Ruling Number: 62030549-120[94-2014/486]-2157 Introduction In a private ruling dated September 3, 2014, the Istanbul Tax Office (Taxpayer Services Income Taxes Group Directorate) addressed whether withholding tax applies to payments made to trainers brought from abroad for the purpose of giving seminars. The taxpayer stated that they would temporarily bring individuals who are citizens of Denmark, Germany, the Netherlands, and the United States to Türkiye for 1-2 weeks to give seminars. The taxpayer requested clarification on whether withholding tax is required on the payments made to these trainers for the services received. Legal Framework – Domestic Law Income Tax Law (Law No. 193) Article 6 – Limited Liability: Real persons not resident in Türkiye are taxed only on their income derived from Türkiye. Article 7 – Income Deemed Derived in Türkiye: For professional service income, the income is deemed derived in Türkiye if the professional services are performed or utilized in Türkiye. Articles 65 & 66 – Professional Service Income: Income arising from any kind of professional service activity constitutes professional service income. Persons who perform professional service activities as a regular profession are considered professionals. Article 94 – Withholding Tax Obligation (Paragraph 1, subparagraph 2(b)): Payments made to persons performing professional services (outside the scope of Article 18) are subject to withholding tax at a rate of 20% (as determined by the Council of Ministers Decree No. 2009/14592). Double Taxation Treaty Provisions The private ruling references the professional services (Article 14) provisions of the double taxation treaties that Türkiye has with: Denmark Germany Netherlands United States Common Principle under Article 14 (Professional Services) of these treaties: Scenario Taxing Right Professional services performed in the home country (without coming to Türkiye) Only the home country (exclusive taxing right) Professional services performed in Türkiye Türkiye may also tax if the individual has a fixed base regularly available in Türkiye OR stays 183 days or more in any 12-month period Determination of Stay Period: If the individual provides services to multiple enterprises in Türkiye, the total stay period and all activities must be considered. Ruling Conclusion Key Principle – At the Time of Payment: Withholding agents (the taxpayer) may not know at the time of payment whether the trainer will: Have a fixed base in Türkiye, or Stay in Türkiye for 183 days or more in any 12-month period. Therefore, withholding tax must be applied at the time of payment at the domestic rate of 20%. After the Fact – Refund Mechanism: If it is later determined that: The trainer did not have a fixed base in Türkiye, and The trainer did not stay for 183 days or more, then Türkiye does not have the taxing right under the treaty. In such a case, the trainer may apply for a refund of the withheld tax from the relevant tax office, either personally or through a representative. Foreign Tax Credit / Exemption Treatment Country Treatment of Turkish Tax Denmark Foreign tax credit (deduction from Danish tax) Germany Exemption (tax paid in Türkiye exempt from German tax) Netherlands Exemption (tax paid in Türkiye exempt from Dutch tax) United States Foreign tax credit (deduction from US tax) Required Documentation for Treaty Benefits To benefit from the treaty provisions, residents of Denmark, Germany, the Netherlands, and the United States must: Obtain a Certificate of Residency from the competent authorities of their home country, proving that they are fully liable to tax in that country on their worldwide income. Provide the original certificate along with a notarized or Turkish Consulate-certified Turkish translation to the withholding agent (the taxpayer) or the relevant tax office. Summary Table Factor Determination Services performed in home country (not Türkiye) No withholding tax (exclusive taxing right of home country) Services performed in Türkiye (at time of payment, duration unknown) 20% withholding tax required After determination: stay <183 days and no fixed base Refund available After determination: stay ≥183 days or fixed base exists 20% final (no refund) Required document for treaty benefits Certificate of Residency + certified Turkish translation Practical Note Withholding agents must withhold tax at the time of payment because they cannot predict the total stay duration or whether a fixed base will be established. The burden is on the service provider (trainer) to claim a refund if the treaty exempts the income from Turkish taxation. Important Notes This private ruling is based on Article 413 of the Tax Procedure Law No. 213. The ruling becomes invalid if incorrect information is provided, or if there is ongoing tax audit, litigation, or reconciliation related to this matter. Acting in accordance with this ruling protects the taxpayer from tax penalties and default interest for the related transactions. Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.