Determining your company's address in Turkey and the associated matters such as address changes or rent increases are crucial to inform your legal accountant. This helps you avoid legal violations, including penalties related to the stopaj tax.

In this article by Trustus Consultancy, we emphasize the importance of notifying your legal accountant about address changes or rent increases in Turkey, while highlighting data from the Turkish Statistical Institute regarding the August 2023 rent increase rate.

Determining the company's address in Türkiye

Determining your company's address in Turkey is a crucial step when establishing your business. The company's operations can be affected when the rent increases or the address is relocated, potentially exposing you to legal violations if your legal accountant is not informed.

Types of company address in Turkey

The approved address when establishing a company in Turkey is one of the basics in order to start your business in a regular manner, and there are 3 types of company addresses, which are as follows:

1-The Physical Address

When establishing a company, you must rent a physical office or company headquarters, referred to as the "physical address." It's essential to provide this address to your legal accountant, register the lease agreement, and submit it to them.

This step allows your accountant to file the contract with the tax authorities when setting up the company.

2- The Virtual Address

Some companies, including Trustus, offer a virtual address service when setting up a company. This address is exclusively used for logistical purposes and comes with a monthly fee.

3- Residential Address

The third type of company address is the residential address, which must be within a residential complex rather than a regular building.

Changing the company address in Turkey

As mentioned earlier, the address is a fundamental aspect when establishing a company in Turkey. Business owners have the flexibility to change their company's address whenever they wish by informing their legal accountant.

Subsequently, the legal accountant notifies the Chamber of Commerce of the company owner's desire to change the address. This initiates the registration of the new address with the Chamber of Commerce. After registration, the tax authorities are informed of the company's new address.

Therefore, it is crucial to notify the legal accountant of any changes to the company's address, as this address is an integral part of the company.

What are the costs of relocation a company address in Turkey?

The process of relocating a company's address in Turkey or opening new branches incurs fees payable to the Chamber of Commerce, in addition to the fees for the legal accountant's services.

However, when opening new branches within the same province where the company's main headquarters is located, the costs for the transfer and notifying the Chamber of Commerce are relatively low. On the other hand, if the company's branches are located outside the province, the procedures can be time-consuming, and the costs are higher.

Mechanism for increasing the rent of corporate headquarters in Turkey

The rent for company headquarters in Turkey increases by a specific percentage each year in line with the inflation rate. The maximum allowable rent increase rate for company headquarters is typically based on the average inflation rate over the previous 12 months according to the Consumer Price Index.

For example, if the rent increase is 10% in the contract and the inflation rate is 20%, the 10% rent increase will still apply, provided it doesn't exceed the specified rate based on the average of the previous 12 months in the Consumer Price Index.

When your company's rent increases or changes, it is essential to inform your legal accountant to avoid financial penalties related to the stopaj tax.

What is the stoppage tax?

A tax imposed on the rent for a company's headquarters is known as "stopaj tax," and its rate is typically 25% of the registered rent value with the tax authorities. The legal accountant submits a monthly or quarterly statement of this tax to the tax authorities.

Informing your legal accountant about your company's address and the rent value helps ensure the accurate payment of this tax and the proper submission of your company's data to the tax authorities.

It's worth noting that if the property owner (the lessor) is the same as the company itself, then the tax imposed on them is Value Added Tax (VAT), KDV in Turkish, instead of stopaj tax.

Rent increase rate for corporate headquarters in Türkiye August 2023

According to data from the Turkish Statistical Institute, there will be an increase of 57.45% applied to the rent of commercial properties that will be renewed in August 2023.

This percentage is based on the following data announced by the Statistical Institute:

The annual inflation rate in July was 47.83%.

The change in the Consumer Price Index (2003=100) in July 2023 was 9.49% compared to the previous month, 31.14% compared to December of the previous year, and 47.83% compared to the same month of the previous year.

As a result, the change in the Consumer Price Index based on a 12-month average is 57.45%.

Why is it important to inform your chartered accountant of a relocation of address or a rent increase?

It is essential to inform your legal accountant about any recent developments regarding the relocation of your company's address or rent increases. This notification ensures that they can submit a monthly or quarterly statement specific to the stopaj tax, which amounts to 25% of the rent value. This tax is the basis for calculating the tax liability of the property owner.

In case the information is incorrect, or you have relocated your address without informing the legal accountant, both you and the property owner may face financial penalties imposed by the tax authorities. If the property owner discovers that you have changed your company's address, they will request that you update your details with the relevant authorities.

When relocating a company's address in Turkey or experiencing rent increases, the legal accountant is responsible for:

• Modifying the rent value with the tax authorities.
• Updating the company's address with the Chamber of Commerce.
• Retaining the old lease agreement even after its expiration.
• Ensuring the alignment of property title information with the tenant company's data.
• Verifying that the person signing the contract is the same as the one on the property title.
• Calculating the total rent fees while considering Value Added Tax (VAT).

In conclusion

As the financial matters of your business are significantly influenced by both the determination of your company's address in Turkey and rent increases, it is crucial to keep your legal accountant updated regularly.

This ensures that they can create a financial plan based on the latest data and oversee various legal and financial aspects.

To gain a deeper understanding of the importance of establishing your company's address in Turkey and the role of your legal accountant in this process, feel free to get in touch with the Trustus Consultancy team for a complimentary legal consultation.

If you're interested in optimizing your company's budget, we encourage you to reach out to us so that our team can handle your financial and legal affairs on your behalf. Contact us now!

Editor: Trustus Consultancy ©

Source: Hurriyet