How does an Employer of Record (EOR) manage payroll taxes in Turkey
- Natia Gabarashvili
- Oct 9
- 12 min read
Table of contents:
TL;DR: How an EOR manages payroll taxes in Turkey
Think hiring in Turkey is just about sending salaries? Think again.
One misstep with income tax, social security, or unemployment contributions can trigger fines, backpay, and audits.
Here’s where an Employer of Record (EOR) saves the day:
Legal employer on your behalf: The EOR takes on all compliance responsibility, so mistakes don’t land on your desk.
Full payroll management: They calculate gross-to-net salaries, apply progressive tax brackets (15–40%), deduct social and health contributions, and submit everything through official channels like SGK and E-Beyanname.
No local entity needed: Hire employees quickly without setting up a Turkish company.
Audit-ready, stress-free compliance: All filings are accurate and on time, protecting you from penalties while your team focuses on growth.
Bottom line: Payroll in Turkey is complex. An EOR makes it simple, legal, and worry-free—so you can focus on scaling your business instead of chasing tax forms.
Introduction
Imagine you’ve hired a local team in Turkey, but a few months in, a payroll mistake triggers fines, delayed filings, or even an audit.
Suddenly, what was supposed to be a smooth expansion turns into a legal and financial headache.
That’s why an Employer of Record (EOR) matters. In Turkey, an EOR becomes the legal employer for your hires, managing employment contracts, payroll, tax withholdings, and social contributions.
They ensure every employee is fully compliant with Turkish labor law while you focus on growing your team and business.
Payroll taxes in Turkey aren’t just a minor administrative task; they’re a compliance-critical function. Errors can cost thousands in fines or backpay, especially for foreign companies unfamiliar with local regulations.
By partnering with an EOR, you make sure all payroll taxes are calculated correctly, filed on time, and fully compliant, reducing risk and giving you peace of mind.
Overview of payroll taxes in Turkey
Hiring in Turkey? Think beyond salaries. Every month, employers face a maze of income tax withholding, social security premiums, and unemployment contributions, and missing a step can cost you fines, audits, or at least a lot of unnecessary stress.
Whether you’re a small Turkish startup or a multinational testing the market, understanding payroll obligations is mission-critical. The rules change regularly, thresholds get updated, and what worked last year might land you in hot water this year. That’s why knowing the fundamentals and having the right systems in place is essential.
In this guide, you’ll get the essentials:
How income tax and social contributions are calculated
What the monthly payroll cycle looks like
Important numbers like minimum wages and bonus payments
Key deadlines and filing requirements to stay compliant
Fiscal year in Turkey
Runs from January 1 to December 31
All tax reporting and accounting use this 12-month period
Payroll cycle in Turkey
Monthly, with salaries paid on or before the last day of the month
Missing deadlines isn’t just inconvenient—it’s a legal risk
Minimum wage in Turkey (2025)
Gross: TRY 26,005.50
Net: TRY 22,104.67
Statutory for all full-time employees
Up from TRY 20,002.50 in 2024, and the government adjusts annually for inflation
Bonus payments
No legal requirement for a 13th-month salary
Any bonus is determined by company policy or contract terms
Payroll taxes vs Income taxes in Turkey
If you’re expanding into Turkey, it’s easy to assume that payroll and income taxes are the same thing. Spoiler alert: they’re not. Confusing the two can lead to miscalculations, penalties, and compliance headaches, especially for foreign companies navigating a new regulatory environment.
Income taxes (personal income tax)
Income tax in Turkey is progressive, applied directly to an employee’s salary. Rates range from 15% to 40%, depending on the income bracket. This is the amount withheld from the employee’s gross pay and remitted to the Turkish Tax Office by the employer or EOR.
Example:
Employee earns 1,000,000 TRY/year
Tax calculated across brackets:
0–158,000 TRY × 15% = 23,700 TRY
158,001–330,000 TRY × 20% = 34,400 TRY
330,001–1,000,000 TRY × 27% = 178,110 TRY
Total income tax = 236,210 TRY/year → ~19,684 TRY/month withheld
Income tax directly affects the employee’s net salary, but it’s just one piece of the payroll puzzle.
Payroll taxes
Payroll taxes include contributions and statutory obligations beyond personal income tax. In Turkey, this typically covers:
Employer contributions: Social security (22.5% of gross salary), pension, disability, health insurance, short-term insurance, and unemployment insurance.
Employee contributions: Social security (9%), health insurance (5%), and unemployment insurance (1%).
