Against a tax assessment and penalties imposed by the tax office, there are three main options: file a lawsuit before the tax court within 30 days of service, request settlement (uzlaşma) for the penalties within the same period, or accept the assessment and benefit from the statutory penalty reduction. Since 2 August 2024, settlement covers penalties only; the tax itself can no longer be settled. Choosing one route often closes the others, so the decision should be made carefully. A tax office payment order can be challenged within 15 days. Individuals resident in Turkey are taxed on their worldwide income; non-residents only on income earned in Turkey.
Tax law in Turkey: the framework
Turkish tax law governs the subject, taxpayer and base of each tax, the stages of assessment, notification, accrual and collection, tax penalties and the resolution of tax disputes. The main procedural source is the Tax Procedure Law No. 213 (VUK), and collection is governed by the Law No. 6183 on the Collection Procedure of Public Receivables. Each tax, such as income tax, corporate tax, VAT and inheritance and transfer tax, is regulated by its own law.
Tax disputes are resolved by the tax courts, which are part of the administrative judiciary. Procedure therefore follows the general rules of administrative law, but time limits in tax matters are shorter; see our administrative law guide.
Options after receiving a tax or penalty notice
When the tax office identifies tax that was not declared or was under-declared, it makes an additional or ex officio assessment and serves a tax and penalty notice (vergi/ceza ihbarnamesi) on the taxpayer. The main options after service are:
| Option | Time limit | Effect |
|---|---|---|
| Lawsuit before the tax court | 30 days from service | Collection of the disputed tax and penalty is generally suspended until the case is decided |
| Post-assessment settlement | Application within 30 days | Only penalties can be settled; a settled penalty becomes final and cannot be challenged in court |
| Penalty reduction (VUK, Art. 376) | Application within 30 days | In exchange for not filing a lawsuit, the penalty is reduced at the statutory rate |
| Payment / acceptance | By the due date | The assessment becomes final |
The choice should take into account the strengths and weaknesses of the audit report on which the assessment is based, the type of penalty (tax loss or irregularity), the amount and the available evidence. For example, a taxpayer who applies for settlement can still file a lawsuit within the remaining time if settlement fails; but matters that have been settled can no longer be challenged.
Settlement (uzlaşma) after the 2024 reform
Settlement is an agreement between the taxpayer and the administration on tax penalties before a settlement commission. Law No. 7524 narrowed its scope with effect from 2 August 2024: now only tax loss penalties and irregularity and special irregularity penalties above a statutory amount can be settled. The tax itself and late payment interest are excluded. A taxpayer who wants to dispute the tax itself must therefore consider a lawsuit.
- Post-assessment settlement (VUK, Add. Art. 1): applied for within 30 days of service of the notice. If settlement fails or the taxpayer does not attend, and the period for a lawsuit has expired, a lawsuit can still be filed within 15 days of service of the record that no settlement was reached.
- Pre-assessment settlement (VUK, Add. Art. 11): requested during a tax audit, before the assessment. Penalties settled at this stage cannot be challenged; if it fails, post-assessment settlement is no longer available, but the lawsuit and penalty reduction routes remain open.
Where the tax loss penalty arises from issuing or using fake or misleading documents, settlement is generally not available.
Tax penalties and reductions
The Tax Procedure Law provides for two types of administrative tax penalty:
- Tax loss penalty (VUK, Art. 344): imposed where tax was not assessed on time or was under-assessed, calculated on the lost tax. Where the loss is caused by fake or misleading documents, the penalty is tripled.
- Irregularity and special irregularity penalties (Art. 352–353): imposed for failure to comply with formal obligations such as bookkeeping, issuing documents and notifications.
If the taxpayer applies to the tax office within 30 days of service, declares that no lawsuit will be filed and pays the reduced amount on time, the penalty is reduced at the statutory rates under Article 376; no lawsuit can then be filed. A taxpayer who voluntarily corrects an undetected error can avoid the tax loss penalty under the voluntary disclosure rules (Art. 371), and explanations made in time in response to an invitation to explain (Art. 370) may also reduce penalty exposure.
