Withholding Tax in Türkiye on Payments to Non-Residents: A Guide for Foreign Companies and Investors

When a Turkish company pays a dividend, interest, royalty, professional fee or rent to a person or company abroad, it usually has to hold back a slice of that payment and send it to the Turkish tax authority before the money leaves the country. That mechanism is called withholding tax (stopaj or tevkifat), and for a non-resident it is often the only Turkish tax that ever applies — the Turkish payer deducts it at source, so you receive the net amount. This guide explains which cross-border payments are caught, who is legally responsible to withhold and remit the tax, and how a double-taxation treaty can lower the rate that would otherwise apply.

What withholding tax (stopaj/tevkifat) is, and why it matters to you

Withholding tax is a method of collecting tax, not a separate tax in itself. Instead of waiting for the recipient to file a return and pay, Turkish law obliges the party making certain payments to deduct the tax at the moment of payment and hand it directly to the state. In Turkish this is called stopaj or tevkifat ("deduction at source"), and the party doing the deducting is the vergi sorumlusu — the person legally responsible for the tax even though it is someone else's income.

For a foreign company or investor, this matters for a simple reason: in many cases the withholding is the final Turkish tax on that income. You do not always have to register, file a Turkish return or chase a refund — the Turkish payer has already settled it on your behalf, and you receive the payment net of the deduction. That convenience cuts both ways. Because the tax is taken before the money reaches you, the only way to secure a lower treaty rate is usually to act before payment, not after.

One clarification at the outset: this guide is about income-tax withholding on payments to non-residents. It is not the same as VAT withholding, a separate mechanism under the Value Added Tax Law No. 3065 (Katma Değer Vergisi Kanunu) under which a Turkish recipient of certain services may account for VAT on behalf of a foreign supplier. The two can apply to the same transaction at once, which is one reason cross-border invoices into Türkiye repay careful checking.

The legal framework: Law No. 5520 and Law No. 193

Which statute governs your withholding depends on who the recipient abroad is.

Non-resident companies — Corporate Tax Law No. 5520

If the payment is going to a company or other legal entity abroad — a limited (dar mükellef) corporate taxpayer — the withholding rules live in the Corporate Tax Law No. 5520 (Kurumlar Vergisi Kanunu). The central provision is Article 30, which lists the types of Turkey-source payment to non-resident companies that are subject to withholding and sets the framework for the rate. Separately, Article 15 deals with withholding on certain payments to resident companies; the cross-border charge on foreign companies is the Article 30 regime.

Non-resident individuals — Income Tax Law No. 193

If the recipient abroad is an individual — a limited (dar mükellef) income taxpayer — the charge sits in the Income Tax Law No. 193 (Gelir Vergisi Kanunu). The main withholding article is Article 94, which lists the payments (wages, professional fees, rent, certain investment income and more) on which the payer must deduct tax at source.

A recurring point of confusion: whether income is Turkey-source at all. Withholding only bites on Turkey-source payments to a non-resident. The source rules — broadly, where the activity is carried on, where the property sits, or where the right is used — decide whether Turkish tax has any claim in the first place. If your income is genuinely foreign-source, no Turkish withholding should arise, and that threshold question is worth settling before anything is deducted.

Dividends paid to a non-resident shareholder

When a Turkish company distributes profit to a shareholder abroad, the dividend is generally subject to withholding at source. This is the classic case foreign investors meet: you hold shares in a Türkiye subsidiary or joint venture, the company declares a dividend, and the amount that reaches your account is the dividend less the withholding.

A few points shape how heavy that deduction is:

• It is a dividend-level charge. The company has already paid corporate tax on its profit; the withholding is a further, separate deduction taken when the after-tax profit is distributed. Retained profit that is not distributed is generally not subject to this particular withholding.
• The domestic rate is set by decree. The percentage applied to dividends to non-residents is fixed by presidential decree and has been changed more than once in recent years, so the rate in force on the distribution date is the one that counts — confirm it before you distribute.
• A treaty can lower it. Most of Türkiye's tax treaties cap the dividend rate, and many provide a reduced cap where the foreign shareholder holds a sufficient percentage of the company. The treaty rate, where lower, displaces the domestic rate — but only if it is properly claimed.

How you hold the investment changes the analysis, so dividend planning belongs at the structuring stage, not after the profit is sitting in the company. If you are still setting up, our work on forming a company in Türkiye covers the choices that later drive your dividend tax.

Interest, royalties and licence fees

Two of the most common cross-border payments out of Türkiye — interest on loans and royalties for the use of intellectual property — are squarely within the withholding regime.

Interest

Interest paid by a Turkish borrower to a non-resident lender is generally Turkey-source and subject to withholding. The applicable domestic rate often depends on the type of lender and loan — for example, loans from foreign banks and recognised financial institutions are frequently treated differently from loans between related companies. Because the category drives the rate, the nature of the lender and the loan should be identified before interest is paid. Confirm the current rate for the specific loan.