Example (monthly gross = 83,333 TRY):
Employee deductions: PIT 19,684 + social & insurance 12,500 = 32,184 TRY
Employer contributions: ~22,500 TRY
Net salary to employee: 51,149 TRY
Total employer cost: 102,083 TRY
Payroll taxes affect the total employment cost, not just what the employee takes home.
how are payroll taxes different from personal income taxes
Type | Paid By | Purpose | Impact |
Income Tax (PIT) | Employee (withheld by employer/EOR) | Tax on employee income | Reduces net salary |
Payroll Taxes | Employee & Employer | Social security, health, and unemployment | Increases total employment cost, funds statutory benefits |
Why this matters for EOR use
An EOR in Turkey ensures both income tax and payroll tax obligations are calculated, withheld, and remitted correctly. This eliminates errors, avoids fines, and keeps your business compliant, letting you focus on managing and growing your team.
How an EOR manages payroll tax withholdings and payments in Turkey
Handling payroll taxes in Turkey can feel like juggling a dozen spinning plates at once: income tax, social security, unemployment insurance, and statutory filings all move on different timelines.
For foreign companies, missteps can mean fines, audits, or compliance headaches. An Employer of Record (EOR) takes on this responsibility, acting as the legal employer and managing the entire payroll tax process for your team.
EOR responsibilities
The EOR’s role includes:
Withholding employee contributions: Deducting income tax (progressive rates from 15% - 40%), social security, unemployment insurance, and health insurance from each employee’s salary.
Calculating employer tax liabilities: Social security premiums, pension, disability contributions, and short-term insurance branch premiums—typically totaling around 22.5% of gross salary.
Applying exemptions or reliefs: For example, income tax exemptions for liaison offices or special sectors.
By centralizing these tasks, the EOR ensures accuracy, timeliness, and compliance while removing administrative burden from your company.
Monthly payroll tax remittance
EORs handle all filings and payments to the Turkish authorities using official channels:
E-Bildirge System: Submits social security data to the SGK with digital authentication.
E-Beyanname System: Used for monthly income tax returns to the Tax Office.
Authorized Intermediaries: Certified professionals may file on behalf of companies.
Bank Transfers: Payments remitted using official reference numbers.
Mobile Apps: Limited functionality for checking account status or submitting data.
Key payroll tax deadlines in Turkey:
Tax Type | Due Date |
Social Security Premiums | End of the following month |
Income Tax Withholding | 26th of the following month |
Unemployment Insurance | End of the following month |
Monthly Premium and Service Document | 23rd of the following month |
Quarterly Withholding Tax Return | 23rd of the month after quarter |
Annual Income Tax Declaration | March 31 of the following year |
Employer and employee payroll contributions in Turkey
Employer contributions (~22.5% of gross salary):
Pension & Disability: 11%
General Health Insurance: 7.5%
Short-Term Insurance Branch Premium: 2%
Unemployment Insurance: 2%
Employee contributions (~15% of gross salary):
Pension & Disability: 9%
General Health Insurance: 5%
Unemployment Insurance: 1%
Income tax: Progressive rates based on annual income:
Income Bracket (TRY) | Tax Rate |
0 – 158,000 | 15% |
158,001 – 330,000 | 20% |
330,001 – 1,200,000 | 27% |
1,200,001 – 4,300,000 | 35% |
4,300,001+ | 40% |
Why using an EOR matters
By managing payroll tax withholdings and payments, an EOR ensures:
Full compliance with Turkish labor and tax law
Timely and accurate filings
Audit-ready documentation
Application of any exemptions or sector-specific reliefs
This allows your company to hire legally without establishing a local entity, reduce risk, and focus on growing your business.
Calculating employer payroll taxesin Turkey
Calculating payroll taxes in Turkey is more than just deducting a flat percentage, it’s a mix of income tax, social security, unemployment insurance, and health contributions, all influenced by salary tiers and tax brackets. For foreign companies, mistakes can be costly, which is why using an Employer of Record (EOR) is critical. Here’s a practical guide with formulas and examples.
1. how do i calculate employer payroll taxes
Turkey uses a progressive income tax system for individuals:
Annual Income (TRY) | Tax Rate |
0 – 158,000 | 15% |
158,001 – 330,000 | 20% |
330,001 – 1,200,000 | 27% |
1,200,001 – 4,300,000 | 35% |
4,300,001+ | 40% |
Example: Employee earns 1,000,000 TRY annually (≈83,333 TRY/month).
