Taxes and finances in Türkiye: A guide for emigrants | KOCH Moving Logistics

Moving to Türkiye is an exciting adventure that offers many new opportunities and experiences. One essential aspect that emigrants must consider is taxes and finances in Türkiye. This article provides comprehensive information about the Turkish tax system, the best banks and tips for international money transfers for anyone wishing to emigrate to Türkiye.

The Turkish tax system has been strongly influenced by German tax law, so the two systems are generally comparable. Tax laws are enacted nationally, and the Turkish authorities apply them uniformly throughout the country. Income tax (Gelir Vergisi) is progressive and reaches top rates of up to 40 percent. Türkiye follows the worldwide income principle: if you are tax‑resident in Türkiye, you must tax your worldwide income there. Unlike in Germany, there is no church tax, and social security contributions are lower.

Noteworthy is a new law that Türkiye is planning: a 20‑year tax exemption on foreign income for new arrivals who have not been tax‑resident in Türkiye for the past three years. This provision could be extremely attractive for international skilled professionals, remote workers and entrepreneurs and should be kept in mind. However, a local tax adviser should always be consulted for binding advice.

In Türkiye, social security contributions (for health, pension and accident insurance) are deducted directly from gross salary. For employees, the total contribution rate is about 37.5 percent of gross wages – of which about 22.5 percent is borne by the employer and about is about 37.5 percent of gross wages – of which about 22.5 percent is borne by the employer and about 15 percent by the employee. The Turkish Social Security Institution (SGK) is a unified insurance covering sickness, maternity, old age, disability and accident. Self‑employed persons pay their contributions entirely themselves. For foreign employees temporarily seconded to Türkiye by a German employer, a German‑Turkish Social Security Agreement exists that prevents double social security liability.

Value added tax in Türkiye is levied on the supply of goods and services within the Turkish tax territory and on importation. The standard tax rate is 20 percent. VAT paid on importation can only be offset by VAT‑registered businesses in Türkiye against taxable turnover; no refund is made to companies resident abroad.

Türkiye levies an annual property tax (Emlak Vergisi) on real estate ownership. The tax rate is 0.1 percent to 0.3 percent of the cadastral value – 0.1 percent for residential property, 0.2 percent for other buildings and 0.3 percent for land. No wealth tax is levied on other assets in Türkiye.

A double taxation agreement (DTA) exists between Germany and Türkiye from 2011, which prevents your income from being taxed in both countries. The agreement is largely based on the OECD Model Convention and contains several important provisions:

– Employees: Income from dependent employment is taxed in the state where the work is actually performed.

– Interest: The DTA withholding tax rate has been reduced from 15 percent at 10 percent percent.

– Royalties: The withholding tax rate remains at 10 percent.

– Dividends: For shareholdings (at least 25 percent stake), a withholding tax rate of 5 percent applies; otherwise 15 percent.

– Pensions: Pensions from the German statutory pension insurance may only be taxed in Germany.

 

Regarding the avoidance of double taxation, it should be noted that the new DTA does not provide for a notional credit of withholding taxes.

In Türkiye, you are generally required to file an annual tax return. The deadline for filing the income tax return is 31 March of the following year. The tax return is mandatory for most taxpayers in Türkiye if:

– your taxable income exceeds the allowances;

– you are self‑employed;

– you have income from multiple sources.

 

The tax administration has become increasingly digitalised in recent years, which considerably simplifies the process for foreigners..

If you work in Türkiye as a foreign employee, there are several tax aspects to consider. Employers are required to withhold part of your salary as an advance payment of your annual income tax directly from your wages (withholding tax). The amount withheld is calculated based on your personal tax situation. At the end of the tax year, the annual tax return reconciles the difference between the withholding tax already deducted and your actual tax liability.

Opening a bank account in Türkiye is an essential step to establishing yourself in the Turkish economy. Türkiye has a modern banking system with a mix of state banks (Ziraat Bank, VakıfBank), private banks (Garanti BBVA, Yapı Kredi, İşbank) and branches of international banks (ING Bank, Citibank, HSBC, Deutsche Bank). To open an account, you generally need:

 

– a tax identification number (VKN): Foreigners can apply for their TIN online via the Interactive Tax Office or at a local tax office (Vergi Dairesi); only a valid passport is required. Personen mit einer Aufenthaltsgenehmigung können stattdessen ihre Ausländeridentifikationsnummer (YKN) verwenden;

– a valid passport (original and copy);

– proof of address in Türkiye (e.g., rental contract, electricity bill, hotel confirmation);

– a Turkish mobile phone number (required for SMS banking and security codes);

– a residence or stay permit if available– many banks require it for longer stays.

 

The applicant must generally appear in person at a branch, as pure online account opening for foreigners is not common in Türkiye. Opening an account does not automatically mean that you can apply for a credit card or chequebook directly – separate criteria apply for these services. Many banks offer expat‑specific accounts with English customer support, for example VakıfBank with its Expat Banking service.

International money transfers between Türkiye and Germany require special attention due to different currencies (euro vs. Turkish lira). Specialised providers such as Wise (formerly TransferWise) often offer more favourable exchange rates than traditional banks. SEPA transfers are not available due to Türkiye's EU accession status; transfers are generally processed as SWIFT transactions.

The cost of living in Türkiye is significantly below the German level, with rents in Istanbul, Ankara and the coastal regions being more expensive than inland. For a single person, monthly living expenses (excluding rent) are about 400 to 500 euros, and for a family of four about 1,200 to 1,600 euros. The Turkish lira is subject to significant exchange rate fluctuations, which can affect financial planning..