In today’s digitalized world, intangible property has become one of the most valuable assets for businesses. Trademarks, patents, software, copyrights, and trade secrets are not only important for their financial value but also for the competitive advantage they provide. The tax implications of these assets are becoming increasingly critical, especially for companies operating on an international scale. Effective tax planning ensures not only compliance with legal regulations but also cost optimization.
What is Intangible Property?
Under Turkish tax legislation, intangible property is generally treated as part of self-employment income as defined in Article 2 of the Income Tax Law, and is also regulated under the Corporate Tax Law and the Tax Procedure Law.
Common examples include:
- Trademarks and trade names
- Patents, utility models, and industrial designs
- Copyrights (including software)
- Know-how and technical information
- Licensing and distribution rights
Taxation Approaches in Turkey
1. Corporate-Level Taxation
In Turkey, income derived from intangible assets owned by a company is considered part of corporate income and is subject to 20% Corporate Tax (as of 2025). This income may arise from licensing fees, royalty payments, or the transfer of usage rights.
2. Transfer Pricing and Related Parties
Intangible assets are particularly important in related party transactions within multinational groups. When such assets are licensed to related entities, the rules on Disguised Profit Distribution via Transfer Pricing apply. In Turkey, these transactions must comply with the arm’s length principle. Otherwise, the tax authorities may reclassify the transaction and impose additional taxes and penalties.
3. R&D and Innovation Incentives
The development of intangible assets is often linked to R&D activities. Turkey offers several important incentives under:
- Law No. 5746 on R&D and Design Activities
- Law No. 4691 on Technology Development Zones
These incentives include:
- 100% deduction of eligible R&D expenses from the tax base
- Exemptions from stamp duty, VAT, and certain social security premiums
- Corporate and income tax exemptions for software and design activities carried out in technoparks
These advantages promote the development of intangible property within Turkey and offer strategic opportunities for tax planning.
International Framework and OECD Guidelines
Intangible assets also play a significant role in the OECD’s BEPS (Base Erosion and Profit Shifting) Action Plan. Specifically, Actions 5 and 8–10 aim to prevent companies from shifting intangible assets “on paper” to low-tax jurisdictions purely for tax advantages.
Turkey has incorporated these standards into its domestic legislation, and additional documentation requirements apply to cross-border transactions involving intangibles.
Recommendations for Effective Tax Planning
- Identify and inventory intangible assets
- Conduct thorough transfer pricing analyses
- Evaluate the tax implications of licensing and royalty agreements
- Structure operations to take full advantage of available incentives
- Prepare complete and timely annual transfer pricing reports
Tax planning for intangible property is essential for reducing risks and optimizing tax liabilities. Turkish regulations offer both challenges and opportunities in this area. Therefore, businesses are strongly advised to work with a qualified CPA or tax advisor to ensure strategic and compliant tax planning. Contact us
