Providing Software Services from Abroad to Turkish Brands: Invoicing, Tax, Contracts

When I moved to the Netherlands in 2019, my first client was a Turkish e-commerce brand. After issuing the first invoice, my accountant said "no VAT, but I don't know if there's withholding tax in Turkey." That day I realized that providing services from abroad to Turkey requires more tax knowledge than technical knowledge.

In this article, I'll share everything I've learned over 6 years of providing software and automation services to Turkish brands from the Netherlands. Which invoice to issue, which tax to pay, which contract to sign. Zero jargon, just practical steps.

Because when creating 79,000 doctor profiles for doktorbul.com with programmatic SEO or setting up the cart recovery automation for diolivo.com.tr, nobody asks "is there VAT on this invoice?" But every month on the 15th, the accountant asks.

Providing Services from Abroad to Turkey: Which Country's Rules Apply?

First question: I own a company in the Netherlands, my client is in Turkey. Which country's tax rules apply?

The answer is simple: where is the service consumed? For digital services like software, design, consulting, the "place of consumption" is where the client is located. So Turkey.

But tax payment can occur on both sides:

• Netherlands side: I own a company in the Netherlands, I pay income tax (IB) and corporate tax (VPB) here. For the Dutch tax authority (Belastingdienst), this counts as "export," with VAT exemption.
• Turkey side: if my client is a Turkish company, they may have withholding tax obligations in some cases. But I'm a foreign resident, not a tax resident in Turkey.

The critical point here: double taxation agreement (DTA). There's been a valid agreement between the Netherlands and Turkey since 1988. Thanks to this agreement, you don't pay tax on the same income in both countries.

Practical result: I pay tax in the Netherlands, no withholding in Turkey. But to prove this, I need a "certificate of residence."

Invoicing: Dutch Invoice or Turkish Invoice?

I'm a registered company in the Netherlands (eenmanszaak, sole proprietorship). When invoicing a Turkish client, which format do I use?

Dutch invoice. Because I'm providing the service, my company is registered in the Netherlands. I don't have a company in Turkey, no tax number there.

A Dutch invoice should include:

• Company name and address (Netherlands)
• KVK number (Netherlands Chamber of Commerce registration number)
• BTW number (Dutch VAT number, mine starts with NL, 12 digits)
• Client information (Turkish company name, address, tax number)
• Service description (e.g., "AI automation setup for e-commerce")
• Amount (in EUR)
• No VAT ("Reverse charge" or "0% BTW - diensten buiten de EU" note)
• Payment information (IBAN, SWIFT/BIC)

Example line: "AI chatbot integration and monthly maintenance — €2,400.00 (excl. BTW, reverse charge applies)".

Important: the invoice can be in English or Dutch. Turkish is not mandatory. I usually issue in English because both my Dutch accountant and Turkish client understand it.

Why No VAT (BTW)?

The VAT (BTW) rate in the Netherlands is 21%. But I don't apply VAT when providing services to Turkey. Why?

Because the "reverse charge" rule applies to services provided outside the EU. Meaning the VAT obligation is in the client's country. Turkey has a similar system: VAT on services purchased from abroad is declared by the buyer (withholding system).

Practical result: I don't write VAT on the invoice, my client shows it in their own VAT declaration in Turkey (if they're a VAT taxpayer).

This way, I can't claim VAT refund in the Netherlands (because I don't pay VAT), but my client doesn't pay me an extra 21% either.

On the Turkish Client Side: Is There Withholding Tax?

Turkish companies are required to withhold tax in some cases when purchasing services from abroad. But these "some cases" are very specific.

When is withholding tax applied?

According to Income Tax Law Article 94, withholding tax is applied to payments made to individuals or entities not resident in Turkey. The rate is generally 20%.

But there are two exceptions:

1. Double taxation agreement (DTA): According to the Netherlands-Turkey DTA, "professional income" is only taxed in the country of residence. So since I'm a resident of the Netherlands, there's no withholding in Turkey. 2. Certificate of residence: to prove this, I need to obtain a "certificate of residence" from the Dutch tax authority and provide it to the Turkish client.

