Tax Exemption Application Guide for Software Developers

For a software developer starting out independently, setting up a company may not always be the first step. In Türkiye, the tax exemption available to individuals earning income from certain activities is an option worth considering before deciding to establish a company. However, this provision does not cover all software work in the same way. At X Mind Solutions, we recommend that developers consider the nature of their income and their tax obligations alongside technical requirements when designing their business models.

Activities that may qualify for the exemption include mobile application development, digital content creation and certain online services. Producing video, audio or text content, as well as providing online education, data processing or development services, are among the activities that may be assessed for eligibility. A professional title alone is not enough to determine eligibility. The service provided, the activity generating the income and the way payments are collected must be considered together. Each income stream must be checked separately.

The application process centres on obtaining an exemption certificate from the tax office and collecting all revenue covered by the exemption in a dedicated bank account opened for this purpose. Notifying the tax office of the account details is also part of the process. Obtaining the certificate alone is therefore not sufficient. Organising payment collection methods from the outset, separating different income streams and checking that covered revenue is tracked through the dedicated account are important for compliance.

The administrative relief offered by the exemption relates to income tax returns, bookkeeping, the certification of accounting books and the issuance of documents for the relevant activities. Income from eligible activities may also qualify for a VAT exemption. However, these benefits should not be interpreted as an unconditional exemption from tax. The annual earnings threshold must be checked for the relevant period, and any filing obligations arising from exceeding the threshold or receiving other income should be assessed with an accountant.

One of the most significant risks is assuming that all income automatically falls within the exemption. Revenue from mobile applications, earnings from content creation and income from a bespoke development agreement may require different assessments. Likewise, eligibility should not be determined solely on the basis of the platform used. Failing to collect revenue in the dedicated account or to submit a required tax return may result in tax liabilities, penalties and late-payment interest. Before deciding to set up a company, review your activities and contracts with an accountant; this content is for general information only.