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Türkiye’s top administrative court, the Council of State (Danistay), ruled on Dec. 18 to suspend a tax practice that treated short-term home rentals on platforms such as Airbnb as commercial activity.
The ruling by the Council of State’s 3rd Chamber directly affects thousands of individual property owners who had faced retroactive tax assessments after receiving permits to rent their homes for tourism purposes.
According to reports, the court ruled that the Finance Ministry’s interpretation went beyond the law and produced binding legal consequences that harmed taxpayers.
The decision marks a major development in the legal debate over how short-term rentals should be taxed in Türkiye and whether individual homeowners should be treated like hotel operators.
In January 2025, the Revenue Administration sent a general letter to tax offices nationwide.
The letter stated that homes rented on a daily or weekly basis with a Tourism Purpose Rental Permit should automatically be classified as commercial enterprises.
Based on this interpretation, tax authorities opened commercial tax registrations for many homeowners. They imposed income tax, provisional tax, and value-added tax at a rate of 20%. In many cases, they also applied penalties retroactively.
The Finance Ministry argued that short-term rentals required continuity and organization. It claimed this was enough to qualify the activity as commercial, even if the owner provided no additional services.
This practice affected thousands of individuals who rented out a single property without forming a company or operating a hospitality business.
One affected taxpayer challenged the application in court, which brought the issue before the Council of State.
The Council of State rejected the Finance Ministry’s procedural objection and ruled that the general letter had direct and binding effects on taxpayers. The court found that the document could be subject to judicial review.
In its reasoning, the court drew a clear distinction between simple rental activity and professional hospitality services.
The ruling stated that a rental can only be considered commercial if it operates within a hotel, apartment-hotel, or boarding house structure and includes services such as breakfast, meals, daily cleaning, ironing, or similar amenities.
The court emphasized that renting a home on a daily, weekly, or monthly basis without these services does not change the legal nature of the income.
The decision included the following assessment, as reported by Ekonomim: “Renting residential property for tourism purposes can only be considered commercial if it is carried out within an organized structure similar to hotel, apartment, or boarding house operations and includes services such as breakfast, meals, ironing, or daily cleaning.”
For this reason, the court ruled that income from such rentals remains classified as rental income rather than commercial profit. It also ruled that imposing VAT under these conditions is unlawful.
The decision suspends the enforcement of the Finance Ministry’s tax practice for now.
Individual homeowners who rent out their properties without operating a hospitality business are no longer automatically subject to commercial income tax and VAT.
The ruling applies specifically to real persons who hold a tourism rental permit but do not provide hotel-style services.
However, the decision is not final, as according to multiple sources, the Finance Ministry is expected to appeal to the Council of State’s Tax Chambers Board within seven days of notification.
The final outcome will shape how short-term rentals are taxed in Türkiye and may set a precedent for future disputes involving Airbnb and similar platforms.
Until then, the enforcement of the contested tax provisions remains suspended.
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