Is the Publisher Share You Pay (or Receive) Royalty or Service? Withholding and DTTs on Cross-Border Rev-Share (2026)

Regulatory Note: This article is prepared as of 2026-07-23, based on Corporate Income Tax Law No. 5520 Art. 30 (withholding under limited liability) and Art. 33 (credit for taxes paid abroad), Council of Ministers Decree No. 2009/14593 setting the limited-liability withholding rates, Articles 7, 12 and 22 of the double taxation treaties (DTTs) (the Turkey–Bulgaria Treaty as sample text), the Tax Procedure Law (TPL) principle that the true nature of the transaction governs, and the settled ruling view of the Revenue Administration (GİB) (including E-38418978-125[30-2023/5]-491893 · 01.11.2023 and E-45404237-130[I-21-59]-74403 · 28.03.2023). DTT caps vary from country to country; verify your own treaty text and current situation before the transaction.

When the contract lands on the table, everyone stares at one number: the revenue share. “70 to you, 30 to me.” Or the reverse. And while that rate is discussed, tax crosses no one’s mind — because everyone assumes the rate already contains the tax answer too.

Do not assume that. The “%X share” is a pricing mechanism; it is not the tax question itself. The real question sits one layer down and is a single sentence: is this share paid in return for the use of a right, or as the price of a service?

The Answer in 60 Seconds

First separate two things, and the order matters:

1. Direction. Are you paying (Turkish studio → foreign publisher), or are you receiving (publisher → Turkish studio)?
2. Nature. Is the payment consideration for the use of an intangible right (copyright, trademark, engine, software licence) — that is, a royalty? Or is it consideration for the publisher’s distribution/marketing/publishing service?

Here is the short answer. On a royalty payment made from Turkey to a limited-liability entity and falling within CITL Art. 30 under domestic law, withholding arises in the source country: the CITL Art. 30/2 domestic rate is %20 (the statutory rate written in the law is %15; the applied rate was raised to %20 by Council of Ministers Decree No. 2009/14593), but DTT Art. 12 typically brings this down to a %10 gross cap — provided the counterparty files its residence certificate and is the beneficial owner. If it is commercial/service, and the publisher has no PE in Turkey and no separate technical-service/independent-professional clause of the relevant treaty is triggered, then under DTT Art. 7 the source country does not tax at all: no withholding.

Multiply direction by nature: four cells emerge, and the four give four different outcomes. But let me say this upfront: these four cells are a pre-screening map, not a definitive tax-decision engine. A full transfer of rights, a limited licence, SaaS access, pure distribution authority and mixed packages do not always sit cleanly in the same two boxes; each cell also demands its own contract-specific analysis. And the absence of withholding does not mean you have no reverse-charge VAT (No. 2 return) obligation — DTTs do not limit VAT; you test that separately. Let us take it in order.

When Is the Publisher Share a “Royalty,” and When a “Service”?

Publisher deals are not a single template. Four structures are common in practice:

• Pure rev-share: revenue is split by a rate from the outset.
• Minimum guarantee (MG) + recoupment: the publisher pays an advance upfront, then recovers it by offsetting (recouping) it against your share.
• Licence/royalty: one party licenses an IP (engine, brand, character, code) to the other.
• Work-for-hire: production to order; usually a service.

Do not let these labels mislead you. Tax looks not at the title but at how the arrangement works. At the heart of the distinction is a single question: who licenses what to whom; who keeps the IP?

An intangible-rights fee (royalty) is a payment made in return for the use, or the right to use, a copyright, a trademark, a patent or software. The canonical distinction GİB has repeated for years applies here. The administration splits software/IP payments into three, and states it in precisely the same wording:

• If a ready/standard product is sold to the end user without modification and without reproduction → the counterparty’s income is commercial income, no withholding.
• If software not available on the market is specially commissioned → it is independent professional income, %20 withholding.
• If reproduction, modification, public distribution or display rights are acquired under “copyright” → an intangible right (royalty) arises, %20 withholding.

Translate this into publisher language. Is the publisher giving you only a distribution and marketing service, or is it letting you use its own engine/brand (or are you transferring to it the reproduction-distribution right of your game)? The first is a service, the second a royalty. The same word “rev-share” can stick over both; your job is to peel off the sticker.

Two Axes, Four Cells

Now we reach the core. Money flows two ways, the nature is one of two. Multiply:

• Axis A — Direction: (1) the Turkish studio pays, (2) the Turkish studio receives. Here “direction” is not the direction of the bank transfer but who legally owns the revenue. In most models the publisher collects the receipts, offsets its own share, and sends you the net — and that netting may be a “book payment” you make to the publisher. Without settling who owes whom (principal/agent), you cannot place either the direction or the tax base correctly.
• Axis B — Nature: royalty / commercial-service.

