VAT Exemption in Turkey (2025): Tax Advantages and Application Guide
Enjoy up to 20% tax advantage with VAT exemption for foreigners in Turkey! Learn how you can benefit from the updated 2025 regulations with our step-by-step application guide.
Turkey has introduced numerous regulations in recent years to attract foreign investors. One of these incentives is VAT exemption for foreigners. Foreign nationals and Turkish citizens residing abroad who wish to purchase real estate or certain goods and services in Turkey may be exempt from VAT, provided they meet specific conditions. In this article, we will cover in detail what VAT exemption for foreigners entails, who can benefit from it, and how the application process works.
What Is VAT Exemption? Quick Overview
- Foreign investors and Turkish citizens living abroad can purchase residential or commercial properties without paying VAT, provided they meet certain conditions.
- To benefit from VAT exemption, the payment must be made in foreign currency, and the property must be held for at least three years.
- VAT rates have been updated as of 2025.
(Continue reading for all the details.)
Who Can Benefit from This Tax Advantage? How to Obtain a Foreign VAT Exemption Certificate?
The following individuals and entities are eligible for VAT exemption:
- Foreign nationals who do not reside in Turkey.
- Turkish citizens who have lived abroad for at least six months with a work or residence permit.
- Foreign companies that do not have a workplace or a permanent establishment in Turkey.
Understanding Turkey VAT Law
The concept of Turkey VAT Law regulates value-added tax obligations in the country. It establishes the criteria for exemptions, tax rates, and compliance measures for both domestic and foreign investors. Understanding these regulations is essential for businesses and individuals aiming to take advantage of Turkey’s tax incentives. Foreign investors should carefully review VAT obligations to ensure full compliance while benefiting from available exemptions.
Who Is Not Eligible?
- Foreigners residing in Turkey.
- Foreign companies that are taxpayers in Turkey.
Updated VAT Rates (2025) – Tax Calculation for Foreign Property Sales
The following table outlines the updated VAT rates for foreign property buyers in Turkey:
| Permit Date | Property Size | VAT Rate |
|---|---|---|
| After April 1, 2022 | Below 150 m² | 10% |
| Above 150 m² | 10% for the first 150 m², 20% for the remaining area | |
| January 1, 2013 – March 31, 2022 | Below 150 m² | 1% |
| Above 150 m² (Non-Metropolitan) | 20% | |
| Above 150 m² (Metropolitan) | Land value below 1,000 TL/m² → 1% | |
| Land value between 1,000-1,999 TL/m² → 10% | ||
| Land value above 2,000 TL/m² → 20% | ||
| Urban Transformation / Risky Buildings | Below 150 m² | 1% |
| Above 150 m² | Permit issued before April 1, 2022 → 20% | |
| Permit issued after April 1, 2022 → 1% for the first 150 m², 20% for the remaining area |
VAT Exemption Conditions for Foreign Property Buyers in Turkey
- The purchased property must be new and sold directly from the first owner.
- At least 50% of the payment must be transferred to Turkey in foreign currency.
- The purchased property cannot be sold for at least 3 years from the date of title deed registration.
⚠️ If the property is sold within 3 years, the previously exempted VAT and accrued interest must be paid by the buyer.
VAT Exemption Application Process
Required Documents:
✔️ Passport or proof of residence abroad
✔️ Tax Identification Number
✔️ Bank transfer receipt proving foreign currency payment
Application Steps:
1️⃣ Visit the Tax Office and submit your VAT exemption request.
2️⃣ Sign the sales agreement in the presence of a notary.
3️⃣ Complete the title deed registration process.
Advantages of VAT Exemption (Article 13-i of VAT Law)
✅ Significant Cost Savings – Avoid VAT payments of up to 20%.
✅ Profitable Investment – Tax advantages increase ROI (Return on Investment).
✅ Easy Application Process – Once the required documents are provided, the process is completed quickly.
Key Points to Remember
⚠️ The purchased property cannot be resold for 3 years.
⚠️ Incorrect applications will not be eligible for VAT refunds.
⚠️ If the payment is not made in foreign currency, VAT exemption will not be granted.
Conclusion
The VAT exemption for foreigners in Turkey offers a great advantage for investors. If you wish to purchase real estate without paying VAT, ensure that you meet all the requirements and consult an expert legal advisor to handle your transactions properly.
Frequently Asked Questions (FAQ) – VAT-Free Property Sales for Foreigners in Turkey
How Can Foreigners Benefit from VAT-Free Property Sales in Turkey?
Foreign nationals who do not reside in Turkey and Turkish citizens living abroad are exempt from VAT when purchasing their first residential or commercial property, provided they meet the following conditions:
✔️ At least 50% of the payment must be transferred to Turkey in foreign currency.
✔️ The purchased property must be held for a minimum of 3 years.
✔️ The property must be new and purchased directly from the first owner.
What Documents Are Required for VAT Exemption?
To apply for VAT exemption, the following documents are required:
📌 Passport or proof of residence abroad
📌 Tax Identification Number
📌 Bank transfer receipt proving foreign currency payment
📌 Notarized sales agreement
📌 Title deed registry document
Can Foreigners Benefit from VAT Exemption More Than Once?
