Circular 2022/10

Sales of Immovable for the Purpose of Citizenship VAT Exemption and Citizenship Application Procedures

Within the scope of Article 13/i of the Value Added Tax Law No. 3065, the conditions under which the deliveries of residences, workplaces etc. will be carried out, and the implementation has been guided by other regulatory procedures. Similarly, the ways of acquiring Turkish citizenship afterwards are stipulated in the Turkish Citizenship Law No. 5901, but the implementation is governed by other regulatory legislation, the Land Registry Law No. 3402 and other regulatory legislation and CBRT circulars.

Below, a statement is made mainly within the scope of VAT exemption, and the general outlines of the transactions to be made in the Land Registry regarding the Citizenship Application are mentioned.

Value Added Tax Exemption:

The exemption value added tax to be applied in the delivery of residences or workplaces to foreigners is stipulated in the sub-paragraph (i) of the first paragraph of the 13th article of the law. According to this;

(To be implemented as of 1/4/2017 with Article 7 of the Law No. 6824 dated 23/2/2017)

“i) To be abroad for more than six months by obtaining a work or residence permit, except for those specified in the first paragraph of Article 3 of the Income Tax Law, provided that it is applied at the first delivery of the buildings constructed as residences or workplaces and the cost is brought to Turkey in foreign currency. Turkish citizens living in Turkey, real persons of foreign nationality who are not settled in Turkey, and residential or workplace deliveries made to institutions that do not have a legal and business center in Turkey and do not earn income in Turkey through a workplace or permanent representative If it is determined that the exemption is applied even though it does not meet the conditions, the taxpayer and the buyer are jointly responsible for the tax, tax loss penalty and delay interest not collected on time.

The residence or workplace received within the scope of the exemption (Amended phrase:RG-28/5/2022-31849)⁽²¹⁾ In case of disposal within three years, the tax not collected on time must be paid by the seller before the title deed transaction, together with the deferred interest calculated in accordance with Article 48 of the Law No. 6183.),”

Although the procedures and principles regarding the exception application have been explained in the Value Added Tax Implementation General Communiqué, the application has been guided by the Value Added Tax internal circulars and rulings.

A Exemptionable Immovables:

• Residences or workplaces defined as residences, shops, offices, offices, residences, apartments, timeshare and similar in the building permit
• In residences or workplaces where floor servitude can be established In addition, the floor easement was established must be.
• sold at the project stage and the aforementioned As of the delivery date, the immovables whose price has come from abroad will be evaluated within the scope of the exception..
• (The law regarding this situation has been provided.)

Although Land and Land sales are not subject to the exemption application, they may be subject to the citizenship application.

The immovables subject to delivery must be the First Delivery. In case the residence or workplace is purchased from the builders and sold to someone else, the delivery of the residence or workplace is not considered as the first delivery.

For example, since the first delivery of the residences delivered to the land owner in construction works in return for flat is realized with the delivery to the land owner, the sale of these residences by the land owner is not accepted as the first delivery, so he cannot benefit from the exception.

B. Exemption Recipients

Exceptional;

– Turkish citizens who have lived abroad for more than six months with a work or residence permit

Seller taxpayers who will deliver the residence or workplace within the scope of the exception; Regarding the proof that it is within the scope of the exemption, the recipient Turkish citizen,

- There is a residence permit obtained from the official authorities of the country of residence that meets the above-mentioned conditions, or a document of this nature or a work permit obtained from the official authorities of the relevant country,

– Have been abroad for at least six months from the date of obtaining a work or residence permit,

– It is not within the scope of subparagraph 2 of the first paragraph of Article 3 of the Income Tax Law.

The buyer must receive the document issued by the Turkish embassies or consulates in the relevant country before the delivery of the residence or workplace.

– Real persons of foreign nationality who are not settled in Turkey,

– A copy of the passport issued by the country of nationality (for those who lost their Turkish citizenship by obtaining a permission to leave, a copy of the blue card),

– The document to be obtained from the tax office of the place where the residence or workplace is located, stating that the foreign natural person has not settled in Turkey

must receive from the buyer before the delivery of the residence or workplace.

– Institutions that do not have their legal and business center in Turkey and do not earn income in Turkey through a workplace or permanent representative

It is applied in residential or workplace deliveries.

It is possible for buyers who meet the conditions to benefit from this exemption to purchase more than one residence or workplace within the scope of the exemption.

Seller taxpayers who will deliver the residence or workplace within the scope of the exception; Regarding the proof that the buyers are within the scope of the exemption,

Seller taxpayers who will deliver the residence or workplace within the scope of the exception; Regarding the proof that the buyers are within the scope of the exemption,

- The document obtained from the official authorities of the country where the legal center of the institution is located, indicating that the establishment and the activity continue,

- The document to be obtained from the tax office of the place where the residence or workplace is located, stating that the legal and business center is not in Turkey and that you do not earn income in Turkey through a workplace or permanent representative.

must receive from the buyer before the delivery of the residence or workplace.