Four cells:

1. Outbound payment + royalty. You pay the publisher for the use of an IP. Turkey is the source country; CITL Art. 30/2 withholding arises. The DTT Art. 12 cap (typically %10) applies with the residence certificate. You withhold and declare it under the reverse-charge (responsible-party) capacity.
2. Outbound payment + service. The publisher gives you only distribution/marketing service and has no PE in Turkey. DTT Art. 7 → the source country does not tax → no withholding.
3. Inbound + royalty. The publisher pays you a royalty for your IP and withholds tax in its own country. You credit that withholding in Turkey under CITL Art. 33 — but capped and subject to documentation.
4. Inbound + service. You provide a service to the publisher and have no PE in that country. The other country does not tax under Art. 7; the income is taxed entirely in Turkey.

One caveat: the “service” here is the publisher’s genuinely commercial distribution/marketing service. If the work is bespoke software development to order, or work-for-hire, the counterparty’s income may be independent professional income; then withholding (%20) comes into play under CITL Art. 30/1-b, and on the treaty side the independent-professional/technical-service clause applies instead of Art. 7. The “service” label alone does not close withholding — what governs is whether the income is commercial or independent professional.

The mistake I most often see in the field comes from placing the same contract in the wrong cell: treating cell 1 as cell 2 and never withholding at all, or losing the credit in cell 3 for failing to collect documentation.

The Numbers: A Share of 100 Units

Let us set side by side how the same 100-unit share produces a different burden as the cell changes. We assume there is a DTT with the publisher’s country of residence and a royalty cap of %10 (this varies by country — explained below).

Scenario	Nature	Withholding in source country	Which DTT article	Residence certificate	Result in Turkey
Outbound payment	Royalty	Domestic rate %20	Art. 12 (cap %10)	Required	10 units with certificate, 20 units without, withheld and declared
Outbound payment	Service	None (if no PE)	Art. 7	Not required	No withholding
Inbound	Royalty	Foreign domestic law may withhold (DTT cap, typically 10 units)	Art. 12	You give your TR certificate to the publisher	CITL Art. 33 credit (capped, documentation required)
Inbound	Service	None (if no PE in that country)	Art. 7	Not required	Entirely corporate tax in Turkey

Two numbers in the table are worth reading. First: on an outbound royalty payment, the difference between having and not having the residence certificate is exactly 10 units versus 20 units — that is, the certificate either doubles or halves the withholding you pay. Second: when you make a net payment (that is, when you say “let the publisher receive net X”), the base is grossed up. For %10, net grossed = net ÷ 0.90; the withholding is computed on that gross. A studio that writes “net of tax” into the contract unknowingly enlarges the withholding out of its own pocket.

DTT Mechanics: Art. 12 or Art. 7?

The switch between the two articles determines the whole outcome.

Art. 12 — intangible-rights fees. On a royalty the source country has a limited taxing right. In the wording of the Turkey–Bulgaria Treaty: if the counterparty is the beneficial owner of the intangible-rights fee, the tax charged “shall not exceed 10 per cent of the gross amount.” Because the domestic rate (%20) is higher than the cap (%10), the cap applies. But had the domestic rate been lower than the cap, the lower one would govern — a treaty exists to limit tax, not to increase it.

Art. 7 — business profits. In the wording of the same treaty: the profit of an enterprise is taxable only in its state of residence unless it carries on business in the other state through a permanent establishment. So if the publisher has no permanent establishment/agent in Turkey, a service-natured share is not taxed in the source country (Turkey). Withholding closes.

Art. 22 — credit. On inbound income, the tax paid abroad is taken into account in Turkey through the credit method. Its domestic-law counterpart is CITL Art. 33.

Here I must draw an honest boundary. The %10 above is an example specific to the Turkey–Bulgaria Treaty. The cap varies from country to country; in many treaties it is %10, in some a different rate applies to certain items (for example a lower rate for the use of industrial/commercial/scientific equipment). It is widely stated that the royalty cap in the Germany and United Kingdom treaties is in the %10 range; still, verify these rates too from the relevant current treaty/protocol text. If your publisher is in the United States, Ireland, Singapore or elsewhere, do not commit that single rate to writing without confirming it from your own treaty text. “Typically %10” is a starting assumption, not a rule.

Who Determines the Nature — the Contract Language, or the Substance?

The core principle of the TPL is clear: in taxation, the true nature of the transaction governs. The words “revenue share agreement” in the title do not automatically make that share commercial income. Both the administration and the courts look beneath the paper.

