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4.1. Domestic PE of a Foreign Entity

Turkish law does not have a unified and comprehensive definition of permanent establishment. However, the circumstances leading to the existence of a taxable presence in Turkey can be garnered from various tax and commercial Acts. The main two tests are (a) the existence of a specific place of business, and the use of such place for business activities, or (b) the conduct of business through a permanent representative.

There is no comprehensive definition of what constitutes a place of business and this can be a factory, office, branch, shop, warehouse, farm, vineyard, quarry, mine, hotel, own home or any other facility used for business purposes. There is also no strict test as to whether the facility is intended for business use. One indication in this sense is the commencement of business activities on the site; another one is registration at the Trade Register. Use of the place of business by the taxpayer is deemed to arise where the facility is available to the taxpayer, whether legally or de facto. There is furthermore no requirement for human intervention; and a fully automated business facility may constitute a PE. Finally, Turkish domestic law does not provide for a specific minimum time threshold to denote permanency (although a measure of permanency can be implied from a number of provisions).

A permanent representative can be any person, whether or not an employee, who acts as an intermediary in business transactions (intermediary agent), or who is authorized to conclude contracts on behalf of the enterprise (dependent agent). Note that the Turkish tax authorities have an extensive interpretation of what constitutes an agency PE.