and this being their first sole proprietorship. Those eligible can submit an online application on the website of the Turkish Tax Service. To learn more about the exemptions, go here.
To learn more about the process of shuttering a sole proprietorship and the reporting timelines, go here.
IMPORTANT! Solar Staff does not have the option to choose a tax status for freelancers based in Turkey, but you can fill in your tax ID in your account.
Additional info
Declaration forms and other reporting documents are available here.
Liability for late payment of taxes: a fine of up to 40% of the unpaid amount and a monthly interest rate of up to 2.5% of the amount owed.
Turkey has double taxation agreements with a number of countries.
Income received through Solar Staff is declared based on certificates and invoices.
If you have any questions, get in touch via the chat in your Solar Staff account, or email [email protected].