In recent years, in the face of recession in the construction sector which is the main force of economic growth in Turkey’s economy, a number of changes have been made to government’s applied fiscal policy in order to increase the demand for the industry.

One of the important regulations contained in these amendments is exempting the VAT of the first sale of residence or business offices built in Turkey to foreign people in order to increase the foreign currency inflow to Turkey and encourage the construction industry.

In this article, the VAT exemption applied to foreigners in the sales of residence or business office will be examined and the tax advantage will be evaluated.

VAT rates applied for residence or business offices

Without discriminating domestic or foreigner people in Turkey, the natural or legal persons who delivered residence, are paying at different rates through (1%, 8% or 18%) over the sales price, and 18% VAT rate is paid over the sale price of the business offices.

Therefore, the cost value to be incurred for the immovables which will be owned by the persons who will buy residence or office also includes the Value Added Tax calculated on this price in addition to the sales price.

In order to support the construction sector, a temporary regulation made in 2018 which reduced the VAT rate applied to the sale of residence and offices from 18% to 8% until 31 March 2019.

VAT exemption application for delivery of residence or business offices to foreigners

With the regulation made in the Value Added Tax Law, VAT exemption will be applied on the first delivery of the buildings constructed as residence or business offices;

  • to real foreign persons who are non-resident in Turkey,
  • to the institutions that legal or business center is not in Turkey and businesses which are not generating income via a business or a permanent representative in Turkey.
  • Hence, foreign natural or legal persons who have the conditions mentioned in the Law can have these structures without paying any VAT without any number limitation.

Conditions to be provided for the delivery of residence and businesses

The conditions to be sought for the foreigners to have a home or a business without paying a Value Added Tax by benefiting from the aforementioned exception are as follows:

  • The house or workplace to be sold to foreigners must be the first delivery of the taxpayer (contractor). Therefore, there is no opportunity to benefit from this VAT exemption for the delivery of houses and workplaces that foreigners will receive as second-hand,
  • Foreign natural and legal persons are required to document that they are not settled in Turkey or legal and business centers are required to document that they are not present in Turkey,
  • The building, which is built as a residence or workplace, must have a building license and must be actually submitted to the use of foreigners,
  • At least 50% of the sales price for the house or office delivery, on behalf of the foreign currency before the date of the invoice must be paid by bringing to Turkey. The remaining sales price from the date of the invoice must be paid in foreign currency in a year again by bringing to Turkey. It is required to be documented that amount of foreign currency brought to Turkey.
  •  If the buildings that are received without paying VAT, are disposed of within one year from the date they are registered to the title, they will be paid by the foreigners, who dispose the immovable, with the unpaid VAT delay interest. The disposal status of the immovable property can be monitored via the Land Registry Office.

Acquisition of real estate in terms of acquiring turkish citizenship

Finally, the other benefit provided in case of buying immovable property in Turkey is about acquiring citizenship status.

The people who bought immovable in Turkey and who do not have citizenship relation with the Republic of Turkey, may acquire citizenship with the decision of President of the Republic of Turkey. With the decisions taken by the President in 2018, foreigners who buy real estate in the amount of minimum of US$ 250,000, may acquire citizenship of the Republic of Turkey, on condition that they do not sell it for three years.


Sales of residence or offices to foreigners are exempted from Value Added Tax as a result of a series of legislative changes, including tax arrangements made to support the construction industry, one of the leading sectors of Turkey’s economy, and promoting the foreign currency inflow to the country.

Foreign real or legal persons with certain conditions after the amendment, the acquisition of real estate in Turkey has become advantageous position. The main elements of this advantage are the removal of the Value Added Tax burden to endure during the acquisition of property by foreigners in Turkey.

In addition to depending on the said acquisition, it is facilitated to be a citizen of the Republic of Turkey for foreigners.


Levent Ergüven, Audit & Tax Partner
Nexia Turkey

Emin Uzun, Tax Manager
Nexia Turkey