I Sell Services Abroad — What About Tax?

You have a company in Turkey and clients abroad. You receive payments via Upwork, you have connected Stripe, perhaps you have signed a contract with a German agency. Everything seems to be going well.

But do you know what is happening on the tax side?

In this article I answer the questions that startup founders and freelancers selling services abroad most frequently get stuck on. It may look complex, but when structured correctly it is possible to build an arrangement that is both compliant and advantageous.

The Basic Question First: Is Overseas Service Revenue Taxed in Turkey?

Yes — but how it is taxed, which exemptions may apply and what happens with VAT depends entirely on your structure.

If you are a Turkey-resident company or individual selling services abroad, the income you earn must be declared in Turkey. What matters is not where the money comes from, but where you reside and where your company is incorporated.

What Happens with VAT?

This is the most frequently asked question.

For services provided to a client abroad, VAT is applied at zero rate provided certain conditions are met. In other words, you can issue the invoice without VAT.

The conditions are:

• The service must be provided to a recipient abroad,
• The service must not be benefited from within Turkey,
• The payment must be brought into Turkey in foreign currency.

When all three conditions are met together, no VAT is calculated and the transaction is shown as an “export exemption” on the VAT return.

A practical example: you provide software development services to a company in Germany and the payment arrives in your account in euros. This transaction is exempt from VAT.

The key point to watch: in order to apply the exemption, you must issue the invoice correctly and document that payment arrived in foreign currency using bank statements.

Income Tax or Corporate Tax?

It depends on your company type.

Sole proprietorship / self-employed income: Revenue earned from abroad is subject to income tax like your other income. However, there is a very important exemption here — I explain it in detail below.

Limited liability or joint-stock company: Overseas service revenue enters the corporate tax base. However, a significant deduction right exists under CTA Article 10/1(ğ), which I also explain below.

ITA Article 89/13: The Overseas Service Income Exemption

This is a tax provision that was initially little known but is now one of the most discussed in the sector.

Article 89 of the Income Tax Act states that a certain proportion of income derived from certain services provided abroad may be deducted from the income tax base. The rate has changed significantly over the years:

• 2012–2022: 50%
• 2023–2025: 80% (increased by Law No. 7491)
• 2026 onwards: 100% (Presidential Decree No. 11257 dated 30 April 2026)

Yes, you read that correctly. If you are an income taxpayer selling services abroad within this scope, you can deduct the entirety of the income you earn from your income tax base. In practice, this means the relevant revenues are completely exempt from income tax.

Services within scope: architecture, engineering, design, software, medical reporting, accounting record-keeping, call centre, product testing, certification, data storage, data processing, data analysis and professional training fields designated by the Ministry of Finance.

Conditions:

• The service must be provided to a person or entity abroad,
• The service must be benefited from exclusively outside Turkey,
• The full amount must be transferred to Turkey by the time the tax return is filed,
• The invoice must be issued in the name of the foreign recipient.

Free-zone note: Free zones are not counted as abroad. A service provided to a company in a free zone cannot benefit from this exemption.

Important note for company (Ltd./A.Ş.) founders: The parallel provision for corporate taxpayers is CTA Article 10/1(ğ), where the rate has also reached 100%. However, due to the domestic minimum corporate tax (CTA Article 32/C) that came into force from 2025, the corporate tax a company pays cannot fall below 10% of income calculated before deductions and exemptions. This means the 100% deduction right is effectively capped for companies. Sole proprietors and self-employed taxpayers are not affected by this restriction.

Working with your CPA on the required documentation and return format for applying this exemption correctly is critical. Incorrect application can create both tax risk and penalties.

Upwork, Payoneer, Stripe: How Are Payments Documented?

This is a frequently encountered question for payments received through digital platforms.

Upwork: Upwork provides you with a Transaction History report showing how much you received for each job. You must keep this report together with your bank or Payoneer account statement for accounting purposes.

Payoneer: Amounts you transfer from your Payoneer account to your Turkish bank account are treated as export proceeds because they arrive in foreign currency. Archive the bank statement and Payoneer transaction summary for each transfer.

Stripe: If you collect payments through Stripe, download the monthly payout reports from the Stripe Dashboard and forward them to your accountant. Stripe also provides tools to simplify invoicing; however, under Turkish tax law you are still required to issue your own separate invoice.

General rule: create a document chain for each payment. Contract → invoice → proof of payment. If this chain is incomplete, you will face difficulties during a tax audit.

What Happens if Foreign Currency Sits in the Account?

You may keep foreign currency in your account; you are not required to convert it to Turkish lira. However, exchange rate difference calculations are needed for accounting purposes.

The requirement that foreign currency be “brought to Turkey” means that it is transferred to your account — not that it physically arrives in the country. If it sits indefinitely in an overseas account, risks may arise regarding documentation and the application of the exemption.

Summary: What You Need to Do

If you sell services abroad, you need to take the following steps:

• Create a contract, invoice and proof-of-payment chain for each job.
• Document foreign-currency payments with bank or platform statements.
• Work in coordination with your CPA to apply the VAT exemption correctly.
• Assess whether you qualify for the 100% deduction under ITA Article 89/13.
• If you are a corporate taxpayer, calculate the impact of the domestic minimum corporate tax.

These steps may seem tedious, but when structured correctly they both optimise your tax burden and let you sleep soundly in the event of an audit.

Final Word

Selling services abroad is a real opportunity for Turkish entrepreneurs and freelancers. You earn foreign-currency income and on top of that you can benefit from some of the broadest tax advantages the legislation offers. As of 2026, that advantage has reached 100% for income taxpayers. The only condition: set things up correctly from the start.

If you have any questions on this topic, feel free to get in touch.