Answers for questions about regarding VAT exemption
Last Updated: 2023-10-28Answering questions regarding VAT exemption
Many always wonder about the VAT exemption law in Turkey, does it include everyone, including foreigners and Arabs? Does it apply to all types of sales or is it related to apartments and houses only? And what happens if an individual is not covered by this law?
We will provide the answer to these important questions about VAT exemption in Turkey.
Does this law include all forms of sale in Turkey or is it limited to real estate? What are the consequences if an individual is not covered by this tax exemption? These questions need clarification to better understand tax rights and obligations.
In this blog, we will closely review Turkey's tax exemption law and highlight its scope of application and the conditions surrounding it. We will provide the necessary guidance to understand what to do if you are not covered by this exemption.
With the constant changes in tax policies and laws, understanding your rights and duties as a citizen or resident of Turkey is crucial. Join us on this journey to understand and interpret the tax exemption provision in this wonderful country.
We invite you to follow the blog to read the full and comprehensive article on this important topic.
What are the conditions for bringing money to Turkey to obtain tax exemption?
First: Foreign currency must be transferred to Turkey through the bank. If the money is brought in through the bank, the authentication of the transferred foreign currency must be provided via a bank receipt.
Second: Payment can be made via credit card provided by foreign banks, in this case, confirmation is made through a receipt or document from the relevant local bank, indicating that the payment process has been completed in foreign currency and then submitted to Turkey.
If the money is brought in via the buyer himself, this must be confirmed by a document obtained from the customs administration.
The problem of the difficulty of applying VAT exemption in countries facing difficulties in converting foreign currencies was solved by issuing a statement from the Revenue Department of the Ministry of Finance allowing the value of real estate to be brought to Turkey as foreign currency in real estate purchases, especially from Iran and some European and African countries.
Note: The bank receipt must contain information about the recipient and the commercial or residential properties involved in the transfer if the transaction is made in foreign currency. The seller can receive a letter of approval specifying that the amount subject to transfer will be sent on behalf of the buyer, providing the recipient's information and the commercial or residential properties involved in the transfer.
Can I sell the property within a year of purchase?
If the residential property or office purchased within the scope of the exception is sold within one year, the uncollected tax is paid at late interest and calculated according to the deferred interest rate in Article 48 of Law No. 6183 to the tax office at the place of the property before the title deed is processed by the seller of the property.
Note: VAT cannot be calculated in such a sales transaction because half of the price is brought to Turkey in foreign currency by the buyer and paid to the seller before the invoice is issued.
What are the conditions necessary for immovable property to be exceptionable?
The building permit required for any property to be built, whether real estate or commercial, under which it is delivered to buyers if it is ready for use.
Is it possible to take advantage of the exemption if I buy a new property but from the second owner?
The exemption cannot be availed because such types of real estate are considered secondary and do not fall under this law.
To whom and how is the payment of the price of the sold property carried out? What is the time limit for payment?
It is paid by the buyer to the seller and this is done in foreign currency.At least 50% of the sale price must be brought and paid but before the date of issuance of the sales invoice and the remaining payment is made within one year at the latest.
What are the conditions necessary for exemption from VAT in real estate sales?
- The taxpayer, whether he is a foreigner or a Turkish national, must have lived outside Turkey for a period of not less than 6 months or more.
- They should not sell their properties within one year after receiving the title deed of the property.
- Payment must be made in foreign currency.
Does the VAT exemption law apply to the purchase of fields or land?
Because it only applies to residential and commercial properties and also the date of these properties purchased after /1/ April / 2017.
Is it possible to buy more than one property to benefit from this law?
Yes, you can buy more than one property to benefit from the VAT exemption.
Is there a VAT exemption in the property if it was purchased by a foreigner before April 1?
VAT is paid for a property delivered before 1 April 2017 and this exemption applies to sales completed before 1 April but provided that the title deed is issued after this date.
How is the VAT exemption process ?
If the application for the property is made through an agency, the application must be submitted to the title deed office with the original copy and the copy of the official agent with the interpreters.The pre-submission is made by taking the sequence number after determining it and matching the required conditions in the title deed office, and then a preliminary contract is signed for the sale of real estate in the presence of the notary public in the event of a transfer of ownership of the property .The sale contract is held at the title deed office.
What is the result of selling the property by the buyer within a year?
If the residential property or office purchased within the scope of the exception is sold within one year, the uncollected tax is paid with late interest and is calculated according to the deferred interest rate in Article 48 of Law No. 6183 to the tax office at the place of the property before the title deed is processed by the property seller.
Note: VAT is not calculated in this sales transaction as half of the price is brought to Turkey by the buyer and in foreign currency and paid to the seller before the invoice is issued.
To whom is the price of the sold property paid, and how is the payment process?
In order to apply the tax exemption, at least 50% of the sales price must be brought and paid before the date of issuance of the sales invoice, and the remaining amount is paid within one year at the latest by the buyer to the seller and in foreign currency.
What are the documents needed to request a refund?
- List of sales invoices.
- Payment receipts proving the payment to the seller with documents issued by the customs administration.
- Refund request.
- List of VAT for the period in which the exception was declared.
- Documents that must be provided by the seller before delivery.
- Bank receipts proving that the entire currency was brought to Turkey.
- An example of a land registration certificate.
What are the consequences of not obtaining the exemption?
In cases where the exemption is applied in the event that the conditions stipulated in Article 13/i of the VAT Law are not met, the seller and the buyer are simultaneously responsible for the payment of the tax due, the loss of the tax penalty and the default interest.
If at least 50% of the sale price is not paid before the invoice date and the remaining amount is not brought to Turkey in foreign currency and is not paid to the seller, the seller and the buyer are simultaneously responsible for paying the due tax, losing the tax penalty and the default interest.
As a foreigner, you must always know all the laws and conditions of the new country and the necessary documents and papers so that he can take advantage of all opportunities, especially since the situation of the expatriate is difficult, especially since the different language makes the subject more difficult.
Conclusion: Take advantage of tax exemption and Mersat real estate services in Turkey
At the end of this comprehensive article on tax exemption in Turkey, we are pleased to offer you a unique opportunity to take full advantage of this information. At Mersat Real Estate, we always strive to provide the best services to our customers.
We invite you to contact us to take advantage of the distinctive real estate offers in Turkey that match your real estate needs and ambitions. We provide integrated real estate ownership services, including real estate residency and opportunities to obtain Turkish citizenship.
In addition, our legal team is always ready to help you get tax refunds related to real estate operations in Turkey. We are here to support you every step of the way towards maximizing your real estate investment.
For more information and to benefit from our services, do not hesitate to contact our teams at Mersat Properties. We will be happy to help you and provide comprehensive support to achieve your real estate goals in Turkey.
We look forward to serving you and providing personal and professional assistance. Contact us today for inquiries and consultations! Thank you for trusting us and look forward to serving you soon. Best regards, Mersat Real Estate Team
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