Can a joint stock company have a home office?
A lease agreement must be drawn up between the property owner and the company and 20% withholding tax must be calculated on the gross rent and paid to the company’s tax office on behalf of the property owner. In addition, a stamp tax declaration regarding the lease agreement must be prepared and declared.
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Example of a special document regarding the use of home office in self-employment activities
Whether expenses such as electricity, water and natural gas of the residence used as a home office can be deducted:
REPUBLIC OF TÜRKİYE
REVENUE ADMINISTRATION
ISTANBUL TAX OFFICE
(Taxpayer Services Value Added Tax Group Directorate)
Number : 39044742-130[Özelge]-236571 05.12.2016
Subject : Whether expenses such as electricity, water and natural gas of the residence used as a home office can be deducted
In the special request form registered in the interest, the opinions of our Presidency are requested on how much of the expenses such as electricity, water, natural gas belonging to the residence you use as a home office due to your self-employment activity can be written as an expense, whether the value added tax (VAT) amounts can be deducted and whether some invoices can be accepted as an expense / discount if they are issued on behalf of the landlord.
IN TERMS OF INCOME TAX LAW:
Article 65 of the Income Tax Law No. 193 defines self-employment income and Article 67 specifies how to determine self-employment income.
In the 68th article of the said Law titled “Professional Expenses”, the expenses to be deducted from the revenue in the determination of self-employment income are listed in subparagraphs, and in the first paragraph of the article, subparagraph 1; “General expenses paid for the acquisition and maintenance of professional income (Those who use part of their residence as a workplace can deduct the entire rent they pay for the residence and half of the other expenses such as heating and lighting. Those whose workplace is their own property may deduct depreciation instead of rent, and those whose residence is their own property and use part of it as a workplace may deduct half of the depreciation).”
In order for the general expenses in subparagraph (1) of the first paragraph of Article 68 of the same Law to be deducted as expenses in the determination of self-employment income, they must have a clear and direct connection with the acquisition and maintenance of the income, be appropriate to the nature of the work performed and be commensurate with the volume of business.
Article 3, subparagraph B of the Tax Procedure Law No. 213 states that “In taxation, the event giving rise to the tax and the true nature of the transactions related to this event are essential.” It is stated that the event giving rise to the tax and the true nature of the transactions related to this event can be proved by any evidence except oath.
Accordingly, it is possible to deduct half of the payments in the form of general expenses such as natural gas, electricity and water bills, which belong to the residence used as a home office due to your self-employment activity and issued in your name, as an expense in the determination of self-employment income if they belong to the workplace where you operate and are used in connection with the business.
In addition, it is possible to deduct half of the invoices issued on behalf of the landlord as an expense in the determination of self-employment income if it is certified (proved by conclusive evidence) that they are paid by you together with the fact that they belong to the workplace where you operate and are used in connection with the business.
IN TERMS OF VALUE ADDED TAX LAW:
The following are stipulated below:
In Article 1/1 of the VAT Law No. 3065, the deliveries and services made within the framework of commercial, industrial, agricultural activities and self-employment activities in Turkey are subject to VAT
In Article 29/1, taxpayers will be able to deduct the VAT calculated over the taxable transactions they make from the VAT calculated due to the deliveries and services made to them in relation to their activities and the VAT shown in the invoices and similar documents.
In Article 30/d, VAT paid due to expenses that are not accepted as deductible in the determination of income according to Income and Corporate Tax Laws cannot be deducted from the VAT calculated over the taxpayer’s taxable transactions.
Accordingly, if the payments in the form of general expenses such as natural gas, electricity and water invoices belonging to the residence used as a home office due to your self-employment activity and issued in your name belong to the workplace where you operate and are used in relation to the business, it is possible to deduct the VAT for the part that is accepted as a deduction in determining the income according to the Income Tax Law.
In addition, if the invoices issued on behalf of the landlord belong to the workplace where you operate and are used in relation to the business, as well as the confirmation that it is paid by you (proved by conclusive evidence), it is possible to deduct the VAT for the part of the VAT that is accepted as a deduction in determining the income according to the Income Tax Law.
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Source: REVENUE ADMINISTRATION
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