What Is Depreciation, and How Are Fixed Assets Expensed in Turkey?

The short answer to the question "what is depreciation?" is this: depreciation (amortisman) is expensing the cost of an asset that is used in the business for more than one year and wears out over time, not all at once but spread over the years in which it is used. When a company buys a computer for 100,000 TL, the whole amount is not deducted from that year's profit. The Tax Procedure Law (VUK) spreads the cost over the useful life and sets rules for the share to be deducted each year.

In this article, we address the question of what depreciation is from the legislative, calculation and bookkeeping angles: we explain the legal basis for depreciation, the rules in Articles 313 to 321 of the VUK, the straight-line and declining balance methods, and the journal entry made at year-end. We do not go into the asset-by-asset rate list; we refer to rates only for an example calculation.

What is depreciation, and why does it matter for a company?

The most practical answer for a company owner asking what depreciation is: depreciation is the transfer of the price paid for a fixed asset to the profit and loss account piece by piece over the years. That way, the cost falls in the years in which the asset generates income. Expensing the full price of a machine in the year of purchase would show that year as loss-making and the following years as more profitable than they really are.

From a tax perspective, depreciation is an expense that reduces the corporate income tax and personal income tax base. From an accounting perspective, it brings the asset value on the balance sheet closer to reality. The depreciation schedule is therefore not a file opened only during return periods, but the company's asset register itself.

The annual amount of depreciation goes, within the income statement , into the expenses of the function in which the asset is used. The share for a production machine goes to cost, and the share for an administrative computer to general administrative expenses. Making this distinction correctly is also necessary for reading gross profit and operating profit correctly.

VUK 313-321: the legal framework for depreciation

The depreciation rules are in Part Three of the Tax Procedure Law, titled “Depreciation” (Amortismanlar). Below, we have summarized in plain language what each article says. For details, we recommend relying on the text of the law.

Article 313: which assets are subject to depreciation?

Under VUK 313, immovable property used in the business for more than one year and subject to wear, deterioration or loss of value is subject to depreciation. Assets valued like immovable property, tools, equipment, furnishings, fixtures and films are also included. The cost of these assets is written off over the years according to the principles in the law.

The same article provides a facility for small purchases. Goodwill payments (peştamallık) and tools, equipment, furnishings and fixtures whose value does not exceed a certain threshold can be expensed directly without being depreciated. According to the Revenue Administration's “Lower Limit for Depreciation” table, this threshold is 12,000 TL for 2026 and was set by VUK General Communiqué No. 588. A year earlier, in 2025, the same threshold was 9,900 TL.

The point to watch in applying the threshold is economic and technical integrity. For a set of desks, chairs and cabinets bought to be used together, the threshold applies to the total of the set, not to each piece separately. The law explicitly states that in this case the threshold is considered collectively.

Articles 314 and 316: land and mines

Vacant land and vacant plots are not subject to depreciation because they do not wear out with use. Agricultural facilities such as orchards and vineyards in agricultural businesses, and roads and irrigation channels built within the business, are exceptions to this rule. Article 316 sets up a separate arrangement for mines and quarries: since the loss of value depends on the depletion of ore, rates are set mine by mine upon application.

Article 315: how is straight-line depreciation calculated?

Straight-line depreciation (normal amortisman) means expensing the depreciable value of an asset at the same rate and in equal amounts each year. Under VUK 315, taxpayers take these rates from the list announced by the Ministry of Treasury and Finance. The rates are based on the useful life of the assets, meaning the rate is found by dividing 1 by the useful life.

According to the depreciation rate table published by the Revenue Administration (GİB), the useful life of concrete, masonry, iron and steel administrative buildings is 50 years, with a straight-line rate of 2%. In the same table, personal computers are listed at 4 years and 25%, and office furniture and fixtures at 5 years and 20%. The full list of items and the underlying communiqués are in the table linked below.

Repeated Article 315: how is the declining balance method applied?

The declining balance method (azalan bakiyeler) is the method in which depreciation is calculated each year on the remaining net value of the asset, so that higher amounts are expensed in the early years. Under the law, the rate for this method is twice the straight-line rate, not exceeding 50%. Only taxpayers keeping books on the balance sheet basis can choose this method.

The value on which depreciation is calculated each year is found by deducting the total depreciation taken to date from the cost of the asset. The period is determined according to the straight-line rate. The value remaining in the last year of the period is expensed in full in that year.

Articles 317 and 318: extraordinary depreciation and the validity of rates

Extraordinary depreciation (fevkalade amortisman) applies to assets that lose value due to disasters such as fire, earthquake or flood, whose technical efficiency falls because of new inventions, or that wear out more than normal due to mandatory intensive use. This rate cannot be used automatically. The taxpayer applies, the opinion of the relevant ministry is obtained, and the Ministry sets a separate rate for each business.

Under VUK 318, the rates announced by the Ministry are valid from the accounting period in which they are announced. Rates set specifically for a business are valid from the period in which the application is made. The Ministry is also authorized to change the rates when necessary; Article 319 has been repealed.

Article 320 and repeated Article 320: period and choice of method

The depreciation period starts from the year the asset is capitalized. Under the general rule, a full year's depreciation is taken for that year, whatever month of the year the asset was bought. For passenger cars, however, depreciation for the year of capitalization is taken only for the remaining months, a partial month counts as a full month, and the remaining share is expensed in the last year of the period. Vehicles used for this purpose by businesses whose activity is renting or operating passenger cars are outside this rule.

