Türkiye offers attractive tax advantages for foreigners who wish to invest in real estate. One of these incentives is the Value Added Tax (VAT) exemption applied to the purchase of residential and commercial properties. When the legal conditions are met, foreign individuals and certain legal entities can buy real estate in Türkiye without paying VAT. This article explains in simple terms how the VAT exemption works, who can benefit from it, and what to pay attention to during the process.

 

What is VAT?

VAT (Value Added Tax) is a consumption tax applied to the delivery of goods or services. In Türkiye, the VAT rate generally varies between 1% and 18%. However, in certain special cases—such as real estate purchases by foreigners—VAT exemptions may apply.

 

Who Can Benefit from the VAT Exemption?

According to Article 13/i of the VAT Law, the following buyers are eligible for the exemption:

• Turkish citizens who have lived abroad for more than 6 months (excluding those under GVK Article 3/2)

• Foreign individuals who are not resident in Türkiye

• Institutions whose legal and business headquarters are outside Türkiye and that do not earn income through a permanent establishment or representative in Türkiye

These buyers are exempt from VAT on the first delivery of residential or commercial property (i.e., purchases made directly from the construction company). The exemption does not apply to the resale of previously owned properties.

 

Conditions for Benefiting from the VAT Exemption

To qualify for the exemption, the following conditions must be met:

1. First Delivery Requirement:
   The property must have a building permit and be delivered in a ready-to-use condition. Second-hand sales are not eligible for the exemption.

2. Bringing the Payment into Türkiye in Foreign Currency:
   At least 50% of the sales price must be transferred to Türkiye in foreign currency before the invoice date, and the remaining amount must be transferred within one year. Payments can be made by:

   • Bank transfer through a Turkish bank (documented with a bank receipt or foreign exchange purchase document),

   • International credit card payment (with proof of transfer),

   • Physically bringing foreign currency into Türkiye (documented with customs certificates).

3. Signing a Commitment Letter:
   The buyer must sign a commitment letter at the time of sale, agreeing to comply with the VAT exemption conditions.

 

SWIFT-Excluded Countries (Example: Iran)

For buyers from countries like Iran, where banking transactions are restricted, special provisions were introduced on October 15, 2019. In these cases, the bank receipt must include both buyer and property details, and a mutual consent document must be signed between the parties.

 

3-Year Non-Disposal Requirement

If the property purchased under the VAT exemption is sold within 3 years, the previously exempted VAT and the related interest are collected from the buyer. Land registry offices record this restriction in the title deed. If the property is sold after 3 years, no VAT or interest is due.

 

Required Documents and Refund Process

For VAT refund claims, sellers must submit the following documents:

• Standard refund application form

• VAT deduction lists and calculation tables

• Sales invoice list

• Bank receipts or customs documents proving that the foreign currency has been transferred to Türkiye

• Land registry records

 

Secure Real Estate Transactions with U&T Law

At Uzunpınar & Tüfek Law, we provide legal support to foreign individuals and institutions who wish to acquire real estate in Türkiye. Our experienced legal team carefully manages title deed, payment, and tax procedures to ensure that investors complete all formalities smoothly and in compliance with Turkish law. For more information on benefiting from the VAT exemption and investing in real estate in Türkiye, you can contact us through our communication channels.