Turkey Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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TURKEY
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Turkey Payroll and Employer of Record: Employment Contracts
- The majority of your staff will require a working visa in Turkey, and you will apply for each work permit when each person applies for their visa. All personnel will apply for a work visa at the Turkish consulate or embassy in their native country. Simultaneously, you will apply for a work permit through the Turkish Ministry of Family, Labor, and Social Services.
- In Turkey, visas cannot be issued for more than 90 days in a 180-day period. Anyone remaining for more than 90 days must apply to the Directorate General of Migration Management for a short-term resident permit. Work permits in Turkey are valid for one year at first, but can be extended to two years, then three years following a second extension.
- Employees who have lived and worked in Turkey for eight years in a row can apply for an indefinite work permit that does not need to be renewed.
PAID TIME OFF
Annual Vacation
Employees are entitled to paid yearly leave after working for at least a year, including the probationary period. Paid time off is calculated based on the number of years of service:
- Years 1 through 5: 14 working days
- More than five years but less than fifteen: twenty working days
- 26 working days if you are 15 years old or older
Sick
Employers are not required to offer sick pay to their employees, but employees have the right to sick pay through government disability programs. In fact, most firms continue to pay employees their full wage while they are sick and remove the amount provided by the Social Security Institution from their income.
Maternity
Pregnant women are entitled to 8 weeks of maternity leave before and after childbirth. They are also entitled to lump-sum pregnancy, delivery, and nursing benefits. By law, maternity leave is 16 weeks.
Paternity
Paternity leave is 5 days.
Family
Employees may also be permitted to work part-time after the birth of a child, with the amount of leave based on the number of children the employee has (in total):
- 60 days of leave for one child
- 120 days of leave for two children
- 180 days of leave if you have more than two children
The leave duration is up to 360 days in the event of incapacity or adoption. If both parents work, they are both eligible to work part-time until their kid enters primary school. The employee must offer written notice of the request to the employer at least one month in advance. Parents are also entitled to up to ten days of leave to attend treatment/medical appointments for a disabled or chronically ill kid.
National Holidays
There are in total 14.5 paid public holidays.
Other Paid Time Off
Depending on the rules of the collective agreement/employment contract, an employee may be granted additional leave for the following reasons, if agreed by both the employer and the employee:
- Employees are entitled to three days of paid leave following the loss of an immediate family member.
- Employees are entitled to up to 90 days of paid leave per year when called up for military exercises or to fulfil a legislative duty other than obligatory military service.
STATUTORY EMPLOYEE BENEFITS
Unemployment
In Turkey, legally employed employees are entitled for unemployment benefits. Foreign employees are included as long as they have been working and residing in Turkey lawfully and are at least 18 years old. Contributions to unemployment funds are 1% of employees’ wages and 2% of their employers’ payrolls. After 600 days of contributions in the previous three years of employment, a worker is entitled for benefits. The minimum benefit payment is 50% of a worker’s average daily wages (derived from the four months preceding unemployment) and cannot be more than the minimum wage for that worker’s industry. Benefits may be provided for up to 1,080 days, depending on the number of contributions made by the jobless individual.
Unemployment insurance premiums are computed on a daily wages level of TRY 1,251 between January 1, 2022 and December 31, 2022. The following premiums are paid by the employee, the employer, and the state:
- Paying Rate ( percent )
- Employee 1
- Employer 2
- State 1
- Foreign nationals are eligible for this insurance if Turkey and their home country have reciprocity
Workers Compensation
System of social insurance.
Employed individuals, including household workers, part-time and casual public transportation workers, casual agricultural and forestry workers; self-employed individuals; applicants for apprenticeships, apprentices, and interns; artists, writers, and intellectuals; and prisoners working in prison workshops. Civil servants and staff of banks, insurance firms, chambers of commerce, and stock exchanges have their own systems.
- A job injury or occupational sickness must be evaluated.
