The taxation of translation, voice-over and subtitling services procured from a non-resident company is determined based on the nature of the income as independent professional services, the place of payment, and whether the service is utilized in Türkiye or abroad. In practice, the taxation of services obtained from non-resident entities frequently raises uncertainty, particularly in terms of withholding tax and Value Added Tax (VAT). For services requiring intellectual input and professional expertise, such as translation, voice-over and subtitling, the place where the service is performed, where it is utilized, and from which accounts the payment is made directly affect the tax consequences. A tax ruling dated 01.10.2025 and numbered E-38418978-125[30-2025], issued by the Revenue Administration of Ankara (Ankara Tax Office Directorate – Income and Corporate Taxes Group), provides important clarifications regarding the taxation of translation, voice-over and subtitling services procured from a UK-resident company. This article addresses the issue solely within the framework of the specific case examined in the ruling. The Specific Case Subject to the Tax Ruling In the case addressed by the ruling, a Turkish corporation procures translation, voice-over and subtitling services from a company resident in the United Kingdom. It was stated in the application that: The services are performed abroad, and The benefit from the services is realized abroad. It was further indicated that payments may be made either from offices in Türkiye or from offices located abroad. Within this context, the taxpayer requested the administration’s opinion on: How the payments should be taxed, Whether corporate withholding tax should apply and, if so, at what rate, and Whether the services are subject to VAT in Türkiye. Who Has the Right to Tax Under the Double Taxation Agreement? The ruling first evaluates the provisions regarding independent professional services under the Double Taxation Agreement in force between Türkiye and the United Kingdom. Accordingly, income derived by a UK-resident enterprise from independent professional services performed in the UK without physically coming to Türkiye is, as a general rule, taxable only in the United Kingdom. However, Türkiye may also obtain taxing rights under domestic law if: The activity is carried out in Türkiye through a permanent establishment, or The duration of the activities performed in Türkiye exceeds 183 days within any uninterrupted 12-month period. In the specific case, the ruling evaluates services performed entirely in the UK without the enterprise coming to Türkiye. Are Translation, Voice-Over and Subtitling Services Considered Independent Professional Income? The ruling clearly states that payments made to the foreign company for translation, voice-over and subtitling services must be regarded as payments made in consideration of independent professional services. This classification is critical. In payments made to non-resident corporations, the applicable taxation depends on the nature of the income. Where the payment qualifies as independent professional income, withholding obligations arise under Article 30 of the Corporate Tax Law. Is Withholding Tax Applicable to Payments Made to a Non-Resident Corporation? Pursuant to Article 3 of the Corporate Tax Law, corporations whose legal and business centers are not located in Türkiye are taxed only on income derived in Türkiye. Article 30 of the same Law provides that tax withholding must be applied to certain payments made to non-resident corporations. According to the ruling: Payments made or to be made to the foreign company for translation, voice-over and subtitling services are considered payments for independent professional services. If such payments are: Made from Türkiye, or Made from offices abroad on behalf and for the account of the Turkish corporation, withholding tax must be applied under Article 30/1(b) of the Corporate Tax Law. What Is the Withholding Tax Rate? As explicitly stated in the ruling, pursuant to Council of Ministers Decision No. 2009/14593, the corporate withholding tax rate applicable to independent professional income, other than income arising from petroleum exploration activities, is 20%. Accordingly, in the specific case, payments made to the UK-resident company for translation, voice-over and subtitling services are subject to a 20% corporate withholding tax, provided the relevant conditions are met. Does the Place of Payment Change the Tax Outcome? The ruling also addresses this issue clearly. Not only payments made directly from Türkiye, but also payments made from overseas offices on behalf and for the account of the Turkish corporation are considered as “evaluated in Türkiye.” Under Article 7 of the Income Tax Law, independent professional income is deemed to be derived in Türkiye if: The activity is performed in Türkiye, or The income is evaluated in Türkiye. “Evaluation in Türkiye” includes situations where: The payment is made in Türkiye, or Even