Law No. 7582, which entered into force on 4 June 2026, introduced a 20-year Turkish income tax exemption for qualifying individuals who relocate to Türkiye and derive income or gains from sources outside Türkiye. The exemption is governed by Article 20/D (mükerrer) of the Turkish Income Tax Law and is available to individuals who became resident in Türkiye for tax purposes on or after 1 January 2026, provided that they also satisfy the conditions relating to the preceding three calendar years.
The new regime may be particularly relevant to Turkish citizens returning from abroad, foreign investors, shareholders, entrepreneurs, senior executives, independent professionals and individuals with foreign rental, dividend or investment income. The exemption does not, however, apply automatically. Applicants must meet all statutory conditions and obtain an exemption certificate from the competent tax office within the prescribed period, in accordance with repeated Article 20/D and Income Tax General Communiqué No. 333.
Key Takeaways
- A 20-year Turkish income tax exemption is available for qualifying foreign-source income and gains.
- The regime applies to individuals who relocate to Türkiye and satisfy the statutory eligibility requirements.
- The exemption concerns foreign-source income; Turkish-source income remains subject to the ordinary Turkish tax rules.
- Eligibility and the scope of the exemption should be assessed carefully based on the individual circumstances of each taxpayer.
What does the new regime change?
As a general rule under the Turkish Income Tax Law, individuals resident in Türkiye for tax purposes are subject to tax on their worldwide income—that is, income and gains derived both within and outside Türkiye. Moving one’s tax residence to Türkiye would therefore ordinarily bring foreign-source income within the scope of Turkish taxation.
Article 20/D introduces a long-term exception to this general rule. Foreign-source income and gains derived by qualifying individuals who become Turkish tax residents are exempt from Turkish income tax for 20 years.
This regime should not be confused with an asset repatriation or “wealth amnesty” programme. Eligibility is not conditional upon transferring foreign assets or income to Türkiye, making a minimum investment in Türkiye or acquiring any particular citizenship status. The determining factors are whether the individual becomes resident in Türkiye for tax purposes, satisfies the look-back conditions for the preceding three calendar years, applies within the statutory deadline and derives income that is genuinely foreign-source under Turkish tax law.
Who is eligible for the 20-year income tax exemption?
The following principal conditions must be met cumulatively:
- The applicant must be an individual. The exemption is available only to natural persons. Companies and other corporate income taxpayers are not eligible.
- The individual must become resident in Türkiye for tax purposes on or after 1 January 2026. Individuals who became Turkish tax residents before that date are not covered by the regime.
- The individual must not have had a domicile in Türkiye during the preceding three calendar years. The test refers to the three calendar years preceding the year in which Turkish tax residence begins; it is not calculated merely by counting backwards for three years from the date of arrival.
- The individual must not have had a Turkish tax liability during those three calendar years. A prior tax liability arising solely from Turkish-source income from immovable property, movable capital or capital gains is, however, expressly permitted and does not by itself prevent eligibility, provided the other conditions are satisfied.
- The individual must be resident in Türkiye for tax purposes on the application date. Tax-resident status must have been acquired by the time the exemption certificate is requested.
- The individual must apply on time and obtain an exemption certificate. Failure to meet the application deadline prevents the issuance of the certificate under the current rules.
The legislation does not distinguish between applicants on the basis of nationality. Both Turkish citizens and foreign nationals may qualify if they meet the applicable conditions.
What does being “resident in Türkiye” mean for tax purposes?
Under the Turkish Income Tax Law, an individual is generally treated as resident in Türkiye if either:
- The individual’s domicile is in Türkiye; or
- The individual remains in Türkiye continuously for more than six months in a calendar year.
Temporary absences generally do not interrupt the period of residence in Türkiye. In some cases, however, domicile, physical presence, the individual’s centre of personal and economic relations and the applicable double taxation treaty must be assessed together. If two countries regard the same individual as resident under their domestic laws, the treaty tie-breaker rules should also be considered.
Accordingly, immigration status and tax residence should not be treated as interchangeable concepts. Holding a residence permit, acquiring citizenship or owning property in Türkiye does not necessarily determine the tax outcome on its own.
Which types of foreign-source income may qualify?
