Payroll taxes from an employer in Turkey
The taxation of personal income is regulated by the Income Tax Law - Gelir vergisi kanunu, N 193, 31.12.1960, hereinafter referred to as the Law). Under the general taxation system, income tax (PIT) is levied.
The procedure for paying PIT from income under an employment contract depends on three main factors:
- place of employment (in Turkey or abroad);
- the status of the employer (whether the employer is recognized as a tax agent);
- the tax status of the employee (whether an individual - the recipient of income is recognized as a tax resident in Turkey).
Remuneration for the performance of labor duties in Turkey is income from sources in Turkey (clause 1, article 7 of the Law). And remuneration for performing work duties outside Turkey is income from sources outside Turkey. At the same time, the place of performance of labor duties is determined not at the location of the employer, but at the place of work of the employee himself, taking into account the terms of his employment contract.
Recognition of wages as income from sources in Turkey or income from sources outside Turkey affects the procedure for taxation with income tax.
As a general rule, regardless of the place of employment, a Turkish employer is recognized as a tax agent in relation to the income of employees - both tax residents and non-residents. The tax agent must calculate, withhold and pay to the budget of the taxpayer (paragraph 2 of article 94 of the Law).
At the same time, a foreign organization that does not have a branch or representative office in Turkey, but which carries out economic activities in Turkey through a representative authorized to conclude contracts (Article 8 of the Law) can also be recognized as a tax agent. In this case, the foreign organization is recognized as having a "permanent establishment" in Turkey and is subject to tax registration.
Procedure for declaring and paying tax
Several different tax periods are established for the taxpayer: if there is a tax agent - a calendar month, and if the tax agent has no more than 10 employees - a quarter (Articles 98, 108 of the Law); when paying tax by an individual on his own - a calendar year (Article 108 of the Law).
As a general rule, if there is only income from employment for a Turkish employer, if there are no tax deductions other than the standard deductions, then filing a tax return is not required.
The employer submits a tax return for each month or quarter (reporting period for the tax agent) by the 23rd day of the month following the reporting period (until January 23, April, July, October, if the reporting period is a quarter), and on that within the same period, he must pay the withheld tax (Articles 84, 109 of the Law). The declaration may be submitted, inter alia, by mail or electronically, at the choice of the taxpayer (Article 28 of the Law on Tax Procedures N 213 of 01.04.1961).
In the presence of income received from a person who is not a tax agent, or when claiming a tax deduction, employees must submit an annual tax return from March 1 to April 25 of the next year (Article 92 of the Law). At the same time, there is a special rule that in case of moving from Turkey, the declaration must be submitted within 15 days after departure.
If there is a tax payable, in addition to that withheld by tax agents, it is payable on the day the declaration is submitted (Article 120 of the Law).
If the declaration is submitted by mail, then the PIT must be paid within 7 days after the date of receipt of the declaration by the tax authority. The date of receipt is indicated in the receipt receipt (Article 109 of the Law).
Tax calculation
For tax purposes, tax exemption provides for a number of tax exemptions regardless of tax status - both for tax residents and non-residents, in particular (Articles 23, 63, 89 of the Law):
The tax rate that applies to income from employment is progressive and applies regardless of the tax status of both the employee and the employer (Article 103 of the Law).
15% (income up to ₺32,000);
20% (income over ₺32,000 to ₺70,000);
27% (income over ₺70,000 to ₺250,000);
35% (income over ₺250,000 to ₺880,000);
40% (income over ₺880,000).
From the income of employees under an employment contract (both residents and non-residents) within the monthly salary up to ₺37,530, unemployment insurance premiums are withheld - 1%.
In addition, from the salary of employees in Turkey (both residents and non-residents) within the monthly salary from ₺5,004 to ₺37,530, social insurance contributions are withheld - 14%.
See below for more information on social contributions from wages.
The following describes the features of the taxation of the PIT of wages, depending on the tax status of an individual. A summary of the criteria for tax residence in Turkey is also provided.
The procedure for paying PIT from income under an employment contract depends on three main factors:
- place of employment (in Turkey or abroad);
- the status of the employer (whether the employer is recognized as a tax agent);
- the tax status of the employee (whether an individual - the recipient of income is recognized as a tax resident in Turkey).
