Getting cash out of Türkiye: dividends, interest, royalties and service fees compared
Withholding rates, deductibility and the audit risks of the four main routes for moving profits from a Turkish subsidiary to its parent, and how to choose between them.
Profits made in Türkiye can reach the parent in four main ways: dividends, interest on intercompany loans, royalties and service fees. Each carries a different withholding tax, deductibility and documentation burden. This guide compares them for 2026.
Withholding tax at a glance
| Route | Domestic withholding rate | Typical treaty effect |
|---|---|---|
| Dividend | 15% (raised from 10% in December 2024) | Often reduced to 5% or 10% for holdings of 25% or more |
| Interest | 10%; 0% may apply to loans from eligible foreign banks and financial institutions | Limited relief, treaty rates are mostly at or above 10% |
| Royalty | 20% | Often reduced to 10% |
Treaty relief applies only when the conditions are met, including beneficial ownership and, for dividends, minimum shareholdings. Keep a current certificate of tax residence for every foreign recipient.
1. Dividends
- Paid from statutory profit after corporate tax, so they are not deductible in Türkiye.
- 15% withholding under domestic law, reduced under most treaties. Dividends to Turkish resident companies carry no withholding.
- Require a general assembly resolution and a legal reserve allocation under the Turkish Commercial Code.
- Distributable profit comes from the statutory books, not the IFRS pack.
2. Interest on intercompany loans
- Deductible in principle, which makes debt attractive, but subject to transfer pricing (the rate must be arm's length), thin capitalisation rules (a 3:1 debt-to-equity safe harbour for related-party debt) and limits on financing expenses where borrowings exceed equity.
- Foreign currency loans expose the Turkish company to FX losses that are deductible for tax but can wipe out statutory equity.
- 10% withholding under domestic law.
3. Royalties and brand fees
- Deductible if the rate is arm's length and the group can show who develops, enhances, maintains, protects and exploits the intangible (DEMPE).
- 20% withholding, often 10% under treaties.
- Payments abroad for services and rights may also trigger reverse-charge VAT at 20%, which is generally recoverable.
4. Management and service fees
- Deductible only with evidence that services were actually received and benefit the Turkish company (a benefit test), priced at arm's length.
- Reverse-charge VAT usually applies. Withholding depends on the type of service and the treaty.
- Tax audits often challenge fees allocated by headcount or revenue without service evidence.
Transfer pricing documentation
Related-party transactions must be reported annually with the corporate tax return, and larger taxpayers prepare a transfer pricing report. Disguised profit distribution through non-arm's length pricing is added back and treated as a dividend for withholding purposes.
How to choose
- If the treaty dividend rate is 5%, dividends are often the cleanest route for surplus cash.
- Loans make sense for funding growth, but model the FX risk and the deductibility limits first.
- Royalties and service fees should follow genuine value creation; building them only to move cash invites challenge.
- Plan the timing: dividend resolutions follow the annual general assembly, while interest and fees can be paid during the year.
Need help structuring this? Request an introduction to a transfer pricing advisor.
Sources: PwC Worldwide Tax Summaries, Türkiye, Withholding taxes and Other taxes (reviewed 09.09.2026); EY Tax News 2025-0134 on the dividend withholding increase. Thin capitalisation and financing expense limits depend on the facts. General information, not tax advice. Last checked 4 November 2026.
For information only; not tax, legal or investment advice. Rules change, so check the official source before acting.