Turkey Tax Treaties – Country of Origin: Essential Guide

Published on October 21, 2025 and written by Cyril Jarnias

The evolution of international tax law is central to the concerns of states seeking to optimize their tax systems and avoid double taxation of their residents. In this context, Turkey plays a pivotal role through its tax treaties with various countries.

These agreements, adapted to address current economic challenges, not only facilitate cross-border business but also encourage foreign investment.

By understanding the specifics of Turkey’s tax treaty with a taxpayer’s home country, businesses and individuals can navigate the complex landscape of international taxation more confidently.

This article aims to explore the key elements of these treaties to shed light on relevant tax practices and strategies.

Understanding Tax Treaties Between Turkey and Home Countries

The tax treaties signed by Turkey with over 85 countries primarily aim to avoid double taxation and prevent tax evasion, thereby facilitating international economic exchanges and legal security for businesses and individuals.

Role and Importance of Tax Treaties:

• Specify which state has the right to tax each type of income (allocation of taxing rights).
• Ensure that income is not taxed twice, thus protecting business profitability and individual mobility.
• Encourage foreign investment and economic cooperation.
• Establish dispute resolution mechanisms to limit risks of cross-border tax disputes.

Key Elements of Tax Treaties:

Key Element	Description
Allocation of Taxing Rights	Determination of the competent state for each type of income (source or residence).
Reduction of Withholding Rates	Reduced maximum rates for dividends, interest, and royalties withheld at source.
Resolution Mechanisms	Mutual agreement procedures and arbitration in case of interpretation or application disputes.
Methods to Avoid Double Taxation	Exemption or tax credit depending on income type and treaty provisions.

Types of Income Covered:

• Salaries
• Pensions
• Dividends
• Interest
• Rental Income
• Business Profits
• Real Estate Capital Gains

Concrete Examples:

Bilateral Treaty	Key Points
Turkey – France	Withholding tax rate on dividends often limited to 15%, interest to 10%, royalties to 10%. Tax credit method applied to avoid double taxation.
Turkey – Germany	Similar reduced rates, with cooperation mechanisms for tax information exchange.
Turkey – United States	Specifics for certain income types, enhanced anti-abuse measures.

Impact on Businesses and Bilateral Relations:

Securing International Financial Flows: Treaties enable businesses to plan their investments with predictability by limiting tax burdens.

Turkey’s Attractiveness to Foreign Investors: Reduced withholding tax rates and clarified taxation rules promote the establishment of international companies.

Strengthening Administrative Cooperation: Information exchange and mutual agreement procedures reduce risks of tax conflicts.

Recent Updates and Revisions:

Many treaties have been adapted in recent years to incorporate international standards for combating tax evasion and improve dispute resolution mechanisms.

Some treaties have been amended to account for OECD BEPS (Base Erosion and Profit Shifting) recommendations, thereby enhancing transparency and cooperation between tax authorities.

In summary:
The tax treaties concluded by Turkey are essential instruments for ensuring legal security for businesses and preventing double taxation, while promoting the development of international economic relations.

Analysis of Double Taxation Agreements Involving Turkey

Turkey has signed over 85 double taxation agreements (DTAs) with countries such as France, Germany, Switzerland, Canada, the United Kingdom, and the United States. These treaties are structured around common principles but also feature notable specificities in their application and recent evolution.

Key Aspects of Turkey DTAs	Detail
Determination of Tax Residence	Based on domicile, center of vital interests, or place of effective management. In case of dual residence, tie-breaker rules are applied (permanent home, personal/economic ties, nationality).
Treatment of Foreign-Source Income	Use of tax credit or exemption methods depending on income types. Taxes paid abroad can be credited up to the limit of Turkish tax due on that income; certain specific income (real estate, diplomatic) may be fully exempt.
Non-Discrimination Clauses	Systematically included to ensure equal treatment between Turkish and foreign residents, prohibiting discrimination based on nationality or residence.

Types of Income Generally Covered

• Salaries
• Pensions
• Dividends
• Interest
• Rental Income
• Business Profits
• Real Estate Capital Gains

Repercussions on Investments and Trade

• DTAs facilitate cross-border investments by reducing overall tax burden and avoiding double taxation, increasing profitability and legal security for investors.
• They promote international professional mobility and smooth commercial exchanges.
• The extension of the 0% withholding tax rate on government bond income and lease certificates until the end of 2025 illustrates the intent to attract foreign portfolio investments.

