VAT Exemptions for Foreign Property Investors in Turkey

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The advantages provided by the Turkish Government to attract foreign investors, such as VAT exemptions, stamp duties advantages, and granting Turkish citizenship to foreign investors, made Turkey a favorable country to invest in real estate and increased its attractivity.

In accordance with the law, which entered into force on March 8, 2017, allowing foreign citizens to purchase real estate, net of VAT. The law applies only to real estate purchased after April 1, 2017. Exemption from VAT is not considered valid for purchases of land, plots, and fields. This law applies only to commercial and residential real estate.

Who can get the advantage of VAT (KDV) Exemptions?

– Turkish citizens who lived abroad for more than 6 months with work or residence permits.
– Foreigners who don’t live in Turkey and do not have a residence permit in Turkey.
– Organizations that have not made any profit from Turkey or do not have an Office within Turkey’s Borders.

What are the conditions?

– The rule is applicable only on the new real estate properties purchased from construction companies are included.
– The purchase price must be in foreign currency.
– The purchased real estate can not be sold for a year. If the real estate is sold in a year, the exempted VAT will be collected.

What are the VAT rates applicable in Turkey?
There are 3 rates in Turkey; 1%, 8%, and 18%. Usually, 1% VAT is valid for the average residential properties. 8% and 18% VAT are for luxury and commercial properties.

The documents needed for the ones who bring foreign currency to purchase

It is essential to transfer foreign currency to Turkey via the bank. If the money is brought using the bank, the authentication of foreign currency being brought to Turkey is provided by a bank receipt. Payment can be also done with a credit card given from foreign banks. In this case, it’s confirmed by a receipt or a document given from the related domestic bank that says the payment is made and brought to Turkey as foreign currency. However, if it is brought physically by the buyer, it should be confirmed by a document acquired from the Customs Administration.

It is necessary to bring and to pay a minimum of 50% of the sales price before the date that the invoice for the sale was issued, and the remaining amount within one year at the latest is paid by the buyer to the seller in foreign currency.

These documents should be obtained before the sale.

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