For people thinking of working in Turkey the relevant fact is that Turkey is not yet in the EU. Therefore, if you want to work you need a work permit. If you want to start a business then you need a 50% Turkish partner.
However, most people buying a property in Turkey are probably not thinking of working. For them there is a ‘hidden’ bonus. It is absolutely true that savings accounts in Turkish banks pay very high rates of interest. Currently, if you deposit 100,000 lira (£40,000) in one of these instant access savings accounts the gross rate of interest is 17%. There is a flat rate of tax of 15% on the interest gained which reduces the 17% by 3% to a net of 14%. This is paid monthly and gives a monthly income of 1,166 lira. When you consider that the average Turkish family budgets 500 lira a month to live on it is easy to see that living can be easy. For each additional 100,000 lira deposited the rate of interest goes up to 19% yielding a net of 16%.
If you do not need to draw on the money and leave it in the bank to gain compound interest then you can double your money in between 4 to 5 years!
Alternatively, if you take out an ‘insurance’ type saving product which locks up your money for 12 months and usually has a starting value of 200,000 lira, then the interest rate varies between 22% and 24% per year. On these products the flat rate tax on the interest gained is 10% giving a net of between 20% and 22%. Quite unbelievable by UK standards. The Global Property Group and our colleagues in the Altinkum office will guide you through the necessary steps to open Turkish bank accounts. Turkish bank accounts are guaranteed by the government up to 50,000 lira.
The reason why this is so, is because inflation in Turkey inflation is historically higher than experienced in the UK, EU, USA, etc. As it goes up or down so the rates vary. However, inflation in Altinkum and similar places is not hitting the basics of food (which is plentiful), and other household costs. The story is probably different for people living the western lifestyle in the major cities. Thus the interest you are earning remains more than adequate to cover everyday items. Any money you do not need can be left in the account to gain compound interest.
Please contact us if you would like to discuss living and working in Turkey in more detail.
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