Impact on Tax Evasion and Double Taxation

• Agreements aim to prevent tax evasion through anti-abuse clauses and enhanced documentation requirements (e.g., obligation to present a foreign tax residence certificate to benefit from treaty advantages).
• Turkey has strengthened digitalization and control of cross-border flows, particularly for digital activities, to limit circumvention risks.

Conflict Resolution Mechanisms

• All agreements include a Mutual Agreement Procedure (MAP), conforming to OECD Model Article 25, allowing taxpayers to request resolution of international tax disputes through diplomatic rather than judicial means.
• Recent updates (2022 guidelines and legislative adaptations) aim to make MAP more effective, particularly by clarifying deadlines, filing procedures, and coordination with domestic remedies.

Recent Revisions and Trends

• Adoption and implementation of the “Subject-to-Tax Rule” (STTR) under OECD Pillar 2, allowing Turkey and developing countries to tax cross-border payments (interest, royalties, services) to low-tax jurisdictions up to 9%.
• Strengthened documentation and information exchange requirements, consistent with international tax transparency standards.
• Ongoing negotiations for new DTAs with Latin American and African countries, showing intent to expand the treaty network.

Comparison with Other Similar Countries

Element	Turkey	Other Emerging Countries (e.g., Poland, Hungary, Morocco)
Extent of DTA Network	Very broad (>85 countries)	Variable, often less extensive
Adoption of OECD Standards	Strong (MAP, STTR, digitalization)	Sometimes partial or slower
Anti-Abuse Clauses	Recently strengthened	Present, but uneven application
Digitalization and Control	Focus on digital income	Generally less advanced

Distinctive or Innovative Aspects of the Turkish Approach

• Rapid implementation of OECD Pillar 2 rules and STTR to protect the national tax base.
• Advanced digitalization of cross-border flow control processes.
• Extension of treaty benefits to modern financial instruments (lease certificates, green bonds).

Turkey thus stands out for the breadth of its treaty network, rapid adoption of international standards, proactive digitalization of tax management, and a focus on protecting the national tax base in the context of digital flows and international tax competition.

Impact of Tax Treaties on Expatriate Income

The bilateral tax treaties signed by Turkey with over 85 countries primarily aim to avoid double taxation and prevent tax evasion for Turkish and foreign expatriates. These agreements precisely determine which country has the right to tax a given income (salaries, dividends, pensions) and establish tax credit or exemption mechanisms to limit the overall tax burden.

Key Terms of Turkey – Home Country Tax Treaties

Key Term	Definition/Example	Practical Application
Tax Residence	Determined by stay >6 months or domicile in Turkey	Tax on worldwide income for residents, only on Turkish income for non-residents
Tax Credit	Tax paid abroad deducted from tax due in Turkey	French expatriate in Turkey: tax paid locally, credited in France
Exemption	Income taxed in another state is not subject to Turkish tax	Salaries already taxed abroad exempt in Turkey
Taxation by Source	Certain income (e.g., real estate) taxed in the country where the property is located	Rental income from property in Turkey taxed in Turkey, even for a French resident
Withholding at Source	Direct deduction of tax on certain income (e.g., dividends)	Dividends from Turkish companies: 15% at source

Potential Tax Benefits for Turkish Expatriates

• Elimination of Double Taxation: Expatriates do not pay tax twice on the same income. Example: a Turkish employee in France pays tax in France and benefits from a credit or exemption in Turkey.
• Preferential Tax Rates: Some agreements cap applicable rates on dividends, interest, or royalties.
• Tax Credit: Tax paid in the host country is deducted from tax due in the home country.

Concrete Examples of Recent Bilateral Agreements

Partner Country	Treaty Date	Main Mechanism	Implications for Expatriates
France	February 18, 1987	Tax Credit/Exemption	Real estate income taxed in Turkey, credited in France
Germany	Treaty in force	Tax Credit	Salaries and pensions taxed according to tax residence
Belgium	Treaty in force	Partial Exemption	Certain income exempt in one of the countries

Influence on Expatriate Tax Planning

• Optimization of Tax Residence: Expatriates can adjust their stay duration or official domicile to benefit from the most advantageous taxation.
• Choice of Location: Favorable treaties encourage choosing Turkey as a residence or investment location.
• Coordinated Declarations: Obligation to declare income in both countries to benefit from anti-double-taxation mechanisms.
• Management of Movable/Immovable Income: Withholding and source taxation rules guide wealth structuring.