Tax audits
A tax audit examines, determines and secures the correctness of taxes due (VUK, Art. 134). It is carried out by tax inspectors and other authorised officials. During an audit:
- Audit letterThe taxpayer is informed of the subject and scope of the audit and asked to produce books and records. Failing to produce them on time can have serious consequences.
- MinutesThe taxpayer can have objections and explanations recorded in the minutes drawn up during the audit; minutes should not be signed without reading them carefully.
- ReportThe audit report forms the basis of the assessment and penalty. Pre-assessment settlement can be requested at this stage.
- Assessment and serviceThe tax office makes the assessment based on the report and serves the notice; the time limits for a lawsuit, settlement and penalty reduction run from this date.
Because the audit report and minutes will be decisive in any later lawsuit, legal advice from the start of the audit is recommended.
Fake invoice allegations (VUK Art. 359)
Issuing or using a fake invoice (with no real underlying transaction) or a misleading invoice (a real transaction misstated in quantity or value) is a crime punishable by imprisonment under Article 359 of the Tax Procedure Law. Such allegations trigger two separate processes:
- Tax process: the expenses shown in the invoices and the VAT deducted are disallowed, and an assessment is made with a triple tax loss penalty, which can be challenged before the tax court.
- Criminal process: the tax inspector's tax crime report is sent to the public prosecutor and a criminal investigation begins, heard independently by the criminal court.
A common situation is that a company bought goods or services in good faith from a supplier later reported as a fake document issuer. Documents proving that the purchase actually took place, such as delivery notes, bank payments, transport records, onward sale of the goods and stock movements, are then crucial.
Payment orders and collection
If a final tax debt is not paid on time, the tax office sends a payment order under Law No. 6183. A lawsuit against the payment order can be filed before the tax court within 15 days of service (Art. 58), arguing that the debt does not exist, has been partly paid or is time-barred. Because a surcharge may be added if the claim is unsuccessful, the decision to sue should be made carefully.
Company directors and legal representatives can be held personally liable for a company's unpaid taxes under Articles 35 and repeated 35 of Law No. 6183, and shareholders of a limited liability company may be liable in proportion to their shares. Partners and directors leaving a company should therefore assess their position regarding tax debts; see our commercial law guide.
Tax obligations of foreigners and Turks living abroad
Under the Income Tax Law, individuals considered resident in Turkey (those whose domicile is in Turkey, or who stay in Turkey continuously for more than six months in a calendar year) are full taxpayers and are taxed on their worldwide income. Certain temporary stays, for example for a specific job or business, do not create residence (Income Tax Law, Art. 5). Non-residents are limited taxpayers and are taxed only on income earned in Turkey.
For foreigners owning property in Turkey and Turks living abroad, the most common tax issues are:
- Declaration of rental income from property in Turkey (subject to certain exemptions)
- Capital gains if a property is sold before the end of the holding period set by law
- Annual property tax and the title deed fee on purchase and sale (see our real estate guide)
- Inheritance and transfer tax on inheritances and gifts in Turkey (see our inheritance guide)
- Application of double taxation treaties to which Turkey is a party
A Turkish tax identification number, obtained from a tax office, is required for property purchases, company formation, opening a bank account and many other transactions.
Competent court and appeals
Lawsuits concerning taxes, duties, fees and similar financial obligations, together with their surcharges and penalties, are heard by the tax courts. The competent court is generally the tax court where the tax office that made the disputed decision is located. Tax court decisions can be appealed to the regional administrative court within 30 days of service and, in the cases listed in the law, to the Council of State.