That is why mixed contracts demand separate attention. Publisher deals often contain both a licence (IP use) and a service (marketing, localization, community management). The approach GİB adopted in a ruling given to a Germany-based software entity is this: where a licence-use right and a development/consulting service are combined, the fee is apportioned. The licence part is assessed within the royalty/Art. 12 framework, the service part separately. If your contract gives a single total figure, you must make that apportionment by a reasonable and documentable method. A rate you draw unilaterally afterwards does not have to be accepted by the administration; you should define the apportionment in advance in the contract and support it with independent price/comparable and concrete cost-deliverable records. If the fee cannot be reliably apportioned, the administration may characterize the whole fee according to the dominant (and often riskier) element.

So how are the minimum guarantee (MG), the advance and recoupment characterized? Here I could not find a dated, numbered GİB view specific to this item; so I do not invent a precise reference, and reason from principle.

The tax nature of the MG follows the nature of the underlying right or service. And “recoupable” is not the same as “refundable”: the MG in the game industry is often a non-refundable advance that the publisher recoups from future shares but does not demand back in cash if there are no sales.

The correct accounting is built by looking at the refund obligation in the contract, the performance of the obligation, and the vesting conditions. An advance that creates no repayment debt / is conditional is not direct income at the moment of collection; it is tracked as an advance received and turns into income as sales are made — but do not put this outcome on autopilot without reading the contract terms.

On the withholding side, the CITL Art. 30/2 trigger is “amounts paid in cash or on account, or accrued” — that is, withholding arises at whichever of payment, book entry or accrual occurs first. If you make an outbound MG of a royalty nature, the withholding obligation arises at the moment of payment (or accrual), even if the game has not been sold at all. A studio that fails to factor this in at signing is surprised at the first MG transfer.

Gökay GÜL’s Note: Before signing the contract, get two things on paper: (1) whether this share is a royalty or a service — and if mixed, which percentage is which — and (2) who will obtain the residence certificate, and how often. Also write down, with a figure, whether you bear the withholding “net of tax” or “gross.” If these three sentences are not in the contract, at year-end the difference is paid not by accounting, but by your own P&L.

Risk Filter: Which Question Finds You the Right Cell

Go through them in order; each question moves you closer to a cell:

• Who holds the IP? If the payment is for your use of the counterparty’s IP, you are on the royalty side. Not if you are merely taking its service.
• Does the publisher have a PE/permanent agent in Turkey? If so, the Art. 7 outcome changes; even a service may bring source-country taxation into play.
• Is the residence certificate on hand and current? Without it you cannot apply the reduced DTT rate (typically %10); the domestic rate %20 kicks in, and then you chase a refund.
• On an outbound payment, did you withhold? If you should have and did not, the tax stays on you in the responsible-party capacity — with late interest and penalty, retroactively.
• On inbound, was the foreign withholding documented? If the consulate-certified document is not present at the time of assessment, the credit is deferred; if the document does not arrive within one year the assessment is not corrected (Art. 33/7) and the foreign tax you paid remains undeducted in Turkey — and, moreover, late-payment interest accrues on the deferred tax (Art. 33/8).

The last two items are the two most expensive mistakes among the four cells: the first a penalty on outbound, the second a double-tax burden on inbound.

Let me open up the credit side a little, because it is the heart of the inbound scenario. Under CITL Art. 33, tax paid abroad may be deducted from corporate tax in Turkey; but the deductible amount cannot exceed the amount found by applying the rate in CITL Art. 32 to that income. Foreign tax exceeding this cap cannot be deducted and is lost; the part that stays within the cap but you could not deduct that period carries forward to the end of the third following accounting period.

And the most critical condition: tax paid abroad cannot be deducted unless it is documented by a paper certified by the Turkish embassy/consulate in that country (Art. 33/6). If the document is not ready at the time of assessment, the credit is not wholly burned: under CITL Art. 33/7 the tax is computed at the rate in force in that country (not exceeding the Art. 32 rate) and the relevant part is deferred; if the document is filed within one year at the latest of the assessment date, the assessment is corrected. If it is not filed in time, late-payment interest accrues on the deferred tax (Art. 33/8). In short, if the document is late the job gets harder, but the door stays ajar for one year; if the document never arrives, the credit is gone.

There is also a tangential but, on the inbound side, important item: on software/game services provided abroad, the income deduction in CITL Art. 10/1-ğ may come into play. This deduction’s rate was raised from %50 to %80 by Law No. 7491 Art. 59 (27.12.2023) and tied to the condition that the entire income is transferred to Turkey by the return-filing deadline; afterwards, Presidential Decree No. 11257 (Official Gazette dated 30.04.2026) was issued on the application of this provision. This is a separate incentive mechanism — a deduction from the tax base, outside the withholding/DTT axis — and since the current rate/scope moves by Presidential Decree, separately confirm its applicability to your situation and the rate in force before the transaction. Whether your rev-share income falls within this scope is a study in its own right.

