Quick answer: If a service supplied by a business without a Turkish residence, workplace, legal seat or place of management is used in Türkiye, the Turkish recipient may be required to declare the full VAT through VAT Return No. 2, subject to the specific supply and exemption rules. Determine where the service is used before deciding who is responsible.
When does VAT Return No. 2 need review?
Start with the service, not the invoice currency. Turkish VAT law treats services performed or enjoyed in Türkiye as supplied in Türkiye for place-of-supply purposes. The Revenue Administration's VAT General Implementation Communiqué explains that where a non-resident supplier performs a service in Türkiye, or performs it abroad but it is enjoyed in Türkiye, the domestic recipient can be responsible for declaring and paying the VAT. If an exemption applies, or a service performed abroad is enjoyed abroad, the result may differ.
This page addresses the imported-service responsible-party question. VAT Return No. 2 also covers other withholding/responsibility cases with different rules; do not apply a single imported-services explanation to every transaction.
Who is the responsible party?
For the described non-resident service scenario, the recipient in Türkiye is generally the party responsible for the VAT declaration. The GİB Communiqué makes clear that the Turkish recipient need not already be a VAT taxpayer for this responsibility to arise. Contract wording that says the foreign supplier pays “all taxes” does not, by itself, change who must file under Turkish tax law.
Three invoice scenarios
- Foreign consultancy used by a Turkish subsidiary: A service delivered from abroad but used in the Turkish business may trigger recipient-side VAT responsibility. Identify the deliverable and place of use.
- Group software or digital services: Review who contracts for the service, where it is used and whether a special digital-services or platform rule changes the analysis. Do not classify every subscription identically.
- Work carried out and used abroad: A foreign invoice alone does not establish Turkish VAT. Check the actual supply, place of benefit and any relevant exemption before filing.
Document and filing checklist
- Foreign supplier agreement, order form and invoice, including the exact service description.
- Evidence of the supplier's location and any Turkish establishment relevant to the supply.
- Explanation of where and by whom the service is used.
- Tax analysis of the applicable VAT rate, exemption and any separate withholding issue.
- Accounting entries, exchange-rate basis and period of the taxable event.
- VAT Return No. 2 filing and payment evidence, plus any VAT Return No. 1 deduction analysis.
Keep the supporting file with the return. If the accounting description says “management fee” but the contract covers several deliverables, each component may require separate examination.
VAT No. 2 versus VAT No. 1
VAT Return No. 2 is the responsibility-side declaration. It is not the same as VAT Return No. 1, through which an eligible VAT taxpayer may claim input VAT under the applicable deduction rules. GİB explains that no deduction is taken in the VAT No. 2 return itself; a qualifying deduction may be considered under the general rules in VAT No. 1. Payment and evidence requirements should be checked for the relevant period.
Is VAT responsibility the same as income-tax withholding?
No. A cross-border payment can require separate analyses for VAT, income or corporate-tax withholding, treaty relief and transfer pricing. Whether a fee is a service payment, royalty or another category matters. Do not use a VAT No. 2 conclusion as a substitute for treaty or withholding review. Our broader corporate tax, VAT and withholding guide explains the wider tax framework.
What should the contract say?
The contract should describe the actual services, where they are delivered and used, which party provides tax documentation, whether prices are gross or net of applicable taxes and how a later tax assessment is handled. For recurring services, review the invoice and use pattern periodically; it may change as the business expands into Türkiye.
Frequently Asked Questions
Does every foreign invoice require VAT Return No. 2?
No. The nature of the supply, place of use, supplier position and any exemption must be assessed. A foreign billing address is not enough.
Can a company that is not a regular VAT taxpayer still be responsible?
Potentially yes. GİB states that a domestic recipient need not already be a VAT taxpayer for the described non-resident service responsibility.
Can VAT declared through No. 2 be deducted?
There is no deduction inside the No. 2 return. Eligibility for a deduction in No. 1 depends on the recipient and the general VAT deduction rules.
Who decides the filing period and rate?
The taxpayer and its accountant should apply the rules in force for the transaction date and type, based on the invoice, service evidence and current GİB guidance.
