Why Investing in Turkey?

In “The experts study the 2005 crystal ball” of Daily Telegraph two of the experts addressed Turkey as the top country to invest:
 

§         Top country: Turkey. It may benefit from future entry into the EU but even if this does not happen the economy is growing rapidly and there are many investment opportunities.(Annabel Brodie-Smith, communications director, Association of Investment Trust Companies)

§         Top country: Turkey. The domestic economy is strong, earnings growth should be 25 per cent plus, valuations are good and there is scope for positive surprises in discussions of accession to the European Union (EU). Israel could also provide a wild card for positive political surprises.(Jeremy Tigue, manager of the Foreign & Colonial Investment Trust)

Real Estate investments by non-resident individuals and corporate entities -transfer of ownership title of a  Real Estate- in Turkey is allowed  on the basis of the reciprocity between two countries.

The Turkish government views the encouragement and protection of investment as a fundamental element in the development strategy of the nation. To support this aim, the government offers a number of incentives to enhance investment. Local and foreign investors are treated equally; foreign companies can benefit from all the incentives and allowances granted to local companies. This equal treatment is guaranteed by law and by treaties for the reciprocal protection and promotion of investments. Parallel to this, new investment policy for foreign investments in Turkish real estate has been changed by a new legislation in June 2003.

 

The new legislation has set the following changes:

§         Foreign companies can now directly purchase properties in Turkey.

§         Foreign companies and non-resident individuals can now freely buy real estate located anywhere except  within military restricted zones in Turkey.

§         Each foreign investor can normally buy up to 300.000 sq meters of land in Turkey. Further land requests are subject to approval of Council of Ministers.

§         Non-resident investor may also invest in Turkish property through a local stock company or limited company (Ltd.)



   

 

Why Investing in Bodrum?

§         Although the prices of the properties are increasing with the demand, it is still extremely cheap. In Bodrum area you can have different types of villas in addition to Apartments.

§         Most of the houses you are going to buy will have exceptional views because of the hilly landscape of the Bodrum Peninsula.

§         More than 90% of the goods and services you are going to buy in this area is much more cheaper than your country. (Food, water, labor,,etc.)

§         Bodrum is situated only 35 minutes by ferry from Kos, Greece, so you are in effect having access to two countries for the price of one.

§         Over 2,000 British families have already settled in Bodrum over the last 3 years, they benefit by having a local British Consulate dealing with their enquiries.

§         Bodrum is located only 40 minutes from the airport, with direct flights arriving daily from most major international airports.

§         Bodrum Peninsula has two fully equipped private Hospitals in which your private health insurances are accepted. Also in every part of the peninsula, there are clinics also can serve you with your insurances.

§         English is commonly spoken in Turkey, especially in Bodrum with its very large and growing English community.

§         Bodrum peninsula has a very good transportation system. Dolmus (minibus) network covers all the bays on the peninsula and longest time from one end to another is around 35 minutes.

§         Long summer season compared to other popular destinations like Croatia, Bulgaria in the emerging Overseas Homes Market. (starts at the end of March, ends at the end October)

§         Climate in summer season is more attractive to those who do not like excess humidity when compared to the other towns in the south of Turkey like Fethiye, Antalya, Alanya.

§         Chance of enjoying one of the best cousins in the world, including the eagean cousine with variety of healthy herbs, olive oil,vegetables, fruits...etc.

§         Experience living in an environment that offers great hospitality blending cultures of West and East.

§         Active night life bars with live music and cultural events concerts, festivals, cinemas, regattas


            

 

Setting up a Turkish Company 

Non-resident individuals do not need to set up a company to purchase real estate in Turkey. However, if you are planning to act as an investor in this emerging market we advice you to set up a Turkish Limited Company to act quicker in buying and selling real estate in Turkey.

Foreign direct investments are subject to Foreign Investment Law No.6224. To facilitate foreign investments Government has simplified  and/or abandoned several bureaucratic formalities related to foreign capital entries during the time of Turkey's proposed Customs Union with Europe.

The most significant provisions foreign investors are subject to are:

§         Approval obligation

§         Foreign participation is permitted up to 100%

§         Forms of business entities can be limited liability or corporation

§         Employment of expatriate staff is permitted

§         Equal treatment is the basis for foreign and domestic investors.

Upon obtaining approval, the establishing company can register at the Turkish Ministry of Industry and Trade. Documents to be presented at the Ministry of Industry and Trade are as follows:

• Articles of Association certified by a Notary

• Certificate of conversion and deposit of the foreign currency

• Investment approval of UT

• Memorandum of Understanding, where the applicant is a legal entity

After confirmation of the establishment of the company by the Ministry of Industry and Trade, further procedures are as follows:

    ·     Registration with the city authority. This requires the presentation of:

• Rent contract for office premises

• Articles of Association as approved by the Ministry of Industry and Trade

• Certified sample of signature

• Registration in the trade register

• Registration with the Chamber of Commerce or Chamber of Industry

• Unblocking of the paid-up capital upon submission of documentation for registration in the trade register

• Confirming completion of the establishment of the company with UT

• Registration with the local tax and social insurance authority

The Turkish government encourages foreign companies to invest in Turkey either through the formation of a new enterprise or the acquisition of an existing company, both are equally acceptable.

There are no restrictions on foreign investment, in fact Turkey has entered into a number of bilateral investments with countries from all over the globe. This trend can be expected to continue as the economy expands and as Turkey's relationship with the European Union develops.

Finance may be obtained from local banks (joint ventures only), foreign banks, financial

institutions or the parent company. However, interest rates are comparably high in Turkey.

TAXATION

Purchasing Tax

Purchasing of a Turkish Property is subject to 1,5% purchase tax (stamp duty) on registration of freehold, to be paid by the seller (1,5%) and the buyer(1,5).

New properties can be exempt from purchase tax under certain conditions. 

VAT is applicable on company to company or company to individual sales. VAT rate varies according to the usage area of residential properties: residential properties with usage areas under 150 sq meter is subject to 1% tax whereas residential properties over 150 sq meters are subject to 18% VAT.

Capital Gain Tax

Capital gains obtained from the sale of property are subject to income taxation. In the calculation of the net capital gain, the cost of purchasing can be re-calculated by escalating with revaluation rates announced by the Ministry of Finance.  Capital gain is calculated by subtracting the (revalued purchase + tax exemption amount set by ministry of finance for the fiscal year) from the sales value.

Property Taxes

Property tax, paid annually in two installments is calculated over a fixed percent of the declared value of the property. Property value declared may not be less than the minimum assessed value determined for the area by the related valuation commission.

Annual tax rates for different types of real estate are as follows:

            Land                 0,3%

            Buildings           0,2%

            Redentials         0,1%

Rental Income Tax

Rental income is taxable. Individuals with real estate income may deduct certain expenses like community charges, heating, electricity, insurance premiums, repairs and maintenance and depreciation.

If income earned in Turkey consists of only rental income that has been subject to withholding tax, non-resident individuals are not required to file an annual tax return.

Rental income earned by companies is subject to 30% corporate tax.

The transfer of profits abroad does not attract any penalty

Contact Us: ozlem@allbodrumproperty.com