C. Bringing the Value to Turkey in Foreign Currency

Time to Bring the Price to Turkey

Konut veya iş yeri tesliminde KDV istisnasının uygulanabilmesi için, bedelin en az %50’sinin satışa ilişkin faturanın düzenlendiği tarihten önce, kalan kısmının da en geç bir yıl

Certification that the Price Has Been Brought to Turkey

It is essential to bring foreign currency abroad by transferring it to a bank in Turkey. In case the foreign currency is transferred to the bank in Turkey, the transfer made The transaction is documented with a bank receipt. It is possible to make the payment with credit cards issued by banks abroad, and it is necessary to prove that the foreign currency related to the payments made with these credit cards has been brought to Turkey with a receipt or letter to be given by the relevant bank in the country.

By natural or legal persons other than the buyers to the account of sellers through banks foreign currency transfers;

– Include information about the recipient and the residence or workplace subject to the delivery (project name, address, independent section number) in the bank receipt for the foreign currency transfer, or

– Giving a letter of consent to the seller by the real or legal persons transferring the foreign currency, stating that the amount subject to the transfer has been sent on behalf of the buyer, containing information about the buyer and the residence or workplace subject to the delivery (project name, address, independent section number).

provided that it is accepted as foreign currency brought to Turkey in the application of exception.

It is also possible to bring the foreign currency abroad to Turkey physically by the buyer, in this case, documents obtained from the customs administration are used to prove that the foreign currency has been brought to Turkey.

On the other hand, in case the foreign currency is physically brought to Turkey or transferred from abroad to the buyer's account in Turkey, the said amount must be paid to the seller through the bank and this payment must be documented with a bank receipt. It is also possible to pay the price brought from abroad in foreign currency to the seller in Turkish Lira.

There is no need for a Foreign Exchange Purchase Document to benefit from the VAT exemption, as explained above, it is sufficient to prove the payment made in foreign currency. However, if the same immovable will be subject to the citizenship application, a foreign currency purchase document will also be sought, as well as the proof of the payment made in foreign currency.

Residence or Business three years Disposal in

In order to apply an exception in the delivery of residence or workplace, a transaction must be established in the title deed.

Those who make sales within the scope of the exemption notify the land registry directorates that the sale of residences or workplaces is made exempt from VAT within the scope of Article (13/i) of the Law No. 3065. Upon this notification, an annotation is put in the declaration section of the land registry by the land registry directorates that if these residences or workplaces are disposed of within three years, the tax not collected on time will be paid together with the default interest calculated at the rate of deferred interest in accordance with Article 48 of the Law No. 6183.

The residence or workplace received within the scope of the exemption  (Amended phrase:RG-28/5/2022-31849)⁽²¹⁾ In case of disposal within three years, the tax not collected on time is paid to the tax office of the place where the immovable is located by the disposer before the deed transaction, together with the delay interest calculated at the rate of deferred interest in accordance with Article 48 of the Law No. 6183. The transfer process is not carried out by the land registry offices without submitting a letter from the relevant tax office stating that the payment has been made and the transfer is possible.

It is considered that the date of establishment of the transaction in the title deed should be taken into account as the date when the "Floor Easement" was established in favor of the buyer, and it should start from this date for a period of three years.

As a result:

Regarding the determination of the starting date of the "3-year disposal period" in the deliveries made by establishing a construction servitude within the scope of the exception, whether an application can be made within the scope of VAT 13/i in the deliveries of residences to be made to foreigners by establishing a construction servitude;

1. Since there is no special determination in the deliveries of residences to be made to foreigners by establishing a floor servitude,  “The products sold at the project stage by establishing a floor servitude and As of the delivery date, the immovables whose price has come from abroad will be evaluated within the scope of the exception,

• The date of establishment of the transaction in the title deed “Floor Easement is established in favor of the buyer be considered as the date, which will begin from this date for a period of three years.

It has been evaluated as

• DOCUMENTS TO BE REQUIRED IN VAT EXCLUSION APPLICATION

REQUIRED DOCUMENTS	EXPLANATION
Passport/	Photocopy of passport issued by the country of nationality (for those who lost their Turkish citizenship by obtaining permission to leave, a copy of the blue card), Notarized
Document Regarding Non-Settled	A document to be obtained from the tax office of the place where the residence or workplace is located, indicating that the foreign natural person is not settled in Turkey
receipt	In case the foreign currency is transferred to the bank in Turkey, the transfer made transaction bank statement   If the payment is made by credit card, a receipt or letter to be given by the relevant domestic bank that the foreign currency for the payments made has been brought to Turkey.   By persons other than buyers If the seller's account is to be transferred to foreign currency; Include information about the buyer and the residence or workplace subject to the delivery (project name, address, independent section number) in the bank receipt regarding the foreign currency transfer, or issuing a letter of consent containing information about the subject residence or workplace (project name, address, independent section number) in case of physical Documents taken from the customs administration to prove that the foreign currency has been brought to Turkey.