- General oversight is provided by the Ministry of Labour and Social Security (https://www.csgb.gov.tr/).
- The Social Security Institution (http://www.sgk.gov.tr/) collects contributions, administers cash payments, and negotiates medical service contracts with health care providers.
Social Security
For Turkish residents:
| Insurance Branch | Employee (%) | Employer(%) |
| Disablement, senescence, burial | 9 | 11 |
| Short term insurance | – | 2 |
| Health | 5 | 7.5 |
| Unemployment | 1 | 2 |
| TOTALS | 15 | 22.5 |
A foreign person who is still covered by his or her home country’s social security system is not needed to pay Turkish social security premiums for a maximum of three months, provided documentation of foreign coverage is lodged with the local social security office. If the home country and Turkey have a social security treaty, the exemption period may be extended based on the terms of the contract. If the employee is not covered by foreign social security, full contributions will be levied in Turkey. The employee’s share of social security contributions is deductible when calculating taxable income.
Retirement
Employees have varied retirement ages based on when they joined the social security system and their gender. Those who entered the system between September 8, 1999, and April 30, 2008, can take their pension at the age of 60 (men) or 58 (women) provided either: 7,000 days of social security contributions for long-term insurance were paid on their behalf. They have been in the social security system for 25 years, and at least 4,500 days of long-term insurance contributions have been paid on their behalf.
Under Law No. 5510, the retirement age for workers who entered the system after 1 May 2008 will progressively grow beginning in 2036 (the Gradual Increase Scheme) up to 65 years of age. Both men and women will be able to retire at the age of 65 beginning in 2048. As a result, persons who entered (or will enter) the system after May 1, 2008 will be able to take their pension if one of the following conditions is met:
They are 60 years old (men) or 58 years old (women), and 7,200 days of social security contributions for long-term insurance have been paid on their behalf (7,200 days of social security contributions are valid for insured employees working under an employment contract for one or more employers who are classified as 4/a employees under the social security system; for other employees, 9,000 days of social security contributions must be paid).
5,400 days of long-term insurance payments have been paid on their behalf, including the three years before the employee reached the appropriate age limit (which is currently 58 for women and 60 for men, but will gradually increase to 65 by 2048). For example, a male employee who is 64 and has 5,400 days of contributions will be entitled to take his pension even though he has not met the 7,200-day contribution criteria.
Health
In Turkey, health insurance is required. Expats must have health insurance in order to get residence or work permits. You may be eligible to utilize your home country’s insurance plan if it is consistent with Turkish legislation.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
N/A
Retirement
Private retirement/pension funds are available as options in Turkey.
Health
Private healthcare is available in Turkey.
Insurance
Private life insurance is available in Turkey.
PERSONAL INCOME TAX
Tax Year
Taxes are paid in two equal instalments each year, the first at any time between March and May, and the second in November.
Tax Tables
| Taxable income (TRY) | Tax on column 1 (TRY) | Tax on excess (%) | |
| Over | Not over | ||
| 0 | 70,000 | – | 15 |
| 70,000 | 150,000 | 10,500 | 20 |
| 150,000 | (370,000) 550,000 | 25,500 | 27 |
| (370,000) 550,000 | 1,900,000 | (85,900) 134,500 | 35 |
| 1,900,000 | (621,400) 607,000 | 40 | |
Taxation Method
Residents in Turkey are taxed on their worldwide income, whilst non-residents are solely taxed on their earnings in Turkey. Income tax is applied at progressive rates on taxable income after various deductions and allowances.
Double Taxation
Turkey has multiple double tax agreements (DTA) with other countries.
Residence Requirements
Residents are people who have a legal residence in Turkey or plan to settle there. Persons with unknown residence status are deemed residents if they have resided in Turkey for more than six months in a calendar year.
