A foreign company can sell goods in Turkey without setting up a Turkish company if it stores the goods in a customs warehouse (bonded area) and transfers them to the buyer there. To trade on its own account in a free zone, it needs an operating licence and a branch or company in the zone. This article compares the two structures in terms of customs, VAT, corporate income tax and permanent establishment risk.
For a foreign seller with no company in Turkey, the customs warehouse is the suitable structure: the transfer of goods under the regime is exempt from VAT (VAT Law Art. 16/1-c), the profit on the sale is not subject to Turkish corporate income tax as long as no workplace or permanent representative is created, and import taxes are paid by the buyer who releases the goods into Turkey. A free zone creates a Turkish tax presence; trading profit is taxed at 25%, and the exemption covers only goods produced in the zone and sold abroad, within the same zone or to other free zones.
What is the main difference between a customs warehouse and a free zone?
A customs warehouse is a storage regime inside Turkish customs territory in which duties and taxes are suspended (Customs Law No. 4458). A free zone is an area deemed outside customs territory where licensed companies may trade and manufacture (Free Zones Law No. 3218). In both, no customs duty or import VAT is paid while the goods remain there. The difference lies in who may use the structure, under what conditions, and where the profit is taxed.
Customs warehouse
- The seller does not need a company in Turkey
- A storage agreement with the warehouse operator and a customs broker are sufficient
- Storage and usual forms of handling only; no manufacturing
- No time limit
Free zone
- Operating licence and a branch or company in the zone required
- Trading, manufacturing, assembly and services permitted
- Statutory books, tax returns and zone reporting in Turkey
- No time limit
Which structure fits which business model?
| Business model | Suggested structure | Reasoning |
|---|---|---|
| Selling stored goods, no staff in Turkey | Customs warehouse | No entity needed; transfer exempt, buyer imports |
| Stock for several buyers, partial lots | Customs warehouse | Duties arise only on the quantity imported |
| Regional hub with staff and a sales team | Free zone branch or company (case by case) | Presence arises anyway; stamp and fee exemptions; profit at 25% |
| Manufacturing or assembly for export | Free zone company | Manufacturing profit exempt; wage exemption at 85% export |
How does a sale in a customs warehouse work step by step?
- Arrival and entry into the warehouseThe goods are placed under the customs warehousing regime through a customs broker acting as the foreign company’s representative. Customs duty and import VAT are suspended. The foreign company obtains a tax identification number for customs filings only; this does not create a tax liability.
- StorageThe goods are held in a public or third-party warehouse; the operator keeps stock records and invoices storage and handling fees.
- SaleThe foreign company issues the contract and commercial invoice to the buyer. The delivery is exempt under VAT Law Art. 16/1-c; the profit is reported in the seller’s home country.
- Transfer in the warehouseThe change of the goods’ holder is recorded with the warehouse operator and customs. The buyer takes over the customs obligations; no taxes arise at this stage.
- Buyer imports or re-exportsA Turkish buyer files an import declaration and pays customs duty, any additional or anti-dumping duties, import VAT and special consumption tax, then deducts the import VAT. A foreign buyer takes the goods out of Turkey under transit or re-export; no Turkish taxes arise.
Does a seller without a Turkish company pay corporate income tax?
A non-resident company is taxed in Turkey on business profits only if it earns them through a workplace or a permanent representative in Turkey (Corporate Tax Law No. 5520, Art. 3/3). Storing goods in a third-party customs warehouse and selling them there does not, by itself, create either. The profit on the sale is therefore not subject to Turkish corporate income tax, and no withholding tax applies to the payment, since payments for goods fall outside Art. 30 of the Corporate Tax Law.
