How do you benefit from Turkey’s VAT exemption law on real estate?

Foreign real estate investors benefit from the distinguished tax exemption granted by the Turkish government. In this article, you will learn about all the conditions for exemption from value-added tax on real estate in Turkey.

Exemption from VAT when investing in real estate in Turkey:

The Turkish government is working to provide permanent facilities to foreign investors to double foreign cash revenues in the country. 

The advantage of exemption from value-added tax is among these facilities, as the value added of real estate in Turkey ranges between 1% to 18% of real estate sales. In addition, the Turkish government offers an exemption For foreign investors not residing in the country, which helps them save money when investing in the real estate sector in Turkey.

This feature may cause doubts about the entity that benefits from this exemption. The following text shows the categories of investors who benefit from the exemption from value-added tax:

“Foreign persons and non-residents in Turkey” and “Foreign companies that are not headquartered in Turkey” are the only ones who can benefit from this privilege.

Conditions for benefiting from the exemption from value-added tax:

Foreign investors must fulfill a set of requirements to benefit from the exemption from value-added tax in Turkey:

  • First, the foreign investor must not be residing in Turkey.
  • The absence of foreign company entities’ headquarters in Turkey.
  • The foreign investor has not lived in Turkey for more than six months during the past year.
  • The lack of a valid residence permit in Turkey from last year.
  • There is no registered address in Turkey.
  • Only new properties are included in the exemption from VAT, while old properties are not included in the exemption.
  • The properties included in the exemption from VAT are residential properties such as apartments and villas.
  • Submitting bank transfers confirming that the paid amounts are foreign funds, that is, from outside Turkey, or it is possible to submit a customs declaration if the money that is entered into Turkey is in cash
  • Payment for real estate investment should be in foreign currency.
  • It is impossible to sell the property included in the tax exemption again until one year has passed.

Finally, any foreign investor wishing to apply for tax exemption must be prudent and accurate, as any small mistake in submitting the transaction may lead to failure of the attempt and wasting the opportunity to benefit from the exemption; therefore, it is better to hire a reliable and experienced Turkish lawyer When applying for exemption from value-added tax, to avoid making mistakes, which could lead to a loss of the opportunity to obtain a tax exemption.