Tax Incentives for Expatriates and Digital Nomads in Turkey
Turkey recognizes the growing trend of remote work and the influx of expatriates and digital nomads. To attract and retain skilled professionals and entrepreneurs, the country offers a range of tax incentives and breaks specifically tailored to these individuals.
Eligibility Criteria
To qualify for expat or digital nomad tax breaks, individuals must meet certain criteria:
- Expatriates: Expatriates are defined as foreign nationals who reside in Turkey for at least six months in a calendar year. They must have a valid work permit or be employed by a Turkish company.
- Digital Nomads: Digital nomads are individuals who work remotely for clients outside of Turkey. They must have a valid residence permit and demonstrate that their income is primarily derived from foreign sources.
Types of Tax Breaks
Expatriates and digital nomads in Turkey can benefit from the following tax breaks:
- Tax Exemption on Foreign-Sourced Income: Expatriates and digital nomads are exempt from paying Turkish income tax on income earned from sources outside of Turkey. This includes salaries, dividends, and rental income.
- Reduced Tax Rate on Turkish-Sourced Income: Expatriates and digital nomads pay a reduced income tax rate of 15% on income earned from Turkish sources, such as employment income or business profits.
- Social Security Contribution Exemption: Expatriates and digital nomads are exempt from paying social security contributions on their foreign-sourced income.
Application Process
To claim these tax breaks, expatriates and digital nomads must apply to the Turkish Revenue Administration (TRA). The application process involves submitting the following documents:
- Proof of residency (e.g., residence permit)
- Work permit or employment contract
- Income statements from foreign sources
- Bank statements showing foreign income deposits
Legal Framework
The tax incentives for expatriates and digital nomads are established under the following laws and regulations:
- Income Tax Law (No. 193): Article 10 exempts foreign-sourced income from Turkish income tax.
- Social Security Law (No. 5510): Article 40 exempts expatriates and digital nomads from social security contributions on foreign-sourced income.
- Circular of the Turkish Revenue Administration (No. 2020/1): Provides detailed guidelines on the application process and eligibility criteria for expat and digital nomad tax breaks.
Rationale and Objectives
The Turkish government's tax incentives for expatriates and digital nomads aim to:
- Attract skilled professionals and entrepreneurs to Turkey
- Promote remote work and innovation
- Support the growth of the digital economy
- Enhance Turkey's competitiveness as a destination for international talent
By offering these tax breaks, Turkey seeks to create a favorable environment for expatriates and digital nomads, fostering economic development and cultural exchange.
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