Residents are considered full taxpayers. Individuals who do not have a legal residence in Turkey or who do not dwell in Turkey for more than six months in a calendar year are considered restricted taxpayers. In general, persons who stay in Turkey for more than six months in a row solely for the purpose of fulfilling particular and temporary tasks are not considered residents, and they will continue to be recognized as restricted taxpayers. Foreign nationals who are forced to stay in Turkey for more than six months owing to a force majeure (such as illness, arrest, etc.) are still considered non-residents in Turkey.
Payroll Calendars
Payroll is done on a monthly basis in Turkey. Work completed between the first and final days of the month is usually compensated on the last day of the month.
Rebates & Tax Credits
In Turkey, there are no additional substantial tax breaks or incentives for individuals.
Health Insurance
In Turkey, health insurance is required. Expats must have health insurance in order to get residence or work permits. You may be eligible to utilize your home country’s insurance plan if it is consistent with Turkish legislation. In Turkey, healthcare is a combination of state and private health services. In 2003, Turkey implemented universal health care. It is known as Universal Health Insurance Genel Salk Sigortas and is supported by a tax levy on employers, which is presently set at 5%.
Unemployment
According to the Unemployment Insurance Law, which is covered in Section 2.1, Turkey provides an unemployment benefit based on a contributory insurance scheme. Unemployment Insurance is a compulsory insurance that performs with insurance techniques, covering a proportion of the income loss due to unemployment, of those who have lost their jobs unintentionally without any fault, despite their will, ability, health, and qualifications for work for a period of time. The government, employers, and the insured covered by Law No. 4447 pay unemployment insurance premiums to fund all types of payments and service expenditures required for unemployment insurance. The unemployment premium is calculated as 1% of the insured person’s monthly gross income, 2% of the employer’s monthly gross revenue, and 1% of the government’s monthly gross income.
Social Security
For Turkish residents:
| Insurance Branch | Employee (%) | Employer(%) |
| Disablement, senescence, burial | 9 | 11 |
| Short term insurance | – | 2 |
| Health | 5 | 7.5 |
| Unemployment | 1 | 2 |
| TOTALS | 15 | 22.5 |
A foreign person who is still covered by his or her home country’s social security system is not needed to pay Turkish social security premiums for a maximum of three months, provided documentation of foreign coverage is lodged with the local social security office. If the home country and Turkey have a social security treaty, the exemption period may be extended based on the terms of the contract. If the employee is not covered by foreign social security, full contributions will be levied in Turkey. The employee’s share of social security contributions is deductible when calculating taxable income.
PAYROLL ELEMENTS
Income
Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum perks are examples of remuneration (revenue from employment). Profits or losses made by a company or trade. Income or profits derived from an individual’s status as a trust beneficiary.
Bonuses
There is no legal necessity in Turkey for 13th-month payments.
Allowances
Meal allowances provided in cash to employees on their payroll are subject to income tax. In terms of SSI, 6 percent of the daily minimum salary is deducted from the PEK base on a working day, and no SSI premium is computed on top of it. Employees who get a cash travel allowance on their wages are subject to both income tax and SSI. There are no exceptions. Employees who get a cash travel allowance on their wages are subject to both income tax and SSI. There are no exceptions.
Benefits in Kind
Benefits in kind are simple payments in kind and company subsidies offered for workers’ personal or social needs. Also, depending on its purpose, money provided to employees may be considered a kind benefit and may be excluded from tax and premium contributions.
Investment Income
In Turkey, there are no specific laws for capital gains taxation. Capital gains and losses are accounted for when calculating taxable corporate income. The dividend payer is exempt from WHT and the dividend recipient is exempt from CIT in dividend distributions between Turkish resident entities. In general, all interest income is taxable. WHT applies to interest income on bank deposits denominated in both Turkish lira and foreign currency. Interest income is recorded in its whole, and any WHT incurred on it is deducted from the CIT computed. In general, royalty income (e.g., from patents, copyrights, or licenses) earned by non-resident persons or businesses that do not constitute a PE in Turkey is subject to WHT at a rate of 20%.