Field Case

The example below is not from a single actual event but a representative (composite) case distilled from several similar files; personal and company details are anonymized.

A mobile game studio working with a Scandinavian publisher had for months been sending the publisher payments labeled “rev-share” — a portion of the revenue, with no withholding at all. Their logic was reasonable: “We pay it a service fee, commercial income, no withholding.”

When we opened the contract the picture changed. The publisher was not merely distributing; it was letting the studio use its own publishing brand and an analytics/LiveOps engine, and was reproducing and distributing some builds of the game on its own infrastructure. So the weighted part of the payment was consideration for a right of use — a royalty. And there was no residence certificate in the file at all.

The result was a twofold exposure. Retroactively, the withholding that should have been taken on the royalty-natured part had never been taken; that amount, with late interest, was on the studio’s back. And because no document had been filed, the rate applied at that stage was not the DTT cap %10 but the domestic rate %20 — had the residence certificate for the relevant period been documented later, a correction/refund route was open, but for the past period that was an extra process.

In the fix we did three things: we apportioned the fee into licence and service, we tied the residence-certificate flow into the contract for every future payment, and we clarified who would bear the withholding with a “gross-up” formula. The commercial split rate did not change; but past withholding plus late interest arose separately as a cost, and now behind every payment there was the right cell and a document.

Frequently Asked Questions

Should I withhold on the rev-share I pay to a foreign publisher? If the payment is for the use of an intangible right (brand, engine, software, reproduction-distribution right), yes: withholding arises under CITL Art. 30/2, the domestic rate is %20, and DTT Art. 12 brings it down to a typical %10 cap with the residence certificate. If the payment is only for a distribution/marketing service and the publisher has no PE in Turkey, you do not withhold under DTT Art. 7.

Rev-share — royalty or service — how do I tell? Look not at the title of the contract but at how it works. One question: are you using a counterparty’s IP (or transferring to it the use/reproduction right of your own IP), or merely taking its service? The first is a royalty, the second a service. If the contract contains both, the fee is apportioned.

Can I apply the reduced DTT rate without a residence certificate? No. If the certificate is not filed, domestic law applies instead of the treaty; that is, not the reduced cap (typically %10) but the domestic rate %20 governs. If the certificate is filed later, you take the refund route for the over-withheld part, but that is an extra process. Obtain the certificate before payment.

The publisher withheld tax in its own country when paying me; do I credit it in Turkey? Yes, you can credit it under CITL Art. 33 — with three conditions: you include the income in the general results in Turkey, the creditable amount cannot exceed the limit computed at the Art. 32 rate (the part exceeding the limit cannot be deducted; the part within the limit that you could not deduct that period carries to the third following accounting period), and you document the tax paid with a consulate-certified paper (Art. 33/6). If the document is not present at the time of assessment, the tax is deferred, and if the document is filed within one year of the assessment date the assessment is corrected; if that period is missed the assessment is not corrected and the credit is gone (Art. 33/7). Late-payment interest is also computed on the deferred tax (Art. 33/8).

How is a minimum guarantee (MG) / advance payment taxed? Its nature follows the nature of the underlying right or service; since there is no dated, numbered GİB view specific to this item, I speak on principle. A refundable advance is not counted as direct income at the moment of collection; it turns into income as sales are made. But if you pay an outbound MG of a royalty nature, the withholding arises at the moment of “payment or book entry or accrual” — even if the game has not yet been sold.

What You Should Do

The skeleton for finding the right cell on a foreign-publisher payment is five steps: determine the nature (royalty or service), clarify the direction (are you paying or receiving), choose the right DTT article (Art. 12 ↔ Art. 7), obtain the residence certificate before payment, and compare the domestic rate with the treaty cap to set up either the responsible-party declaration or the Art. 33 credit. In a mixed contract, apportion the fee; characterize MG/advance items by the underlying right.

This topic interlocks with two neighboring articles: how a foreign investor obtains the residence certificate is the key to the reduced DTT rate; if you sell directly through a store rather than a publisher, the VAT base of App Store/Google Play store commission is a separate axis — there the relationship is usually one of brokerage and the matter shifts to the VAT base; still, withholding and VAT must be examined separately according to the specific contract. On a payment to the publisher, reverse-charge VAT (the No. 2 return) may also come into play; I covered its mechanics in that article.

If you would like to place the share in your publisher contract into the right cell with your own figures, we at Sistem Global Danışmanlık can build your characterization–DTT–residence-certificate chain together. For details and contact, write via gokaygul.com.