A freight invoice is the service invoice issued by the carrier or forwarder for transporting the cargo. It shows the parties, shipment reference, route, freight and surcharges, currency and VAT status. Under Article 14 of the Turkish VAT Law, transport between Türkiye and other countries as well as transit transport is exempt from VAT; on import, the freight up to the place of entry is added to the customs value.
What does a freight invoice contain?
- Name, address and tax number of the issuer and recipient; invoice date and serial number
- Shipment reference: CMR or bill of lading number, vehicle registration or container number
- Place of loading and delivery, mode of transport
- Main freight charge and currency
- Additional items: fuel surcharge, port and terminal charges, waiting time, documentation fees, insurance brokerage
- VAT rate or the reason for exemption
The meaning of the additional items is explained in the entry on freight surcharges.
VAT treatment in international transport
Article 14/1 of the VAT Law (KDV Kanunu) exempts from tax those transit transport services and transport services between Türkiye and foreign countries that are determined by the President. According to the VAT General Implementation Communiqué (KDV Genel Uygulama Tebliği), the exemption covers, under Council of Ministers Decision No. 84/8889, the following freight and passenger transport by sea, air, road and rail:
- transport starting in a foreign country, passing through Türkiye and ending in a foreign country,
- transport starting in a foreign country and ending in Türkiye,
- transport starting in Türkiye and ending in a foreign country.
If the transport is subcontracted to other carriers, both the invoice of the organising company that undertakes the job towards the customer and the invoice of the second-tier contractor that performs the actual carriage fall under the exemption. However, if the second-tier contractor's transport starts and ends within Türkiye, it is subject to VAT. In the example given in the communiqué, for transport from Argentina to Konya the organiser's invoice for the entire transport is issued without VAT, while the invoice of the subcontractor performing the Mersin–Konya road leg includes VAT. With the amendment to the communiqué published in the Official Gazette (Resmî Gazete) of 18 January 2024, it has also become a condition for the exemption that the taxpayer holds a valid international transport authorisation certificate issued in its own name during the period in which the transport activity is carried out. The exemption is reported in the VAT return on the line with code 311, "International transport".
Effect on customs value
On import, freight is not just a service charge but also part of the tax base. Article 27 of the Customs Law (Gümrük Kanunu) provides that the transport and insurance costs of imported goods up to the port or place of entry into Türkiye, together with the related loading and handling charges, are added to the customs value. Transport after the place of entry, by contrast, is not included in the value, provided it is shown separately from the price (Art. 28). That is why, on import, showing the foreign and domestic legs separately on the freight invoice directly affects the amount of tax.
When is the invoice issued?
The freight invoice is usually issued after loading has taken place or after the vehicle has left the border; some lines and carriers require prepayment. For VAT reporting purposes, exempt transport is declared in the return for the period in which the service was completed, and for outbound and transit transport in the return for the period in which the goods left the customs territory at the earliest. The consistency between invoice date and exit date should therefore be monitored by the accounting team.
Who pays the invoice?
| Incoterm | Party paying the main carriage freight |
|---|---|
| EXW, FCA, FAS, FOB | Buyer |
| CFR, CIF, CPT, CIP | Seller (even though risk passes earlier) |
| DAP, DPU, DDP | Seller |
Details of the delivery terms are in the entry on Incoterms. The party to whom the invoice is addressed must be consistent with the delivery term in the sales contract; otherwise, the cost is charged to the wrong party.
Common mistakes
- Applying the exemption to a subcontractor's transport that starts and ends in Türkiye
- Not giving a shipment reference on the invoice, which makes document matching difficult for VAT refunds
- Not showing the domestic leg separately on import
- Omitting the exchange rate and date on an invoice in foreign currency
As tax treatment can vary with the structure of the job, the opinion of a certified public accountant should be obtained in case of doubt; for international transport contracts, regulatory consulting can also provide support.