The legislation is not limited to a particular category of income. It broadly exempts “income and gains derived outside Türkiye.” Subject to the applicable source rules and the location of the underlying activity or asset, the following may therefore fall within the exemption:
- Dividends received from companies resident outside Türkiye;
- Rental income from real estate situated outside Türkiye;
- Foreign-source interest and other investment income;
- Profits from business or professional activities carried on outside Türkiye;
- Employment income arising from duties performed abroad; and
- Capital gains from the disposal of assets or rights situated outside Türkiye.
The fact that income is denominated in a foreign currency, paid from a foreign bank account or received from a client based abroad is not sufficient in itself. Whether income is derived in or outside Türkiye must be determined under the source rules of the Turkish Income Tax Law.
For example, salary paid by a foreign company for work physically performed in Türkiye does not automatically become foreign-source income. Nor is a consultancy fee necessarily foreign-source merely because it is paid by an overseas client. Income Tax General Communiqué No. 333 expressly states that professional income earned by an engineer carrying out activities in Türkiye and providing services in Türkiye for an overseas client does not qualify for the exemption.
The analysis must therefore consider more than the country from which the payment is remitted. Relevant factors may include where the activity is physically performed, the location of the employer and workplace, the situs of the relevant property, the structure through which capital is invested and the statutory source rules applicable to the particular category of income.
Is Turkish-source income also exempt?
No. The exemption applies only to income and gains derived outside Türkiye. A qualifying individual will remain subject to the ordinary Turkish tax rules in respect of:
- Rental income from real estate situated in Türkiye;
- Dividends received from a company resident in Türkiye;
- Profits from business or professional activities carried on in Türkiye; and
- Other Turkish-source income and gains.
For example, an individual who relocates to Türkiye and obtains an exemption certificate may qualify for the exemption in respect of dividends from a Spanish company and rental income from property in Monaco. Dividends from a Turkish company and rental income from property in Istanbul would remain outside the scope of the exemption.
Does previously earning income in Türkiye prevent eligibility?
As a general rule, the individual must not have had a Turkish tax liability during the three calendar years preceding the year in which the individual becomes resident in Türkiye. The legislation nevertheless provides a specific carve-out for three categories of Turkish-source income. A prior Turkish tax liability arising from:
- Income from immovable property;
- Income from movable capital; or
- Capital gains
does not prevent the individual from benefiting from the 20-year exemption, provided all other conditions are satisfied.
In contrast, a Turkish tax liability arising from employment income or business profits during the relevant three-year period may prevent the individual from obtaining the exemption certificate. A detailed review of the applicant’s historic Turkish tax registrations and filings is therefore essential before an application is made.
Where and when must the application be made?
An individual wishing to benefit from the exemption must apply to the competent Turkish tax office and obtain a “Certificate of Exemption for Income and Gains Derived Outside Türkiye.”
The application deadlines are as follows:
- As a general rule, by the end of the calendar year in which the individual becomes resident in Türkiye for tax purposes; or
- For individuals who become resident during the final two months of a calendar year, by the end of February of the following calendar year.
For example, an individual who becomes resident in Türkiye on 12 July 2026 must apply by 31 December 2026. An individual who becomes resident on 2 November 2026 may apply until 28 February 2027.
If the application is not filed within the relevant period, the tax office will not issue the exemption certificate even if the substantive eligibility conditions are otherwise satisfied. Determining in advance when Turkish tax residence will begin is therefore a critical part of any relocation plan.
Must exempt foreign-source income be reported in Türkiye?
No annual Turkish income tax return is required solely in respect of foreign-source income and gains covered by the exemption. If the individual is required to file a return because of other taxable income derived in Türkiye, the exempt foreign income is not included in that return.
This treatment has two important consequences:
- Expenses and costs relating to exempt foreign income cannot be deducted when calculating other income taxable in Türkiye; and
- Foreign taxes paid on exempt income cannot be credited against Turkish income tax assessed on the individual’s other taxable income.
The exemption removes the Turkish income tax charge. Whether the same income remains taxable in the source country must be assessed separately under that country’s domestic law and any applicable double taxation treaty.
Must foreign income be remitted to Türkiye?
No. Article 20/D does not require exempt income to be transferred to a Turkish bank account. Equally, transferring funds earned abroad to Türkiye does not, in itself, create a Turkish income tax liability.
The relevant question is not where the funds are held but where and through which activity or asset the income was derived. Bank transfer records may nevertheless be important evidence of the nature, source and movement of the income, even though they do not determine the source of income on their own.
What happens if the conditions are later found not to have been met?
