One of the questions foreign-owned companies in Turkey ask most often is whether running the group accounting software on a server abroad breaches Turkish tax rules. The short answer is that keeping accounting records on foreign servers is not in itself a breach, but the statutory books and documents must be retained in Turkey. Confusing those two things is what causes most of the trouble in practice.
Where an entry is made, and where the book is kept, are two separate questions. Nothing in the legislation prevents entries being made through a group planning system hosted abroad, and the Revenue Administration takes the view that the retention duty places no restriction on where the accounting records are made. Electronic ledgers and their certificate files, by contrast, must be retained in the taxpayer’s own information system and in places where the laws of Turkey apply, and secondary copies must be held for at least ten years with a licensed integrator or with the Administration itself. The workable structure is to leave the group system abroad while maintaining a separate statutory ledger layer and a local archive in Turkey.
Where entries are made is not where books are kept
The discussion usually opens with a single question: our server is in Germany, is that a problem? The legislation, however, does not regulate where a server physically sits. It regulates three separate duties. The first is making the entry, that is recording the transaction in the books. The second is retention, that is keeping the book and the document. The third is production, that is presenting them to the authorities on request.
These three need not happen in the same place. Keeping accounting records on foreign servers falls under the first duty and is unrestricted; retention and production are tied to Turkey. Almost every wrong answer given on this subject comes from failing to draw that distinction.
Accounting records on foreign servers
The Revenue Administration has addressed the point directly in a private ruling given to a company whose information system and data were held abroad and whose accounting team worked by connecting to that server. The Administration’s position is that the retention duty concerns the keeping and production of electronic ledgers and their certificate files, and imposes no restriction on where the accounting records for those ledgers are made.
On the same reasoning, the Administration sees no obstacle to using a leased server provided that authority to access the records remains the taxpayer’s responsibility. Holding the records on a server inside Turkey is treated as sufficient, and that does not prevent the main business operations being run from abroad or a copy of the records being held outside Turkey.
The practical result is that a global enterprise planning system running on a server abroad, with the Turkish team connecting to it remotely to post entries and the data also sitting at group headquarters, is not by itself a tax breach.
Retention of books and documents: Turkey is mandatory
Accounting records on foreign servers may be unrestricted, but retention allows no flexibility. Under the Communique on electronic ledgers, the taxpayer must retain the electronic ledger and certificate files in its own information system. Retention with third parties or abroad does not remove the taxpayer’s responsibility and has no effect as far as the Administration is concerned. The Communique expressly requires the retention duty to be performed within the borders of Turkey and in places where the laws of Turkey apply.
The reasoning is the territoriality of law: the audit powers of the Turkish tax authority do not reach directly into a server in another country. The same logic applies to electronic documents, so electronic invoices, electronic archive invoices, electronic delivery notes and the rest are subject to the same retention and production rules.
Holding the ledger only on the group server abroad, with nothing in Turkey but a screen view or a printed report, does not satisfy the retention duty. What has to be in Turkey is the readable and verifiable original file itself.
The secondary copy obligation
There is a further layer on top of retention. Since 1 January 2020, secondary copies of electronic ledger files and their certificate files must be stored. The storage takes place either in the information systems of private integrators that hold the Administration’s permission and the necessary technical capability, or directly in the Administration’s own systems. The minimum storage period is ten years.
In practice this means storage in Turkey, because the permitted storage providers are domestic. So even in a company running on a server abroad, a copy of the electronic ledger will always sit with a storage provider inside the country.
Conditions for using a server abroad
Every heading below has to be satisfied when the structure is set up. If one is left out, the problem surfaces during an audit, which is the most expensive moment to fix it.
| Subject | Basis | What is required |
|---|---|---|
| Original file | Electronic ledger Communique | A readable original accessible in Turkey. A backup abroad is not enough on its own. |
| Secondary copy | Electronic ledger Communique | Ten years minimum with a licensed integrator or the Administration. |
| Production | Tax Procedure Law art. 256 | Records produced together with access passwords and tools. |
| Language and currency | Tax Procedure Law art. 215 | Turkish and lira. Functional currency requires separate permission. |
| Posting deadline | Tax Procedure Law art. 219 | Ten days, or forty-five days where vouchers or payroll registers are used. |
| Electronic access | Commercial Code art. 65 | Books must stay reachable and readable throughout the retention period. |
| Retention period | Commercial Code art. 82 | Ten years, longer than the five years under tax law. |
| Record storage | Communique no. 431 | Taxpayers in scope store the listed records inside Turkey. |
| Personal data | Data Protection Law art. 9 | A transfer basis is established for payroll and personnel data. |
The Turkish language and lira requirement
Article 215 of the Tax Procedure Law requires records to be kept in Turkish and in Turkish lira. Another currency may also be shown, provided the lira equivalent appears; and companies meeting conditions set by Presidential decision may be permitted to keep their records in a functional currency. That permission is an exception, not a general freedom.
The consequence in practice is that a group system whose chart of accounts and descriptions exist only in English is not sufficient on its own. A separate statutory ledger layer has to be maintained on the Turkish side, with account names in Turkish and amounts in lira, and the reconciliation between group reporting and the statutory ledger has to be documented.
Production on request, and the consequences of failure
Article 256 of the Tax Procedure Law requires production not only of books and documents but also of the passwords and tools needed to reach records held electronically. That a server sits abroad is not a defence; if a record requested during an audit cannot be produced, the consequences follow.
