Differences Between Tax Residency in Turkey and Abroad

Domestic and Foreign Tax Residency: Why Is It So Important?

If you live in Turkey, earn income from multiple countries at the same time, or plan to move to another country; your tax residency status directly determines how much tax you will pay and which country you will declare your income to.

Many people cannot give a clear answer to the question, “I have a residence permit in country X, my citizenship is in country Y, my company is in country Z; so where am I considered ‘resident’ for tax purposes?” Incorrect or incomplete planning can lead to serious consequences such as:

• Paying tax in two countries on the same income (double taxation),
• Tax penalties due to filing in the wrong country or not filing at all,
• Unexpected tax costs when moving abroad or receiving investments

In this article, we will examine the fundamental differences between tax residency in Turkey and abroad; in the context of OECD models, European countries, the UK, and US practices, using practical and comparative language. We will also discuss what it means for professionals opening from Turkey to abroad or working abroad, and how Corpenza can support in these processes.

1. What Is Tax Residency? (Basic Principles of Tax Residency)

Most countries around the world tax individuals based on two main categories:

• Tax resident (full/classic taxpayer):
  The relevant country has the right to tax the individual’s worldwide income.
• Non-resident (limited taxpayer):
  The individual is taxed only on income earned in that country, i.e., source-based income.

This principle applies to Turkey, EU countries, the UK, and most developed countries. However, the critical difference arises in the answer to the question, “who is considered a tax resident of that country and when?”:

• Some countries decide almost solely based on days spent (183-day rule).
• Some consider factors such as center of vital interests, permanent home, family, business, and economic ties.
• Exceptional countries like the US apply citizenship-based taxation.

2. Tax Residency Rules in Turkey

2.1. Who Is Considered a Tax Resident in Turkey?

According to the Turkish Income Tax Law and international tax guidelines, a person is considered a tax resident in Turkey if they meet one of the following conditions:

• Their domicile is in Turkey:
  This means the place where the person intends to settle permanently is Turkey.
• They have stayed in Turkey for more than 6 months (183 days) in a calendar year:
  The general rule is that physical presence exceeding 183 days constitutes a presumption of residency in Turkey.
• If they are a Turkish citizen and cannot provide documentation proving tax residency in a foreign country:
  Unless proven otherwise, they can be considered as residing in Turkey and deemed a full taxpayer.

2.2. If I Stay More Than 6 Months, Am I Always Considered a Resident?

No. There are significant exceptions, especially for foreign nationals. Staying in Turkey for more than 6 months (183 days) for the following purposes does not always create tax residency:

• Temporary assignment for a specific and limited project,
• Long stays for tourism/vacation purposes,
• Education (university, language school, etc.),
• Temporary stay for health (treatment) purposes.

In this case, the person’s primary intention of residence and whether the stay is temporary or not becomes important. For example, a person receiving treatment in Turkey for 8 months may continue to be a tax resident of another country.

2.3. Consequence of Being a Tax Resident in Turkey: Worldwide Income

The result is clear from Turkey’s perspective:

• Resident (full taxpayer):
  A person who is resident in Turkey or stays more than 183 days in a calendar year is obliged to declare all worldwide income in Turkey (subject to double taxation treaties).
• Non-resident (limited taxpayer):
  A person who is not resident in Turkey or does not exceed the 183-day threshold is taxed only on Turkey-sourced income (such as salary, rent, business profits, freelance income, etc. in Turkey).

Therefore, for individuals earning salary, freelance income, dividends, interest, or rental income from abroad, whether they are a tax resident in Turkey or not directly changes the scope of declaration.

3. Tax Residency Abroad: General Model and Prominent Countries

3.1. Common Ground for Most Countries: Residence-Based Taxation

Like Turkey, most countries apply “residence-based taxation”:

• Tax residents → are taxed on worldwide income.
• Non-residents → are taxed only on source-based income earned in that country.

However, criteria for being considered a resident vary significantly by country.

3.2. Countries That Only Consider Days Spent

Some countries, in a simplified manner, look almost solely at the 183-day rule:

• If you stay in the country for more than 183 days in a calendar year → tax resident,
• If you stay for less than 183 days → non-resident.

