Evren Özmen
Serbest Muhasebeci Mali Müşavir
Bilirkişi
evrenozmen@ozmconsultancy.com
www.kooperatiflerkanunu.com

How To Recruit And Manage Your Developer Team In Turkey

What are the best practices for hiring developers from Turkey?

How Turkey has become a talent pool for international companies looking for successful software developers?

Turkish software developers are increasing in popularity and are becoming more readily available. These skilled professionals have the ability to develop software that is high-quality and will improve your business. They also come with a proven track record of success, which means you can be confident that you are hiring someone who will not disappoint.

Benefits of hiring software engineers in Turkey

• Large Talent Pool
• Desire to work for foreign companies
• Relatively low cost because of f/x rate

But what is the best way to hire and Manage Your Developer Team In Turkey? 

How to legally hire a software engineer in Turkey?

There are some choices to be made about how to hire, pay and manage a Turkish software engineer.

1-Set up a permanent entity in Turkey

2-Sign contract with Independent developers

3-Work with an outsourcing company

When we compare the above options in terms of tax and legal costs signing an independent contractor agreement with developers is the best practice of hiring instead of establishing a permanent entity in Turkey.

Nowadays many developers choose to be independent contractors because of tax advantages and relatively high fees because of the f/x rate in Turkey.

The hesitancy of software developers to set up a company disappears after they realize that the amount of income to be earned is significantly higher than working as staff and they realize that when they own a company, they only spend 5 minutes for monthly accounting procedures. 

What are the tax advantages for software developers rendering services outside Turkey?

If a software developer renders software services abroad from Turkey, half of the income is not subject to income tax and also if the age of the developer is below 29 there are some additional incentives too.

For many developers, the employee model is no longer in their favor. Nowadays, independent contractors can earn 20–30% more than what they would as an employee with the help of the above tax advantage.

As a non-resident foreign company, is there any tax liability on my part in Turkey?

No there is tax liability arising on your side in Turkey.

Independent contractor is a third-party provider for the company therefore please know that contractor will be responsible for the taxes that will arise from the independent contractor agreement.

Sample Clauses from some independent contractor agreements

• Independent Contractor: It is expressly agreed that you are acting solely as an independent contractor in performing the consulting services. Neither party to this letter has any authority to bind or commit the other nor will either party’s acts or omissions be deemed the acts of the other. The company shall carry no worker’s compensation insurance or any health or accident insurance to cover you. The Company shall not pay any contributions to Social Security, unemployment insurance, federal or state withholding taxes or provide any other contributions or benefits which might be expected in an employer-employee relationship and you expressly waive any right to such participation or coverage. By executing this letter agreement you agree that you shall make such contributions and pay applicable taxes and hereby indemnify and hold harmless the Company in the event of your failure to do so
• The developer shall be responsible for all tax liabilities in respect of the fees paid by the Company to the developer under this agreement, including all VAT payments and returns and other any other forms of taxation whether such tax liabilities arise
• The agreement is one for the provision of services and not a contract of services or employment, and accordingly, Contractor will be solely responsible for a payment of all taxes, benefits, national insurance premiums, social security contributions, withholding taxes, workers’ compensation, unemployment and disability insurance and any other liability, deduction, contribution, assessment or claim arising from or made in connection with the performance of the services required any government agency or any other competent authority. Contractor will report to all applicable government agencies as income all compensation received by client pursuant to this agreement.Contractor will ensure that there is no employment relationship with client

Where to start ?

When hiring developers in Turkey with a consultancy company, you won’t have to bother getting to know the tax system of the country. Consultant is a partner that helps businesses from all over the world hire Turkish software developers through the dedicated team model. Consultants take care of all the administrative and legal hassles: office, workstations, paperwork, taxes etc.

As more companies and clients turn their attention toward Turkey’s rich talent pool for freelance and contract opportunities, it’s important for Companies to find one point solution local partners to render service to hired developers including tax and other legal issues.

08.03.2022

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