VAT Exemption When Purchasing a Property for Turkish Citizenship

VAT is considerable factor for purchasing a property. Therefore, VAT exemption when purchasing a property for Turkish Citizenship is crucial.

As it is well known and explained in detail in our Turkish Citizenship by Property Investment page, a foreigner can obtain Turkish Citizenship by Purchasing a Property with the value of 250.000-USD.

In this article we will evaluate what will be the VAT incurred for such purchase and the options to be exempted from the VAT.

The current VAT rates applicable are as below;

• For residential properties < 150 m2 (net) = 1%
• For commercial units (regardless of the size) and residential properties > 150 m2 (net) = 18%

As can be seen if the property purchased for Turkish Citizenship is a residential unit smaller than 150 m2 the VAT will be 1%. Such amount can be ignorable, since the cost of obtaining this exemption can be more than the tax itself. In that case, the project developer may bear such VAT cost on the Turkish Citizenship applicant’s behalf.

However, if the property purchased for Turkish Citizenship is a commercial unit or a residence > 150m2 in that case the VAT rate is quite important as 18%. Therefore VAT exemption when purchasing a property for Turkish Citizenship becomes important.

Are the foreigners apply for Turkish Citizenship by Investment Exempt (Immune) from VAT ?

As of April 2017 the foreigners are exempt from VAT. Therefore, the applicants of Turkish Citizenship by Property investments are in this category as well. However there are certain conditions to be met for the exemption from VAT.

Who Can be Benefited From VAT Exemption When Purchasing a Property for Turkish Citizenship

(i)The natural persons who are not the citizen of Turkey and (ii) according to the Turkish Tax Code not resides in Turkey can be benefited from VAT tax exemption. The first condition is quite simple. However, the second condition for VAT immunity while obtaining Turkish Citizenship by Property can be complex for the applicant.

According to Turkish Tax Code if a natural person (regardless of the nationality) stays in Turkey more than 6 months in a calendar year will be considered as the resident of Turkey.

Therefore, if an applicant of Turkish Citizenship by Investment wishes to be immune from VAT has to prove 2 elements collectively;

• S/he is not the citizen of Turkey
• S/he has not stayed in Turkey more than 6 months in a calendar year.

For the proof of such condition two types of documents need to be obtained;

• Non residence document from the immigration office
• VAT exemption document from TAX office (TAX office requires to see at first the immigration office document)

The Sales Amount of Property Investment for Turkish Citizenship Should be Transferred Abroad for VAT Exemption

One of the conditions to benefit from the exemption is the obligation to bring the amount for the property for Turkish Citizenship outside of Turkey.  The buyer may directly transfer the amount to Seller over bank accounts. Alternatively, the amount can be brought physically. In first option the prove will be made with bank receipts in the second option with the documents obtained from the customs. Cost before the date of the invoice for the sale of at least half of regulation, as foreign by the recipient within one year of rest shall be paid to the seller brought to Turkey.

In conclusion If an applicant of Turkish Citizenship by Property Investment purchases a commercial unit or resident > 150 m2 (net) VAT is 18%. The applicant of Turkish Citizenship can be exempted from tis amount. However, there are certain procedures to be followed. Please consult us for details.