Key Takeaways
- Taxpayers who provide software, engineering, design or consulting services to clients abroad can qualify for a significant income or corporate tax exemption, subject to certain conditions.
- To qualify, payment must be brought into Turkey in foreign currency, and the service must be used abroad.
- The exemption's rate and scope can be updated over time, so we recommend confirming the current rate with us before you apply.
- This exemption is independent of the young entrepreneur exemption; a taxpayer who meets both sets of conditions can benefit from both.
The number of freelancers and sole proprietors providing software, design, engineering and consulting services to clients abroad has grown quickly in recent years. Most of this group isn’t aware of an incentive that can exempt a significant share of their earnings from tax.
Who Qualifies for the Exemption?
Individuals or companies registered as taxpayers in Turkey who provide services such as software development, engineering, architecture, design, call-center services, bookkeeping, data processing and analysis, professional training, product testing, and certification to clients based abroad can have a significant portion of the resulting earnings exempted from income or corporate tax.
Conditions for Qualifying
- The service must be provided to a person or entity based abroad
- Payment must be brought into Turkey in foreign currency, evidenced by a bank receipt
- The service must be used abroad — meaning its output isn’t used in Turkey
- The service must actually be produced in Turkey and sold abroad
Which Professionals Use This Exemption Most?
Software developers and freelance programmers, digital designers (UI/UX, graphic design), engineers and architects serving overseas clients, remote consultants, and content/marketing specialists are the most common beneficiaries. It’s available whether you operate as a sole proprietor or a limited company.
Common Mistakes
- Invoicing in foreign currency but failing to bring the payment into Turkey, or routing it through a different account
- Applying the exemption to the entire business when only part of the service was provided to a client abroad, without separating out the domestic portion
- Leaving the nature of the service poorly defined in the contract and invoice, which can lead to disputes over which exemption applies during an audit
How We Support the Application and Filing Process
We assess whether your foreign-client income qualifies for the exemption based on your contracts and invoices, track that foreign currency receipts are properly documented, and record the exempt amount correctly on your annual return. If you serve both domestic and foreign clients, we help you separate your earnings correctly so you don’t lose the tax advantage.
Accounting and tax advisory in Şişli and Mecidiyeköy
If you want tailored support on this topic, we can meet in person at our Şişli office or through digital channels.
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