Taxation of Independent Personal Services in Turkey under Double Taxation Agreements

How are independent personal services taxed in Turkey under double taxation agreements? This article explains key conditions, such as the 183-day rule, fixed base requirement, and when tax withholding may not be necessary.

A person signing tax-related documents at a desk — representing double taxation procedures and declaration responsibilities in Turkey.

With the expansion of cross-border professional services in today’s global economy, an increasing number of foreign consultants, freelancers, and experts operate in Turkey. However, double taxation in Turkey has become a critical concern, as income may be taxed both in the country where the service is performed and in the country of residence of the service provider. When the same income is taxed both in the country where the service is performed (e.g., Turkey) and in the country of residence of the service provider, it creates a financial and legal burden.

To prevent this, countries sign Double Taxation Agreements (DTA), and Turkey has entered into more than 80 such agreements to date. Yet in practice, particularly in the taxation of independent personal services, there have been persistent uncertainties. To address these, the Turkish Ministry of Treasury and Finance issued the General Communiqué No. 4 on Double Taxation Agreements on 26 September 2017, which remains applicable and relevant.

Key Criteria for Double Taxation in Turkey on Independent Services

According to the provisions of Double Taxation Agreements, foreign individuals or entities are subject to taxation in Turkey on their independent personal service income only if at least one of the following conditions is met:

  1. The existence of a fixed base in Turkey
  2. Physical presence in Turkey for 183 days or more within any 12-month period

If either condition is fulfilled, Turkey has the right to tax the related income. Thus, the service’s scope, duration, and execution method directly affect the tax obligation.

Calculation of 183 Days for Double Taxation in Turkey

Previously, the Turkish Revenue Administration used to calculate the physical presence by multiplying the number of foreign personnel by the number of days they stayed in Turkey. For example, 4 employees staying 50 days each would be treated as 200 days total.

However, OECD standards accept only the actual number of calendar days of physical presence. With the issuance of Communiqué No. 4, Turkey adopted this internationally accepted approach. From now on, only actual physical presence days are counted, including:

  • Arrival and departure days
  • Weekends and national holidays
  • Preparation days before/after the service
  • Leisure or rest days spent in Turkey

Transit through Turkey is excluded from the calculation.

Withholding Tax Rules under Double Taxation in Turkey

Previously, any service performed in Turkey by a foreign individual or entity was subject to withholding tax (stopaj) by default, regardless of whether Turkey had the taxing right under the DTA. This led to unnecessary tax burdens and refund procedures.

Under Communiqué No. 4, withholding tax is not required in the following cases:

  • The service is not performed in Turkey
  • The service does not constitute a royalty or intellectual property
  • The service is performed in Turkey, but Turkey has no taxing right under the applicable DTA

In such cases, service recipients are not obliged to withhold tax — provided that the required documentation is completed.

Documentation Required When No Withholding Tax is Applied

If the service is performed in Turkey but withholding is not applied due to treaty protection, the following documents must be submitted:

  • Form 1: Completed by the foreign service provider, together with a certificate of residence, and delivered to the Turkish recipient before the service begins.
  • Form 2: Completed by the Turkish service recipient and submitted to the local tax office prior to payment.

Failure to submit these documents may result in penalties during a tax audit.

If tax has already been withheld but later found not applicable, the foreign taxpayer may apply for a refund using Form 3 and supporting documents.

Practical Implications for Businesses

These regulations impact not only tax obligations but also operational and contractual workflows:

  • Foreign consultants or companies can better plan their presence and reporting obligations in Turkey
  • Turkish businesses that receive services are no longer required to withhold tax in all cases, provided the conditions are met and documentation is complete
  • Accountants and tax advisors can help clients minimize risk and ensure full compliance with DTA provisions

Conclusion

The General Communiqué No. 4 on Double Taxation Agreements has clarified many ambiguities in the taxation of independent personal services. It aligns Turkish practice with OECD standards and brings greater transparency and predictability to cross-border service taxation.

Businesses must carefully assess whether the foreign service provider triggers tax liability in Turkey, and if not, ensure the required forms are completed on time. Otherwise, the Turkish recipient becomes liable for any tax loss and potential penalties.

📌 If you’re also interested in the deadline for offsetting paid taxes in advance tax returns, feel free to check out our detailed guide here.

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