Withholding on business rent: gross or net?
How a tenant business calculates withholding, what it pays the landlord and when it pays the tax over; what changes if the landlord is a company.
When a business rents premises from an individual, it withholds 20% income tax from the rent, pays the rest to the landlord and pays the withheld tax with the withholding and premium service return.
If the lease states a gross rent
On a gross rent of TRY 25,000 the withholding is TRY 5,000. The landlord receives TRY 20,000 and TRY 5,000 goes to the tax office. The tenant's expense is TRY 25,000.
If the lease states a net rent
If the landlord is to receive TRY 20,000, the gross rent is 20,000 ÷ 0.80 = TRY 25,000. A common mistake is 20,000 × 1.20 = TRY 24,000, which under-withholds.
| Stated in the lease | Gross rent | Withholding (20%) | Paid to the landlord |
|---|---|---|---|
| Gross TRY 25,000 | TRY 25,000 | TRY 5,000 | TRY 20,000 |
| Net TRY 20,000 | TRY 25,000 | TRY 5,000 | TRY 20,000 |
| Net TRY 40,000 | TRY 50,000 | TRY 10,000 | TRY 40,000 |
When and how is it paid?
- Withholding is declared on the withholding and premium service return by the 26th of the month after the rent is paid, and paid the same day.
- For annual rent paid in advance, the full withholding is declared in the month of payment.
- Rent must be paid through a bank or the post office; otherwise a special irregularity penalty may apply.
If the landlord is a company
If the landlord is a company or a VAT taxpayer, there is no withholding; a rent invoice is issued with 20% VAT added.
For the landlord
The landlord declares the rental income in the annual income tax return and credits the tax withheld during the year. Details and example: Rental income return · Rental income tax calculator
Common mistakes
- Grossing up a net rent by adding 20%.
- Renting a flat as an office and forgetting withholding (a flat used as a workplace is also subject to withholding).
- Paying rent in cash.
- Withholding on premises rented from a company.
Try your own figures in the rent withholding calculator.
Sources: Income Tax Law No. 193 arts. 70 and 94/5-a; VAT Law No. 3065; Tax Procedure Law No. 213 art. 355 (documenting collections and payments).