Hiring a foreign employee in Turkey requires employers to consider more than the standard Turkish payroll process.
Foreign employees may be subject to Turkish income tax, social security contributions and unemployment insurance in much the same way as Turkish employees. However, additional issues such as work permits, minimum salary requirements, tax residency and international social security agreements can significantly affect payroll.
For international companies, understanding payroll for foreign employees in Turkey is therefore essential before hiring or relocating an employee.
This guide explains the main payroll, tax and social security considerations for foreign nationals working in Turkey.
Can Foreigners Be Employed in Turkey?
Yes.
Foreign nationals can work in Turkey provided that the applicable immigration and employment requirements are satisfied.
In most cases, a foreign national must obtain a valid work permit before legally performing employment activities in Turkey.
The employer and employee should therefore coordinate the work permit process before the intended employment start date.
Employing a foreign national without the appropriate authorisation can expose both the employer and employee to administrative consequences.
Work Permit and Payroll Are Closely Connected
For foreign employees, work permit compliance and payroll should not be treated as completely separate processes.
Information declared during the work permit application must be consistent with the actual employment relationship.
This includes elements such as:
- job title;
- occupation;
- employer;
- workplace;
- salary;
- employment conditions; and
- duration of employment.
Employers should therefore coordinate HR, immigration and payroll processes when hiring foreign employees.
Minimum Salary Requirements for Foreign Employees
One of the most important differences between hiring Turkish and foreign employees concerns the salary criteria applied during the work permit process.
The Turkish Ministry of Labour applies minimum remuneration criteria based on the employee’s professional category.
The salary offered to the foreign employee must be calculated by reference to the gross statutory minimum wage applicable on the work permit application date.
Under the current criteria, remuneration must generally be at least:
Senior Executives and Pilots:
5 × gross minimum wage
Engineers and Architects:
4 × gross minimum wage
Other Managers:
3 × gross minimum wage
Jobs Requiring Expertise or Mastery:
2 × gross minimum wage
Domestic Services and Other Professions/Jobs:
At least the gross minimum wage
Specific exemptions can apply to certain categories of foreign nationals.
Employers should therefore verify the applicable work permit salary requirement before agreeing the employee’s compensation.
Why the Work Permit Salary Matters for Payroll
The salary declared during the work permit process should be consistent with the salary actually processed through payroll.
For example, if a foreign manager’s work permit is approved on the basis of remuneration satisfying the applicable salary criterion, the employer should not subsequently process an inconsistent lower salary without reviewing the legal consequences.
Payroll and work permit records should therefore remain aligned.
This is particularly important during:
- salary changes;
- promotions;
- changes of position;
- work permit renewals; and
- amendments to employment conditions.
Are Foreign Employees Subject to Turkish Income Tax?
Foreign nationality does not automatically exempt an employee from Turkish income tax.
The tax treatment depends on factors such as:
- tax residence;
- source of employment income;
- place where the employment activity is performed;
- employer structure;
- applicable exemptions; and
- relevant double taxation agreements.
An employee considered resident in Turkey can generally be subject to Turkish income taxation according to the applicable residency rules.
Individuals who have their domicile in Turkey or who remain continuously in Turkey for more than six months during a calendar year can generally be considered resident, subject to statutory exceptions and applicable tax treaty provisions.
Non-residents are generally subject to Turkish taxation on income considered to arise in Turkey.
Tax Residency Is Different From Nationality
This distinction is fundamental.
A French, British, German, American or other foreign national can become a Turkish tax resident.
Similarly, nationality alone does not determine where employment income must be taxed.
For payroll purposes, employers should therefore ask:
Where does the employee work?
Where is the employee tax resident?
Who is the employer?
Who bears the employment cost?
Is there a Double Taxation Agreement?
These questions are generally more relevant than the employee’s passport.
Income Tax on Foreign Employees’ Salaries
When a foreign employee is subject to standard Turkish payroll taxation, salary income is generally subject to Turkey’s progressive income tax system.
Income tax is calculated on a cumulative basis during the calendar year.
As the employee’s cumulative taxable income increases, higher tax brackets may become applicable.
This means that a foreign employee receiving the same gross salary each month may receive a lower net salary later in the year.
The basic principle is the same as for Turkish employees.
Gross-to-Net Calculation for Foreign Employees
A simplified Turkish payroll calculation can be represented as:
Gross Salary
minus
Employee SGK Contribution
minus
Employee Unemployment Insurance Contribution
minus
Income Tax
minus
Stamp Tax
equals
Net Salary
However, the exact calculation depends on the employee’s individual circumstances.
For foreign employees, the social security position must be checked before assuming that standard SGK deductions apply.
Are Foreign Employees Subject to SGK?
Foreign employees working in Turkey are generally subject to the Turkish social security system when the applicable conditions are met.