if paid abroad, the amount is recorded in the accounts of the payer in Türkiye or allocated from its profits. Therefore, the mere fact that payment is made from an overseas office does not eliminate the withholding obligation. Is VAT Applicable If the Service Is Performed and Utilized Abroad? The VAT assessment in the ruling is explicit. If the translation, voice-over and subtitling services procured from the UK-resident company are both: Performed abroad, and Utilized abroad, the transaction falls outside the scope of Turkish VAT. In such a case, no VAT declaration under the reverse charge mechanism is required. In other words, if both the place of performance and the place of utilization are abroad, no Turkish VAT arises. What If the Service Is Utilized in Türkiye? The ruling also clarifies the alternative scenario. If the translation, voice-over and subtitling services procured from the UK-resident company are utilized in Türkiye, the service is considered as benefited from in Türkiye and becomes subject to VAT. In this case: VAT must be declared and paid by the Turkish recipient under the reverse charge mechanism through VAT Return No. 2, and The VAT declared and paid via VAT Return No. 2 may be deducted in VAT Return No. 1 for the relevant taxation period. Summary of the Tax Consequences Under the Ruling The ruling establishes two separate tax consequences: Withholding TaxPayments made to the UK-resident company for translation, voice-over and subtitling services are treated as independent professional income.If the payments are made from Türkiye or from overseas offices on behalf and for the account of the Turkish corporation, a 20% corporate withholding tax applies. VAT No VAT arises if the service is performed and utilized abroad. If the service is utilized in Türkiye, VAT must be declared under VAT Return No. 2 through the reverse charge mechanism. Assessment This ruling issued by the Ankara Tax Office Directorate clearly demonstrates how withholding tax and VAT applications must be distinguished in services procured from non-resident companies. Three elements stand out as decisive: The classification of the service as independent professional income for withholding purposes, The treatment of payments as evaluated in Türkiye even when made from overseas offices, and The place of utilization as the determining factor for VAT purposes. In this respect, the ruling highlights that in international service procurements, attention must be paid not only to where the service is performed, but also to how the payment is made and where the service is actually utilized. Frequently Asked Questions Is withholding tax applied to translation services obtained from a foreign company?According to the ruling, since translation services are considered independent professional services, withholding tax applies if the payment is made from Türkiye or from overseas offices on behalf and for the account of the Turkish corporation. What is the corporate withholding tax rate for voice-over and subtitling services?As stated in the ruling, the withholding tax rate applicable to independent professional income, other than petroleum exploration activities, is 20%. Are payments made to a UK-resident company considered independent professional income?Yes. In the specific case, payments for translation, voice-over and subtitling services were treated as payments made in consideration of independent professional services. Does Türkiye have taxing rights if the service is entirely performed abroad?Under the Double Taxation Agreement, if the UK-resident enterprise performs the service in the UK without coming to Türkiye, taxing rights generally belong solely to the United Kingdom. Does payment from an overseas office eliminate withholding?No. Payments made from overseas offices on behalf and for the account of the Turkish corporation are also considered evaluated in Türkiye. Is VAT applicable if the service is performed and utilized abroad?No. If both performance and utilization occur abroad, the transaction falls outside the scope of Turkish VAT. What happens if translation or voice-over services are utilized in Türkiye?In that case, the service is subject to VAT in Türkiye, and the VAT must be declared and paid under VAT Return No. 2 by the Turkish recipient. Can VAT declared via VAT Return No. 2 be deducted?Yes. VAT declared and paid through VAT Return No. 2 may be deducted in VAT Return No. 1 for the relevant period. What is the most critical criterion for VAT under the ruling?The decisive factor for VAT purposes is whether the service is utilized in Türkiye or abroad. What is the main tax conclusion for international service procurements under this ruling?For withholding tax, the decisive elements are the classification as independent professional income and the manner of payment. For VAT, the place of performance and, more importantly, the place of utilization determine the tax treatment. Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. 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