Remuneration for the performance of labor duties in Turkey is income from sources in Turkey (clause 1, article 7 of the Law). And remuneration for performing work duties outside Turkey is income from sources outside Turkey. At the same time, the place of performance of labor duties is determined not at the location of the employer, but at the place of work of the employee himself, taking into account the terms of his employment contract.
Recognition of wages as income from sources in Turkey or income from sources outside Turkey affects the procedure for taxation with income tax.
As a general rule, regardless of the place of employment, a Turkish employer is recognized as a tax agent in relation to the income of employees - both tax residents and non-residents. The tax agent must calculate, withhold and pay to the budget of the taxpayer (paragraph 2 of article 94 of the Law).
At the same time, a foreign organization that does not have a branch or representative office in Turkey, but which carries out economic activities in Turkey through a representative authorized to conclude contracts (Article 8 of the Law) can also be recognized as a tax agent. In this case, the foreign organization is recognized as having a "permanent establishment" in Turkey and is subject to tax registration.
Procedure for declaring and paying tax
Several different tax periods are established for the taxpayer: if there is a tax agent - a calendar month, and if the tax agent has no more than 10 employees - a quarter (Articles 98, 108 of the Law); when paying tax by an individual on his own - a calendar year (Article 108 of the Law).
As a general rule, if there is only income from employment for a Turkish employer, if there are no tax deductions other than the standard deductions, then filing a tax return is not required.
The employer submits a tax return for each month or quarter (reporting period for the tax agent) by the 23rd day of the month following the reporting period (until January 23, April, July, October, if the reporting period is a quarter), and on that within the same period, he must pay the withheld tax (Articles 84, 109 of the Law). The declaration may be submitted, inter alia, by mail or electronically, at the choice of the taxpayer (Article 28 of the Law on Tax Procedures N 213 of 01.04.1961).
In the presence of income received from a person who is not a tax agent, or when claiming a tax deduction, employees must submit an annual tax return from March 1 to April 25 of the next year (Article 92 of the Law). At the same time, there is a special rule that in case of moving from Turkey, the declaration must be submitted within 15 days after departure.
If there is a tax payable, in addition to that withheld by tax agents, it is payable on the day the declaration is submitted (Article 120 of the Law).
If the declaration is submitted by mail, then the PIT must be paid within 7 days after the date of receipt of the declaration by the tax authority. The date of receipt is indicated in the receipt receipt (Article 109 of the Law).
Tax calculation
For tax purposes, tax exemption provides for a number of tax exemptions regardless of tax status - both for tax residents and non-residents, in particular (Articles 23, 63, 89 of the Law):
- insurance contributions to the pension fund, social insurance contributions, as well as contributions to trade union organizations;
- contributions of the employee and the employer for voluntary pension insurance, as well as 50% of contributions for life insurance of the employee, his spouse and minor children. The exemption is granted for insurance in Turkish organizations and within 15% of the wage or within the annual minimum wage;
- expenses for training and health care incurred in favor of the employee, his spouse and minor children. The exemption is granted when paying for services in Turkey and within 10% of the amount of wages.
- providing meals to employees within 51 Turkish Lira (₺) per day worked;
- transportation costs to and from the place of work within ₺25.5 per day worked.
The tax rate that applies to income from employment is progressive and applies regardless of the tax status of both the employee and the employer (Article 103 of the Law).
15% (income up to ₺32,000);
20% (income over ₺32,000 to ₺70,000);
27% (income over ₺70,000 to ₺250,000);
35% (income over ₺250,000 to ₺880,000);
40% (income over ₺880,000).
From the income of employees under an employment contract (both residents and non-residents) within the monthly salary up to ₺37,530, unemployment insurance premiums are withheld - 1%.
In addition, from the salary of employees in Turkey (both residents and non-residents) within the monthly salary from ₺5,004 to ₺37,530, social insurance contributions are withheld - 14%.
See below for more information on social contributions from wages.
The following describes the features of the taxation of the PIT of wages, depending on the tax status of an individual. A summary of the criteria for tax residence in Turkey is also provided.
