Business Tax On Turkish Property Rental Income 2018 and 2019

COMPLYING WITH BUSINESS TAX FOR HOLIDAY RENTALS 2019

(Published July 2019)

Essentially our 2018 guide below to complying with business tax for holiday rentals still applies.

There are few points of note to bring this up to date for 2019.

2019 Revised Business Profit Tax Levels:

  • Income up to 18,000 TL – 15% (2,700 TL)
  • Income 18,000 TL – 40,000 TL – 20% (4,400 TL)
  • Income 40,000 TL – 98,000 TL – 27% (15,660 TL)
  • Income over 98,000 TL  -148,000 TL – 35% (17,500 TL)

2019 Revised Costs To Open The Business License Including 1 Year Accountancy 

  • Notary POA/Translator fee 1,100 TL
  • Accountancy Fee including printing of invoice books and guest record books 4,720TL

Guest Registration, the KBS System & Your Business

The KBS guest registration has changed dramatically in 2019 and for the most part for the better. Guest registration is now done via the government website turkiye.gov.tr which means it can be accessed any time on any form of device with no special program required. Guest are registered once on arrival and the simply “checked out” on their departure day. There no longer the need to login and file a record a every day.

Use of the turkiye.gov.tr site for this purpose is however limited to Turkish citizens at this time. So foreign owners will have to get their management or maintenance company to open an ID for their property and do the registration for them. If they have a KBS User Code/Tesis Kod from 2018 this is simple to do.

In addition to registering guests on this KBS database owners are also required to complete a daily handwritten guest log/book for the tax department.  This includes the guests names, which property they stayed at and the rate charged per guest per night in TL.

We can only hope that the guest book system will be updated in the near future……watch this space!

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COMPLYING WITH BUSINESS TAX FOR HOLIDAY RENTALS 2018

(Published April 2018)

There has been a lot of information being shared across the internet about the new rules for paying tax on holiday home rental income. I have now completed all the necessary processes and paperwork ready for 2018 and want to share with you this hands on to do list to get yourself compliant.

In short all private owners who are commercially renting their Turkish holiday homes,  must now have a business license to operate and pay business taxes. So what does that mean? Simply put it means a piece of paper/business license (Vergi Levhasi) that says you are rental business  rather like a sole trader.

Like all small businesses, you will have a local Turkish accountant to file your returns on a monthly basis-  which will require your sales (rental) invoices and business expenses.

Getting Your Business License or “Vergi Levhasi”

Getting your business license established is really quite easy. Decide on your local accountant and then go to the Notary public in Kas*. There you will need to arrange 2-3 documents for the accountant:

  • Imza Beyannamesi: Registered notarised copy of your signature x 3 original copies
  • Vekaletnahme: Power of attorney to the accountant x 1 original copy.
  • Notary passport translation: x 1 copy

As a foreigner you need to have a licensed translation at the notary to translate the documents verbally before signing. We recommend you contact a translator to make an appointment before heading to the Notary office. There is a translators office right next to the Notary if needed.

What to take?

  • Your passport
  • Your Turkish tax number
  • Cash (Around 450TL for the notary fees plus extra for the translator’s fee)
  • Copy of a Turkish notarised passport translation if done previously. Otherwise a new notarised translation will be done.
  • Details of your accountant (they will give you the relevant details).

A sample copy of the Imza Beyannasmesi and Vekaletnahme documents are below.

Once this paperwork is complete visit your accountant with following:

  • The Imza Beyannasmesi x 3 original copies
  • The Vekaletnahme x 1 original copy
  • Copy of your property title deeds
  • Address of the property you are renting and your contact details.

The accountant will prepare some forms for you to sign to complete the business license process.

You will then get a copy of your “Vergi Levhasi”.

The accountant will arrange for the printing of your invoice books, guest book and business stamp

The ball park cost for getting the business license established, invoice books, stamps, 12 months accountancy fees plus some standing fees associated annually with running a business is in the region of 3,300TL for the first year (£:TL 5.4 at time of writing). This may vary a little from accountant to accountant.