Portion 0–158,000 × 15% = 23,700 TRY
Portion 158,001–330,000 × 20% = 34,400 TRY
Portion 330,001–1,000,000 × 27% = 178,110 TRY
Total annual income tax = 236,210 TRY → 19,684 TRY/month withheld
2. Employee payroll contributions
Employees also contribute to social security and health coverage:
Pension & Disability: 9% of gross salary
General Health Insurance: 5% of gross salary
Unemployment Insurance: 1% of gross salary
Example: Monthly gross salary = 83,333 TRY
Pension & Disability: 83,333 × 9% = 7,500 TRY
Health Insurance: 83,333 × 5% = 4,167 TRY
Unemployment Insurance: 83,333 × 1% = 833 TRY
Total employee deductions: 12,500 TRY
3. Employer payroll contributions
Employers contribute an additional ~22.5% of gross salary:
Pension & Disability: 11%
General Health Insurance: 7.5%
Short-Term Insurance Branch Premium: 2%
Unemployment Insurance: 2%
Example: Monthly gross = 83,333 TRY
Total employer contribution = 83,333 × 22.5% ≈ 18,750 TRY
4. Gross-to-net salary example
Gross salary: 83,333 TRY/month
Employee deductions: 19,684 (income tax) + 12,500 (social & insurance) = 32,184 TRY
Net salary: 83,333 – 32,184 ≈ 51,149 TRY
Total employer cost: 83,333 + 18,750 ≈ 102,083 TRY
Why salary tiers matter
Higher salaries push employees into higher income tax brackets, increasing PIT deductions and affecting net take-home pay. Employers need to calculate accurately to maintain compliance. EORs automatically apply progressive rates, social security caps, and health contributions, ensuring every employee’s payroll is compliant and accurate.
Payroll tax reporting and compliance in Turkey
Payroll in Turkey is more than just calculating salaries; it’s about meeting strict deadlines, filing accurate reports, and staying audit-ready. For foreign companies, missing a step can lead to fines, interest charges, and unnecessary headaches. An Employer of Record (EOR) in Turkey handles these obligations, ensuring compliance and reducing risk.
Monthly filing and reporting obligations
An EOR manages all payroll tax filings and remittances through the official Turkish systems:
Social Security Premiums: Paid to the SGK (Social Security Institution) by the end of the following month
Income Tax Withholding: Submitted to the Tax Office by the 26th of the following month
Unemployment Insurance: Remitted by the end of the following month
Monthly Premium and Service Document: Submitted by the 23rd of the following month
Quarterly Withholding Tax Return: Filed by the 23rd of the month following the quarter
Annual Income Tax Declaration: Due by March 31 of the following year
EORs ensure that these filings are completed accurately and on time, avoiding the administrative burden on your internal team.
Penalties and risks of non-compliance
Late or incorrect filings can trigger:
Fines and interest charges for unpaid or misreported taxes
Audits by the tax authorities to review payroll records and contributions
Back-pay obligations if errors are discovered, potentially affecting multiple employees
By managing the filings, an EOR mitigates these risks and ensures your company remains in good standing with Turkish authorities.
Audit readiness and document retention
An EOR maintains comprehensive, organized payroll records, including:
Employee salary details
Tax withholdings and remittances
Social security and unemployment insurance contributions
Copies of all monthly and annual filings
This ensures that, if audited, your company can demonstrate full compliance and avoid penalties.
Employer of Record (EOR) vs payroll outsourcing in Turkey: What’s the difference?
When expanding into Turkey, companies often confuse Employer of Record (EOR) services with traditional payroll outsourcing. On the surface, both help manage payroll, but the responsibilities, legal exposure, and operational impact are very different.
What payroll outsourcing covers in Turkey
Payroll outsourcing typically means hiring a third-party provider to calculate salaries, deduct taxes, and process payments. They may generate reports and provide guidance, but your company remains the legal employer.
Key points:
Legal liability: Remains with your company. Any errors in tax filing, social contributions, or labor compliance are your responsibility.
Scope: Limited to payroll administration; does not handle contracts, employment law compliance, or statutory benefits.
Flexibility: Works well for established entities in Turkey that just want administrative support.
What an EOR does in Turkey
An Employer of Record (EOR) goes further: they become the legal employer of your Turkish hires.
Key responsibilities:
Employment contracts: Issue compliant contracts under Turkish labor law
Payroll and taxes: Calculate, withhold, and remit income tax, social security, unemployment insurance, and other contributions
Compliance management: Ensure all statutory benefits, filings, and regulations are met
Risk mitigation: Legal liability for employment compliance shifts to the EOR
Benefits: EORs are ideal for foreign companies without a local entity, for rapid market entry, or for scaling teams without navigating Turkey’s complex employment regulations themselves.
Side-by-side comparison of Employer of Record (EOR) vs payroll outsourcing in Turkey
Feature | Payroll Outsourcing | EOR Turkey |
Legal Employer | Your company remains employer | EOR assumes legal employer role |
Payroll Processing | Admin only | Full payroll and tax management |
Compliance Responsibility | Company liability | EOR assumes liability for compliance |
Employment Contracts | Not handled | Drafted and maintained by EOR |
Suitability | Companies with Turkish entity | Foreign companies without entity or scaling rapidly |
Why it matters
Choosing between a payroll provider and an EOR in Turkey comes down to risk, compliance, and speed. Payroll outsourcing is administrative support, whereas an EOR ensures full legal compliance, reduces liability, and enables faster market entry.
