Do I Pay Forex Trading Taxes In Turkey?

Best brokers for Forex trading in Turkey

1

9.4/10

Go to broker

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest.

Minimum deposit:

$50, $100 (for UK clients)

Bonus for deposit:

0%

Regulation:

CySEC, FCA, ASIC

Review

The eToro broker was founded in 2007. The company promotes itself as a social trading platform working with traders from over 140 countries. The broker has several divisions operating under different jurisdictions and licensed by different regulators. For example, eToro (Europe) is licensed by the Cypriot regulator CySEC (109/10) and eToro (UK) is licensed by the British regulator FCA (583263). The broker also has a representative office in Australia and the USA. eToro Profile Details

Pros/Cons

•the minimum transaction amount for copying is $1;

•handy functionality for passive investing;

•regulated by independent monitors;

•it is possible to purchase contracts for fractional shares (that is, to invest amounts less than the cost of one share);

•it is possible to buy shares at once (not CFDs) on the US stock exchanges.

•high spreads;

•periodic technical failures in order execution;

•lack of the most popular platforms such as MetaTrader 4 and MetaTrader 5 in Europe and the CIS;

•no access to ECN systems, orders are processed only according to the STP (straight-through processing) scheme with access to specific liquidity providers;

•there is a commission for withdrawing funds;

•impolite support staff;

•inconvenient website.

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2

9.2/10

Go to broker

Your capital is at risk.

Minimum deposit:

No minimum

Bonus for deposit:

0%

Regulation:

FSC (BVI), ASIC, IIROC, FCA, CFTC, NFA

Review

The name OANDA is an acronym for “Olsen & Associates” or “Olsen AND Associates”. It is registered in the United States and provides its clients with a wide range of financial services in most countries of the world. The company was founded in 1996 and is currently regulated in four jurisdictions. The main regulator of the broker is the UK Financial Conduct Authority (FCA). Oanda Canada is licensed by IIROC. The company has several significant awards to its credit, including a victory in the category "Best Forex Trading Technologies" from the UK Forex Awards, "Best Trading Platform" from FX Week, as well as "Best Customer Service" from the US Foreign Exchange Report.

Pros/Cons

•Minimum deposit from 1 dollar.

•A large selection of the most popular trading instruments.

•Several reliable and reputable financial regulators.

•Inconvenient and poorly functioning site.

•Lack of cent accounts.

•Lack of bonus programs.

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3

9.1/10

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Minimum deposit:

$1

Bonus for deposit:

0%

Regulation:

FCA, BaFin, ASIC, MAS, CySec, FINMA, BMA, CFTC, NFA

Review

IG Markets has been providing brokerage services for retail traders since 2014. It was established in 1974 in London to work with professional traders. It is a part of the IG Group with representative offices in 17 countries. IG Markets stocks are traded on the London Stock Exchange as a part of the FTSE 250 index. The broker is regulated by FCA (Financial Conduct Authority | the UK), CySec (Cyprus Securities and Exchange Commission), ASIC (Australian Securities and Investments Commission), BaFin (the Federal Financial Supervisory Authority | Germany), FINMA (Swiss Financial Market Supervisory Authority), and NFA (National Futures Association). The IG Group global representative office is supervised by BMA (the Bermuda Monetary Authority). The broker provides services of trading Forex and different CFDs through MetaTrader 4 and its in-house platforms for retail and professional traders.

Pros/Cons

•Regulated activities and participation in compensation funds;

•No minimum deposit requirements when opening an account with the international division;

•Leverage is available for trading currencies and CFDs;

•Wide range of trading assets and markets;

•Fee rebates for new and active existing clients with large trading volumes;

•Floating spreads from 0.6 pips for retail Forex traders;

•Bonuses for new clients and partnership programs for different client categories.

•The broker can reject opening accounts to traders with low capital or insufficient knowledge of derivatives trading;

•Deposits and withdrawals can’t be made with e-wallets, electronic payment systems, or cryptocurrencies;

•Trading conditions differ for various countries, so you have to look for the broker’s website in your country.

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Forex trading taxation in Turkey - How it works

In Turkey, individuals engaged in Forex trading need to be aware of the taxation system that applies to their income. The country employs a progressive tax system for employment income starting from January 1, 2023. The tax rates, denominated in Turkish Lira, are as follows:

Additionally, there has been a recent reduction in the Banking and Insurance Transaction Tax (BITT) in Turkey. The BITT rate has decreased from 1% to 0.2%, as specified in Presidential Decree 3031, published in the Official Gazette on September 30, 2024.

