Remote Employee in Turkey: Tax, Payroll, SGK & PE Risk for Foreign Employers
An employee moving to Türkiye does not create one compliance question. It creates several: employee income tax, payroll withholding, social security, treaty protection and potentially a Turkish permanent-establishment exposure for the foreign employer.
“`A foreign company can allow an employee to work from Türkiye without automatically becoming a Turkish corporate taxpayer. But the arrangement should not be treated as a simple “work-from-anywhere” decision. The employee’s salary tax, Turkish filing position, social security coverage and the employer’s Turkish permanent-establishment exposure must each be analysed separately.
One remote employee creates five separate questions
International employers often begin with the wrong question: “Can our employee simply remain on our home-country payroll?”
Payroll location is relevant, but it does not determine the Turkish tax result. The correct analysis separates five issues.
Tax residence
Has the individual become taxable in Türkiye as a resident?
Salary tax
Where are the employment services physically performed?
Payroll
Who has the Turkish withholding or reporting obligation?
Social security
Does Turkish SGK apply or can foreign coverage continue?
Employer presence
Could the employee create a Turkish PE or permanent representative risk?
1. Is the employee’s foreign salary taxable in Türkiye?
Turkish tax law places significant weight on where the employment services are actually performed. Where an employee physically performs his or her duties from Türkiye, the salary cannot be classified simply by looking at the employer’s country or the bank account into which the remuneration is paid.
A Turkish tax resident is generally within the Turkish worldwide-income system unless a specific exemption or an applicable double taxation agreement changes the result.
Where salary is received directly from a foreign employer and no Turkish wage withholding has been made, the employee may need to report the employment income through an annual Turkish income tax return unless an exemption applies.
The 183-day rule is not the whole analysis
Double taxation agreements generally consider where the employment is exercised and may provide relief depending on physical presence, the identity of the employer and whether the remuneration is borne by a Turkish permanent establishment.
The applicable treaty therefore needs to be reviewed separately. The familiar “183-day rule” is only one part of the analysis.
2. Can Article 23/14 exempt the foreign salary?
Turkish Income Tax Law Article 23/14 may provide an important exemption for qualifying employees of foreign employers. It is not, however, a general exemption for everyone working remotely for a foreign company.
The relevant conditions should be tested together.
| Test | What should be verified? |
|---|---|
| Foreign employer | The employer’s legal and business centre should not be in Türkiye. |
| Turkish activity | The employer’s Turkish business footprint should be reviewed carefully. |
| Employment relationship | The payment must constitute genuine employment income. |
| Funding | The remuneration should be funded from the employer’s foreign earnings. |
| Currency | The statutory foreign-currency payment requirement should be satisfied. |
| Turkish cost recharge | The salary should not become an expense of a Turkish operation in a manner inconsistent with the exemption conditions. |
3. Does the foreign employer need Turkish payroll?
There is no reliable one-line rule stating that foreign employers never need Turkish payroll or that having one employee in Türkiye automatically requires establishing a Turkish company.
Where an individual receives salary directly from a foreign employer and the employer has no Turkish payroll withholding mechanism, Turkish income tax can, depending on the facts, be settled through the employee’s annual tax return.
The position can change where the foreign employer has a Turkish branch, subsidiary, permanent establishment, cost recharge arrangement or other local presence.
Foreign payroll does not eliminate Turkish compliance
A company may continue operating its foreign payroll for HR or commercial reasons while separate Turkish tax or reporting obligations arise. In practice, this can create a split-compliance model rather than a simple choice between foreign payroll and Turkish payroll.
4. Income tax and Turkish social security are separate analyses
One of the most common mistakes in cross-border employment is assuming that a favourable income-tax result automatically eliminates Turkish social-security exposure.
It does not.
Türkiye has bilateral social-security agreements with a number of countries. Depending on the applicable agreement, a temporarily assigned employee may be permitted to remain within the home-country social-security system instead of entering Turkish SGK.
