Expanding into Turkey offers many opportunities for international companies—especially thanks to its skilled workforce, strategic location, and competitive labor costs. But before you hire your first employee in Turkey, it’s crucial to understand how to manage payroll and social contributions properly.
This guide explains everything global and local HR managers need to know about payroll social contributions Turkey, including payroll structure, employer obligations, social security requirements, taxes, and best practices to ensure legal compliance.
1. Understanding the Payroll System in Turkey
Payroll in Turkey is governed by the Turkish Labor Law (No. 4857) and regulated by institutions such as the Social Security Institution (SGK) and the Revenue Administration (GİB).
Employers must process payroll on a monthly basis, deduct income taxes and social security contributions, and pay employees by bank transfer. Both employers and employees are legally required to make social contributions, and failure to do so can result in significant penalties.
2. Key Payroll Elements in Turkey
A typical payroll cycle in Turkey includes the following components:
a. Gross Salary
- The total monthly wage agreed upon in the employment contract.
- Subject to deductions (social security and income tax).
b. Net Salary
- The take-home amount after mandatory deductions.
c. Allowances and Benefits
- Includes meal cards, transportation support, bonuses, and private health insurance (if applicable).
d. Deductions
- Income tax
- Employee social security contribution
- Unemployment insurance
- Stamp tax
These deductions are calculated and withheld by the employer each month.
3. Minimum Wage in Turkey (2025)
As of January 2025, the Turkish government set the minimum wage as follows:
- Gross monthly minimum wage: TRY 26,005.50
- Net monthly minimum wage (after deductions): TRY 22,104.67
- Total cost to employer (including contributions): TRY 30,621.48
Employers must comply with this baseline even for part-time or entry-level employees. The government may revise the minimum wage mid-year based on inflation or economic conditions.
4. Social Security Contributions in Turkey
Employers and employees are both responsible for contributing to the Social Security Institution (SGK), which covers pensions, healthcare, unemployment insurance, and more.
a. Employer Contributions (Approx. 22.5% of gross salary)
| Contribution Type | Employer Share (%) |
|---|---|
| Short-term insurance | 2.0 |
| Disability, Old Age, Death | 11.0 |
| General Health Insurance | 7.5 |
| Unemployment Insurance | 2.0 |
| Total | 22.5% |
b. Employee Contributions (Approx. 15%)
| Contribution Type | Employee Share (%) |
|---|---|
| Disability, Old Age, Death | 9.0 |
| General Health Insurance | 5.0 |
| Unemployment Insurance | 1.0 |
| Total | 15.0% |
These contributions are withheld from the employee’s gross salary and paid to the SGK by the employer along with their own portion.
5. Income Tax and Stamp Tax in Turkey
Employees in Turkey are subject to progressive income tax rates based on their annual earnings.
a. 2025 Income Tax Brackets (estimated)
| Annual Income (TRY) | Tax Rate |
|---|---|
| 0 – 110,000 | 15% |
| 110,001 – 230,000 | 20% |
| 230,001 – 870,000 | 27% |
| 870,001 – 3,000,000 | 35% |
| Over 3,000,000 | 40% |
The employer is responsible for calculating and withholding this tax every month.
b. Stamp Tax
- A fixed 0.759% of the gross salary.
- Also withheld by the employer and submitted to the tax office monthly.
6. Payroll Reporting and Payment Process
To comply with Turkish payroll law, employers must complete the following steps each month:
1. Calculate Gross to Net Salary
- Determine employee’s gross salary.
- Apply deductions for SGK, unemployment insurance, income tax, and stamp tax.
2. Generate Payroll Report
- Prepare a detailed payslip for each employee.
- Must include gross salary, all deductions, and net pay.
3. Submit SGK Declarations
- File social security declaration through the SGK online portal by the 23rd of each month.
- Pay contributions by the end of the month.
4. Submit Tax Returns
- File income tax and stamp tax with the Revenue Administration by the 26th of each month.
- Payment due by the end of the same month.
5. Pay Employees
- Wages must be paid via bank transfer, typically on the last working day of the month.
7. Additional Employer Responsibilities
In addition to handling payroll and social contributions, employers must:
- Register employees with SGK before the first working day.
- Maintain digital personnel files, including signed contracts, identity copies, and SGK registration documents.
- Provide payslips to employees upon request.
- Ensure compliance with annual leave, overtime, and severance pay rules.
8. Penalties for Non-Compliance
Failing to follow proper procedures for payroll and social contributions in Turkey can result in serious consequences:
- Late SGK declarations: Administrative fines per employee
- Failure to register employees: Legal prosecution and monetary penalties
- Underpayment of taxes: Interest, penalties, and risk of audits
- Improper contracts or salary reporting: Labor court disputes, compensation claims
To avoid these issues, businesses should implement strict payroll procedures or work with local payroll experts or an Employer of Record (EOR).
9. How to Simplify Payroll: Use an Employer of Record (EOR)
For international companies without a legal entity in Turkey, managing payroll and compliance can be overwhelming. An Employer of Record (EOR) can handle all payroll responsibilities on your behalf.
Benefits of using an EOR in Turkey:
- ✅ Legally employs staff on your behalf
- ✅ Handles all SGK, tax, and payroll filings
- ✅ Guarantees full compliance with Turkish labor law
- ✅ Provides payslips, contracts, and benefit administration
- ✅ Ideal for remote teams, short-term hiring, or market entry
EORs are the easiest way to hire legally and run compliant payroll in Turkey without setting up a local branch or subsidiary.
10. Best Practices for Payroll Management in Turkey
To ensure accuracy and compliance, follow these payroll best practices:
- ✅ Keep employment contracts up to date and bilingual (Turkish and English)
- ✅ Track working hours, overtime, and paid leave digitally
- ✅ Automate payroll calculations and deductions
- ✅ Conduct monthly audits of tax and SGK filings
- ✅ Use payroll software or outsource to a certified payroll provider
- ✅ Stay informed on changes to tax rates and minimum wage updates
Conclusion: Mastering Payroll and Social Contributions in Turkey
Handling payroll and social contributions in Turkey requires attention to detail, understanding of local law, and strict administrative discipline. Whether you’re a domestic business or an international employer, compliance is non-negotiable.
By understanding employer obligations—from minimum wage and gross-to-net calculations to SGK filings and income tax—you can operate legally and avoid expensive mistakes. For foreign companies, partnering with a local payroll expert or using an EOR offers a fast, safe, and efficient way to manage payroll in Turkey.
Looking for payroll or EOR support in Turkey?
We help international businesses hire, pay, and manage employees in Turkey with full legal compliance. Contact us to learn how we can simplify your payroll and social contribution processes in Turkey.