This model is particularly common in countries with less complex tax systems or those that receive short-term migration. The advantage is simplicity; the disadvantage is that it may not fully reflect the person’s actual economic and social ties.

3.3. Countries That Consider Ties: Example UK and OECD Model

Some countries apply a more sophisticated “ties test”. For example:

• The UK, with its “statutory residence test”; in addition to days spent, considers the following ties:
  • Where do family and children live?
  • Where is the permanent home?
  • Where is the workplace or company headquarters?
  • Where are bank accounts, social life, club memberships?
• OECD Model Tax Convention, especially in cases of dual residency:
  • Permanent home,
  • Center of vital interests,
  • Habitual abode,
  • Nationality

  provides “tie-breaker rules” to determine which country will consider you a tax resident.

This approach plays a critical role in clarifying the situation of individuals with significant ties in multiple countries.

3.4. Exceptional Model: The US Citizenship-Based Taxation System

The US applies an exceptional model worldwide:

• US citizens and green card holders must declare their worldwide income to the US, regardless of where they live.
• Additionally, they may also be tax residents of the country they live in; meaning they fall under the tax radar of two countries.

To reduce double taxation:

• The tax treaty between the US and the relevant country,
• Foreign Tax Credit,
• Foreign Earned Income Exclusion and other exemptions

are used. However, the principle remains unchanged: US citizenship almost perpetuates tax liability. This fundamentally differs from the residence-based model of most countries, including Turkey.

4. Key Differences Between Turkey and Other Countries

4.1. Residency Criteria: 183 Days, Domicile, and Ties

Turkey’s approach can be summarized as follows:

• Focuses on 183 days + “domicile” + “intention to settle”.
• Staying longer than 6 months for temporary purposes such as tourism, education, health, or specific projects may not alone create tax residency.

In other countries:

• Some countries decide solely based on days spent (“183-day” rule).
• Some apply advanced ties tests:
  • The country where family and children are located,
  • The country where the permanent home is located,
  • The country of business, company, active commercial activities,
  • Bank accounts, social life, education, health services, etc.

Especially for individuals with significant ties in both Turkey and an EU country, which country considers you a tax resident is determined by both domestic law and the relevant tie-breaker rules of the applicable double taxation treaty.

4.2. Worldwide Income Approach: Turkey vs. Other Countries

If you are a tax resident in Turkey:

• You may have an obligation to declare all worldwide income in Turkey, including salary, freelance, rent, interest, dividends, etc.
• If you have paid tax on the same income abroad, you may have the opportunity for offsetting (similar to foreign tax credit) under the relevant double taxation treaty and domestic legislation.

In other countries:

• The general principle is still worldwide income; however:
  • Which types of income are exempt,
  • The scope of deductions, exemptions, and tax credits,
  • The structure of tax rates (brackets, family deductions, child benefits, etc.)

  varies by country.

• Some countries may show a tendency to tax only domestic income by introducing exceptions that are close to a territorial system.

4.3. Differences in Double Taxation and Tax Treaties

Turkey has signed double taxation agreements (DTA) with over 80 countries. These agreements generally:

• Determine which type of income (salary, pension, dividends, interest, royalties, real estate rent, etc.) will be taxed by which country.
• If both countries tax, describe which method will be applied: offsetting (tax credit) or exemption.
• If a person is considered a tax resident in both countries, according to the OECD model:
  • Permanent home,
  • Center of vital interests,
  • Habitual abode,
  • Nationality

  introduces binding tie-breaker rules.

Different countries have different numbers and scopes of DTAs. For example, in some countries:

• Pensions are taxed only in the country of residence,
• In another agreement, tax may arise in both the source and residence countries, and the offsetting method may be applied.

You can find detailed information about Turkey’s compliance with OECD standards regarding automatic information exchange (CRS) in the OECD’s note on Turkey’s tax residency.

5. Tax Residency in Turkey: Practical Effects and Cost Dimension

5.1. Where Will You Declare Your Income?

If you are a resident (full taxpayer) in Turkey:

• You may have an obligation to file a declaration in Turkey for all your income, both domestic and foreign.
• For example:
  • Salary from your job in Germany,
  • Dividends from a limited company in the UK,
  • Interest/profit from a brokerage account in the US,
  • Rent from your properties abroad

  you may need to include such income in your Turkish agenda as well.