❌ No. VAT exemption is only applicable to the first property purchase. Even if an individual buys multiple properties, the exemption can only be used for the first purchase.
In Which Cities Is VAT-Free Investment Available?
VAT exemption applies to all cities in Turkey. However, in metropolitan areas, VAT rates may vary depending on land unit prices.
Some of the most popular investment destinations include:
🏙️ Istanbul
🏙️ Ankara
🏙️ Izmir
🏙️ Antalya
Can a Property Purchased with VAT Exemption Be Sold Immediately?
❌ No. The property cannot be sold for at least 3 years from the date of title deed registration.
⚠️ If the property is sold within 3 years, the unpaid VAT amount must be repaid along with accrued interest.
VAT Exemption Application Process
✅ Step 1: Obtain a Tax Identification Number
Foreign investors seeking VAT exemption must first obtain a Tax Identification Number, which can be done at any tax office in Turkey or online.
✅ Step 2: Payment Process
At least 50% of the property price must be transferred to Turkey in foreign currency.
🔹 Important: Bank receipts must confirm that the funds were transferred from abroad.
✅ Step 3: Sales Agreement
A notarized sales agreement must be signed between the buyer and the seller. The contract should clearly state that VAT exemption is applied.
✅ Step 4: Title Deed Registration
Once all required documents are complete, the buyer must apply to the Land Registry Office to finalize the title deed transfer.
✅ Step 5: Obtain the VAT Exemption Certificate
As the final step, the buyer must collect the VAT Exemption Certificate from the relevant Tax Office, completing the process.
Advantages of VAT Exemption for Investors
✅ Cost Savings: Reduce your investment costs by saving up to 20% in VAT.
✅ Higher Profitability: With rising real estate prices in Turkey, long-term investors can achieve high returns.
✅ Residence Permit Benefit: Foreign investors meeting specific criteria may obtain a residence permit in Turkey.
✅ Easier Sales Process: After holding the property for 3 years, selling a VAT-exempt property becomes more advantageous.
✅ Foreign Currency Investment Opportunity: Buying real estate in Turkey provides a strong opportunity for investors looking to invest in foreign currency.
Common Mistakes Investors Make
⚠️ Beware! The 3 Biggest Mistakes About VAT Exemption in Turkey!
❌ Incorrect Currency Payment!
VAT exemption requires payment in foreign currency. If the payment is made in the wrong currency, the exemption will be denied!
✔️ How to Avoid?
Before making any payments, always confirm with your bank and financial consultant.
❌ Incomplete Documents May Risk Your VAT Exemption!
Applications with missing or incorrect documents may be rejected. Ensure all required documents are complete before applying!
✔️ How to Avoid?
Verify your documents with a legal advisor before submission.
❌ Selling the Property Within 3 Years
To retain VAT advantages, the property must be held for at least 3 years. Selling before this period will result in VAT and accrued interest payments.
✔️ How to Avoid?
Plan your investment timeline carefully and ensure you hold the property for at least 3 years.
Relationship Between VAT Exemption and Turkish Citizenship
The Turkish government offers VAT exemption and Turkish Citizenship by Investment programs as complementary incentives for foreign investors. Investors who purchase real estate under the VAT exemption program may qualify to apply for Turkish citizenship if additional conditions are met.
VAT Exemption & Citizenship Requirements
Purchasing property through VAT exemption can simplify the Turkish citizenship application process, but VAT exemption alone does not grant citizenship. Additional criteria must be met:
✔️ Invest at least $400,000 in real estate.
✔️ Hold the property for at least 3 years.
✔️ Make the payment via a Turkish bank in foreign currency.
Investors who meet these conditions become eligible to apply for Turkish citizenship. The VAT exemption reduces investment costs while encouraging long-term real estate investment in Turkey.
Can You Apply for Citizenship with a VAT-Exempt Property?
✅ Yes! If the property purchased with VAT exemption exceeds $400,000, it can be used for a citizenship application. Investors must obtain a property valuation report from the Ministry of Environment, Urbanization, and Climate Change to verify the property’s value.
Thus, VAT exemption serves as both a cost-saving and a citizenship pathway incentive. With proper planning, investors can purchase real estate tax-free and simultaneously qualify for Turkish citizenship.
Tax Advantages vs. Citizenship Application – Quick Comparison
| Feature | VAT Exemption | Turkish Citizenship |
|---|---|---|
| Investment Requirement | No minimum investment limit for VAT exemption | Minimum $400,000 investment required |
| Tax Advantage | Up to 20% savings | No tax exemption, but grants long-term residence rights |
| Property Holding Period | Cannot be sold for 3 years | Must hold for 3 years |
| Processing Time | Applied immediately | Takes 2-6 months |
This comparison clearly illustrates how investors can benefit from both tax exemptions and citizenship opportunities.
📌 For more details, visit our Foreign Investment & Citizenship Law page.
Conclusion & Summary
VAT exemption for foreigners is a valuable opportunity for investors looking to acquire real estate in Turkey. If you wish to purchase property with tax advantages, ensure all required documents are properly prepared and benefit from VAT-free investment.
📞 To get more information and speed up the process, it is recommended to consult a legal advisor.