The ruling from the Tax Authority evaluates the tax situation of a taxpayer who conducts a freelance profession by opening an office abroad.
- Income Tax: The taxpayer must declare income earned both in Turkey and abroad. Income earned abroad is considered to be earned in the year it is transferred to accounts in Turkey and must be included in the tax return for that year. Income tax withholding is not applied to expenses for an office abroad, but double taxation treaties should be considered.
- Tax Procedure Law: A freelancer can open a liaison office abroad but cannot open a branch. The books used for domestic activities cannot be used for foreign activities; new books must be kept.
- Value Added Tax (VAT): Services provided abroad are not subject to VAT unless they are used in Turkey. VAT cannot be refunded for expenses incurred abroad.
In summary, the taxpayer must declare income earned in both Turkey and abroad separately, comply with the tax laws of each country, and consider double taxation treaties.
Source: Revenue Administration
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