Guide to Foreign Income Tax Rules for Turkey Residents in 2025
Guide to Foreign Income Tax Rules for Turkey Residents in 2025
How Are Foreign-Sourced Incomes Taxed for Turkish Residents in 2025?
Understanding the taxation of foreign-sourced income is vital for individuals residing in Turkey who earn income abroad. This comprehensive guide answers key questions regarding various types of foreign income and their tax implications under Turkish tax laws as of 2025.
1. Are Profits from Foreign Stock Trading Taxable in Turkey?
If you are a Turkish tax resident investing in foreign stocks, how are your profits taxed in Turkey?
Under the Turkish Income Tax Code (G.V.K.), profits derived from trading stocks listed on foreign exchanges are not subject to the temporary Article 67, which applies specifically to Turkish-issued securities registered with the Capital Markets Board of Turkey and traded on Turkish stock exchanges.
Instead, the taxation of foreign stock trading profits falls under the general provisions of Article 80. This means:
Capital gains from foreign stocks are always taxable, regardless of the holding period.
The exemption applicable to stocks of Turkish full taxpayer corporations held for more than two years does not apply to foreign stocks.
You must declare these capital gains in your annual income tax return if you are a full taxpayer in Turkey.
2. Do I Have to Declare Dividends from Foreign Stocks in Turkey?
Yes. Dividends you earn from foreign stocks must be declared in Turkey if you are a tax resident.
According to Article 3 and Article 4 of the Turkish Income Tax Code:
Tax residents in Turkey are liable for worldwide income taxation.
Dividends from foreign sources qualify as investment income (menkul sermaye iradı) under Article 75.
For 2024, if your total foreign dividends exceed 13,000 TRY, you are obligated to declare them via the annual tax return.
Additionally:
Foreign withholding taxes paid on such dividends can be credited against Turkish tax liabilities, provided proper documentation is obtained.
Certified documents confirming foreign tax payments must be verified by Turkish embassies or consulates.
3. Are Royalties from Abroad (Intellectual Property) Taxable in Turkey?
Yes, royalties earned from abroad, including payments for intellectual property such as books, software, music, or patents, are subject to Turkish tax regulations.
Per Article 18 of the Income Tax Law and the amendments introduced in 2019:
If your total annual royalties exceed the threshold (e.g., 1,900,000 TRY in 2023, subject to annual adjustments), you cannot benefit from the royalty income tax exemption.
Regardless of exemption, royalty income requires annual tax declaration.
Royalties are classified as self-employment income, obligating the taxpayer to:
Keep accounting records
Issue self-employment invoices (Serbest Meslek Makbuzu)
However:
If the payer is abroad and is not subject to Turkish tax withholding obligations, no withholding is applied.
There is potential eligibility for the incidental income exemption if the royalties are sporadic and below the threshold (129,000 TRY in 2023).
4. How Is Employment Income from Abroad Taxed for Turkish Residents?
Employment income earned abroad by Turkish residents is generally taxable in Turkey. However, Article 23/14-a of the Income Tax Code introduces an exemption under specific conditions:
The employer must be a non-resident entity with no legal or business presence in Turkey.
The salary must be:
Paid in foreign currency
Sourced from the employer’s foreign income
Not recorded as an expense in Turkey
If all these criteria are satisfied, the salary is exempt from Turkish income tax.
Otherwise:
If any condition is unmet, the salary is taxed as regular employment income.
Declarations are made through the annual income tax return.
5. Do Turkish Residents Have to Pay Tax on Foreign Pensions?
It depends on the source of the pension income:
State Pensions from Foreign Social Security Institutions:
Exempt from Turkish income tax under Article 23/13.
No need for a tax return regarding such pensions.
Private Pension Schemes Abroad:
Subject to Turkish income tax as employment income if not subject to withholding abroad.
Must be declared via the annual income tax return.
This distinction ensures that pensions received from government social security systems abroad remain tax-free, but payments from private pension funds or schemes do not benefit from this exemption.
6. When Do You Declare Foreign Income in Turkey?
As stipulated in Article 85:
Foreign income must be declared in the year it is transferred to Turkey.
If the funds are not transferred but remain abroad due to reasons beyond your control, taxation occurs in the year you gain disposal power over them.
7. Can Foreign Taxes Be Deducted in Turkey?
Yes. Article 123 allows:
Foreign taxes paid on income abroad to be deducted from the Turkish tax calculated on the same income.
This deduction is only applicable if the foreign tax is a personal income tax.
Conditions:
Proof of payment with certified documentation from foreign tax authorities.
Verification by Turkish embassies or consulates.
The deduction cannot exceed the amount of Turkish tax attributable to the foreign income.
8. Do You Have to Keep Records and Issue Invoices for Foreign Royalties?
Yes. Even if your royalty income comes from abroad:
You must register in the Defter-Beyan System if operating continuously.
Issue a Self-Employment Receipt (Serbest Meslek Makbuzu) for each payment.
Maintain accounting records.
Defter-Beyan registration is mandatory for professionals engaging in consistent royalty income, even when payments are sourced internationally.
9. What Is the Tax Treatment of Incidental Royalties from Abroad?
If the royalties are incidental (not regular business activity), you may benefit from the incidental income exemption:
For 2023, the threshold is 129,000 TRY.
Income below this amount may not be taxable, provided it is not a recurring activity.
10. Are There Specific Documentation Requirements for Declaring Foreign Income?
Absolutely. Turkish tax authorities require:
Official proof of foreign tax paid, validated by Turkish consulates.
Documentation of the source and amount of income.
Exchange rate conversion records when transferring foreign currency income.
Proper documentation is essential to benefit from foreign tax credits and to substantiate your income declarations.
11. What If You Fail to Declare Foreign Income?
Failing to declare foreign income when required can lead to:
Tax penalties
Late payment interests
Possible criminal tax fraud investigations
Full disclosure and timely declaration are critical to avoid legal consequences.
12. Summary Table of Foreign Income Taxation for Turkish Residents
| Income Type | Tax Status | Declaration Requirement | Exemption/Threshold |
| Foreign Stock Gains | Taxable | Annual tax return | None |
| Foreign Dividends | Taxable | If exceeds 13,000 TRY | None |
| Foreign Royalties | Taxable | Always, if above threshold | 1,900,000 TRY (2023) |
| Foreign Salaries | Conditional | If conditions unmet | Full exemption if conditions met |
| State Pensions (Foreign) | Tax-exempt | No | N/A |
| Private Pensions (Foreign) | Taxable | Always | None |
13. Key Takeaways and Next Steps
Turkish tax residents must be vigilant about declaring foreign-sourced income.
Understanding the exemptions, thresholds, and documentation requirements is critical.
Seek professional tax consultancy to ensure compliance and optimize your tax obligations and benefits.
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