Starting to Operate Your Business

Once you have your Vergi Levhasi you can start to collect expenses for anything that you buy or pay to maintain your property. You will need to get invoices from suppliers quoting your name, tax number and registered business address. You will notice that VAT will be added by suppliers in order to give you an invoice and so some things you traditionally paid cash for will look more expensive.  It’s a good idea to print up a card you can show for this purpose.

By the middle of each month you will need to send information to the accountant on the previous month’s business. This will include sending copies of expense invoices to the accountant (scanned and later hard copy should do) . You will also need to inform them of the invoices to write for each guest’s stay. i.e. Guest names, number of nights and total rental income which they will convert to appropriate TL value. We anticipate that many property management companies will offer this liaison service with your accountant along with your guest KBS daily recording.

The taxes you pay will depend on how well you operate this system and collect invoices. The key taxes will be

  • VAT (KDV)
  • Business profit tax

18% KDV will be calculated and payable on the sales (rental) invoices,  however the real amount of KDV paid can be offset by KDV on your expenses invoices. For this reason it makes sense to pay a little more in order to get invoices and reduce your KDV annual bill.

The level of profit tax you pay will depend on the final  profit level once all expenses and KDV have been paid.

2018 Business Profit Tax Levels:

  • Income up to 14,800TL – 15% (2,220TL)
  • Income 14,800TL – 34,000TL – 20% (6,060TL)
  • Income 34,000TL – 80,000TL – 27% (18,480TL)
  • Income over 80,000TL  -120,000TL – 35% (32,480TL)

Example: 3-4 bedroom villa with private pool with gross income £15,000 and costs £5,674 per annum

2018 Business Tax On Rental Property Calculation

Guest Registration, the KBS System & Your Business

If you registered for KBS last year with your own user code then you need to reactivate the code for your first guests of 2018. If you had an agency register your guests previously  with their code,  then this has to change. You must get your own code for 2018. The accountant can use the above power of attorney to apply for the code on your behalf and this will be the preferred route for most home owners.

However if you plan on getting your code by yourself this is what to do:

Visit the Jandarma office at Kas by the Public Building and Kaymakan offices. Take the 2nd entrance door on theright hand side of the building, go to the first floor and then turn right down the corridor to the office at the end.

To get your KBS user code take with you:

  • Your Turkish tax number and/or business license (Vergi Levhasi)
  • Copy of your title deed
  • Paper with your Kalkan property address, email address, contact phone number.
  • Notary translation of your passport, or your Turkish ID/residency card.

They will ask the name of your property and how many rooms (oda) and bedrooms (yatakodasi) it has. If you have more than one rental property, just add them all up under one property name.

You will receive a piece of paper confirming your Tesis Kod (User code) and password which will give you access to logging your guests on the KBS system. As soon as you get this code you need to record your guests on a daily basis. When empty that just means logging on and sending an empty record.

The KBS software can be downloaded on line at:

http://www.jandarma.gov.tr/

Select “Kimlik Bildirim Sistemi (KBS)” from the bottom left of the screen

Select “Kurulum Dosyalari” on the top right of the screen

Download the 4 files from the green arrow links titled “Indir” and execute them.

[If you were running this software last year you need to download these 4 new files and execute these for the latest updated version. As you do so it should ask if you want to repair or remove the older version. Select remove.]

Do a computer restart and make sure you are online.

Then open the program  and follow our advice from 2017 on using the KBS system.

Remember the KBS files only works with windows operating systems.

NOTE: This office will be busy and the staff do not really speak English. I would recommend you take a Turkish speaker with you. If you are using the system on a laptop take it with you along with a phone or wifi stick so you can connect it to the internet. You can then make sure it is working before you leave Kas.

A Final Note Of Warning

It is imperative as property owners that in 2018 you take heed of these requirements.  2017 was seen unofficially, as a transit year, in which the tax department took a more flexible view. However this was on the basis that owners would fully comply in 2018 . If owners don’t the full weight of tax law could fall on them.

*If as an owner you are not going to be in Kalkan before your first rental guests then you can arrange all these documents via a UK notary/lawyer route and sign any paperwork remotely by scanned copy. There is no excuse not to get on and do it..

Useful Contacts:

Translator: MONIX (Next door to the notary)
translation@monix.com.tr
M+w/app +90 532 761 11 33

Accountant: Recep Ozdemir
recep_ozdemir07@hotmail.com