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GIYKIMBIL: short term property rentals and related matters - update November 2017 PDF Print E-mail
Friday, 10 November 2017

Property rentalsWe last wrote on this subject on 6th June 2017.  Click here to read what we said: GIYKIMBIL: short term property rentals and related matters - update June 2017.  Today's report brings you important news of a change in approach from the local tax authorities in Kaş.

Back in June we told you about what we termed "the elephant in the room" - namely whether renting out for holidays was classed as "commercial activity", and if it was how this would oblige property owners to establish a business (company, partnership or sole trader).

KTLN was, and still is of the opinion that holiday rentals do constitute commercial activity.  More importantly, several months ago it was viewed as such by officials in some parts of Turkey, including Muğla province, however the prevailing view of the authorities in our part of the world has been more benign. 

There has been no obvious sign that local tax officials or accountants were expecting people who rented out properties to establish a business.  But this laissez faire approach appears to have changed now.

A message from Kaş tax office
We have received feedback from credible sources that in future the local tax authorities will be treating holiday rentals as commercial activity and this means that people who operate in this market must establish a business here in Turkey and pay business tax on profits here in Turkey. 

This new information was sourced from our local tax office in Kaş.  Some local finance professionals and property management people are still getting up to speed on the change so don't be surprised if this is news to them.

We have heard anecdotally that here in Kaş they seem happy to allow people to get things in order in time for the 2018 season, (from 1st January 2018), but we should stress that we have not had this confirmed yet.

KDV (VAT) on rental income
In addition to tax on business profits, it is also being widely reported that KDV (the equivalent of the UK's VAT) is due at 18% on holiday rentals.  This will further eat into profits if property owners do not adjust their prices accordingly.

GIYKIMBIL details available to the tax office
Another development here is that very much as expected the GIYKIMBIL data for each property now appears to be available to the tax authorities.  This is going to make the level of rentals activity transparent.  If you owe any tax on your holiday rentals, (business tax on profits, not personal income tax), the local tax authorities are likely to notice if you don't pay it. 

Seek professional advice
To anyone who is renting out their property for holiday rentals we would recommend seeking professional advice. 

Some owners may decide that following the introduction of GIYKIMBIL reporting, this additional requirement to set up and operate a business, with all the responsibilities and obligations that entails, they will call it a day on renting.  Others, perhaps those who have got a number of properties, may take this opportunity to regularise the situation (if they are not already establsihed as a Turkish business) and take up the slack from those who may exit the market.

Interesting times.

As always we welcome your feedback so please let us know your own experiences on this subject.  Contact KTLN

 

Kalkan Turkish Local News - your window on Kalkan Turkey.

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Last Updated on Friday, 10 November 2017