Practical steps:

• I request a "Verklaring van woonplaats" (residence certificate) from the Dutch tax authority (Belastingdienst) website.
• The document comes as a PDF, showing my Dutch tax number and address.
• I send this to the Turkish client, they give it to their accountants to secure withholding exemption.

Without this document, the client may be required to withhold 20%. In 2020, when I issued the first invoice to a client, I hadn't sent this document, withholding was applied. Then I sent the document, they got a refund. But it took 3 months.

Contract: Which Country's Law Applies?

Is a contract necessary when providing software services? Technically no, but practically yes. Because issues like payment disputes, scope changes, intellectual property rights always come up.

I sign a simple "Service Agreement" with every new client. 3-4 pages, no jargon. Contents:

• Scope of service: what I will do, what I won't do (e.g., "AI chatbot setup, 2 hours monthly maintenance, new feature development excluded")
• Payment terms: monthly €X, invoice on the 1st of each month, 14-day payment period
• Intellectual property: ownership of produced code belongs to the client (I only use licenses, Claude API, etc.)
• Termination conditions: 30 days' notice
• Dispute resolution: which country's law applies, which court has jurisdiction

The last clause is critical. I generally write "Dutch law applies, Amsterdam courts have jurisdiction." Why? Because I'm a resident of the Netherlands, my company is here. Filing a lawsuit in Turkey is not practical for me.

But some large Turkish companies want "Turkish law applies." In this case, I accept, because the likelihood of a payment dispute is low anyway. But with small clients, I insist on Dutch law.

Is Electronic Signature Sufficient?

Yes. I use DocuSign or PandaDoc. E-signature (the one on e-Devlet) is not mandatory in Turkey, simple electronic signature (like on DocuSign) is sufficient.

Just one note: Turkish companies sometimes want "wet signature," especially if they work with public institutions. In this case, I print the PDF, sign it, and scan it, old school.

Receiving Payment: IBAN, SWIFT, PayPal?

The most practical method for receiving payment from Turkish clients is bank transfer (SEPA or SWIFT). I have a Rabobank account in the Netherlands, I share my IBAN number on the invoice.

SEPA vs SWIFT:

• SEPA: intra-EU payments, free or very low commission. But Turkey is not in the SEPA zone.
• SWIFT: international payments, 15-30 EUR commission (on both sender and receiver sides).

Turkish clients make payments via SWIFT. Usually takes 2-3 days, commission around 20-25 EUR. I write "all bank charges for the payee" on the invoice, meaning the client covers the commissions.

Alternative: Wise (formerly TransferWise). Much lower commission (1-2%), faster (1 day). But some Turkish companies can't use Wise because their accounting only accepts payments from bank accounts.

I don't use PayPal. Commission is too high (4-5%), doesn't look professional.

Tax Declaration: How I Do It in the Netherlands

I own a sole proprietorship (eenmanszaak) in the Netherlands. I file an annual income tax (IB) declaration. Payments I receive from Turkish clients are declared as "omzet" (turnover).

Tax declaration in the Netherlands works like this:

• Quarterly VAT declaration: I have VAT exemption (because I provide services outside the EU), but I still file a declaration. I show "0% omzet."
• Annual income tax: I total all my income (Turkish clients + other countries), deduct my expenses (office, software, hardware), pay 37% tax (for the first €75,000) on the remaining amount.

Example: In 2024, I earned €30,000 from Turkish clients. My expenses were €5,000 (Claude API, hosting, MacBook depreciation). Net income €25,000. Tax: €25,000 x 37% = €9,250.

Since I pay this tax in the Netherlands, there's no additional payment in Turkey (thanks to the DTA).

Is an Accountant Necessary?

I did it myself the first year, then handed it over to an accountant. Accountant fees in the Netherlands are €600-1,200 annually. Is it worth it? Absolutely. Because tax rules change every year, I can't keep up.

My accountant doesn't do anything special regarding Turkish clients, just takes my invoices and files declarations. But I consult on matters like certificate of residence, DTA.