The standard Turkish system is administered by the Sosyal Güvenlik Kurumu (SGK).
Where the employee falls within Turkish compulsory social security coverage, both employee and employer contributions must be taken into account through payroll.
For a standard employee subject to the normal Turkish system, employee-side deductions generally include:
- 14% employee social security contribution; and
- 1% employee unemployment insurance contribution.
Employer-side contributions must also be considered when calculating the total employment cost.
However, foreign employees require an additional check because an international social security agreement may apply.
International Social Security Agreements
Turkey has concluded bilateral social security agreements with numerous countries.
These agreements are particularly important for employees who are temporarily assigned to Turkey by a foreign employer.
The general principle under Turkey’s social security agreements is that an employee is normally subject to the social security legislation of the country where the work is performed.
However, agreements can contain important exceptions.
One of the most common concerns temporary assignments or secondments.
An employee temporarily sent to Turkey may, subject to the conditions of the relevant agreement, remain covered by their home-country social security system for a specified period.
This can prevent double social security contributions.
Temporary Assignment to Turkey
Consider an employee working for a foreign company who is temporarily assigned to Turkey.
Depending on the applicable bilateral social security agreement, the employee may be able to remain affiliated with the home-country system.
Appropriate documentation will generally be required to demonstrate continued coverage abroad.
If the conditions are satisfied, Turkish SGK contributions may not apply during the permitted assignment period.
Employers should never assume that a foreign employee is automatically exempt from SGK simply because they continue contributing abroad.
The applicable agreement and supporting certificate must be reviewed.
What If There Is No Social Security Agreement?
If the employee comes from a country that does not have an applicable social security agreement with Turkey, different rules must be considered.
The employee’s circumstances, assignment structure and Turkish social security legislation should be reviewed individually.
Employers should therefore determine the social security position before the employee begins working in Turkey rather than attempting to correct payroll retrospectively.
Double Taxation Agreements
Social security agreements and Double Taxation Agreements (DTAs) are different.
A social security agreement determines which country’s social security system may apply.
A Double Taxation Agreement helps determine taxation rights between Turkey and another country.
Turkey has concluded tax treaties with many jurisdictions.
For internationally mobile employees, the applicable treaty may need to be reviewed to determine whether employment income is taxable in Turkey, the employee’s treaty residence and whether relief from double taxation is available.
Employers should therefore avoid using the terms “tax treaty” and “social security agreement” interchangeably.
They address different obligations.
The 183-Day Rule
Foreign employers often assume that an employee staying in Turkey for fewer than 183 days is automatically exempt from Turkish income tax.
This is an oversimplification.
Many tax treaties contain provisions referring to approximately 183 days when allocating taxation rights over employment income.
However, the number of days spent in Turkey is only one part of the analysis.
Other conditions can include:
- who the employer is;
- whether the employer is resident in Turkey;
- whether remuneration is borne by a Turkish permanent establishment; and
- the wording of the applicable Double Taxation Agreement.
Employers should therefore not rely on the 183-day threshold alone.
Foreign Employer Paying the Salary
Another important scenario occurs when an employee works in Turkey but continues receiving salary directly from a foreign company.
Payment from abroad does not automatically mean that the salary is outside Turkish taxation.
The employee’s tax residency, place of employment and applicable tax treaty must still be considered.
Turkish legislation does provide a specific income tax exemption for certain salaries paid by qualifying non-resident foreign employers.
However, several cumulative conditions must be satisfied, including conditions relating to the employer’s activities, the source of the funds, the currency of payment and the treatment of the salary expense in Turkey.
This exemption should therefore not be assumed to apply to every foreign employee paid from abroad.
Foreign Currency Salaries
International companies frequently want to determine foreign employees’ salaries in:
- EUR;
- USD;
- GBP; or
- another foreign currency.
The employment contract, Turkish legislation, work permit requirements and payroll reporting rules must all be considered when structuring foreign-currency compensation.
Even where compensation is commercially agreed by reference to a foreign currency, Turkish payroll and statutory declarations may require amounts to be converted and reported according to the applicable rules.
Currency fluctuations can therefore affect payroll budgeting.
Bonuses for Foreign Employees
Foreign employees can receive:
- performance bonuses;
- annual bonuses;
- sales commissions;
- sign-on bonuses;
- retention bonuses; and
- other variable compensation.
Where these payments constitute employment remuneration taxable through Turkish payroll, they generally need to be included in the payroll calculation.
Bonuses can affect:
- cumulative income tax;
- SGK contribution base, where applicable;
- unemployment insurance;
- net salary; and
- total employer cost.
International companies should therefore calculate the Turkish payroll impact before communicating a net bonus amount.
Benefits for Foreign Employees
Foreign employees may also receive additional benefits such as:
- private health insurance;
- meal allowance;
- transportation allowance;
- company car;
- mobile phone;
- internet allowance;
- housing support;
- relocation expenses;
- flights;
- education expenses; and
- supplementary insurance.
