The new amendment about VAT exemption entered into force on 1 April 2017. It allows foreign investors to exempt by VAT in their first real estate purchase. The exemption is valid for foreigners who do not reside in Turkey, foreign institutions whose business center is not located in Turkey, Turkish citizens who live abroad for more than six months.
Before, foreigners were required to pay VAT at rates ranging from 1% to 18% when purchasing real estate in Turkey, but now the 18% value-added tax (VAT) is abolished for foreigners to bring investment opportunities to the attention of potential investors.
Who can benefit from this exemption?
• Turkish citizens who live abroad for more than six months with a work or residence permit
• Foreign citizens who do not reside in Turkey
• Foreign institutions that do not have an office in Turkey or do not make a profit in the country
Note: Turkish citizens cannot benefit from VAT exemption if they reside in foreign countries but work for institutions, establishments, and institutions headquartered in Turkey.
What are the conditions of the exemption?
• VAT exemption is valid for real estate purchased from construction companies. To add, it applies to the first delivery of the buildings built as residences or workplaces.
• Foreign and Turkish citizens who live abroad must pay the price in foreign currency.
• To benefit from this exemption, buyers cannot sell their real estate for a year after purchasing. If they do, buyers will pay the VAT tax.
There are three types of VAT rates which are 1%, 8%, and 18% in Turkey. In general, 1% VAT is valid for cheap properties. 8% and 18% VAT are for expensive properties. VAT rates for properties in Antalya are 1%. The 8% or 18% VAT rates apply to properties from construction companies in Istanbul.
Note: Before you buy a property, ask a builder for the VAT rate or request it from us.
The necessary documents for foreigners
• The copy of passport issued by the country where the buyer resides or the copy of Turquoise card for those who lost Turkish citizenship.
• A document issued by the tax office stating that the buyer who will purchase real estate does not reside in Turkey.
The necessary documents for institutions that do not have an office in Turkey or will not make a profit
• Documents issued by legal authorities of the country in which an institution's center operates. The documents should indicate that its establishment and activity are continuing. These documents should have an apostille.
• A document issued by the tax office indicating that the institution's business center is not located in Turkey. The institution does not earn a profit in Turkey.
Note: These institutions should not have an office in Turkey or will not make a profit.
The necessary documents for those who bring foreign currency to Turkey from abroad
• If buyers keep their money in a foreign bank to purchase a property, they must transfer the money to a bank in Turkey. The debit receipt must be delivered to the relevant authority.
• If buyers purchase a property with a credit card issued by a foreign bank, the document must be taken by the relevant bank in Turkey to show that buyer will pay the price with foreign currencies.
• If buyers keep their foreign currencies in cash to purchase a property, they should obtain a written document from the relevant Customs Administration.
The necessary documents for Turkish citizens who live abroad
• Documents showing that residence permit, work permit, or the relevant document taken from the country of residence that are obtained from the Turkish embassies or consulates.
• Document showing that you live abroad for at least six months after the work and residence permits are obtained.
Updated on October 15, 2019: Since VAT exemption application cannot be made in countries (Iran, some African and European Countries) having difficulties in foreign exchange transfer to purchase a property, the Revenue Administration of the Ministry of Treasury and Finance amended to solve the problem. The details of the amendment are as follows:
In case of foreign currency transfers to be made within this scope;
• If the bank receipt of the transfer contains information about the buyer and the purchased property or
• If the buyer sends a consent letter to the seller that contains information about the buyer and the purchased property and also states that the price has been sent on behalf of the buyer, VAT exemption will be applied.
Note: In all cases, the price paid cash or through a bank must be transferred to the seller's account through the bank.
All the above documents must be provided within a reasonable time before the sale.
Letter of Undertaking
This document contains the commitments of the buyer about VAT exemption and is sent to the sales office. This document can be signed at the sales stage.
If you are considering buying a property in Turkey, please contact us to learn how you could benefit from a VAT exemption.