FUTIA's Real Experience: The diolivo.com.tr Case

diolivo.com.tr is one of Turkey's olive oil brands. When they reached out to me in 2023, the cart abandonment rate was 78%. They said "customers add products to cart but don't complete payment."

We installed the CartBounty plugin, an automation system that follows up on abandoned carts via email and SMS. After 6 months, the cart abandonment rate dropped to 52%, monthly revenue increased by 340%.

But what's important here is not the technical aspect, but the business process. When diolivo's accountant saw the first invoice, they asked "this is a foreign invoice, should we withhold tax?" I sent the certificate of residence, no withholding was applied. Then I issue regular invoices every month, no problems.

This case taught me: when working with Turkish brands, clarifying tax and invoicing processes is as important as technical service. Talk to the accountant before the first invoice, prepare the documents.

Common Problems and Solutions

Problems I've encountered while providing services from abroad to Turkey:

1. Client wants "VAT-inclusive price"

Some Turkish clients ask "is your price VAT-inclusive?" I say "there's no VAT because I'm in the Netherlands." But they have to declare VAT in Turkey (if they're VAT taxpayers). To prevent this confusion, I write a "reverse charge" note on the invoice.

2. Payment delay

Turkish companies generally make payments in 30-60 days. I write "14-day payment period" on the invoice, but in practice I wait 30 days. If 45 days pass, I send a reminder email.

3. Exchange rate difference

I issue the invoice in EUR, the client pays in TRY. Who covers the exchange rate difference? I write "EUR amount is final, exchange rate risk is on the client" on the invoice. So the client uses the exchange rate on the payment day.

4. Invoice language dispute

One client said "the invoice must be in Turkish." I said "as a Dutch company, I issue invoices in English, I can add a Turkish translation." They accepted. Then I started adding English + Turkish descriptions to every invoice.

Step-by-Step Guide for Beginners

If you're going to start providing services to Turkish brands from abroad:

1. Establish a company (in your own country)

I established a sole proprietorship (eenmanszaak) in the Netherlands. It took 1 day, free. There's a similar system in your country too. You can't issue invoices without a company.

2. Get a tax number and VAT number

I got a BTW number in the Netherlands. You can't issue international invoices without this.

3. Request a certificate of residence

Request a "certificate of residence" from your country's tax authority. Without this document, the Turkish client may withhold tax.

4. Prepare a simple contract

Scope of service, payment terms, termination rules. 2-3 pages is enough. No need to show it to a lawyer, you can use online templates.

5. Issue the first invoice

Company name, address, tax number, service description, amount, VAT note ("reverse charge"), payment information. Send as PDF.

6. Find an accountant

You can do it yourself the first year, but after the second year an accountant is essential. Tax rules are too complex.

7. Regular communication

Talk to Turkish clients every month. Payment status, scope changes, new projects. The hardest part of remote work is lack of communication.

Notes for Countries Outside the Netherlands

I gave examples from the Netherlands, but the principle is the same for every country:

• Germany: similar DTA exists, no withholding. But the VAT (MwSt) system in Germany is stricter, accountant essential.
• UK: outside the EU after Brexit, but has DTA with Turkey. No withholding.
• USA: has DTA with Turkey, but state-based tax rules are complex. CPA (accountant) essential.
• Dubai (UAE): no DTA with Turkey, withholding may be applied. But there's no income tax in the UAE, only corporate tax (9% from 2023).

For each country, obtain a certificate of residence from your own tax authority, send it to the Turkish client.

I've been going through this process for 6 years. The first year I encountered a new problem every month. Now it's become routine. But I still share the certificate of residence with every new client, sign contracts, explain the invoice format.

If you're also planning to provide services to Turkish brands from abroad, the first step is to establish a company. The second step is to find an accountant. The third step is to issue the first invoice. The rest is routine.

As FUTIA, I provide AI automation services to Turkish brands from the Netherlands. Site setup, artificial intelligence integration, monthly maintenance. If you have a similar project or want to ask questions about purchasing services from abroad, you can write email info@futia.net. Or email: info@futia.net.