Turkey (Türkiye) gives contractors who export services an unusually large tax break: from 2026, a resident who sells software or similar services abroad deducts 100% of that income. The engagement is simple when the contractor is a registered self-employed professional (serbest meslek) issuing an electronic receipt in your name. Two things complicate it: a lira that loses value quickly, and a Labour Law that treats a full-time, single-client contractor as an employee.
Contractor forms and taxes
Two forms cover most IT contractors:
- Serbest meslek (self-employed professional). Registration with the tax office, professional income, and an electronic self-employment receipt (e-SMM) for every collection, mandatory under VUK General Communiqué 509 since 1 June 2020 (muhasebenews.com, checked 2026-09-28).
- Şahıs şirketi (sole proprietorship). Commercial income, registration as a business, and an e-Arşiv invoice or e-Fatura instead of an e-SMM (ilkkod.com, checked 2026-09-28).
Both pay progressive income tax at 15–40%. For 2026 the brackets for non-wage income end at TRY 190,000, 400,000, 1,000,000 and 5,300,000 (Income Tax General Communiqué No. 332, alomaliye.com, checked 2026-09-28). Bağ-Kur social security is due on top: at least TRY 11,808.23 a month in 2026 (cottgroup.com, checked 2026-09-28).
Two incentives change the math:
- Service-export deduction. Article 89/1-13 of the Income Tax Law lets residents deduct income from architecture, engineering, design, software, data processing and other listed services provided to non-residents and used abroad. Presidential Decision 11257 of 30 April 2026 raised the deduction from 80% to 100% for income from 1 January 2026 (esin.av.tr, checked 2026-09-28). The invoice must be in the foreign customer’s name and the full amount must reach Turkey by the annual return deadline, and the deduction applies to serbest meslek and sole-proprietor income alike (aliozansahin.com, checked 2026-09-28).
- Young entrepreneur exemption. A contractor who registered before turning 29 exempts up to TRY 400,000 a year for three years; the one-year Bağ-Kur support ended on 1 January 2026 (vergiselboyut.com, checked 2026-09-28).
Services to a customer abroad, used abroad, are also exempt from VAT under Articles 11/1-a and 12/2 of the VAT Law (muhasebenews.com, checked 2026-09-28), so the receipt to you carries no Turkish VAT.
Foreign nationals. Turkey became a relocation base after 2022: Russian-partner companies founded there rose from 177 in 2021 to 1,363 in 2022 (tepav.org.tr, checked 2026-09-28), though Russian embassy figures show the number of Russians living in Turkey fell from 154,000 to about 85,000 by 2025 (themoscowtimes.com, checked 2026-09-28). A residence permit does not give a foreigner the right to work; working on one’s own account needs an independent work permit under Law 6735 (csgb.gov.tr, checked 2026-09-28).
Reclassification risk
The Labour Law defines an employment contract by work performed in subordination to an employer (Law No. 4857, Art. 8, ILO NATLEX, checked 2026-09-28). Classification is factual. The patterns that point to employment: exclusive service, fixed daily hours, line management, company equipment, integration into your team and a monthly fee paid regardless of deliverables. A reclassified contractor can claim notice, job security, annual leave, overtime and severance, social security premiums become due retroactively with penalties, and a foreign choice-of-law clause may not shield you (ccs.law, checked 2026-09-28). Severance is 30 days’ pay per year of service, capped at TRY 73,729.87 per year from 1 July 2026 (demiraydinhukuk.com, checked 2026-09-28). A long-running dependent engagement can also raise permanent establishment questions for a client with no Turkish entity.
Multi-client, deliverable-priced work on the contractor’s own schedule and equipment is low-risk. A full-time developer who works only for you is the case to restructure or move to a Contractor of Record.
What to put in the contract
- A written services agreement with the serbest meslek or sole proprietorship, scoped to deliverables, rate, currency and who pays wire fees.
- IP assignment in writing, right by right. The employer rule in Article 18 of the Law on Intellectual and Artistic Works (No. 5846) covers employees; an independent developer is the author and keeps the rights (grc-legal.com, checked 2026-09-28). Article 52 requires contracts on economic rights to be in writing with each right listed separately (emrekurt.av.tr, checked 2026-09-28). Name each right in Articles 21–25: adaptation, reproduction, distribution, performance and communication to the public (WIPO Lex, checked 2026-09-28). Moral rights cannot be transferred.
- Invoicing details that keep the contractor’s deduction: your legal name and country on the e-SMM or invoice.
- Independence markers: own tools, own schedule, the right to serve other clients.
FX rules on the contractor’s side
Turkish residents may freely dispose of foreign currency earned from services to non-residents: keep it in a foreign-currency account or sell it to a bank (muhasebetr.com, checked 2026-09-28). The 180-day repatriation rule and the duty to sell 35% of proceeds to the central bank apply to goods exports documented by customs declarations, not to software or consulting income (istanbulmalimusavirlik.net, checked 2026-09-28). The 35% rate runs until 31 January 2027 (bulentdemirbag.com, checked 2026-09-28).
The practical constraint is tax, not currency law: the export deduction needs the money in Turkey by the annual return deadline. The receipt shows the currency amount and its lira value at the central bank rate (musavirlerkulubu.com.tr, checked 2026-09-28). With the dollar at 48.79 lira on 25 September 2026 against 41.40 a year earlier (tcmb.gov.tr, checked 2026-09-28), most contractors want to be paid and to hold in USD or EUR.
Taxes and paperwork on your side
Pay gross against the e-SMM or invoice; a foreign client withholds nothing (muhasebetr.com, checked 2026-09-28). US payers collect a W-8BEN and file no 1099: services performed in Turkey are foreign-source, and the two countries have an income tax treaty from 1996 (irs.gov, checked 2026-09-28). Keep the contract, receipts and payment confirmations.
How to pay contractors in Turkey
SWIFT in USD or EUR to the contractor’s foreign-currency account is the default. Wise sends lira to a Turkish IBAN, but a contractor based in Türkiye cannot receive into a Wise account (wise.com, checked 2026-09-28). PayPal has not operated in Turkey since June 2016 (paypal.com, checked 2026-09-28). Rails, fees, the bank-side failure points and the platforms we would shortlist are on how to pay contractors in Turkey.
Contractor of Record in Turkey
A Contractor of Record contracts with the contractor, checks independence and, as the contracting party, reduces misclassification risk, which is worth most for full-time, single-client engagements that meet the subordination patterns above. Where the role is really a job, an EOR employs the person under Turkish law. Compare providers in our COR rating.