Employers should not assume that a benefit commonly provided tax-free in another country will receive the same treatment in Turkey.
Each benefit should be reviewed separately for Turkish income tax and SGK purposes.
Expatriate Compensation Packages
Senior foreign employees frequently receive more complex compensation packages than local employees.
For example:
Base Salary
Annual Performance Bonus
Housing Allowance
Private Health Insurance
Company Car
Relocation Package
Such arrangements should ideally be reviewed before the employee relocates to Turkey.
This allows the employer to determine which components are taxable, which are subject to SGK and what the employee’s estimated net remuneration and total employer cost will be.
Net Salary Agreements
Foreign employees sometimes negotiate salaries on a net basis.
For example:
Guaranteed Net Salary: EUR 5,000 per month
This creates additional payroll complexity.
The employer must calculate the gross salary necessary to produce the guaranteed net amount after Turkish deductions.
Because Turkish income tax is progressive and cumulative, the required gross salary can change during the year.
A net salary agreement can therefore create substantially higher employer costs than a gross salary agreement.
Foreign employers should request a full-year net-to-gross simulation before agreeing to guaranteed net compensation.
Employer Cost for a Foreign Employee
The employee’s gross salary should not be confused with the employer’s total cost.
Where the employee is fully subject to Turkish payroll and SGK, the employer must generally budget for:
Gross Salary
Employer Social Security Contributions
Employer Unemployment Insurance
Benefits
Bonuses and Other Compensation
=
Total Employer Cost
Where a social security agreement provides an exemption from Turkish SGK, the calculation may differ.
This is why employer cost simulations for foreign employees should be prepared individually.
Hiring a Foreign Employee Without a Turkish Entity
A foreign company may want to hire an employee in Turkey without establishing its own Turkish subsidiary.
Depending on the circumstances and intended employment structure, the company may need to consider an Employer of Record (EOR) solution.
Under an EOR structure, a local employer can manage employment administration and payroll while the foreign company manages the employee’s operational activities within the agreed framework.
The structure must nevertheless be assessed carefully, particularly regarding immigration, tax, permanent establishment and employment-law considerations.
Payroll Documents for Foreign Employees
Employers should maintain appropriate payroll and employment documentation for foreign employees.
Depending on the circumstances, this may include:
- employment agreement;
- work permit;
- identification documents;
- SGK registration;
- payroll records;
- payslips;
- salary payment records;
- tax documentation;
- social security coverage certificates;
- bonus documentation; and
- benefit records.
International assignment documentation may also be required for seconded employees.
Common Payroll Mistakes When Hiring Foreign Employees
Foreign employers should pay particular attention to several common mistakes:
- allowing the employee to start before work authorisation is properly addressed;
- ignoring work permit salary criteria;
- assuming foreign nationality creates an income tax exemption;
- assuming fewer than 183 days automatically means no Turkish tax;
- paying salary abroad without analysing Turkish tax consequences;
- automatically registering an employee with SGK without checking an applicable social security agreement;
- assuming foreign social security coverage automatically creates an SGK exemption;
- agreeing to a net salary without modelling the full-year employer cost; and
- failing to coordinate payroll with work permit renewals and salary changes.
Checklist Before Hiring a Foreign Employee in Turkey
Before the employee starts work, the employer should determine:
1. Work Permit
Does the employee require a Turkish work permit?
2. Salary Requirement
Does the proposed salary meet the applicable work permit criterion?
3. Tax Residency
What is the employee’s expected Turkish tax position?
4. Income Tax
Will the salary be subject to Turkish payroll withholding?
5. Social Security
Is the employee subject to SGK?
6. International Agreement
Does a bilateral social security agreement apply?
7. Tax Treaty
Does a Double Taxation Agreement affect the employee’s position?
8. Benefits
How should additional benefits be treated?
9. Gross or Net Salary
Is compensation contractually agreed on a gross or net basis?
10. Total Employer Cost
What is the expected full employment cost in Turkey?
Managing payroll for foreign employees in Turkey requires coordination between payroll, tax, social security and immigration rules.
Foreign employees are not automatically exempt from Turkish payroll obligations because of their nationality or because their salary is paid from abroad.
Employers must consider the employee’s work permit, applicable salary criteria, Turkish tax residency, income tax obligations, SGK coverage and any relevant international agreements.
The distinction between a Double Taxation Agreement and a social security agreement is particularly important, as each addresses a different aspect of international employment.
For foreign companies, reviewing these issues before the employee begins working in Turkey can prevent payroll corrections, unexpected employment costs and compliance issues later.
Set Idari Destek supports international companies employing foreign personnel in Turkey, including payroll calculations, gross-to-net simulations, SGK processes, work permit coordination and monthly payroll management.