The Türkiye–Netherlands double taxation treaty: key points

A Turkish investor with a Dutch BV deals with two tax administrations: the Belastingdienst and the Turkish Revenue Administration. To prevent the same income from being taxed twice, Türkiye and the Netherlands have had a double taxation treaty in force for many years.

This article explains the logic of the treaty and its most common concepts in general terms. Rates, thresholds and exemptions are deliberately left out: they change over time and differ from one person to the next. Our aim is to help you ask the right questions before a tailored assessment.

What does the treaty do?

Every country may levy tax under its own law. When a person living in Türkiye receives a dividend from their Dutch company, the Netherlands may want to tax it as the source country and Türkiye as the country of residence. The treaty limits these two rights against each other.

It does three things: it determines which country may tax which type of income; it limits the tax the source country may levy on some types of income; and it sets out how the country of residence takes tax paid abroad into account (by credit or exemption). The treaty introduces no new tax; it only allocates existing taxing rights.

Tax residency: where everything begins

The first question is always the same: of which country are you a resident? Residency is not a matter of citizenship; it follows from where you live, where your family is, where your economic interests are centred and how much time you spend in a country.

Where both countries regard you as a resident, the treaty settles on one through tie-breaker rules applied in order: permanent home, centre of vital interests, habitual abode, nationality. For investors who keep living in Türkiye while running a Dutch company, this analysis shapes every answer that follows.

A similar question exists for companies. Even though the BV is incorporated in the Netherlands, where it is actually managed matters: a BV whose decisions are all taken from Türkiye may also be regarded as a resident by Türkiye. Where board meetings are held and where day-to-day management takes place are therefore not minor details.

Dividends, interest and royalties

The articles consulted most often cover three types of income flowing from the company to its owner:

• Dividends: Profit distributed by the BV to its shareholder. The Netherlands may levy a limited tax as the source country; Türkiye, as the country of residence, includes the income in the return and takes the Dutch tax into account under the treaty.
• Interest: Interest received by the shareholder or the Turkish parent company on a loan to the BV. The taxing right is again shared between the two countries.
• Royalties: Payments for the use of a trademark, licence, software or know-how. These come up often in licensing arrangements between the company in Türkiye and the Dutch BV.

For all three, benefiting from the treaty’s limitation requires specific documents (such as a certificate of residence) and procedures; without them, the source country may apply its full domestic tax.

Permanent establishment and what it means for a BV owner

Another core concept is the “permanent establishment”. If a company in one country operates in the other through a fixed place of business (an office, branch or workshop), or has a representative there with authority to conclude contracts on its behalf, that country may tax the profit attributable to that establishment.

For a Turkish owner of a Dutch BV the concept matters in two directions. First, whether the BV creates a permanent establishment in Türkiye: sales, warehousing or representative activities run from Türkiye can raise this question. Second, whether the Turkish parent creates one in the Netherlands: how the BV acts on behalf of the parent is decisive here.

In practice, for a Turkish shareholder working from Türkiye this means: salary, dividends and any interest or licence income from the BV may also have to be declared in Türkiye; Dutch tax is taken into account under the treaty; and where the BV is managed affects whether Türkiye claims a taxing right over the company itself. Some Turkish domestic rules (for example on controlled foreign companies) can also apply independently of the treaty.

Conclusion: why an individual assessment matters

The treaty is a framework; the outcome depends on your residency, the types of income you receive, the BV’s place of management and your existing structure in Türkiye. Because these variables differ for every investor, a conclusion drawn from general information can be misleading. We take care of the Dutch side, work with your financial adviser in Türkiye for the Turkish side and keep the filings in both countries consistent. We are glad to discuss a tailored assessment in a free intro call.