• However, the provisions of the DTA between the relevant country and Turkey and the taxes you paid in that country may reduce your final tax burden.

If you are a non-resident (limited taxpayer) in Turkey:

• You only pay tax in Turkey on your Turkey-sourced income.
• For example, in Turkey:
  • If you rented an apartment,
  • If you provided services under a short-term project,
  • If you received salary for temporary work

  tax will apply.

5.2. Tax Rates and Burden

Turkey’s individual income tax system has a progressive structure, and rates range approximately from 15% to 40%.

The same rates generally apply to non-resident individuals; however:

• Final tax may be collected through withholding tax for many types of income.
• Double taxation treaties may reduce the rate or provide exemptions for certain incomes.

Therefore, especially if you are paying tax on the same income in both Turkey and another country, correctly modeling how much you should pay to which country significantly affects your tax cost.

6. Who Is It Critical For? Global Mobile Professionals, Investors, and Companies

Differences in tax residency primarily affect the following groups:

• Turkish professionals working abroad (expats),
• Investors and freelancers living in Turkey but earning part of their income from abroad,
• Turkish companies sending personnel abroad (under the posted worker model),
• Entrepreneurs establishing companies in foreign countries,
• Wealthy individuals considering golden visas, residence permits, or citizenship through investment.

A poorly structured tax residency strategy for these groups can lead to:

• Heavy tax burdens in both Turkey and the country of operation,
• Inconsistent payroll processes (especially in personnel leasing and EOR models),
• Audits and penalties from tax authorities

risks.

7. Corpenza Perspective: How Do We Manage International Tax Residency and Mobility?

At Corpenza, we work with individuals and companies that are resident in Turkey but expanding abroad, resident abroad but investing in Turkey, or operating simultaneously in multiple countries. Specifically:

• Incorporation (Turkey, Europe, the UK, etc.),
• Residence permits and golden visa programs,
• International accounting and tax reporting,
• Payroll and EOR (Employer of Record) solutions,
• Sending personnel abroad under the posted worker model and tax optimization,
• Citizenship through investment and asset structuring

we plan with a focus on tax residency rules.

In practice, we typically follow these steps:

• We analyze your tax residency status in current and target countries (Turkey, EU, UK, US, etc.).
• We design the most suitable structure for your income types, considering the double taxation treaties between the relevant countries.
• We redesign your company, individual, and payroll structure within the triangle of legal compliance + tax optimization + mobility flexibility.
• When sending personnel abroad, we clarify:
  • Which country will be considered the “principal employer” for tax and social security purposes,
  • In which country the personnel will be a “tax resident”,
  • Which country will withhold payroll and where the contributions will be paid

  among other issues.

Thus, we establish a manageable and predictable framework for managing tax residency complexity for both individuals and companies.

8. Conclusion: Tax Residency Is Strategic, Don’t Leave It to Chance

The differences between tax residency in Turkey and abroad are not just a legal technical detail but a strategic element that directly affects your cash flow, investment returns, and global mobility.

In summary:

• If you are a resident in Turkey, your worldwide income falls under Turkey’s radar; you need to optimize your burden with double taxation treaties.
• If you are a resident in another country, you must correctly apply the limited taxpayer regime for your income in Turkey and the relevant DTA provisions.
• If you have ties in multiple countries, which country considers you the “primary” tax resident is determined by both domestic law and the tax treaty rules based on the OECD model.

In processes such as international mobility, incorporation, sending personnel abroad, and citizenship through investment; correctly structuring the tax residency decision from the outset significantly reduces future costs and risks. At this point, working with professional teams that understand both international tax legislation and practical application becomes critical.

Disclaimer

This article is prepared for general informational purposes. The information here does not constitute legal, tax, or financial advice. Tax legislation can change frequently; the domestic laws of each country and the double taxation treaties signed by Turkey may yield different results.

Before making decisions regarding your tax residency and declaration obligations, we recommend checking current official sources (for example, OECD and relevant tax authorities) and seeking professional support from a qualified tax advisor or lawyer. Corpenza can only provide professional services within the framework of a separate contract and individual assessment; this text does not constitute a basis for decision-making on its own.