Freelancer Tax Liabilities: A Guide for Remote Workers

If you’re new to freelancing, especially working remotely for international clients, understanding your tax obligations can feel overwhelming. Terms like withholding tax, accrual slip, and Bağkur may seem complicated, but don’t worry—we’re here to simplify things for you. In this guide, we’ll cover the most important aspects of freelancer tax liabilities, so you can start your remote career confidently and without unnecessary stress.

Key Tax Terms Every Freelancer Should Know

As a freelancer, you’ll come across several terms that might be unfamiliar at first. Here’s a quick glossary to get you started:

• Accrual Slip (Tahakkuk Fişi): A document proving your tax payment.

• Declaration (Beyanname): A form you submit to the tax office detailing your earnings and tax calculations.

• Withholding Tax (Stopaj): A tax deducted at the source—while you may not need to worry about this for now, it’s something to be aware of.

• Bağkur: A social security contribution, separate from your taxes, that you pay monthly to the Social Security Institution (SGK).

In the following sections, we’ll answer some of the most frequently asked questions from freelancers who are just starting to work remotely.

1. When Do I Need to Register My Freelance Business?

After receiving a remote work offer from an international client, you might wonder whether you need to set up your business immediately. The good news is that you can sign your contract before officially registering your business. Typically, freelancers work under independent contractor agreements, which can be signed through platforms like DocuSign.

You don’t need to rush to set up your business before signing the contract, but make sure your company is registered before you receive your first payment.

Freelancer Tax Tip #1: Be careful about the language in your contract. To maximize your tax benefits, avoid terms like "consultant" or "service provider" and opt for titles like "contractor," "developer," or "designer."

2. How Much of My Income Will I Keep After Taxes and Expenses?

Calculating your annual taxes and expenses upfront can give you peace of mind and reduce uncertainty. After accounting for all your costs, your net income will depend on factors such as:

• The type of business you set up (e.g., sole proprietorship).

• Whether you qualify for young entrepreneur tax benefits (if you're under 29).

• Your business expenses.

Thanks to an 80% tax exemption available for certain remote freelancers, your tax burden is much lower than in a traditional employment setup. Here are the primary costs to consider:

• Income tax

• Bağkur contributions

• Declaration stamp duties

• Accounting service fees

• Virtual office costs (if applicable)

In total, these costs typically represent less than 10% of your total income, making freelancing a tax-efficient option. You can find detailed calculations based on the 2024 tax brackets here.

Freelancer Tax Tip #2: Make sure you select the correct NACE code when registering your business. The wrong code could result in losing your tax benefits and paying up to five times more in taxes.

3. Do I Need to Issue Invoices If My Client Doesn’t Ask for One?

Yes, even if your international client doesn’t request an invoice, you are still required to issue one each month for your work. This ensures that you comply with local tax regulations in your country. Your first invoice should be issued at the end of the month when you start working.

If you’re unsure how to issue an invoice, don’t worry—I’ve created a step-by-step guide, complete with screenshots, which you can find here.

4. When Are My First Tax and Social Security Payments Due?

Once your business is registered, your first payment will be the Bağkur contribution, which is due by the end of the month in which your business is established. Fortunately, making Bağkur payments is easy and can be done through online banking using your national ID number.

For your tax payments, you’ll receive documents from your accounting firm, which you can then pay online through public banks or via credit card through the Interactive Tax Office. However, no official document will be sent for your Bağkur payments—you’ll need to handle these payments yourself using your ID number.

For a more detailed breakdown of how to manage your Bağkur and tax payments, check out my guide here.

Final Thoughts

These steps should help you feel more confident as you begin your remote freelancing career. Of course, there are additional considerations, such as which expenses can reduce your tax liability and how to handle your first hire, but focusing on these key areas will help you start on the right foot.

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