Retirement Funding
Employees have varied retirement ages based on when they joined the social security system and their gender. Those who entered the system between September 8, 1999, and April 30, 2008, can take their pension at the age of 60 (men) or 58 (women) provided either: 7,000 days of social security contributions for long-term insurance were paid on their behalf. They have been in the social security system for 25 years, and at least 4,500 days of long-term insurance contributions have been paid on their behalf.
Under Law No. 5510, the retirement age for workers who entered the system after 1 May 2008 will progressively grow beginning in 2036 (the Gradual Increase Scheme) up to 65 years of age. Both men and women will be able to retire at the age of 65 beginning in 2048. As a result, persons who entered (or will enter) the system after May 1, 2008 will be able to take their pension if one of the following conditions is met:
They are 60 years old (men) or 58 years old (women), and 7,200 days of social security contributions for long-term insurance have been paid on their behalf (7,200 days of social security contributions are valid for insured employees working under an employment contract for one or more employers who are classified as 4/a employees under the social security system; for other employees, 9,000 days of social security contributions must be paid).
5,400 days of long-term insurance payments have been paid on their behalf, including the three years before the employee reached the appropriate age limit (which is currently 58 for women and 60 for men, but will gradually increase to 65 by 2048). For example, a male employee who is 64 and has 5,400 days of contributions will be entitled to take his pension even though he has not met the 7,200-day contribution criteria.
Health Insurance
In Turkey, health insurance is required. Expats must have health insurance in order to get residence or work permits. You may be eligible to utilize your home country’s insurance plan if it is consistent with Turkish legislation. In Turkey, healthcare is a combination of state and private health services. In 2003, Turkey implemented universal health care. It is known as Universal Health Insurance Genel Salk Sigortas and is supported by a tax levy on employers, which is presently set at 5%.
Risk Insurance
N/A
Taxable Income
Residents in Turkey are taxed on their worldwide income, whilst non-residents are solely taxed on their earnings in Turkey. Income tax is applied at progressive rates on taxable income after various deductions and allowances. Expats are not subject to a separate tax regime.
Allowable Deductions
The total amount of personal deductions for the year cannot exceed the yearly minimum gross salary.
Donations to charities
- Donations to specified institutions are eligible for personal deductions up to certain limitations.
Education costs
- Individuals filing yearly tax returns can deduct certified education expenditures incurred in Turkey by themselves and their family from the income indicated on the tax return. This deduction is limited to 10% of the income tax base.
- Personal insurance premiums (for oneself, one’s spouse, and/or one’s children) are deductible. The deduction for insurance premiums, however, cannot exceed 15% of the individual’s monthly gross income and yearly minimum wage.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
All workers working for a resident employer are included on the local payroll, according to Turkish tax legislation. The employer withholds taxes and other duties on employees’ earnings at the source, and the employees get the net amount after deductions. Employers must disclose income tax and stamp tax when completing the withholding tax return. Employers who file the social security premium declaration on a monthly basis should disclose the social security premiums and the unemployment premiums. The legal deductions from a salary include income tax, stamp tax, social security premiums, and unemployment premiums.
Unemployment
In Turkey, legally employed employees are entitled for unemployment benefits. Foreign employees are included as long as they have been working and residing in Turkey lawfully and are at least 18 years old. Contributions to unemployment funds are 1% of employees’ wages and 2% of their employers’ payrolls. After 600 days of contributions in the previous three years of employment, a worker is entitled for benefits.
The minimum benefit payment is 50% of a worker’s average daily wages (derived from the four months preceding unemployment) and cannot be more than the minimum wage for that worker’s industry. Benefits may be provided for up to 1,080 days, depending on the number of contributions made by the jobless individual. Foreign nationals are eligible for this insurance if Turkey and their home country have reciprocity.
