VAT exemption for foreigners entered into force on April 1, 2017. Along with the new law, foreigners will not pay VAT when buying a property from Turkey. A new convenience has been provided for foreigners who want to invest in our country and get citizenship. Making investments in Turkey has always been a rational and profitable option for foreign investors and businessmen. Various facilities have been offered to increase the housing and investment opportunities of the foreigners in 2017. After the developments such as granting citizenship to the foreigner who buys a house for a minimum of 1 Million Dollars, VAT discount, and resetting the stamp duty, the Turkish government has eliminated the VAT for the foreign investors who bought their first properties in Turkey.
Foreign nationals were paying VAT at rates ranging from 1% to 20% when they bought housing or commercial property in Turkey. Now The Turkish government has exempted foreign buyers from paying 20% value-added tax (VAT) when investing in real estate. Turkish Finance Minister Naci Ağbal said that they are launching VAT exemption on the sale of properties to foreigners. "If the construction companies sell a housing or commercial property to a foreign real person or company, we will exempt the VAT. Therefore foreigners will not pay VAT when they want to buy a house or workplace in Turkey," he said.
Who can benefit from this law?
• Turkish citizens living abroad for more than 6 months by the work and residence permits
• Foreign citizens who have not settled in Turkey
• Institutions that do not have an office in Turkey or do not make a profit in the country
Important note: Turkish citizens who reside in foreign countries, working for institutions, establishments, and institutions headquartered in Turkey will not be able to benefit from VAT exemption.
What are the conditions to benefit from the exemption?
• VAT exemption applies to real estate purchased from the construction company. This exemption is applied to the first delivery of the buildings built as residences or workplaces.
• Foreigners and Turkish citizens living abroad must pay the price in foreign currency.
• They will not be able to sell the real estate that they buy by taking advantage of the VAT exemption for a year. If the purchased real estate is sold in a year, the exempted tax (Unpaid VAT) will be collected.
There are 3 types of VAT rates in Turkey; 1%, 8%, and 20%. Usually, 1% VAT is valid for cheap properties across Turkey. 8% and 20% VAT are for expensive properties. VAT rates for properties in Antalya are 1%. 8% or 20% VAT rates apply when buying a property in Istanbul from construction companies.
Note: Before you buy a property, ask a builder for the VAT rate or request it from us.
Documents required for Turkish citizens living abroad
• Documents obtained from the Turkish embassies or consulates regarding the residence permit, work permission or the document in this scope taken from the country of residence.
• Document showing that you are abroad for at least six months from the date of receipt of work and residence permit.
Documents required for foreign nationals
• The copy of passport issued by the country where the foreigner resides or the copy of Turquoise card for those who lost Turkish citizenship.
• A document issued by the tax office stating that the person who will buy the property is not settled in Turkey.
Documents required for institutions that do not have an office in Turkey or will not make a profit
• Documents issued by the official authorities of the country where the institution's center indicating that the establishment and activity are continuing. These documents should have an apostille.
• A document issued by the tax office indicating that the business center to be purchased is not located in Turkey and does not earn a profit in Turkey.
Documents required for persons who bring foreign currency to Turkey from abroad
• If the price is to be brought from abroad through a bank, this price must be transferred to a bank in Turkey. The debit receipt must be delivered to the relevant authority.
• If the price is paid by credit card issued by foreign banks, the document showing that the money is brought from abroad must be taken by the relevant bank in Turkey.
• If the price is brought in cash from abroad to Turkey, a written document should be obtained from the relevant Customs Administration.
Updated on 15.10.2019: Due to the inability to apply for VAT exemption in countries with difficulty in foreign exchange transfer; A flexible solution was brought to the issue with the communiqué issued by the Revenue Administration of the Ministry of Treasury and Finance in the Official Gazette. With this amendment, the major difficulty in bringing the sales price to Turkey as foreign currency in real estate purchases the especially Iran as well as some African and European Countries has been resolved. According to the provisions added to the communiqué;
• In case of foreign currency transfers to be made within this scope, If the bank receipt of the transfer includes information about the recipient and the commercial or residential property subject to a delivery, or;
•Provided that the seller has got a consent letter that states the amount subject to transfer has been sent on behalf of the buyer, and containing the information of the recipient and the commercial or residential property subject to a delivery, VAT exemption will be applied.
Note: In any case, the money paid in a bank way or cash must be transferred to the seller's account via bank.
All the above documents must be provided within a reasonable time before the sale.
Letter of undertaking
Text that circulated to the sales office and that contains the recipient's commitments regarding VAT exemption. This document can be signed at the sales stage.
If you are considering buying a property in Turkey, please contact us to find out how you could benefit from VAT exemption.
