Who Is Eligible?
Turkey offers a highly attractive real estate market for foreign investors. One of the key incentives making the country more appealing is the Value Added Tax (VAT) exemption granted to eligible foreign buyers. This exemption not only provides financial benefits to investors but also contributes positively to the Turkish economy.
What Is VAT Exemption?
Value Added Tax (VAT) is an indirect tax applied to goods and services in Turkey. However, under Article 13/1-i of Law No. 3065 on VAT, foreign investors meeting specific criteria are exempted from VAT on the purchase of residential or commercial properties.
Who Is Eligible?
The following individuals and entities may benefit from VAT exemption:
- Foreign Nationals:
- Individuals who are not Turkish citizens.
- Those who are not residents of Turkey—i.e., they do not reside in Turkey for more than six months within a calendar year.
- Turkish Citizens Living Abroad:
- Citizens who have resided abroad with a residence or work permit for at least six months.
- Citizens serving abroad in official duties are noteligible for this exemption.
- Foreign Legal Entities:
- Companies whose legal and business headquarters are located outside of Turkey, and which do not have a permanent establishment or representative office in Turkey.
How Does the Application Process Work?
To benefit from VAT exemption, foreign investors need to follow these steps:
- Document Preparation:
- Foreign nationals must provide a valid passport and proof of non-residency in Turkey.
- Turkish citizens abroad must submit their residence/work permits and proof of living abroad for at least 6 months.
- Transferring the Purchase Price in Foreign Currency:
- At least 50% of the property’s purchase price must be brought into Turkey in foreign currency beforethe invoice date.
- The remaining amount must be brought in within one yearfrom the invoice date.
- Land Registry Process:
- The sale must be registered with the Land Registry Office.
- A restriction is added to the title deed stating that the property cannot be sold within three years.
Investment Advantages and Key Considerations
VAT exemption offers foreign investors significant financial advantages. However, several points must be considered:
- First-Time Sale Requirement:
- The exemption applies onlyto the first sale directly from the construction company.
- It does notapply to second-hand property purchases.
- Three-Year Holding Period:
- The property must be held for at least three years from the date of title registration.
- If sold before this period, the previously exempted VAT amount will be reclaimed with interest.
Secure Your Investment with Legal Istanbul
Legal Istanbul provides expert legal consulting for foreign investors seeking to buy property in Turkey. Our experienced team offers guidance throughout the VAT exemption process and beyond. With Legal Istanbul, your investment is in safe hands—maximizing your legal advantages while minimizing risk.
Conclusion
VAT exemption presents a valuable opportunity for foreign investors aiming to purchase property in Turkey. By understanding the requirements and properly managing the process, you can enjoy the financial benefits it offers.
Let Legal Istanbul support you with professional, personalized legal guidance at every step of your investment journey.
