Cash rent payments now subject to fines in Türkiye: Landlords and tenants beware!

Cash rent payments in Türkiye will now result in fines for both landlords and tenants under a new regulation drafted by the Türkiye Revenue Administration. According to the draft, landlords and tenants who fail to comply with the new rules will face a fine calculated as 10% of the monthly rent paid in cash.

If the amount is less than ₺5,000 ($147), both the landlord and the tenant will be subject to a special irregularity fine of ₺5,000 ($147) each.

Cash rent payments will be made by bank or PTT transfers

The Ministry of Treasury and Finance will implement this new penalty system. As outlined in the draft regulation, rent payments made in cash will result in a fine for every month the payment is made.

If 10% of the rent is less than the ₺5,000 ($147) minimum penalty, a flat fine of ₺5,000 ($147) will be applied. For instance, starting from October 1, 2024 if a landlord rents a property for ₺25,000 ($735) per month and ₺15,000 ($441) of that rent is paid in cash for the next 3 months, a ₺15,000 ($441) fine will be imposed on both the landlord and tenant for the months of October, November, and December.

The Revenue Administration prepared this draft regulation to clarify the mandatory bank payment requirement, which was introduced into law published on August 2, 2024. All rental payments, whether for residential or commercial properties, must now be documented through bank or Turkish Post or Telegraph Agency (Posta ve Telgraf Teskilati – PTT) records. This also applies to short-term rentals, such as weekly or daily bookings. In cases of co-owned properties, if the full rent is paid to one of the owners via a bank or PTT, the payment will be considered properly documented.

Fines for non-compliance

A special irregularity fine will be imposed for failure to comply with the new regulations. The penalty will vary depending on the nature of the taxpayer: ₺20,000 ($588) for first-class merchants and self-employed individuals, ₺10,000 ($294) for second-class merchants and registered farmers, and a minimum of ₺5,000 ($147) or 10% of the transaction value for everyone else.

These fines will be increased annually based on the revaluation rate. The maximum fine for a calendar year is capped at ₺20 million ($588,065). However, if the non-compliance is reported to the authorities within five working days, no fine will be imposed.

How penalties will be applied

The Revenue Administration provided several examples in its draft regulation. In one case, if a landlord rents out a property for ₺20,000 ($588) and the rent is paid in cash, both the landlord and the tenant will be fined ₺5,000 ($147), as the 10% threshold is below the minimum fine amount.

In another case, if a landlord receives a monthly rent of ₺25,000 ($735), the cash payment for two months would result in a fine of ₺10,000 ($294) (₺5,000 [$147] for each party, per month).

Payments above ₺7,000 ($206)

Another draft regulation introduces a rule that any transaction over ₺7,000 ($206) must be conducted through a financial institution.

For example, if someone buys a refrigerator worth ₺20,000 ($588), this transaction must be completed via a financial institution, and failing to do so will result in a fine for both the buyer and seller.