The issuance of an exemption certificate does not prevent the Turkish tax authorities from subsequently reviewing the applicant’s eligibility. If it is later established that the individual did not satisfy the conditions, the certificate may be cancelled. Any underpaid tax relating to foreign income that was not reported under the exemption will be collected together with:
- A tax loss penalty; and
- Late-payment interest.
An incomplete or inaccurate assessment of the applicant’s domicile or tax-liability history during the preceding three calendar years may therefore have significant financial consequences. The application should be supported, as appropriate, by address and civil registry records, entry and exit records, historic tax returns and registrations, and certificates of tax residence issued by foreign authorities.
An additional advantage for transfers by inheritance
Law No. 7582 also introduced a significant advantage under the Turkish Inheritance and Gift Tax Law. If an individual benefiting from the Article 20/D income tax exemption dies during the exemption period, assets passing by inheritance are subject to inheritance and gift tax at a flat rate of 1%.
This rule may be particularly relevant to the relocation, succession and estate planning of individuals holding substantial or internationally diversified assets. The 1% rate applies to transfers by inheritance. Lifetime gifts and other gratuitous inter vivos transfers remain subject to the ordinary rules.
Why should legal and tax planning take place before relocation?
Although the 20-year exemption offers a substantial benefit, its application will depend on each individual’s particular circumstances. The following matters should be reviewed together before relocating to Türkiye:
- The date on which Turkish tax residence will commence;
- Domicile and Turkish tax-liability history during the preceding three calendar years;
- The rules determining whether each category of income is Turkish- or foreign-source;
- Shareholdings, management roles and the jurisdiction in which services are physically performed;
- Double taxation treaties in force between Türkiye and the relevant jurisdictions;
- Other Turkish tax consequences of foreign companies, trusts, foundations, partnerships and asset-holding structures;
- The application deadline and documentary evidence required for the exemption certificate; and Succession and estate planning.
Eligibility cannot be determined merely by listing the applicant’s income streams. Coordinating the timing of the relocation with the individual’s income and asset structure is important to reduce the risk of future tax assessments, penalties and disputes.
Frequently Asked Questions
Is the exemption available only to foreign nationals?
No. The legislation is based on tax residence and the other statutory conditions, not nationality. Turkish citizens may also qualify.
Must I invest in Türkiye or purchase real estate?
No. The legislation imposes no minimum investment, property acquisition or employment-creation requirement.
Are dividends from a foreign company exempt?
They may qualify if the dividends are genuinely foreign-source and all other conditions are satisfied. Dividends received from a company resident in Türkiye are not covered.
Is rental income from a property abroad exempt?
It may qualify if the property is situated outside Türkiye and the other statutory conditions are satisfied. Rental income from property situated in Türkiye is outside the scope of the exemption.
Must exempt foreign income be reported on a Turkish tax return?
No annual income tax return is filed solely for income and gains covered by the exemption. Such income is also excluded from any return filed in respect of other taxable income.
Can I apply after the deadline has passed?
Under Income Tax General Communiqué No. 333, the application must be filed within the prescribed period. The deadline is generally the end of the calendar year in which Turkish tax residence begins, or the end of February of the following year for individuals becoming resident during the final two months of the year. A late application will not result in an exemption certificate.
What happens if I leave Türkiye after obtaining the exemption certificate?
If the individual ceases to be resident in Türkiye for tax purposes, the treatment of foreign-source income will be reassessed under the general provisions of the Turkish Income Tax Law. If the individual later becomes resident in Türkiye again, the continued availability of the exemption and the calculation of the 20-year period should be analysed in light of the particular facts.
Conclusion
Article 20/D (mükerrer) of the Turkish Income Tax Law introduces one of Türkiye’s most extensive tax incentives for individuals who plan to relocate to Türkiye while continuing to derive income from sources abroad. Access to the 20-year exemption nevertheless depends on correctly determining the date on which Turkish tax residence begins, documenting the applicant’s position during the preceding three calendar years, properly classifying the source of each income stream and completing the application on time.
Before relocating, the individual’s personal tax position, international income and asset structure, and the relevant double taxation treaties should be reviewed together to ensure that the exemption can be relied upon with an appropriate degree of legal certainty.
in-novalegal provides tailored legal advice on relocation to Türkiye, tax-residence analysis, the legal assessment of international income and asset structures, and applications for the foreign-source income exemption certificate.
This article is intended for general information only and does not constitute legal or tax advice. Each case should be assessed separately in light of the individual’s tax residence, sources of income and the laws of the jurisdictions concerned.