Additional Conditions For Acknowledgement Of Foreign Currencies Brought In Turkey With Respect To The Delivery Of Houses And Work Places

23.10.2019 - Elmas&Yeşiloğlu

Pursuant to the Communiqué on the Amendment to the General Communiqué on the Value Added Tax published by the Turkish Ministry of Treasury and Finance in the Official Gazette last week (Serial: 27) (the “Amendment Communiqué“); certain conditions have been introduced in relation to bringing of foreign currency from abroad into the country in relation to the hand-over of houses and workplaces falling under Section 12 of the General Communiqué on the Value Added Tax stipulating an exception of VAT application to such kind of hand-overs .

Scope of VAT exemption applicable on houses or work places falling under Article 12 of the General Communiqué on the Value Added Tax

As it’s known already, effective from 1 April 2017 - except for cases mentioned in Article 3 first paragraph sub-paragraph 2 of the Turkish Income Tax - any deliveries of houses and workplaces to (i) Turkish citizens living abroad for more than 6 months by obtaining a work permit or residence permit, (ii) foreign individuals not permanently residing in Turkey, and (iii) institutions whose legal residences and headquarters are not located in Turkey and which are not earning any profits in Turkey by virtue of a workplace or any permanent representative are exempted from VAT PROVIDED THAT such exemption is only applied to the first delivery of the houses and workplaces falling under the mentioned exemption and foreign currency is brought into Turkey in return to such delivery

Conditions for the application of VAT exemption

In order to apply the above mentioned VAT exemption to any deliveries of the houses and workplaces falling under the above referred scope, 50% of any consideration in return to such delivery has to be brought by the buyer into Turkey as foreign currency prior to the issuance of the relevant invoice related with the sale where the rest of which has to be brought in to the country within one year at the latest and paid to the seller. 

Procedure for bringing foreign currency from abroad into Turkey! 

Any foreign currency delivered from abroad has to be brought into the country via bank transfer. Such transfer has to be authenticated via bank receipt. The payment can be done via credit cards issued by banks operating abroad but the local correspondent bank has to verify by virtue of a receipt or a written statement that the foreign currency underlying any payment made via such credit cards has been transferred to Turkey. 

According to the Amendment Communiqué; 

In order to recognize any foreign currency bank transfers made by individuals or legal entities except for those made by buyers into sellers’ accounts as a foreign currency brought into Turkey within the scope of the above-mentioned VAT exemption:


-     Information (project name, address, independent unit number) about the buyer and the house or workplace subject to delivery has to be cited in the bank receipt related to the foreign currency transfer or 

-     Approval has to be submitted by the individuals or legal entities bringing foreign currency from abroad, which shall include information in relation to the buyer and the house or the workplace subject to the delivery (project name, address, and independent unit number). 

The following rules in relation to bringing foreign currencies in consideration to any delivery of a house or workplace falling under the above-mentioned scope are still in effect and applicable: 

- Any foreign currency to be brought into Turkey within the above-mentioned VAT exemption can also be brought physically in which case customs clearance documents obtained from the customs authority shall be used while authenticating that the foreign currency has been transferred to Turkey indeed. 

- On the other hand, in case of bringing foreign currency to Turkey physically or it would be transferred to the buyer’s bank account into Turkey from abroad, the relevant payment has to be made via bank transfer which needs to be authenticated by virtue of a bank receipt. It is also possible to pay the price brought in foreign currency to the seller in Turkish Lira.

- Any foreign currencies brought into the country before 8 March 2017 shall not be deemed as a foreign currency, which would be stipulated under the above-mentioned VAT exemption. However, certain foreign currencies brought into the country and paid to the seller before such date in order to buy certain houses or workplaces shall be deemed as foreign currency brought into the country related to houses or workplaces subject to deliveries falling under the above-mentioned VAT exemption.