Royalties and licence fees

Payments for the right to use intellectual property — patents, trademarks, copyrights, software licences, know-how, designs — paid to a non-resident are royalties, and they are generally subject to withholding as a Turkey-source payment. Treaties almost always address royalties specifically and frequently set a reduced cap, but the precise scope of what counts as a "royalty" can differ between the domestic rule and the treaty, especially for software and mixed contracts. Where a single agreement bundles a licence with services, the components may need to be separated, because they can be taxed differently.

Professional, service and rental payments to non-residents

Fees paid to a non-resident for professional or technical services — consultancy, engineering, design, certain management and technical-assistance fees, and independent professional work — are a frequent source of withholding questions, and also of disputes.

The key issues are:

• Is the fee Turkey-source? Broadly, services connected to or used in Türkiye are more likely to be caught. Where the work is performed, where it is used, and whether the foreign provider has any presence in Türkiye all feed into the analysis.
• Self-employment vs. commercial profit. A fee to a non-resident individual for independent professional work falls under the Income Tax Law No. 193 withholding rules; a fee to a non-resident company is analysed under the Corporate Tax Law No. 5520. The two can lead to different outcomes.
• The treaty's business-profits and permanent-establishment articles. Many treaties provide that a foreign company's service fees are taxable in Türkiye only if it has a permanent establishment here. Where a treaty applies and there is no permanent establishment, the domestic withholding may be reduced or removed altogether — but, again, only on a proper claim.

Rent paid to non-resident landlords

Rent for immovable property in Türkiye — and rent for certain rights and equipment — paid to a non-resident owner is Turkey-source income, and Turkish law again uses withholding to collect the tax. Where a Turkish business tenant pays rent to a landlord abroad, the tenant is typically obliged to withhold tax from the rent and remit it. A foreign landlord who assumes "the tenant will sort out the tax" is often right — but should still confirm that the correct amount has been withheld and remitted, because gaps surface later. The mechanism is generally tied to business tenants within the withholding system; rent received from a private individual tenant may be handled through a return instead. If rent goes unpaid, a non-resident owner still has enforcement options — we can assist with recovering unpaid rent and commercial debts.

Who must withhold and remit — and what happens if they don't

This is the part foreign recipients most often misunderstand. The legal obligation to deduct, declare and pay the withholding tax falls on the Turkish payer, not on you as the recipient abroad. The payer is the vergi sorumlusu (responsible party), and the duty runs in three steps:

• Withhold the correct amount at the time of payment (or when the payment is accrued, depending on the item);
• Declare it on a withholding tax return (muhtasar beyanname) for the relevant period; and
• Remit the tax to the tax office by the statutory deadline.

The deadlines and the form of declaration are governed by the Tax Procedure Law No. 213. The consequence of getting it wrong is significant and falls on the payer: a Turkish company that fails to withhold, or withholds too little, can be assessed for the unpaid tax itself, plus a tax-loss penalty and default interest — even though the income belonged to the foreign recipient. In other words, the Turkish payer carries the risk, which is exactly why Turkish counterparties are usually careful about deducting before they release a cross-border payment.

How tax treaties reduce the rate

Türkiye has a wide network of double-taxation avoidance agreements (DTAs) with other countries. These treaties matter to withholding for one central reason: where a treaty sets a lower rate for dividends, interest or royalties than Turkish domestic law would, the treaty rate generally prevails, and some payments (such as certain service fees with no permanent establishment) may not be taxable in Türkiye at all.

But treaty relief is not self-executing. In practice:

• You must claim it. Absent a valid claim, the Turkish payer will normally apply the full domestic rate — that is the safe course for the payer, who carries the liability.
• A certificate of tax residency is usually required. To apply a reduced treaty rate, the payer typically needs a residency certificate (mukimlik belgesi) issued by the tax authority of your home country, often within a defined validity period, sometimes with a translation or apostilleApostilApostilleA certificate added to a public document in its own country so that it is accepted as genuine in Türkiye, without consular legalisation.Glossary →.
• Beneficial ownership and anti-abuse rules apply. Treaties and Turkish practice look at whether the recipient is the genuine beneficial owner of the income; routing a payment through an intermediary purely to access a better treaty rate can be challenged.

How Lexin Legal helps foreign payees and Turkish payers

Cross-border withholding rarely turns on a single number. It turns on whether the payment is Turkey-source at all, which statute governs it — the Corporate Tax Law No. 5520 for companies or the Income Tax Law No. 193 for individuals — how it is characterised (dividend, interest, royalty, service fee or rent), and whether a treaty lowers or removes the charge. We help foreign companies and investors confirm whether a payment from Türkiye is subject to withholding, identify the correct domestic rate to verify, assess and claim treaty relief (including obtaining and presenting the residency certificate), and review the tax and gross-up clauses in cross-border contracts. We also advise Turkish payers on their obligations as the responsible party so a missed deduction does not become their liability under the Tax Procedure Law No. 213.

If you are unsure how a dividend, interest payment, royalty, fee or rent into or out of Türkiye will be taxed, contact Lexin Legal for advice tailored to your facts. You may also find our companion guide to income tax in Türkiye for foreigners useful for understanding how resident and non-resident taxpayers are treated more broadly.

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