Business Tax On Turkish Property Rental Income 2024

A Guide To Short Term Kalkan Property Rentals (less than 90 days)

Complying with Turkish Tax rules

In 2018 the system for short term or holiday rental taxable income changed.  Since 2018 it is a requirement for private owners of holiday rental property, to run their rentals as a business set up, similar to that of a “Sole Trader” in the UK. The information given below is specific to the sole trader set up and does not consider owners of property in village areas who may have formed limited companies in order to purchase their property in the first place.

If you intend on renting your Kalkan property as an investment you will need to appoint a local Turkish accountant and take a business license (Vergi Levhasi).

From January 2024 you will additionally need to obtain a Tourism License. This process is relatively straightforward for detached villa properties, but more complicated for apartments or semi detached villas, where 100% consent is required from all other owners in the building/block.

In addition to the sole trader accounting status, & Tourism license, you will need to have your guests’ passport or ID information registered online with Jandarma. Guests need to be registered on arrival and checked out on departure. (For the time being as well owners are also required to keep a manual daily guest book of the names of each guest staying at the property which is filled in daily.)

On departure you will be required to issue a rental sales invoice in Turkish Lira in the lead guest’s name to include the property name and number nights stay. This system moved to an online invoice system in 2022.  Additionally the rental income should be deposited in TL into a Turkish bank account with reference of the invoice number.

The basic principles of rental income taxes are as follows:

  • 20% VAT called KDV on rental sales.
  • 2% rental tax
  • Annual profit tax which is between 15% and 40% according the amount of profit made. For the tax year 2023 the brackets are as follows:

0TL to 70,000TL: 15%
70,000TL – 150,000TL: 20%
150,000TL – 550,000TL: 27%
550,000TL – 1,900,000TL: 35%
>1,900,000TL: 40%

  • In addition there are some standard additional annual taxes to be paid connected with the business license but these tend to be small and vary each year.

However cost allowances are generous:

  • All annual overheads such as insurances, property management/site fees, water, electric, internet, council tax provided they are submitted with a legal invoice from the supplier.
  • There is no apportionment made for the part of the year the property is not rented out.
  • 20%/year of any capital investment over a period of 5 years for renewal and repairs if submitted with legal invoice from the supplier.
  • Sales VAT/KDV may be offset with VAT/KDV on costs/purchases although the rates vary.

For further advice on renting property as a business, the estimated costs and tax estimates please contact us for a one to one consultation.

The system of taxation for longer term rentals over 90 days is very much different and we do not go into the details here.