Lawyer in Turkey: May 2015

Thursday, May 7, 2015

Stamp Duty Tax Policy

Most foreigners do not take into account the stamp duty as a tax allowance when concluding agreements in Turkey.

All types of contracts are actually subjected to the stamp duty charge which is been called 'the damga vergisi’ in Turkish.

This rule has several exemptions but the main exemption that I like to highlight further is the agreement signed by two natural persons.

All written agreements that are not related to commercial, agricultural or professional activities entered into by two natural persons are exempt from stamp duty charge. The exception to this exemption is that the duty will still be charged if the signed agreement will be announced at a public authority such as a public notary or a Court house. The applicant of the document will be obliged to pay the mandatory fee. I will explain this exception by reference to the following examples.

Suppose; as an average citizen you rent out your vacation home in Turkey. The rental agreement that you undersigned with the tenant is exempt of this stamp duty charge.
It becomes different when you want to use the rental agreement as evidence for vacating the property or for debt collecting by submitting it to the bailiff’s office at the Court house.
The public authorities at that moment will require you to pay the outstanding legal stamp duty fee to the Tax office.

Another example is a loan agreement or a debt agreement that you like to conclude as a natural person. It is not required to have an agreement notary legalized unless your are not sure about the signatures. But if you do conclude an agreement at the notary, the notary will still charge legal stamp duty on behalf of the tax office.

The legal stamp duty allowance (valid for 2015) for contracts is 9,48 per mil (0.948%) of the agreed amount. For rental agreements it is 1.89 per mil or knowing 0.189% on the total amount for the agreed rental period.

This exemption applies only to agreements without commercial, agricultural or professional activities concluded between natural persons. Natural or legal persons with professional, commercial or agricultural activities who are involved in concluding contracts are not exempt from this regulation. The contractor agreement can serve as a clear example of this;
Building a real estate in Turkey through a contractor is not exempt from the stamp duty charge.

As long as you are not familiar with the language and the specific rules it is advisable to consult a qualified lawyer before closing contracts in Turkey.