Social Security
For Turkish residents:
| Insurance Branch | Employee (%) | Employer(%) |
| Disablement, senescence, burial | 9 | 11 |
| Short term insurance | – | 2 |
| Health | 5 | 7.5 |
| Unemployment | 1 | 2 |
| TOTALS | 15 | 22.5 |
A foreign person who is still covered by his or her home country’s social security system is not needed to pay Turkish social security premiums for a maximum of three months, provided documentation of foreign coverage is lodged with the local social security office. If the home country and Turkey have a social security treaty, the exemption period may be extended based on the terms of the contract. If the employee is not covered by foreign social security, full contributions will be levied in Turkey. The employee’s share of social security contributions is deductible when calculating taxable income.
Workers Compensation
A job injury or occupational sickness must be evaluated. General oversight is provided by the Ministry of Labor and Social Security (https://www.csgb.gov.tr/). The Social Security Institution (http://www.sgk.gov.tr/) collects contributions, administers cash payments, and negotiates medical service contracts with health care providers.
ADMINISTRATION
Income
Residents in Turkey are taxed on their worldwide income, whilst non-residents are solely taxed on their earnings in Turkey. Income tax is applied at progressive rates on taxable income after various deductions and allowances. Expats are not subject to a separate tax regime.
Payroll Taxes
All workers working for a resident employer are included on the local payroll, according to Turkish tax legislation. The employer withholds taxes and other duties on employees’ earnings at the source, and the employees get the net amount after deductions. Employers must disclose income tax and stamp tax when completing the withholding tax return. Employers who file the social security premium declaration on a monthly basis should disclose the social security premiums and the unemployment premiums. The legal deductions from a salary include income tax, stamp tax, social security premiums, and unemployment premiums.
Unemployment
According to the Unemployment Insurance Law, which is covered in Section 2.1, Turkey provides an unemployment benefit based on a contributory insurance scheme. Unemployment Insurance is a compulsory insurance that performs with insurance techniques, covering a proportion of the income loss due to unemployment, of those who have lost their jobs unintentionally without any fault, despite their will, ability, health, and qualifications for work for a period of time. The government, employers, and the insured covered by Law No. 4447 pay unemployment insurance premiums to fund all types of payments and service expenditures required for unemployment insurance. The unemployment premium is calculated as 1% of the insured person’s monthly gross income, 2% of the employer’s monthly gross revenue, and 1% of the government’s monthly gross income.
Social Security
For Turkish residents:
| Insurance Branch | Employee (%) | Employer(%) |
| Disablement, senescence, burial | 9 | 11 |
| Short term insurance | – | 2 |
| Health | 5 | 7.5 |
| Unemployment | 1 | 2 |
| TOTALS | 15 | 22.5 |
A foreign person who is still covered by his or her home country’s social security system is not needed to pay Turkish social security premiums for a maximum of three months, provided documentation of foreign coverage is lodged with the local social security office. If the home country and Turkey have a social security treaty, the exemption period may be extended based on the terms of the contract. If the employee is not covered by foreign social security, full contributions will be levied in Turkey. The employee’s share of social security contributions is deductible when calculating taxable income.
Workers Compensation
A job injury or occupational sickness must be evaluated. General oversight is provided by the Ministry of Labour and Social Security (https://www.csgb.gov.tr/). The Social Security Institution (http://www.sgk.gov.tr/) collects contributions, administers cash payments, and negotiates medical service contracts with health care providers.
Statutory Benefits
Turkey has universal healthcare and a mandatory social security contribution every month.
Employee Benefits
Certain benefits are mandated by law. Turkey has 14.5 public holidays on which employees are excused from work, and they are additionally entitled to14 days of vacation time every year. Employers are not obligated to pay for sick leave. Maternity leave is 8 weeks and paternity leave is 1 week.
LEGISLATION
- Labour Code
- Labour Law
STATUTORY BODIES
- The Competition Authority.
- The Banking Regulation and Supervision Authority.
- Turkish Revenue Administration.
