On January 5, 2024, in a live broadcast, our Managing Partner Erdem Mümtaz Hacıpaşaoğlu delivered a deep dive titled “Taxing Foreign Revenues of Digital Products,” examining how the cross-border taxation of digital products entering global markets actually works.
The central thesis of the broadcast was clear: cross-border digital sales by a Turkish venture are not just “receiving revenue from abroad”; they are a tax architecture in which VAT, corporate income tax, transfer pricing, and U.S./EU withholding thresholds must be managed in parallel.
The Turkey side: VAT and corporate income tax
For digital product sales abroad, the session covered VAT exemption conditions, the export-of-services characterization, the foreign-currency-earning document process, and the corporate-income-tax bookkeeping obligations.
Selling in markets: U.S., EU, U.K.
Sales in the U.S. trigger sales tax / nexus obligations; the EU triggers OSS / IOSS registration; withholding-tax triggers were laid out — clearly framing the tax-design decision the founder must make for each market.
Transfer pricing
For structures where a Turkish entity coexists with a U.S. entity (as in flip-ups), the session addressed transfer-pricing documentation and the risks of disguised profit distribution.
Highlights from this broadcast
- Turkey: VAT exemption, export of services, corporate income tax
- U.S.: Sales tax, nexus, withholding
- EU: OSS/IOSS, VAT registration
- Transfer pricing: Documentation in two-country structures
You can watch the full broadcast on YouTube.
