Contract R&D in a Technopark: Is Development Done for Someone Else In Scope?

A significant share of software companies in Turkish technoparks are not building their own product — they are building for someone else. Writing a corporate client’s system, producing a module for a group company, preparing a bespoke solution for a customer abroad.

The question most often skipped in that model is this: whose R&D is this work?

The answer determines what happens on the tax side. And what determines the answer is not the accounting — it is the contract.

Where the confusion comes from

The technopark exemption applies to income arising from software, design and R&D activity carried out in the zone. In contract work the activity is carried out in the zone — so far so good.

The complication arises here: who owns the value created? Is the company doing the development selling a service, or producing and transferring an intangible right?

In both cases money flows in the same direction, but the tax treatment can differ.

What does the contract determine?

Four headings have to be settled in a contract-R&D arrangement:

Ownership of the output. Who holds the rights in the software developed? Do they pass entirely to the party commissioning the work, stay with the developer, or are they shared?

What the consideration is for. Is the amount paid a service fee, a fee for the transfer of a right, or a licence fee?

Rights of use. Can the developer sell the same solution to other customers? If it can, that moves the arrangement closer to product development.

Where the risk sits. Who bears the cost if the development fails? The party bearing the risk is a strong indicator of who really owns the R&D.

If those four are not clear in the contract, the applicable tax regime is not clear either. And the need to clarify usually arises during an audit — that is, at a moment when the contract can no longer be changed.

Contract work with a related party

Between group companies the picture is one layer more complex, because three regimes engage at once:

The technopark exemption — whether the activity was carried out in the zone.

Transfer pricing — whether the price charged to a related party is at arm’s length. If set too low, disguised profit distribution comes into play; if too high, a disallowance on the other side.

The qualified expenditure ratio — if a patentable intangible right emerges, R&D services bought from related parties lower that ratio. I explain the mechanism in the qualified expenditure ratio article.

An intra-group R&D structure built without assessing all three carries risk from three separate directions.

The foreign customer: where two regimes intersect

If a company in a technopark develops for a customer abroad, two separate regimes lay claim to the same income:

• The technopark earnings exemption (Law 4691),
• The service export earnings deduction — for companies, Corporate Tax Law art. 10/1-ğ, a regime whose importance has grown now that the rate has risen to 100%. I cover the mechanics in the service export article and the calculator.

Since the same income cannot benefit from both, which one applies has to be settled at the outset. And it is not merely a matter of preference: because their conditions differ, one may fit your structure while the other does not.

What to look at when deciding: whether the activity was carried out in the zone, whether the benefit arises abroad, whether the fee is repatriated, and who owns the output.

Practical advice: before you sign

In contract work, the highest-return fifteen minutes are the fifteen minutes before the contract is signed.

Four questions to ask:

1. Who will own the rights in whatever comes out of this work?
2. What will we invoice the fee as being for?
3. Is the counterparty a related party?
4. Is the customer in Turkey or abroad?

The answers to those four determine which regime applies and which documents have to be kept through the year. Answers given afterwards amount to interpreting an existing contract.

In short

In contract R&D, the contract determines how the exemption applies. Ownership of the output, the nature of the consideration, rights of use and where the risk sits — if those four are clear, the tax side is clear. In work with related parties, transfer pricing and the qualified expenditure ratio engage; with a foreign customer, the technopark exemption and the service export deduction intersect and one must be chosen.

None of these distinctions can be constructed afterwards through an accounting entry. They are constructed at the contract stage.

Sources

• Law No. 4691 on Technology Development Zones — Legislation Information System
• Corporate Tax Law No. 5520, art. 10/1-(ğ) and art. 13 on transfer pricing — Legislation Information System
• Corporate Tax General Communiqués — Turkish Revenue Administration
• Advance rulings on contract R&D — Turkish Revenue Administration ruling database

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This article reflects 2026 legislation and is provided for general information only; it is not legal or tax advice. In contract work the treatment depends on the specific terms of the agreement — consult a licensed professional on your own contract.