Provisions added in 2021 by Law No. 7338 introduced two more options. Taxpayers who so wish may start depreciation for newly capitalized assets from the day they are ready for use and calculate it on a daily basis. They may also choose a longer period, provided it is not shorter than the useful life set by the Ministry; this period cannot exceed twice the Ministry's period or 50 years.

Repeated Article 320 limits the choice of method. For assets forming an economic and technical whole, only one of the straight-line and declining balance methods can be applied. There is no going back for an asset started under the straight-line method; a taxpayer switching from declining balance to the straight-line method states this in its tax return or in the balance sheet attached to it and spreads the remaining value equally over the remaining period.

Article 321: how is depreciation shown in the accounts?

Under VUK 321, depreciation taken can be tracked in two ways, provided it is shown separately in the accounts. It is either deducted directly from the value of the asset or accumulated in a separate provision account on the liabilities side. The Uniform Chart of Accounts follows the second route and keeps accumulated depreciation in a contra account separate from the asset account.

Depreciation methods in one table

In practice, the answer to the question of what depreciation is depends on which method is chosen. The depreciation methods companies encounter in practice fall under five headings. The table below summarizes each method's legal basis, who can use it and its basic rule. The arrangement specific to mines was not included in the table because of its narrow scope.

Straight-line vs. declining balance: an example comparison

Let's put the two methods side by side with a fictional example. A limited liability company keeping books on the balance sheet basis buys computer and server hardware for its administrative office in 2026 for 100,000 TL excluding VAT. We assume a useful life of 4 years and a straight-line rate of 25%. Since the amount exceeds the 12,000 TL threshold, it cannot be expensed directly.

Under the straight-line method, the company takes 25,000 TL of depreciation each year for four years. Under the declining balance method, the rate is 50% and is calculated each year on the remaining value. In the first year 50,000 TL is taken, in the second year 25,000 TL, half of the remaining 50,000 TL, and in the third year 12,500 TL. Since the fourth year is the last year, the entire remaining 12,500 TL is expensed.

Under both methods, the total expense is 100,000 TL; what changes is how the expense is spread over the years. Declining balance lowers the tax base in the early years and leaves less expense for later years. Which one suits your company depends on your profit expectations and investment plan for the coming years; this decision must be made before the asset is capitalized.

How is depreciation recorded in the accounts?

In the depreciation journal entry at year-end, the related expense account is debited and account 257 Accumulated Depreciation is credited. The asset's own account, that is 252 Buildings, 253 Plant, Machinery and Equipment, 254 Vehicles or 255 Fixtures, stays at the purchase price and is not reduced by depreciation. We verified the account codes against the Uniform Chart of Accounts annex published by the Revenue Administration (GİB).

Under the Uniform Chart of Accounts, account 255 Fixtures tracks assets such as office machines and desks, armchairs, cabinets and furniture. In the operation of account 257, depreciation taken is credited to this account against the related expense account. When the asset is sold, transferred or becomes unusable, 257 is debited and the asset account is credited.

Two entries are made for the computer purchase in the example:

• Purchase entry: Debit 255 Fixtures 100,000 TL and 191 Deductible VAT, credit 320 Suppliers. VAT is not included in the cost of the asset; how it is deducted and how the carried-forward amount is tracked is the subject of our article VAT refund accounting entries .
• Year-end depreciation entry (straight-line method): Debit 770 General Administrative Expenses 25,000 TL, credit 257 Accumulated Depreciation 25,000 TL. If the asset were used in production, 730 Manufacturing Overhead would be on the debit side.

At the end of four years, the accumulated amount in account 257 reaches 100,000 TL, and the computer's net value appears as zero on the balance sheet. As long as the asset continues to be used, it can remain in accounts 255 and 257. On a sale, under VUK 328 the difference between the price received and the net value is recorded as a gain or loss.

For day-to-day tracking of entries, trial balance checks and maintaining fixed asset cards, take a look at our our general accounting services page.

Depreciation mistakes we often see in practice

Even in teams that know well what depreciation is, errors can arise at year-end closing. Most of the depreciation problems we encounter stem not from calculation technique but from bookkeeping discipline. The ones we see most often are:

• Skipping a year: If depreciation is not taken in a year, that share is lost. Under VUK 320, failing to take depreciation or taking it at a lower rate does not extend the period, and the remaining share cannot be added to later years.
• Assessing a set piece by piece: Splitting fixtures used together into separate invoices and showing each one below the threshold violates the law's integrity rule.
• Taking a full year for a passenger car: If the pro rata depreciation rule is forgotten, the expense for the year of capitalization is overstated.
• Changing the method midway: It is not possible to move an asset started under the straight-line method to declining balance later.
• Not keeping fixed asset cards: If the card does not show which asset was capitalized in which year, at what rate and under which method, it becomes harder to provide explanations during a tax audit.

When a new asset is capitalized, we gather the invoice, the ready-for-use date and the chosen method and period on the same card. This card becomes the basis for the depreciation schedule both in advance tax periods and at year-end. At foreign-owned companies, the parent company's reporting package may require a different useful life, so tracking two separate periods on the card also makes your work easier.

You can find the full text of the depreciation rules in the current text of the Tax Procedure Law on mevzuat.gov.tr, and asset-by-asset useful lives and rates in the Revenue Administration's depreciation rate table . Our other articles on returns, bookkeeping and types of tax are in in the Tax Legislation category .