Turkish tax residence criteria
As a general rule, tax residents are recognized (Articles 3-5 of the Income Tax Law - Gelir vergisi kanunu, No. 193, 31.12.1960, hereinafter - the Law):
- individuals whose place of residence is in Turkey (domicile);
- individuals permanently residing in Turkey for more than 6 months in a calendar year. When calculating the term, temporary departures are not taken into account. For the purposes of applying this criterion, individuals who come to Turkey for work, science, experts, press and broadcasting reporters and other persons whose situation is similar to those who come to Turkey for a specific or temporary duty or for the purpose of studying or treatment or vacation or travel.
So, taking into account your actual tax status (the status of your employee), click on the appropriate button below to get detailed information on the procedure for paying TIT by a tax agent or employee, including when changing tax status (resident / non-resident) during the year.
You can also see the visual taxation scheme at the bottom of the page.
Taxation of wages of a Turkish tax resident
Income under an employment contract of a Turkish tax resident is taxed in the performance of labor duties both in Turkey and outside Turkey.
If you perform work duties from outside Turkey, then your income will be taxed in Turkey only if you are recognized as a tax resident of Turkey.
As a general rule, if the tax resident has only income from employment for a Turkish employer, and if the annual income does not exceed ₺880,000, then filing a tax return is not required. Otherwise, tax residents must submit a tax return from March 1 to April 25 of the following year (Article 92 of the Law).
If you perform work duties from outside Turkey, then your income will be taxed in Turkey only if you are recognized as a tax resident of Turkey.
As a general rule, if the tax resident has only income from employment for a Turkish employer, and if the annual income does not exceed ₺880,000, then filing a tax return is not required. Otherwise, tax residents must submit a tax return from March 1 to April 25 of the following year (Article 92 of the Law).
If the tax was paid abroad
If you work abroad, you may be liable to pay tax in the relevant foreign country. If the conditions for such an exemption do not apply, then a Turkish tax resident, when filing a tax return, is entitled to reduce Turkish income tax by the amount of tax paid abroad. Moreover, if the tax paid abroad exceeds the income tax liability in Turkey, then the difference is not returned to the taxpayer (Article 123 of the Law).
To apply such a deduction, you will need a certificate confirming the payment of tax abroad. The certificate must be issued by a foreign tax authority
and certified by the Turkish embassy or consulate in the respective country, or by another organization representing Turkey and protecting Turkish interests.
If such a certificate is submitted later than the tax payment date, the deduction may be postponed for one year, after which the tax credit will not be possible.
It is necessary to take into account the provisions of Turkey's double taxation treaties (DTT).
To apply such a deduction, you will need a certificate confirming the payment of tax abroad. The certificate must be issued by a foreign tax authority
and certified by the Turkish embassy or consulate in the respective country, or by another organization representing Turkey and protecting Turkish interests.
If such a certificate is submitted later than the tax payment date, the deduction may be postponed for one year, after which the tax credit will not be possible.
It is necessary to take into account the provisions of Turkey's double taxation treaties (DTT).
Taxation of wages of a tax non-resident of Turkey
Income under an employment contract of a tax non-resident of Turkey is taxed when carrying out labor activities in Turkey (clause 1, article 29 of the Law).
That is, if you, while working for a Turkish company, perform labor duties remotely outside of Turkey, then your income will be taxed in Turkey only if you are a tax resident of Turkey.
As was the abolition above, a Turkish employer, including a permanent establishment of a foreign organization, calculates and withholds the PIT as a withholding agent.
For a Turkish tax non-resident working under an employment contract in Turkey, the same tax exemptions are available as for a Turkish resident (see above).
Individuals - tax non-residents who receive income from work in Turkey for a Turkish employer, as a general rule, do not have to submit a tax return (Article 86 of the Law). Otherwise, tax non-residents must submit a tax return from March 1 to April 25 of the following year (Article 92 of the Law).
We also recall that non-resident employees must receive a special tax card.
That is, if you, while working for a Turkish company, perform labor duties remotely outside of Turkey, then your income will be taxed in Turkey only if you are a tax resident of Turkey.