A free zone is different: the licensed foreign company sets up a branch or company in the zone and becomes a Turkish taxpayer. Trading profit is taxed at 25%, and branch profit transfers or dividends are subject to 15% withholding tax, subject to treaty relief.
| Criterion | Customs warehouse (no Turkish entity) | Free zone |
|---|---|---|
| Tax status | Non-resident; only a customs tax number | Non-resident branch, or resident company |
| Profit on sale of goods | No tax without a workplace or representative | 25% |
| Manufacturing profit | Not applicable; no manufacturing in a warehouse | Exempt on exports and zone sales; 25% into Turkey |
| Domestic minimum corporate tax (10%) | Not applicable | Applies; the exemption is deductible in the calculation |
| Profit repatriation | Not applicable; profit arises abroad | 15% withholding (subject to treaty relief) |
| Wage income tax | Not applicable | Exempt where 85% of FOB value is exported |
| Ongoing obligations | None beyond customs formalities | Statutory books, tax returns, payroll, zone reporting |
How can permanent establishment risk arise in the customs warehouse model?
The absence of Turkish tax depends on the seller having no workplace and no permanent representative in Turkey. Because Article 156 of the Tax Procedure Law lists warehouses among possible workplaces, the following facts are decisive.
The operator provides storage services; the seller does not control the premises.
A warehouse at the seller’s disposal may qualify as a workplace under domestic law.
Negotiation and signature take place from the seller’s home country.
A dependent agent habitually concluding contracts for the seller is a permanent representative.
Intermediaries acting in their ordinary course of business do not create risk.
Marketing, after-sales service or processing carried out in Turkey may create a workplace.
The Hong Kong–Turkey double tax agreement entered into force on 30 January 2026 and applies to Hong Kong tax for years of assessment beginning on or after 1 April 2027. Once it applies, a fixed place used only for storage, display or delivery of goods is not a permanent establishment. Until then, the domestic workplace and permanent representative rules apply. As Hong Kong taxes on a territorial basis, whether the profit is Hong Kong-sourced depends on where the contracts are negotiated and concluded.
How are VAT, customs duties and stamp duty applied?
| Item | Customs warehouse | Free zone |
|---|---|---|
| VAT on the sale | Exempt under Art. 16/1-c; no reverse charge | Deliveries within the zone exempt (Art. 16/1-c) |
| Customs duty and import VAT | Paid by the buyer on release into Turkey | Buyer pays on import from the zone |
| Goods sent from Turkey | Not a standard route | Treated as an export; supplier exempt |
| Stamp duty (0.948%) | A contract signed abroad is taxable only if presented | Papers related to zone activities exempt |
| Deferred-payment imports | A levy may arise on credit-term imports | Same |
| EU Customs Union | Not in free circulation; A.TR only after release | Same |
What does the free zone manufacturing exemption cover in 2026?
| Period | Scope of the exemption | Legal basis |
|---|---|---|
| Until 31.12.2024 | All sales, including into Turkey | Law No. 3218, Provisional Art. 3 |
| 2025 | Sales abroad only | Law No. 7524 |
| From 1.1.2026 | Exports and zone sales; sales into Turkey taxable | Law No. 7577 (Official Gazette 17.04.2026) |
Trading profits of zone users licensed after 6 February 2004 are not exempt. A company established in Turkey that buys goods abroad and sells them abroad without bringing them into Turkey should also assess the transit trade earnings deduction introduced by Law No. 7582; whether goods passing through a customs warehouse qualify must be reviewed transaction by transaction.
What should be considered in practice?
- Keep the seller’s activity in Turkey limited to storage and delivery; conclude contracts outside Turkey.
- A private warehouse leased or controlled by the seller increases workplace risk.
- The VAT treatment of storage, handling and logistics services invoiced inside the warehouse should be reviewed separately.
- Where seller and buyer are related, the buyer’s purchase price must be at arm’s length (transfer pricing).
- Sale contract and commercial invoice
- Warehouse entry and stock records
- Record of transfer in the warehouse
- Transport documents and import or re-export declaration
Frequently asked questions
Can a foreign company sell goods in a Turkish customs warehouse without a Turkish company?
Is VAT charged on a sale made in a customs warehouse?
Which taxes does a Turkish buyer pay on goods bought in a customs warehouse?
Is a trading company in a Turkish free zone exempt from corporate income tax?
How long can goods stay in a customs warehouse?
Is manufacturing allowed in a customs warehouse?
We advise foreign companies considering a sales structure through a customs warehouse or a free zone in Turkey on tax, customs and permanent establishment risk. To review your business model before choosing a structure, contact us.
