According to the Turkish Income Tax Law, wages include monetary payments, in-kind benefits, and other earnings convertible into money provided by an employer in return for services. Employees with high levels of income or complex compensation structures may be required to assess their annual income tax declaration obligations carefully under Turkish tax legislation.
The circumstances under which employees are required to submit an annual income tax return in Turkey are outlined below, based on the applicable income thresholds and filing principles in force for the relevant tax year.
1. Income from a Single Employer
Individuals who receive wage income from a single employer are required to file an annual income tax return if their total gross annual wage income exceeds the statutory declaration threshold applicable for the relevant year.
Where an individual is already required to submit an annual income tax return due to other types of income (such as rental income or capital gains), wage income must also be included in the same return, even if it has already been taxed through withholding.
Annual income tax returns must be filed within the statutory filing period following the end of the income year, as prescribed by the Turkish tax legislation.
When Is Annual Income Tax Declaration for Employees in Turkey Required?
Under the Turkish Income Tax Law, particularly within the framework of Article 86 and related provisions governing annual returns, employees may be required to submit an Annual Income Tax Declaration for Employees in Turkey when statutory income thresholds are exceeded or when cumulative income conditions trigger filing obligations.
In line with guidance issued by the Turkish Revenue Administration (Gelir İdaresi Başkanlığı) and established administrative practice reflected in professional tax platforms, wage income that has been subject to withholding through payroll may still need to be declared if total annual income surpasses the applicable declaration limits or if income is received from multiple employers beyond secondary thresholds.
Additionally, tax residency status and foreign-sourced employment income must be assessed carefully, as income not subject to withholding in Turkey may independently create a declaration obligation. The applicable thresholds and filing conditions are determined based on the relevant income year and should be evaluated in accordance with official guidance and legislative updates.
2. Income from Multiple Employers
Employees who receive wages from more than one employer are required to submit an annual income tax return if:
- The total wage income from all employers exceeds the applicable annual declaration threshold, and
- The wage income obtained from the second and subsequent employers exceeds the legally determined secondary threshold, regardless of whether withholding tax was applied at source.
The annual return must be submitted within the legally prescribed filing period through the Revenue Administration’s electronic filing system or the relevant tax office.
3. Income from Foreign Employers
Individuals who are tax residents in Turkey and receive wage income from foreign employers are generally required to file an annual income tax return, as such income is not subject to withholding tax in Turkey.
Exception:
If an employee physically performs work abroad and is employed by a liaison office or regional management center registered in Turkey, and provided that the statutory exemption conditions are met (including the absence of commercial activity), the related income may qualify for an exemption from Turkish income tax.
4. Deductions on the Annual Tax Return
Employees who submit an annual income tax return may benefit from certain deductions, subject to the conditions and limits set out in the Income Tax Law:
- Education and health expenses:
Deductible up to the statutory percentage of the declared income, provided that such expenses are incurred and documented in Turkey. - Donations and aid:
Donations made to public institutions, tax-exempt foundations, or public-benefit associations may be deductible, subject to legal limitations and conditions. - Insurance premiums:
- A portion of life insurance premiums
- Personal insurance premiums such as health, accident, or disability insurance, within statutory limits
Overall limitation:
The total amount of deductions is subject to the limits determined under the Income Tax Law and related secondary legislation and should be assessed on a case-by-case basis.
5. Tax Offsets on Declared Income
From the income tax calculated on the declared wage income:
- Income taxes withheld in Turkey through payroll may be offset against the annual tax liability.
- Income taxes paid abroad on foreign-sourced wage income may be credited against Turkish income tax, subject to double taxation agreements and proper documentation.
Income tax assessed under the annual return is generally payable in two installments, in accordance with statutory payment schedules.
Key Considerations
- The portion of wage income corresponding to the statutory minimum wage exemption, where applicable, is excluded from income tax.
- Declaration thresholds, deduction limits, filing periods, and payment schedules may be amended through legislative or administrative changes.
- Each employee’s obligation should be assessed based on the relevant income year and the official guidance issued by the Turkish Revenue Administration.
Professional Considerations
The annual income tax declaration regime in Turkey involves technical income thresholds, cross-border implications, and detailed compliance requirements. Misinterpretation of declaration obligations, incorrect reporting of foreign income, or improper application of deductions and tax credits may result in tax exposure, penalties, and administrative scrutiny.
A structured assessment of employment arrangements, income composition, and applicable treaty provisions is therefore essential. At ÖzbekCPA, we provide comprehensive tax advisory and compliance support to individuals and companies to ensure accurate reporting, effective tax risk management, and full alignment with Turkish tax legislation and administrative practice.
