A foreign-owned Turkish company pays 25% corporate income tax on its profit and charges 20% VAT on most sales. When it pays a dividend to its foreign parent, Turkey withholds 15%, or less under a tax treaty. Royalties paid abroad carry 20% withholding and interest 10%, both usually reduced by treaty.
Which taxes does a Turkish company pay?
Pending lawyer review| Tax | Rate | Note |
|---|---|---|
| Corporate income tax | 25% | 30% for banks and financial institutions. 5-point reduction for exporters on export income |
| Domestic minimum corporate tax | 10% | Parallel calculation since 1 January 2025. The higher amount is payable |
| Global minimum tax | 15% | Only for multinational groups with consolidated turnover above EUR 750 million |
| VAT, standard rate | 20% | Reduced rates of 10% and 1% for listed goods and services |
| Dividend withholding | 15% | On dividends to non-residents. Reduced by treaty |
| Royalty withholding | 20% | Treaties generally reduce it to 10% |
| Interest withholding | 10% | Most treaties keep 10% |
| Branch profit transfer | 15% | On profit sent to the foreign parent, subject to treaties |
Rates are from the official tax guide of the investment office and PwC Tax Summaries.
What does your tax treaty change?
Pending lawyer review| Parent company in | Dividend withholding, qualifying stake | Condition | Otherwise |
|---|---|---|---|
| Germany | 5% | Holding of at least 25% | 15% |
| Netherlands | 10% or 15% | Holding of at least 25%. 10% applies while the dividend is not taxed in the Netherlands | 15% |
| United Kingdom | 15% | Holding of at least 25% | 15% |
| United Arab Emirates | 10% | Holding of at least 25% | 12% |
| United States | 15% | Holding of at least 10% | 15% |
What does EUR 100,000 of profit leave for a German parent?
A worked example with the rates above. The Turkish company earns a pre-tax profit equal to EUR 100,000. Corporate tax at 25% takes EUR 25,000, leaving EUR 75,000. If all of it is paid as a dividend to a German parent with a qualifying stake, 5% withholding takes EUR 3,750. The parent receives EUR 71,250, an effective Turkish tax of 28.75%. Without a treaty the withholding would be EUR 11,250 and the effective rate 36.25%.
Common questions
Pending lawyer reviewWhat is the corporate tax rate in Turkey in 2026?
25%. Banks and financial institutions pay 30%, and exporters get a 5-point reduction on export income.
What is the VAT rate in Turkey?
The standard rate is 20%. Reduced rates of 10% and 1% apply to listed goods and services.
How are dividends to a foreign parent taxed?
Turkey withholds 15% on dividends paid to non-residents. A tax treaty can reduce the rate, for example to 5% for a German parent holding at least 25%.
Is there a minimum corporate tax in Turkey?
Yes. Since 1 January 2025 companies calculate a parallel 10% domestic minimum tax on income before certain deductions, and pay whichever amount is higher.
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