Benefits of using an EOR for payroll taxes in Turkey
Remote hiring in Turkey comes with more than just paperwork; it’s a maze of income tax, social security contributions, unemployment insurance, and statutory filings.
For foreign companies, missteps can mean fines, audits, or even reputational risk. This is where an Employer of Record (EOR) provider in Turkey becomes invaluable.
Simplifies compliance and reduces risk
An EOR handles all payroll calculations, withholdings, and filings, ensuring that employees’ salaries comply with Turkish labor law. By managing income tax, social security, and unemployment contributions, the EOR reduces the risk of fines or back-pay claims. Compliance is automated, accurate, and timely, taking the burden off your internal team.
No local entity required
Setting up a legal entity in Turkey is expensive, time-consuming, and administratively complex. An EOR allows you to hire employees legally without establishing a local entity, streamlining market entry and avoiding bureaucracy.
Access to local expertise and payroll technology
EORs combine deep knowledge of Turkish labor and tax law with modern payroll systems, providing:
Accurate payroll calculation and remittance
Timely reporting through official portals (e.g., SGK, Tax Office)
Continuous updates on changes in regulations and thresholds
This ensures payroll is always compliant, even as rules change.
Enables fast, compliant market entry
By handling payroll taxes efficiently, an EOR lets your company focus on growth and operations while entering the Turkish market quickly. Employees are onboarded legally, paid correctly, and your business avoids compliance pitfalls, all without the overhead of entity setup.
Conclusion
Handling payroll taxes in Turkey doesn’t have to be a headache. With TeamUp’s Employer of Record (EOR) services, you can hire employees legally, ensure full compliance, and avoid fines or audits, all without setting up a local entity.
Take control of your Turkish expansion today: schedule a meeting with our EOR experts. During the meeting, we’ll:
Walk you through compliant payroll management in Turkey
Show you how to calculate, withhold, and remit all taxes accurately
Provide a customized plan and quote tailored to your hiring needs
Ensure your team is onboarded quickly, legally, and efficiently
Click below to book your meeting and start building your compliant Turkish team with confidence.
Frequently asked questions
How to record payroll tax expenses in Turkey?
Payroll taxes in Turkey include income tax, social security contributions, and unemployment insurance. These should be recorded as part of total employment costs. If you partner with an EOR, all these items are consolidated into one monthly invoice, making your accounting simpler and fully compliant.
What payroll taxes do employers pay in Turkey?
Employers in Turkey are responsible for:
Social Security Contributions (SGK): around 20.5% of gross salary (covering pension, health, and other insurances).
Unemployment Insurance Contribution:2% of gross salary. Together, employer costs are roughly 22–23% of gross salary, in addition to the employee’s net wages.
What is the difference between an EOR and an employee in Turkey?
An employee directly hired makes your company the legal employer, responsible for contracts, payroll, and compliance. With an EOR, the provider becomes the legal employer in Turkey. The EOR handles payroll, taxes, and benefits while the employee still works for your company operationally.
Do employers pay state and local payroll taxes in Turkey?
No. Payroll taxes in Turkey are paid only at the national level. There are no separate state or municipal payroll taxes.
Which payroll taxes must an EOR withhold in Turkey?
An EOR in Turkey withholds and pays:
Income Tax: progressive, from 15% to 40%, depending on salary levels.
Employee Social Security Contributions: about 14% of gross salary.
Employee Unemployment Insurance:1% of gross salary. The EOR also pays the employer’s share of social security and unemployment contributions.
How does an EOR calculate employer contributions in Turkey?
Employer contributions are calculated as a percentage of the employee’s gross salary:
~20.5% for social security
2% for unemployment insurance These rates are standard across industries, though there may be sector-specific incentives or reductions.
What payroll reporting deadlines must an EOR meet in Turkey?
Payroll reporting in Turkey is monthly. Taxes and contributions must be declared and paid to the Social Security Institution and the Tax Office, typically by the end of the following month. The EOR ensures deadlines are met and penalties are avoided.
Do EORs handle pension and social contributions for Turkish hires?
Yes. An EOR is responsible for both employer and employee contributions to the Turkish social security system (SGK), which covers pensions, healthcare, disability, and maternity benefits.
How does using an EOR affect employee tax residency in Turkey?
Using an EOR does not change an employee’s tax residency status. Residency in Turkey is generally based on physical presence of 183 days or more in a calendar year. The EOR ensures income taxes and contributions are withheld in line with residency and local tax law.
