Key Changes to Turkish Tax and Social Security Laws

On 19 December 2025, Türkiye published Law No. 7566 in the Official Gazette, introducing wide-ranging amendments to tax legislation, social security rules, public fees, real estate taxation and sector-specific regulations. The new law significantly affects employers, investors, property owners, financial institutions and foreign businesses operating in or investing in Türkiye. This article highlights the key changes and their practical implications.

1. Income Tax: Removal of Lump-Sum Expense Deduction for Residential Rentals

Under the amendments to the Income Tax Law:

• The lump-sum expense deduction for rental income no longer applies to residential properties.

• The deduction remains available only for non-residential leased assets and rights.

Impact:Individual landlords letting residential property may face higher taxable income unless they opt for the actual expense method.

2. Provisional Tax: Full-Year Application

The restriction limiting provisional tax to the first nine months of the year has been removed.

Impact:Provisional tax will now apply throughout the entire fiscal year, affecting cash flow planning for businesses and self-employed professionals.

3. Investment Funds: Clarification and Exemptions for Qualified Investor Funds

Key updates include:

• Terminology updated from “participation certificates” to “participation units”.

• Certain investment funds sold exclusively to qualified investors are exempt from:

  • Borsa Istanbul trading requirements

  • Portfolio composition restrictions

Impact:The amendments support flexible fund structures and are particularly relevant to private funds and alternative investment vehicles.

4. Motor Vehicles and Transfer Fees

• A 2‰ transfer fee (minimum TRY 1,000) applies to vehicle sales and transfers.

• Transfers to authorised second-hand motor vehicle traders are exempt from this fee.

Impact:Private vehicle transactions become more costly, while licensed dealers benefit from exemptions.

5. Title Deed Fees: Higher Declared Values Expected

Title deed fees will now be calculated based on:

• The declared transfer value,

• Provided that it is not lower than the real estate tax value.

Impact:This change is expected to limit under-declaration practices and may increase transaction costs in real estate transfers.

6. Significant Increases in Licence and Permit Fees

Law No. 7566 introduces substantial increases in annual licence and authorisation fees, including:

• Real estate brokerage licences

• Second-hand motor vehicle trade licences

• Jewellery trade licences

• Private healthcare and dental clinics

• Veterinary clinics and animal hospitals

• Precious metals refineries and intermediaries

• Airline and aviation operator licences

In metropolitan municipalities, most fees are applied at double rates, subject to limited exceptions.

Impact:Businesses operating in regulated sectors must reassess compliance costs and annual budgeting.

7. Property Tax: Cap on Increases for 2026–2029

For property tax purposes:

• Property values for 2026 cannot exceed twice the 2025 value.

• The same valuation basis applies for 2027, 2028 and 2029.

• Taxes and fees linked to property values will follow the same capped figures.

Impact:This provides temporary predictability and protection against sharp valuation increases.

Please also see our article on "Navigating Turkey's Updated Property Laws: Essential Legal Insights for Foreign Buyers in 2024"

8. Higher Education Tuition Fees

Tuition fees for years following preparatory and first-year education will be determined based on:

• The average of the annual Producer Price Index (PPI) and

• The annual Consumer Price Index (CPI) increases.

  
  

9. UEFA Events: Broad Tax Exemptions

Comprehensive tax exemptions are granted for:

• 2026 UEFA Europa League Final

• 2027 UEFA Conference League Final

• 2032 UEFA European Football Championship

UEFA, participating teams and non-resident service providers benefit from:

• VAT exemption

• Income and corporate tax exemption

• Withholding tax exemption

  
  

10. Social Security Contributions: Substantial Increases

One of the most significant impacts of Law No. 7566 concerns social security contributions:

• Multiple contribution and buy-back rates increased from 32% to 45%

• Employer contribution rates increased from 20% to 21%

• Maximum earnings cap raised from 7.5 times to 9 times the minimum wage

• Social security debts of pensioners may be deducted from pensions, capped at 25%

Impact:These changes result in material cost increases for employers, executives and individuals engaging in voluntary contribution schemes.

Also, see our article on "A Handbook for Foreign Investors and Employers on Turkish Employment Law"

11. Urban Transformation and Public Financing

• Certain tax incentives under the Urban Transformation Law are extended until 31 December 2027.

• The relevant authority is granted borrowing powers from public banks to finance urban transformation projects.

• 
  

12. Effective Dates

• Most provisions entered into force upon publication.

• Key social security and fee-related provisions will apply from 1 January 2026.

• Certain fiscal measures apply retroactively from 1 January 2025.

CCS Law is closely monitoring the implementation of Law No. 7566 and its secondary legislation, including potential regulations and administrative guidance to be issued by the relevant authorities.

Given the breadth of the amendments, particularly in the areas of taxation, social security contributions, licensing fees and real estate valuation, the practical impact of the new rules is expected to vary significantly depending on sector, transaction structure and taxpayer status.

We will continue to assess how these changes are interpreted in practice and how they affect companies, investors and individuals with interests in Türkiye, especially in cross-border and multi-jurisdictional contexts.

Disclaimer: This article is intended for informational purposes only and does not constitute legal or tax advice.