Tax Status of Turkey Touristic Residence Permit Holders

[piou 4]

I am a French citizen spending about 8 months a year in Turkey (although not in a row) and my question is whether an ikamet "for touristic purposes" qualifies me as resident or non-resident for tax purposes in Turkey (unlimited liable taxpayer vs limited liable taxpayer). 

I checked the Turkish Personal Income Tax Law (PITL) but it is rather ambiguous: while, on the one hand, it states that "Residents are individuals with legal permanent residence in Turkey and those who reside in Turkey for more than six months during one calendar year", it later says that "those who have arrived for the purpose of [...] rest and travel are considered non-residents, regardless of their time of stay in Turkey." 

This issue is very important for my global tax situation, especially in France. Currently, the French tax office thinks that I'm a tax resident in Turkey simply because I reside here a lot and have a rental address here, citing the tax treaty between Turkey and France. However, they seem to disregard the fact that the treaty only applies if I am deemed a resident by the PITL in the first place, and it is up to me to clarify this point.

I thought of applying to my local Turkish tax office for a ruling but, given the ambiguity in the law, I would first like to gather some advice from people with experience in the matter. 

Additionally, I would welcome any recommendation for a good Turkish tax advisor on the matter.

[Ken Grubb 1,421]

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my question is whether an ikamet "for touristic purposes" qualifies me as resident or non-resident for tax purposes in Turkey (unlimited liable taxpayer vs limited liable taxpayer). 

I don't see how the title of the type of residence permit has anything to do with your intention of living in Turkey. The name "touristic" really doesn't fit in my case for example. I've lived in Turkey for 18 years continuously, yet I still have a "touristic" residence permit because I'm a renter. And I'm definitely a resident of Turkey for tax purposes, regardless of what my residence permit type is called.

[piou 4]

Hi Ken and thank you for your feedback.

It is true that ‘"touristic" residence permits cover a wide range of individual situations, so other criteria such as length or periods of stay are probably more important as you suggest. I’m just trying to make sense of the PITL as it is the first step in understanding how the tax treaty should apply in my particular situation.

I guess this really takes a good tax adviser so if by chance anyone could recommend one, that would be very helpful and I would make sure to share the outcome here in case this may help others.

And just so that nobody gets me wrong  - I’m not trying to avoid paying tax in Turkey. Ironically, the nature of my revenues is such that, as per the treaty, it is not taxable in Turkey anyway, regardless of whether I’m considered a tax resident or not.

Many thanks

[Ken Grubb 1,421]

Turkey must have a tax treaty with France. It should be on the internet somewhere, that would be your best source of information. It would override the Turkish tax law, and would also say when a French citizen becomes liable for taxes and what taxes they're liable for.

For example, as a US citizen I'm liable to pay taxes on all worldwide income, except for government pensions or income from rental properties in the USA. Therefore, even though I am a tax resident of Turkey, my tax liability is zero.

So be sure to read the tax treaty between Turkey and France to see exactly what your situation is.

[piou 4]

Hi Ken,

Thank you once again for your prompt reply.

That's right, Turkey and France do have a tax treaty, to which I was referring in my previous messages. As you said, it does override the Turkish tax law to some extent, and this is how I could determine that (just like you) my revenues are not taxable in Turkey, regardless of whether I am considered a tax resident in this country or not.

When it comes to defining residency, however, the treaty provides some indications, but it also states that this is dependant on local laws in the first place. I'm copying the relevant extract from the French treaty here, because it is common to many other treaties, including the one between Turkey and the US:

ARTICLE 4 - Resident 

1. For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation, or any other criterion of a similar nature.

2. Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows: [etc. etc.]

"under the laws of that State" = so for Turkey, the Personal Income Tax Law (PITL) 

 

 

 

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[Ken Grubb 1,421]

OK I understand now. You're looking at everything you would need to look at to determine your tax residence, and it certainly is ambiguous. And you've gotten advice from the tax authorities. I don't know what else you could do.

[piou 4]

Hi Ken,

Well, I was just hoping that someone could recommend a good tax adviser in Turkey to help me with those ambiguities and lend their expertise. I could look one up in Google of course, but I'd rather have a recommandation.

[MLG 4]

On 29/11/2020 at 18:22, piou said:

And just so that nobody gets me wrong  - I’m not trying to avoid paying tax in Turkey. Ironically, the nature of my revenues is such that, as per the treaty, it is not taxable in Turkey anyway, regardless of whether I’m considered a tax resident or not.

Many thanks

Hi there, i'm on the same boat as yourself and very confused. I'm wondering what revenue type that is not taxable in Turkey that you mention? In my case i have passive income on print-on-demand sites outside of Turkey, which i usually pay tax in the UK for that but with the pandemic i've stayed longer than 6 months in Turkey.... Would really appreciate to know if there are people on the same situation. Thanks!

[piou 4]

Hi!

The only way to find out is to look up the tax treaty between the UK and Turkey. This can easily be found online in English and it should cover your revenue type, as well as your status (do you have a company? are you a freelancer?) The 6-month limit may be an issue, but since Turkey made some allowance for visa overstays during the pandemic, I should think this may also apply to tax matters (don't take my word for it, though).

 

 

[MLG 4]

Thank you.