For companies with cross-border transactions between Türkiye and other countries, the taxation of payments abroad, the application of double taxation agreements and related-party transactions require separate assessment. Yeşil Outsourcing advises companies with foreign shareholders on the tax consequences of transactions between Türkiye and other countries, including Russia; transaction structure, withholding tax and the application of treaty provisions are assessed transaction by transaction. The responsible professional is Ümit Çelik, SMMM (Certified Public Accountant), registered with İSMMMO (Istanbul Chamber of Certified Public Accountants) under registration no. 26273.

Last updated: 28 October 2026 · Responsible professional: Ümit Çelik, SMMM

Who is this service for?

• Companies with service, licence, interest or goods transactions with related companies abroad
• Companies paying royalties, know-how fees, service fees, interest or dividends abroad
• Companies with foreign shareholders carrying on business between Türkiye and Russia
• Businesses purchasing services from abroad that need to monitor reverse-charge VAT
• Companies engaged in transit trade or acting as intermediaries in purchases and sales of goods taking place abroad
• Corporations with income on which tax has been paid abroad

Scope of service

Payments abroad and withholding tax

• Analysis of the tax consequences of royalty, know-how, service, interest and dividend payments
• Determination of withholding tax on payments to non-resident taxpayers
• Application of double taxation agreements, including the agreement between Türkiye and the Russian Federation
• Documents required to apply treaty rates, in particular the tax residence certificate

Related-party transactions

• Identification of related-party transactions within the scope of transfer pricing
• The annual transfer pricing form and, where required, reporting

VAT and other matters

• Reverse-charge VAT on services purchased from abroad
• Assessment of tax deductions relating to international and transit trade
• Credit of taxes paid abroad against tax calculated in Türkiye

How does the process work?

• 1. Information gathering: The group structure, related parties, contracts and planned payment flows are reviewed.
• 2. Characterisation: The nature of each payment (service fee, royalty, interest, dividend, etc.) is determined under tax law and the relevant agreement.
• 3. Treaty check: Whether a double taxation agreement exists with the other country and which provisions may apply is examined.
• 4. Document check: The tax residence certificate and other supporting documents are checked before payment.
• 5. Filing and recording: Withholding tax is reported in the muhtasar return and reverse-charge VAT in VAT Return No. 2.
• 6. Annual work: The transfer pricing form, credit of foreign taxes and matters relating to the corporate income tax return are handled.

Required documents

• Contracts and invoices with the counterparty abroad
• A tax residence certificate issued by the competent authority of the counterparty’s country, with a sworn translation
• Information showing the group structure and related parties
• Bank records of the payments
• Documents showing taxes paid abroad (for a credit claim)
• Schedules supporting the pricing of related-party transactions

The validity period and form of legalisation of documents are checked against the relevant Revenue Administration rules.

Relevant legislation

• Corporate Income Tax Law No. 5520: Controlled foreign corporation income (Art. 7), thin capitalisation (Art. 12), disguised profit distribution through transfer pricing (Art. 13), withholding tax on non-resident taxpayers (Art. 30), credit for taxes paid abroad (Art. 33)
• Corporate Income Tax Law Art. 10/1-(i): Deduction for income from transit trade and intermediation in purchases and sales of goods abroad (as amended by Law No. 7582)
• Income Tax Law No. 193: Full and limited tax liability of individuals, domicile and residence criteria
• VAT Law No. 3065: Tax liability for services purchased from abroad (Art. 9)
• Double taxation agreements to which Türkiye is a party, including the agreement with the Russian Federation (gib.gov.tr)
• General Communiqué on Disguised Profit Distribution through Transfer Pricing

Note: Withholding tax and treaty rates vary depending on the type of payment and the agreement concerned; the applicable rate is determined on the basis of the legislation and treaty text in force on the payment date.

Risks to be aware of

• Incorrect characterisation of a payment: The distinction between a service fee and a royalty may change the withholding tax outcome.
• No tax residence certificate obtained before payment: The treaty rate may not be applicable.
• Overlooking reverse-charge VAT: This may lead to retrospective assessments together with penalties and late payment interest.
• Undocumented related-party transactions: These carry the risk of a finding of disguised profit distribution through transfer pricing.
• The balance between borrowings from related parties and equity: Under the thin capitalisation rules, interest and exchange-difference expenses may be disallowed.
• The position of foreign subsidiaries: Under certain conditions, a foreign subsidiary’s income may be taxed in Türkiye under the controlled foreign corporation rules.

Frequently asked questions

Does a double taxation agreement apply to payments to a company in Russia?

There is a double taxation agreement between Türkiye and the Russian Federation. To apply its provisions, the nature of the payment is determined and the counterparty’s tax residence certificate is obtained.

Why is a tax residence certificate needed?

To apply the reduced rates or exemptions provided in an agreement, it must be documented that the recipient is resident in the other contracting state. Without the certificate, the domestic rate applies.

Does VAT arise on services purchased from abroad?

If the service is used in Türkiye, VAT is calculated by the Turkish company receiving the service on a reverse-charge basis and reported in VAT Return No. 2. For taxpayers subject to the general regime, this VAT may be deducted where the conditions are met.

Which companies does transfer pricing concern?

Every corporate taxpayer that buys or sells goods or services with related parties must comply with the arm’s length principle. The scope of the annual form and report obligations depends on the company’s circumstances.

Is tax paid abroad taken into account in Türkiye?

Taxes paid on income earned abroad and included in corporate income in Türkiye may be credited against tax calculated in Türkiye, within the conditions and limits of Art. 33 of the Corporate Income Tax Law.

Is there a specific rule for transit trade income?

Under Art. 10/1-(i) of the Corporate Income Tax Law, a deduction from corporate income is provided for income from selling goods bought abroad without bringing them into Türkiye, or from intermediation in purchases and sales of goods abroad, subject to conditions such as transferring the income to Türkiye within the filing period of the return.

Contact

The steps to be followed, from incorporation to ongoing reporting, are determined in Turkish, English or Russian in an initial meeting based on the shareholding structure and business plan.

Phone: +90 506 271 43 48 · WhatsApp: 0506 271 43 48 · Email: info@yesiloutsourcing.com