Impact on Turkish Tax Authorities’ Jurisdiction and Location Decisions

• Clear Allocation of Taxing Rights: Treaties limit Turkish authorities’ jurisdiction to certain income, particularly for non-residents.
• Strengthened Administrative Cooperation: Information exchange between administrations to prevent fraud and verify declarations.
• Increased Attractiveness of Turkey: Agreements reassure expatriates about tax security and predictability of their obligations, promoting international mobility.

Practical Application Example for a French Expatriate in Istanbul

• Salary taxed in Turkey, credited in France: no double taxation, but obligation to declare in both countries.
• Rental income from property in Turkey: taxed in Turkey, credit or exemption in France per the treaty.
• Dividends from Turkish companies: withheld at source in Turkey, tax credit in France.

Key Steps to Benefit from Tax Treaties

• Verify existence of a treaty between Turkey and the home country.
• Identify relevant income types (salaries, dividends, capital gains).
• Collect supporting documents (tax certificates, assessment notices).
• Complete and submit tax returns in each country.
• Retain all documents for future audits.

Key Takeaway

Tax treaties between Turkey and expatriates’ home countries constitute a major lever for international mobility, income security, and optimization of the overall tax burden.

Challenges and Opportunities of Tax Treaties for Investors

Challenges Faced by Investors in Applying Tax Treaties Between Turkey and Their Home Country:

Differences in Interpretation of Tax Rules

Turkish tax authorities and those of the home country may interpret key concepts differently, such as tax residence, income qualification, or the permanent establishment principle.

Concrete example: A French investor receiving dividends from a Turkish company may see this income qualified differently by French and Turkish administrations, impacting the applied withholding tax rate or eligibility for tax credit.

Administrative Obstacles

• Complex procedures to obtain required tax residence certificates.
• Need to provide various supporting documents (official attestation of effective tax payment, tax/residence certificate, certified copies of foreign tax assessments).
• Sometimes lengthy delays to have a credit or exemption recognized in each jurisdiction.

Residual Risks of Double Taxation

Even with a treaty, some income may remain partially taxed twice if national legislations disagree on their treatment.

Concrete example: For a seconded employee whose salary is partly received in Turkey and partly in France, lack of coordination between administrations can lead to cumulative taxation despite the treaty.

Opportunities Offered by These Bilateral Tax Treaties:

Tax Reductions

Reduced rates applicable to dividends, interest, or royalties according to specific provisions in each treaty.

Income Type	Rate Without Treaty	Rate with France-Turkey Treaty
Dividends	Up to 15%	Generally reduced to 10%
Interest	Up to 15%	Reduced to maximum 10%
Royalties	Up to 20%	Reduced to maximum 10%

Effective Prevention of Double Taxation

Application of either the tax credit mechanism (tax paid in Turkey is deductible from that due in the resident country) or the exemption method (income already taxed is not taxed locally).

Example: A French expatriate legally working in Turkey will pay taxes locally but can declare income in France without facing second taxation thanks to the credit or exemption granted under applicable texts.

Incentives for Cross-Border Investment

Clear limitation of respective tax rights thus encouraging foreign equity participation and facilitating international profit transfers.

Example: Many European entrepreneurs have thus benefited for several years from favorable conditions to repatriate profits made through Turkish subsidiaries, secured by treaties signed with their countries.

Enhanced Legal Security for Investors

Increased precision on applicable tax treatment enabling economic operators better cross-border/estate planning.

Recent Legislative Developments & Relevant Case Law:

The recent entry into force of automatic international exchange of financial information between Turkey and several European states has strengthened controls but also facilitated certain voluntary regularizations for investors: possibility now recognized by French/German/Dutch administrations to spontaneously regularize holdings in Turkey with full justification, thus limiting any subsequent criminal risk.

Recent case law example: Several French decisions have confirmed that only systematic production of official documents (banka dekontu/Turk vergi beyannamesi) effectively allows concerned taxpayers—including business owners—to fully benefit not only from the provided credit/exemption but also to avoid any retroactive penalties during Franco-Turkish cross-audits.

⚠️ Treaties thus offer an important protective framework but require constant documentary rigor and active monitoring of their recent legislative developments.