1. CITIZENSHIP PROCEDURES

A. FOREIGN ACQUISITIONS

Real people:

Foreign real persons who want to acquire real estate; • Must be a citizen of a country determined by the President and who can acquire real estate and limited real rights in our country, and must meet the conditions of acquisition.

• Real persons of foreign nationality can acquire any kind of immovable (residence, workplace, land, field, etc.) in terms of quality in our country, provided that legal restrictions are complied with.

• In case of acquisition of unstructured real estate by foreign real persons (lands, fields, etc., which do not have a building on it), a project should be developed in accordance with the nature of the real estate and this project should be submitted to the approval of the relevant Ministry within two years. If no application is made to the Ministry within two years or the project is not completed within the time limit, the real estate in question will be subject to liquidation provisions. Real estate to be purchased by real persons of foreign nationality;

• If it is agricultural land, from the Ministry of Agriculture and Forestry,

• If it is an immovable located in the protected area, the opinion of the Ministry of Culture and Tourism or the Ministry of Environment and Urbanization that the immovable is suitable for acquisition is taken, depending on the nature of this area.

Legal Entities Foreign trade companies with legal personality established in foreign countries according to the laws of these countries can acquire real estate and limited real rights in Turkey only if there are special provisions in the laws.

B. LEGAL RESTRICTIONS

In our country, only the citizens of the countries determined by the President's Decision can acquire real estate and limited real rights. With this;

• The total amount of real estate that a foreign natural person can acquire is at most thirty hectares throughout the country.

• The total area of immovables that can be acquired by real persons of foreign nationality cannot exceed ten percent of the area of the district subject to private ownership.

• If the immovable to be acquired is within the “Special Security Zones”, permission must be obtained from the governorship of the place where the immovable is located. (For detailed information on the subject, Circular No. 2013/15)

6. REQUIRED DOCUMENTS FOR APPLICATION AND PROCEDURE

REQUIRED DOCUMENTS	EXPLANATION
Identity Document or Passport	Identity Document or Passport The foreigner's country identification document or passport is presented. (with translation if needed)
Identity Declaration Form	1 photograph is requested from the foreign real person for the "Identity Declaration Form".
If there is representation in the transaction, the document regarding the representation	Power of attorney, guardian's decision, certificate of authorization ... etc.
Valuation report of the real estate	It should be obtained from authorized valuation institutions published on the official website of CMB or TDUB. Valuation Real estate valuation reports are valid for 3 months from the date of issuance.
Compulsory earthquake insurance policy	Housing, workplace etc. required for buildings.
Sworn translator	Required if there is a party that does not speak Turkish. (It must be authorized by the district judicial justice commission.)
Title fees	Not less than the declared value of the real estate declared by the relevant municipality, a title deed fee of 20 per thousand is collected separately for the seller and the buyer over the declared value for sale. (If there is a fee exemption, a letter from the Tax Office regarding this issue must be submitted)
Circulating capital	Revolving Fund fee is charged. (It varies according to the local coefficient applied in the place where the real estate is located)
Currency Purchase Certificate	In sales transactions in which foreign real persons are parties as buyers, the sale price of the real estate shall be sold to a bank by the buyer, seller, their proxies or representatives in USD or equivalent foreign currency to a bank to be sold to the Central Bank and shall be arranged by the bank.Currency Purchase Certificatemust be submitted to the Land Registry Directorate before the sale process. Concern (b) In the third paragraph of Article 13 of the Circular, “Related persons are obliged to submit the foreign exchange purchase document proving that the foreign currency with the sales price has been sold to a bank in the application for title deed transactions. The Turkish lira amount registered in the foreign exchange purchase document is declared to the title deed administration as the sales price by the persons concerned. Since it is said that the official deed, “Currency Purchase CertificateBased on the TL value shown in ” Paying special attention to the amount of foreign exchange sales, since it will be made to the bank within the scope of these regulations;

This publication contains views in a broad sense and should be considered as a general guide. Professional opinion and help should be sought regarding special cases, and applications should not be made based on this publication. You can contact our company to discuss the effects of the published issues on your particular situation. Based on the information in this publication, Likya Certified Financial Consultancy Audit Consulting and its employees do not accept any liability or responsibility for damages that may arise due to taking or not taking certain actions.