The permitted assignment period and certificate requirements differ from country to country. The applicable social-security agreement should therefore be reviewed individually.
| Situation | Practical approach |
|---|---|
| Social-security treaty country | Review the bilateral agreement, permitted assignment period and certificate requirements. |
| No applicable treaty protection | Assess Turkish SGK registration and contribution obligations under domestic law. |
| Temporary assignment becomes permanent | Re-test the position rather than assuming temporary relief continues indefinitely. |
5. Could the employee create a Turkish permanent establishment?
An employee working from Türkiye does not automatically create a Turkish permanent establishment for the foreign company. Equally, the absence of a Turkish subsidiary does not automatically eliminate PE risk.
The analysis depends on the facts.
Employer PE risk test
Where PE exposure exists, the issue can extend beyond employee payroll into corporate income tax, accounting, registration, VAT and profit-attribution questions.
What about Türkiye’s new 20-year foreign-income exemption?
Türkiye introduced Article Mükerrer 20/D in 2026. Subject to the statutory conditions and the exemption-certificate process, qualifying new Turkish residents may benefit from a twenty-year exemption for qualifying income and gains genuinely derived outside Türkiye.
The regime may be particularly relevant to individuals receiving foreign dividends, interest, rental income or investment gains.
20/D is not automatically a foreign-salary exemption
Employment physically performed from Türkiye requires a separate employment-income analysis. Article 23/14 and the relevant double taxation agreement may be more relevant to the salary itself.
The same executive may therefore have foreign investment income potentially falling within Article 20/D while his or her employment income follows a completely different Turkish tax analysis.
Four common remote-employment scenarios
| Scenario | Main Turkish issue | What should be tested? |
|---|---|---|
| Employee of a US company relocates to Istanbul | Salary tax + SGK + employer PE | Residence, Article 23/14, treaty position, employer activities and social security. |
| UK employee is temporarily assigned to Türkiye | Treaty + social security | Employment article, assignment duration, certificate requirements and PE facts. |
| German employee works from Türkiye while remaining on German payroll | Salary reporting + SGK | Place of work, Article 23/14, applicable treaty and social-security documentation. |
| Founder relocates while continuing to manage a foreign company | Individual + corporate tax | Salary, dividends, management activity, effective management, PE and Article 20/D. |
What employers should review before changing payroll
Employee
Nationality, relocation date, residence status and expected days in Türkiye.
Employment
Contracting employer, role, reporting line, salary currency and place of work.
Company
Turkish clients, local entities, premises, contract authority and commercial activities.
Payroll
Payroll country, tax withholding, cost recharge and accounting treatment.
Social security
Existing coverage, treaty jurisdiction and certificate-of-coverage availability.
Other income
Foreign investments and other income potentially relevant to Article 20/D.
Frequently asked questions
Can the employee simply remain on our foreign payroll?
Possibly, but remaining on foreign payroll does not determine the Turkish tax, SGK or employer-registration position.
Does staying under 183 days automatically make the salary tax-free?
No. The 183-day test is only part of the analysis. Domestic Turkish rules, the place where employment is exercised and the applicable treaty must be reviewed together.
Is salary paid by a foreign company automatically exempt under Article 23/14?
No. Article 23/14 contains specific conditions relating to the foreign employer, funding of the remuneration, foreign-currency payment and the employer’s Turkish activities.
Does Article 20/D exempt salary from a foreign employer?
Not merely because the employer or bank account is abroad. Salary for work physically performed from Türkiye requires a separate employment-income analysis.
Can one employee create a permanent establishment in Türkiye?
Potentially. The result depends on the employee’s functions, contractual authority, working location and the relevant double taxation agreement.
Turkish Income Tax Law Articles 7 and 23/14 · Article Mükerrer 20/D · Turkish Revenue Administration guidance · Turkish Social Security Institution guidance · applicable double taxation and bilateral social-security agreements.
Before changing payroll, determine the Turkish position.
SystemsCPA supports international employers with Turkish employee tax, payroll, SGK, permanent-establishment and cross-border compliance analysis.
We can review the employee’s proposed working arrangement and provide a practical implementation roadmap for both the employer and the employee.
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