For foreign-owned companies operating in Turkey, one of the most important financial considerations is how profits generated in Turkey can be transferred to the parent company or foreign shareholders.
As of 2026, transferring company profits abroad is legally possible in Turkey. However, the process must be evaluated within the framework of corporate tax, withholding tax, and double taxation treaties.
This guide explains the main methods of transferring profits abroad and the tax implications associated with each option.
Step One: Corporate Tax on Company Profits
Before profits can be distributed or transferred abroad, the company must first pay corporate tax on its earnings.
Example:
- Pre-tax profit: 10,000,000 TL
- Corporate tax (assumed 25%): 2,500,000 TL
Net profit after corporate tax:
10,000,000 – 2,500,000 = 7,500,000 TL
The distributable profit is calculated based on this net amount.
Profit Transfer Through Dividends
The most common method of transferring profits abroad is through dividend distribution.
Dividend Withholding Tax
When dividends are distributed in Turkey, a withholding tax is applied.
The general withholding tax rate typically ranges between 10% and 15%, depending on the current regulations.
However, this rate may be reduced under a Double Taxation Avoidance Agreement (DTAA) between Turkey and the shareholder’s country.
Example:
- Distributable profit: 7,500,000 TL
- Withholding tax rate: 15%
Withholding tax amount:
7,500,000 × 15% = 1,125,000 TL
Net amount transferred abroad:
7,500,000 – 1,125,000 = 6,375,000 TL
Impact of Double Taxation Treaties
Turkey has signed double taxation agreements with more than 80 countries.
These agreements may provide:
- Reduced withholding tax rates on dividends
- Protection against double taxation
- Tax credit opportunities in the shareholder’s home country
For certain countries, the withholding tax rate may be reduced to 5% or 10%.
Therefore, reviewing treaty provisions before distributing profits is extremely important.
Alternative Profit Transfer Methods
Dividends are not the only way to transfer profits abroad. Several alternative mechanisms exist.
Management Service Fees
The Turkish company may pay management or consulting service fees to the parent company.
However, these payments must comply with transfer pricing rules and reflect market conditions.
Royalty Payments
Payments may be made for the use of trademarks, intellectual property, or know-how.
Royalty payments may also be subject to withholding tax.
Interest Payments
Companies may transfer funds through interest payments arising from intra-group loans.
Thin capitalization rules must be considered in such structures.
If these mechanisms are incorrectly structured, they may create tax audit risks.
Transfer Pricing Risks
When payments are made between related companies across borders, the following rules must be observed:
- Arm’s length principle
- Transfer pricing documentation
- Supporting financial documentation
Failure to comply with these requirements may lead to tax penalties and tax base adjustments.
Banking and Technical Process
To distribute profits abroad, the following steps are typically required:
- General assembly resolution approving profit distribution
- Calculation and payment of withholding tax
- Submission of tax declarations
- Transfer of funds through the banking system
Capital transfers from Turkey are generally unrestricted, provided that all tax obligations are fulfilled.
Why Strategic Planning Matters
When planning profit transfers abroad, several strategic questions should be considered:
- When should profits be distributed?
- How can withholding tax rates be optimized?
- Is the group structure designed efficiently?
- What is the impact on company cash flow?
Poor planning may result in unnecessary tax costs and financial inefficiencies.
How Sunrise CPA Supports Profit Transfers
At Sunrise CPA, we support foreign-owned companies with:
- Profit distribution planning
- Withholding tax calculations
- Double taxation treaty analysis
- Transfer pricing risk assessments
- Managing cross-border profit transfer processes
Our goal is to help foreign investors transfer profits safely and efficiently while remaining fully compliant with Turkish tax regulations.
Conclusion
Transferring company profits abroad from Turkey is legally possible, but it must be carefully planned within the framework of corporate tax, withholding tax, and international tax agreements.
With proper structuring and professional advisory support, companies can minimize tax risks while improving financial efficiency.