VAT Exemption for Foreigners in the Purchase of Residential and Commercial Property in Turkey 

Türeli & Ceylan Law Firm – Real Estate & Tax Law Services

1. Who May Benefit from the VAT Exemption?

The following persons and entities may be eligible for VAT exemption on the first delivery of newly constructed residential or commercial properties in Turkey:

• Foreign nationals (natural persons),
• Legal entities not resident in Turkey (with both legal and actual headquarters located abroad),
• Turkish citizens residing abroad or holders of Blue Card status.

Residency status is determined based on passport records and a stay of less than six months in Turkey, or the presence in Turkey for temporary assignment purposes.

2. Conditions for VAT Exemption

To benefit from the exemption, the following criteria must be met:

1. The buyer must not be a resident of Turkey.
2. The property must be a first delivery of a newly constructed residential or commercial unit.
3. At least 50% of the purchase price must be paid before the issuance of the invoice, and the remaining balance must be brought into Turkey in foreign currency within one year.
4. A non-sale undertaking for 3 years must be annotated on the title deed (as of 1 May 2022, this period has been extended from 1 year to 3 years).

3. Application Process

For newly built properties, the seller must apply to the tax office to obtain a VAT exemption approval letter.

Required documents include:

• Copy of buyer’s passport,
• Proof of non-residency,
• Foreign currency transfer receipt,
• Title deed and property appraisal report,
• Annotation of VAT exemption on the title deed,
• Bank transaction documents.

4. Key Considerations

• The foreign currency payment must be made via a bank in Turkey, or if brought physically, it must be certified by Customs documentation.
• The VAT exemption must be formally annotated in the land registry, and payment installments must be documented with timing.
• If the property is sold within 3 years, the previously exempted VAT amount and accrued deferral interest will be collected from the buyer.

5. Frequently Asked Questions

Who qualifies as a non-resident foreigner?
Any individual who has stayed in Turkey for less than 6 months or is present for temporary assignment is considered non-resident.

Is the VAT fully waived?
Yes. Under this exemption, 100% of the VAT is waived; the full purchase amount is exempt.

Is this exemption applicable to Turkish Citizenship by Investment?
Yes. Properties valued at USD 400,000 or more, and which are not sold for 3 years, may qualify both for VAT exemption and for the Turkish Citizenship by Investment application.