As was the abolition above, a Turkish employer, including a permanent establishment of a foreign organization, calculates and withholds the PIT as a withholding agent.
For a Turkish tax non-resident working under an employment contract in Turkey, the same tax exemptions are available as for a Turkish resident (see above).
Individuals - tax non-residents who receive income from work in Turkey for a Turkish employer, as a general rule, do not have to submit a tax return (Article 86 of the Law). Otherwise, tax non-residents must submit a tax return from March 1 to April 25 of the following year (Article 92 of the Law).
We also recall that non-resident employees must receive a special tax card.
Algorithm for paying PIT from income from an employer in Turkey
* regardless of the tax status of the employee (resident or non-resident)
**check tax liabilities in the country of tax residence
If tax status has changed during the year
Since tax residency is determined on a calendar year basis, tax status may change during the course of the year. At the same time, since the tax rate and the procedure for paying tax by a tax agent do not depend on the place of work of employees, and also since the tax period for a tax agent is a calendar month, a change in tax residency will affect taxation only if the place of performance of labor duties changes.
Was a resident, became a non-resident
If an employee becomes a non-resident within a year, then his income is subject to income tax in Turkey only when performing labor functions in Turkey. Income of a non-resident working outside of Turkey is not subject to taxation in Turkey.
Was a non-resident, became a resident
If an employee was a non-resident, but became a resident of Turkey due to the time spent in Turkey or place of residence, then his income will be taxed in Turkey, regardless of the place of performance of labor functions.
Was a resident, became a non-resident
If an employee becomes a non-resident within a year, then his income is subject to income tax in Turkey only when performing labor functions in Turkey. Income of a non-resident working outside of Turkey is not subject to taxation in Turkey.
Was a non-resident, became a resident
If an employee was a non-resident, but became a resident of Turkey due to the time spent in Turkey or place of residence, then his income will be taxed in Turkey, regardless of the place of performance of labor functions.
IMPORTANT
In addition to the PIT, from the salary of employees in Turkey (both residents and non-residents) within the monthly salary from ₺5,004 to ₺37,530, social insurance contributions are withheld - 14%. This is a general rate, the specific rate may vary by employee category. Foreign workers also pay these contributions, although there may be exceptions for the following foreign nationals:
In addition to the PIT, unemployment insurance premiums of 1% are deducted from the salary of employees in Turkey (both residents and non-residents) within the monthly salary up to ₺37,530.
The calculation and payment of contributions have a number of features.
In addition to the PIT, from the salary of employees in Turkey (both residents and non-residents) within the monthly salary from ₺5,004 to ₺37,530, social insurance contributions are withheld - 14%. This is a general rate, the specific rate may vary by employee category. Foreign workers also pay these contributions, although there may be exceptions for the following foreign nationals:
- citizens of countries - parties to the European Convention on Social Security;
- citizens of countries with which bilateral agreements on social security have been concluded;
- citizens of other countries, in the presence of a valid document of the relevant country on social security - in this case, exemption from contributions is granted for a period not exceeding 3 months.
In addition to the PIT, unemployment insurance premiums of 1% are deducted from the salary of employees in Turkey (both residents and non-residents) within the monthly salary up to ₺37,530.
The calculation and payment of contributions have a number of features.
In 2022, a different threshold was applied on the amount of income taxed at a rate of 27%:
Otherwise, the procedure described above is relevant both for the current tax period and for previous years.
- 15% (income up to ₺32,000);
- 20% (income over ₺32,000 to ₺70,000);
- 27% (income over ₺70,000 to ₺170,000);
- 35% (income over ₺170,000 to ₺880,000);
- 40% (income over ₺880,000).
Otherwise, the procedure described above is relevant both for the current tax period and for previous years.
Changes are not expected.
Using the buttons below, you can check whether the conditions for recognizing you as a tax resident in the country where you actually work remotely are met, and whether you have an obligation to pay tax on your salary in this country. Also find out if Turkey has a double taxation treaty (DTT) and its conditions in relation to wages.
Currency control in Turkey
There are no currency control restrictions in Turkey regarding foreign accounts of Turkish citizens.
However, there may be restrictions in your country of citizenship - select the appropriate country here.