Turkey has clarified rules for taxing income derived from independent professional services (and similar activities) carried out within Turkey, by residents of countries which have double taxation prevention agreements with Turkey. The number of days a company’s employees spent in Turkey will now become the only basis for calculating the company’s duration of stay. Foreign residents must now also apply for a Certificate of Residence, from the competent authorities in their own country.
Calculating the Duration of Stay in Turkey for Legal Entities and Enterprises
Previously, the number of employees at a company and their duration of stay in Turkey were taken into account when calculating the company’s duration of stay in Turkey. The Communiqué clarifies that the number of days employees spent in Turkey will become the only basis for calculating the company’s duration of stay. The company’s number of employees will no longer be considered.
Under the new approach, if a legal person or enterprise which is resident in another country performs 20 days of independent professional service activities in Turkey with ten employees, the duration of stay will be calculated as 20 days. Previously, the duration of stay would have been calculated as 200 days.
Certificate of Residence
To benefit from Double Taxation Treaties, foreign residents must now apply for a Certificate of Residence, obtained from the competent authorities in their country. The original of the Certificate of Residence must be submitted to Turkish tax authorities, alongside with a certified Turkish translation. Failure to submit a Certificate of Residence will mean local legislation will apply, instead of the relevant Double Taxation Treaty.
The certificate for each calendar year must be valid until the fourth month of the following year. An original, notarized or certified Turkish translation of the certificate must be presented to the relevant tax office or tax accountants.