How to Receive Payments from Abroad?

From e-commerce to freelance work, from digital content creation to consultancy services, many people today can increase their income by using international payment systems. However, this process is not just about choosing the right intermediaries—it also requires attention to tax regulations, banking infrastructure, and other essential factors. This article breaks down the steps, advantages, disadvantages, legal obligations, and key points you must consider when receiving payments from abroad.

What are the requirements for receiving payments from abroad?

Specific legal, financial, and technical requirements must be met to smoothly send and receive international payments. Being cautious about tax obligations and financial transactions, and seeking expert advice when necessary, can help prevent potential problems. The key conditions for successfully managing international money transfers include:

A suitable bank account

To receive payments from abroad, you must have a bank account that supports international money transfers. You’ll also need to provide the sender with the necessary banking details, such as your IBAN or SWIFT code.

Appropriate payment infrastructure

If you plan to receive payments from credit or debit cards abroad, your business should have a virtual POS (point-of-sale) system. Integrating a virtual POS system into your business allows customers to enter their card details on a payment page and complete transactions easily.

Legal compliance and tax obligations

Receiving payments from abroad is legal in Turkey; however, any income earned from abroad must be declared in Turkey and the required taxes paid. Some exceptions may apply depending on agreements between Turkey and specific countries. It’s highly recommended to consult with tax professionals or accounting experts to avoid penalties and ensure accurate reporting.

Advantages of receiving payments from abroad

There are many advantages for businesses that can receive payments from abroad. Some of these benefits include:

Access to global markets

Businesses can enter international markets by receiving payments from abroad. Expanding into global markets enables them to reach new customer segments in different countries and increase their revenue.

Income diversification

Receiving payments in different currencies allows businesses to diversify their income sources and benefit from currency fluctuations, which is an important financial advantage.

Brand awareness and trust

Accepting international payments can help businesses gain global recognition and boost their credibility and trustworthiness.

Competitive advantage

Businesses that can receive payments from abroad have access to a broader customer base than their competitors, giving them a significant competitive edge.

Disadvantages of receiving payments from abroad

Although receiving payments from abroad can support business growth and increase revenue, it also has disadvantages. These include:

High transfer fees and currency exchange risks

Due to transfer fees and exchange rate fluctuations, the cost of international payments can be high.

Taxation and legal regulations

Receiving payments from abroad may bring tax obligations and require compliance with international regulations.

Security risks

Since international payments can take longer to process than local ones, they may pose security concerns and carry a higher risk of fraud.

Operational challenges

Receiving payments from abroad may lead to technical difficulties, such as system access issues or the need to comply with different countries’ payment regulations, potentially causing operational disruptions.

Ways to receive payments from abroad

You can choose from various payment methods depending on your business needs and target audience. Here are some of the most common options to consider:

EFT and wire transfer

One of the most traditional ways to receive payments from abroad is through EFT (Electronic Funds Transfer) or wire transfer, though these methods have some limitations. Wire transfers typically require the sender and receiver to use the same bank. Therefore, EFT might be a better option, as it allows transfers between different banks. Keep in mind that processing times and fees for international EFTs may vary.

Credit and debit card payments (virtual POS)

Virtual POS is a widely used method, especially for e-commerce businesses. It requires integration with a bank or third-party provider’s virtual POS system. Once integrated into your e-commerce site, customers worldwide can pay using credit or debit cards.

SWIFT

The SWIFT system is commonly used for international currency transfers. To receive payments via SWIFT, you need to open a foreign currency account at a bank in Turkey. This method transfers funds from an international bank account to your foreign currency account in Turkey. While SWIFT is highly secure and supported by a vast network of banks globally, transactions may take 1 to 5 business days. Also, transaction fees and exchange rate differences may apply between the sender and recipient banks.

Taxation and legal regulations

Anyone who is a taxpayer in Turkey is required to declare both domestic and foreign income. Declaring your income accurately and on time is essential to avoid potential tax penalties. Since the declaration and taxation of foreign income in Turkey can be complex, consulting a certified public accountant may be helpful. Here’s how to report foreign income in Turkey:

Full tax liability and income tax declaration

Individuals who reside in Turkey or spend more than six consecutive months in Turkey within a calendar year are considered “full taxpayers” under Article 193 of the Income Tax Law. Those classified as full taxpayers must declare not only their income earned in Turkey but any income earned abroad in their annual income tax return.

Double taxation avoidance agreements (DTAA)

Turkey has signed Double Taxation Avoidance Agreements with many countries, which help prevent double taxation on the same income if such an agreement exists between the country where the income is earned and Turkey, taxes paid abroad can be deducted from the taxes owed in Turkey.

Deduction of taxes paid abroad

If there is no Double Taxation Avoidance Agreement between Turkey and the income-earning country, Article 123 of the Income Tax Law allows for the deduction of similar taxes paid abroad from the income tax calculated in Turkey. To apply this deduction, you must provide official documents showing taxes paid abroad, and the amount deducted cannot exceed the tax calculated in Turkey for the same income.

Tax filing deadlines and methods

Income earned abroad must be declared by the end of March following the relevant calendar year. This declaration can be submitted electronically via the Turkish Revenue Administration’s Ready Declaration System. 

 

 

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The information provided in this blog post is for general informational purposes only and does not constitute legal, financial, or investment advice. The content is prepared solely for informational purposes, and seeking professional advice for your specific circumstances is recommended. The statements in this article do not create any binding obligations or liabilities and solely reflect the author's opinions. All decisions and responsibilities are yours, and Papel Elektronik Para ve Ödeme Hizmetleri A.Ş. assumes no liability.