The amount of foreign currency sales and the applicable tax levied when a bank completes a foreign currency sale determine the tax base for BITT in foreign currencies. Notably, BITT does not apply to Forex sales by banks to borrowers with foreign currency loans, transactions between banks and selected authorized institutions, and Forex sales to the Turkish Ministry of Finance and Treasury.

What are the tax rates for Forex trading income in Turkey?

How much trading income is tax free in Turkey?

There is no specific tax-free threshold for trading income in Turkey. All income generated from Forex trading is subject to taxation based on the progressive tax rates mentioned above.

Subjects of taxation in Turkey

In Turkey, the subjects of taxation are categorized into residents and non-residents based on their legal residence and duration of stay in the country.

Residents

Residents are individuals with legal residences in Turkey or those intending to settle in the country. Additionally, individuals with uncertain residence status become residents if they have lived in Turkey continuously for more than six months in a calendar year.

Residents are treated as full taxpayers, including obligations related to personal income tax, social security contributions, unemployment insurance, dividends and interest tax, and capital gains tax. They are taxed on their worldwide income.

Non-residents

Non-residents, on the other hand, include individuals whose legal residence is not in Turkey or those who spend less than six months in the country during a calendar year. Individuals staying in Turkey for over six continuous months for specific and temporary assignments are considered limited taxpayers, not residents.

Foreign individuals compelled to stay in Turkey for more than six months due to force majeure, such as illness or arrest, are still classified as non-residents.

Both residents and non-residents are subject to property taxes when buying, owning, and selling real estate in Turkey. However, residents are subject to personal income tax, social security contributions, unemployment insurance, dividends and interest tax, and capital gains tax on a global income basis. Non-residents, on the other hand, are taxed only on Turkish-source earnings.

Tax benefits and exemptions in Turkey

Within the Turkish tax system, both individuals and businesses can benefit from various tax advantages and exemptions aimed at supporting financial well-being. Let's delve into some key aspects:

Individuals

• Deductions for education and health expenses
  Individuals in Turkey can avail themselves of deductions for documented education and health expenses incurred within the country

• Personal insurance premiums
  Taxpayers can benefit from deducting personal insurance premiums (for self, spouse, and/or children). However, this deduction is capped at 15% of the individual's total taxable income

• Charitable contributions
  Contributions to charitable causes are eligible for deductions, provided they adhere to defined limits for donations to specific institutions

Businesses

• Foreign tax credit
  Businesses can benefit from a foreign tax credit, allowing them to offset foreign taxes paid against their Turkish Corporate Income Tax (CIT). Any unused credit can be carried forward for up to three years

• Participation exemption for dividends
  There is an unconditional corporate income tax and dividend withholding tax exemption for dividends received by a Turkish company from a foreign counterpart, subject to meeting specified conditions

• Exemption for foreign construction and repair activities
  Profits arising from construction and repair activities conducted by Turkish corporations in foreign countries are exempt from corporate income tax

• Capital gains exemption for international holding companies
  Turkish international holding companies can enjoy an exemption from corporate income tax on capital gains, provided the foreign participation has been held for at least one year

• Withholding tax rates
  Non-residents receiving dividends, interest, and royalties are subject to a 15% withholding tax

• Free Economic Zones
  Turkey boasts eighteen free economic zones with a special tax regime, offering advantages like no income and corporate tax, no stamp duty, no real estate and property taxes, and no VAT on logistics services provided to third countries

Case studies

• Ayşe is a Turkish resident who has been trading Forex for the past year. She has made a profit of 100,000 Turkish Lira (TRY) during this period, over and above his regular income of 30,000 TRY. As a resident, Ayşe is subject to personal income tax on her worldwide income. According to the progressive tax system, Ayşe will be taxed at a rate of 15% on the first 70,000 TRY of her income and 20% on the next 60,000 TRY. Therefore, Ayşe will pay 22,500 TRY in taxes on her Forex trading income

• Mehmet is a non-resident who has been trading Forex in Turkey for the past year. He has made a profit of 50,000 TRY during this period. As a non-resident, Mehmet is only subject to personal income tax on his Turkish-source earnings. Therefore, he will only be taxed on the 50,000 TRY he earned from Forex trading in Turkey. According to the progressive tax system, Mehmet will be taxed at a rate of 15% on his entire income. Therefore, he will pay 7,500 TRY in taxes on his Forex trading income

Taxation tips for Forex trading in Turkey