Exception from VAT Applied to Non-Residents in Turkey, Duration of Sale Ban on Housing and Workplace Deliveries Extended


İSTANBUL LAWYERS

The Law No. 7394 on the Evaluation of Treasury-owned Immovables and Amending the Value Added Tax Law and Amending Certain Laws and Decrees (“Law”) was published in the Official Gazette dated April 15, 2022 and numbered 31810. One of the regulations envisaged in the law is to change the sales ban period regarding the value added tax (“VAT”) exemption applied to foreign real and legal persons and Turkish citizens. living abroad in certain circumstances. As Istanbul law firm, we provide Istanbul lawyer services to our clients.

Value added tax is one of the indirect taxes in the Turkish legal system. The law you mentioned above constitutes an exception to this tax. You can get detailed information about this and other legal issues from our Istanbul lawyer team and other lawyers under the umbrella of karagöz&üner.

What does the law say?

The Law envisages some amendments to the Value Added Tax Law No. 3065 (“VAT Law”). One of these changes is related to the VAT exemption that can be applied to real and legal persons living abroad and Turkish citizens in the sales of residences and workplaces. İstanbul lawyer.

In accordance with the VAT Law, VAT exemption is applied to foreigners and Turkish citizens residing abroad for more than 6 months, provided that the sales price is brought to Turkey in foreign currency at the first delivery of residences or workplaces.

By taking advantage of this exception, it is possible for the buyers of residences and workplaces to sell these immovables 1 year after the title deed date without carrying any financial burden related to the exception, while this period has been increased to 3 years with the amendment made.

Accordingly, if the sale takes place within 3 years from the date of title deed registration, VAT and deferred interest not collected on time will be paid by the transferor.

The effective date of the amendment is May 1, 2022.

Solution:

It is aimed to increase the period of sale/transfer ban applied to those who buy residences and workplaces within the scope of VAT exemption from 1 year to 3 years, to reduce the attractiveness of this exception and to prevent abuse of VAT exemption in practice.

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