Failure to produce books and documents is a ground for assessing the tax base on an estimated basis. The audit then proceeds on the authority’s findings rather than the taxpayer’s own records.
Failing to meet the duty to produce records or supply information carries a special irregularity penalty. The amounts are revalued each year.
Where the books cannot be produced, the input value added tax claimed may be treated as unsupported, and the deduction can be refused.
Transferring personal data abroad
Once payroll and personnel data is processed on a server abroad, the subject moves out of tax law and into data protection law. Article 9 of the Personal Data Protection Law was rewritten in 2024. A transfer may be made freely to a country for which the Board has issued an adequacy decision; where there is no such decision, one of the appropriate safeguards must be put in place. Those safeguards are binding corporate rules, the standard contract published by the Board, which may not be altered, and an undertaking prepared with the Board’s permission. A standard contract has to be notified to the Board within five business days of signature.
The exceptions allowed for incidental transfers do not cover transfers that are continuous, so a regular data flow into a group system cannot rest on them. Breaching the transfer and notification duties carries an administrative fine.
The structure that works in practice
Keeping accounting records on foreign servers becomes compliant once the following six layers are in place.
- Group layerThe planning system stays abroad
Group reporting, consolidation and the operational modules continue to run on the existing server. The team in Turkey can connect to it remotely and post entries.
- Local layerA separate statutory ledger is kept in Turkey
A statutory ledger layer is built on the uniform chart of accounts, in Turkish and in lira. Differences against the group records are tracked through a reconciliation schedule.
- ArchiveThe electronic ledger and document archive sits in Turkey
The original ledger, certificate and electronic document files are retained on a server in Turkey. The copy held abroad is a backup, nothing more.
- Secondary copyTen-year storage with a licensed provider
Secondary copies are stored with a licensed private integrator or in the Administration’s systems. The storage agreement and the upload reports are kept on file.
- AccessAccess rights are kept ready for an audit
Because an audit request covers access passwords and tools as well as the records, those rights are held by the people responsible in Turkey.
- Data protectionThe transfer basis is documented
A standard contract or binding corporate rules are put in place for personnel data, the notification deadline is met, and the documents are retained.
Practical points
These are the headings where accounting records on foreign servers most often cause trouble in an audit.
- A backup is not an original. The existence of a copy abroad does not satisfy the retention duty; what must be in Turkey is the verifiable original file.
- Buying a storage service does not transfer responsibility. Signing with a private integrator leaves the taxpayer’s own retention and production duties intact.
- Ten years is longer than the tax rule. Tax law requires five years of retention while the Commercial Code requires ten; the archive plan should follow the longer period.
- Functional currency permission is not automatic. Keeping records in a foreign currency requires meeting the conditions and holding the permission.
- Posting deadlines are missed during system changes. Transactions must be recorded within ten days, or forty-five where vouchers are used; migrations are where that slips.
- The chart of accounts mapping has to be documented. A mapping table between the group chart and the uniform chart is what makes the records traceable in an audit.
- Data protection runs on its own track. Complying with tax rules does not discharge the obligations on transferring personal data abroad; the two reviews are independent.
Frequently asked questions
Our accounting software runs on a server abroad. Does that breach the rules?
Not in itself. The Revenue Administration’s position is that the retention duty imposes no restriction on where the records are made. A breach arises if the original books and documents are not held in Turkey.
Can we store our electronic ledger on the group server abroad?
No. Electronic ledgers and certificate files must be retained within the borders of Turkey. Storing them abroad does not remove the taxpayer’s responsibility and has no effect as far as the Administration is concerned.
Who does the secondary copy obligation apply to?
It applies to taxpayers within the electronic ledger system. For files created from 1 January 2020 onwards, secondary copies are stored with licensed private integrators or in the Administration’s systems for at least ten years.
Can we keep our records only in English and in dollars?
Not for the statutory ledger. Records are kept in Turkish and in lira, and another currency may be shown alongside the lira equivalent. Keeping records in a functional currency depends on separate conditions and permission.
What happens if the server cannot be reached during an audit?
The records are treated as not produced. That leads to assessment of the tax base on an estimated basis and to a special irregularity penalty, and it creates exposure on the input value added tax claimed.
Does using cloud accounting software create a problem?
No, provided that authority to access the records remains the taxpayer’s responsibility and the original books and documents are held in Turkey. Leased and cloud servers are not prohibited.
What is needed before payroll data goes abroad?
Where the destination country has no adequacy decision, one of the appropriate safeguards is established: binding corporate rules, the standard contract, or an undertaking approved by the Board. A standard contract is notified to the Board within five business days of signature.
How many years must the books be kept?
Tax law requires five years of retention and the Commercial Code requires ten. The minimum for secondary copies of electronic ledgers is also ten years, so the archive plan should be built around ten.
Ozbek CPA advises foreign-owned companies in Turkey that hold accounting records on foreign servers, on the structure between a group planning system and the Turkish statutory ledger: chart of accounts mapping, the electronic ledger and document archive, and audit readiness. To have your current structure reviewed, get in touch.
- Tax Procedure Law no. 213, articles 215, 219, 242, 253, 256 and repeating article 355
- Turkish Commercial Code no. 6102, articles 64, 65 and 82
- Communique on electronic ledgers and the related implementation rules
- Tax Procedure Law General Communique no. 509 (electronic documents)
- Tax Procedure Law General Communique no. 431 (record storage requirements)
- Personal Data Protection Law no. 6698, article 9, and the rules on transfers abroad
- Revenue Administration private ruling — retention and production duties of a company whose data is held abroad