Key time limits
| Item | Period | Legal basis |
|---|---|---|
| Lawsuit against a tax/penalty notice | 30 days from service | Law No. 2577, Art. 7 |
| Post-assessment settlement application (penalties only) | 30 days from service | VUK, Add. Art. 1 |
| Lawsuit after failed settlement (if the period has expired) | 15 days from service of the record | VUK, Add. Art. 7 |
| Penalty reduction application | 30 days from service | VUK, Art. 376 |
| Lawsuit against a payment order | 15 days from service | Law No. 6183, Art. 58 |
| Limitation for assessment | 5 years from the start of the year following the taxable event | VUK, Art. 114 |
| Limitation for collection | 5 years from the start of the year following the due date | Law No. 6183, Art. 102 |
Tax rates, penalty amounts, reduction rates and exemption thresholds change frequently. Check the current legislation and announcements of the Turkish Revenue Administration before taking action.
Documents usually required
- Tax/penalty notice or payment order and proof of the date of service (including e-notification records)
- Tax audit report and minutes drawn up during the audit
- Tax returns, books and accounting records for the relevant period
- Invoices, delivery notes, bank payment records and contracts
- For fake invoice allegations: transport, stock and sales records proving the purchase took place
- For foreigners: passport, residence details and documents on taxes paid abroad
Relevant legislation
Turkish legislation is published (in Turkish) at mevzuat.gov.tr:
- Law No. 7524 (2 August 2024; settlement limited to penalties)
- Tax Procedure Law No. 213 — Art. 114, 134 et seq., 344, 352–353, 359, 370–371, 376, Add. Art. 1 et seq.
- Law No. 6183 on the Collection Procedure of Public Receivables — Art. 35, Rep. Art. 35, 58, 102
- Income Tax Law No. 193 — Art. 3–7 (full and limited tax liability)
- Inheritance and Transfer Tax Law No. 7338
- Administrative Procedure Law No. 2577
Tax Law: topics
The main topics within Turkish tax law are listed below. Detailed guides for each are in preparation.
- Challenging tax penalties
- Settlement (uzlaşma)
- Tax audits
- Fake invoice (VUK 359) allegations
- Tax obligations of foreigners
Frequently asked questions about tax law in Turkey
I received a tax and penalty notice. What should I do?
Note the date of service. Within 30 days you can file a lawsuit before the tax court, apply for settlement of the penalties, or apply for the statutory penalty reduction in exchange for not suing. Each option has different consequences, and choosing one can close the others, so the audit report and evidence should be assessed first.
Can I still negotiate the tax amount through settlement?
No. Since 2 August 2024 (Law No. 7524), settlement covers only tax loss penalties and certain irregularity penalties. The tax itself and late payment interest cannot be settled; to dispute them, a lawsuit before the tax court is required.
Does filing a lawsuit stop the collection of the tax?
Generally yes. When a lawsuit is filed against a tax and penalty notice within the time limit, collection of the disputed amounts is generally suspended until the case is decided. A lawsuit against a payment order follows different rules.
Am I a tax resident in Turkey?
You are generally a full taxpayer if your domicile is in Turkey or if you stay continuously in Turkey for more than six months in a calendar year, subject to exceptions for certain temporary stays. Full taxpayers are taxed on worldwide income; double taxation treaties may affect the outcome.
Do I have to declare rental income from my property in Turkey?
Rental income from property in Turkey is generally subject to declaration, including for non-residents, subject to certain exemptions and thresholds that change over time. Check the current rules each year.
Is there tax when I sell my property in Turkey?
Capital gains tax may arise if a property is sold before the end of the holding period set by the Income Tax Law. The holding period and the treatment of the gain depend on the rules in force at the time of acquisition and sale, so check them before selling. Title deed fees also apply on sale.
A supplier has been reported for fake invoices. What happens to my company?
The tax office may disallow the related expenses and VAT and impose a triple tax loss penalty, and a criminal investigation may follow. If the purchase was genuine, gather evidence such as delivery notes, bank payments, transport and stock records to prove it.
Can a company director be personally liable for company taxes?
Yes. Under Law No. 6183, directors and legal representatives can be held personally liable for unpaid company taxes, and shareholders of a limited liability company may be liable in proportion to their shares.
This article is for general information only and does not constitute legal advice. Please consult a lawyer about your specific situation. Legislation and court practice change over time, so check the current legislation before taking any step. Last updated: 7 October 2026