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Türkiye has introduced a new tax incentive for individuals relocating to the country. With the Law No. 7582 enacted on 4 June 2026, a new Article repeated 20/D has been inserted into the Income Tax Code, creating a long-term exemption from Turkish income tax on foreign-sourced income. The implementing rules were published in Income Tax General Communique No.333. This article sets out the key features of the regime and highlights the practical considerations.
- What Does the Regime Offer?
Individuals who become tax resident in Türkiye, provided they had neither a domicile nor tax liability in Türkiye during the three calendar years immediately preceding their relocation, are exempt from Turkish income tax on their foreign-sourced income for a period of twenty years.
Exempt income is not required to be reported in an annual tax return, and even where a return is filed for other Turkish-sourced income, exempt foreign income must not be included.
The exemption also extends beyond income tax. Pursuant to an amendment to Article 16 of the Inheritance and Gift Tax Law introduced by Law No.7582, individuals benefiting from the income tax exemption are subject to a reduced 1% inheritance tax rate on assets transferred to them by way of inheritance during the exemption period. This is a notable additional advantage for high-net-worth individuals with cross-border estate planning considerations.
- Who Qualifies?
The exemption is available to individuals who had no domicile and no tax liability in Türkiye during the three calendar years prior to becoming resident in Türkiye.
However, prior passive income in Türkiye is not disqualifying. Where an individual had, prior to becoming resident, Turkish-source rental income, investment income or capital gains giving rise to a tax liability, this does not preclude them from benefiting from the exemption. In practice, this means a foreign investor who already holds Turkish real estate or securities can still qualify upon relocating.
Yet, prior active income or employment in Türkiye is disqualifying. For instance, an individual who received employment income from a Turkish employer, or who had a tax registration in Türkiye due to the commercial activities, within the three-year look-back period, will be denied the exemption certificate.
Individuals who have been treated as resident in Türkiye as from 1 January 2026 onwards are eligible to benefit. The exemption is available to individuals only; corporate taxpayers cannot benefit.
- How Is the Exemption Obtained?
The regime requires a formal application. Eligible individuals must apply to the competent tax office for an "Exemption Certificate for Income Obtained from Abroad", no later than the end of the calendar year in which they became resident in Türkiye. Where an individual becomes resident during the final two months of a calendar year, the deadline is extended to the end of February of the following year.
The tax office will verify whether the applicant had a domicile or tax liability in Türkiye during the relevant three-year period, and whether the applicant is currently treated as resident. The certificate is issued once those conditions are confirmed.
- What Income Is (and Is Not) Exempt?
Only foreign-sourced income falls within the exemption. Turkish-sourced income remains fully taxable, and individuals holding the exemption certificate continue to be subject to all ordinary tax obligations in respect of their Turkish income.
An important case referred under the Communique that; where a certificate-holder is engaged in a professional activity in Türkiye, and for instance, providing investment advisory services to foreign-resident clients in relation to their Turkish investments; although the clients are located abroad, considering that the services are related to their Turkish investments and therefore the services are treated as rendered in Türkiye, the professional income would be treated as Turkish-sourced and falls outside the scope of the exemption.
- Two Important Technical Limitations
No foreign tax credit: Taxes paid abroad on exempt income cannot be credited against Turkish income tax.
No deduction of associated costs: Expenses and costs attributable to exempt foreign income may not be deducted against taxable Turkish income.
- Penalties for Non-Compliance
Where it is subsequently established that a certificate-holder did not in fact meet the eligibility conditions, the tax that was not assessed will be imposed together with delay interest and a tax loss penalty.
- How Does This Compare to Classic Non-Dom Regimes?
Türkiye’s new regime bears a structural resemblance to the non-domicile frameworks operated in countries such as the United Kingdom (historically), Malta, Cyprus, Greece, and Italy, all of which offer favourable treatment of foreign-sourced income for qualifying new residents. However, there are meaningful differences:
Duration: At twenty years, Türkiye’s exemption period is considerably longer than most comparable regimes.
No remittance basis: Many non-dom regimes (most notably the historical UK model) taxed foreign income only upon remittance to the residence country. Türkiye’s regime contains no such condition and the exemption applies regardless of whether funds are transferred to Türkiye.
No flat-rate alternative: Some regimes (Italy, Greece) offer a fixed lump-sum tax as an alternative to full disclosure. Türkiye’s regime is a pure exemption, so foreign income is simply not taxed, with no minimum tax charge option.
Strict look-back test: The three-year prior non-residence condition is broadly in line with international practice, but Türkiye’s inclusion of prior tax registration (not merely domicile or physical presence) as a disqualifying factor adds a dimension which must be examined carefully for individuals with any historical Turkish nexus.
- Practical Takeaways
Türkiye’s newly introduced foreign-income exemption, which provides a twenty-year exemption horizon, no remittance requirement, and a straightforward certification process makes Türkiye a materially more attractive residence option than it has been historically, especially for internationally mobile individuals, particularly those with significant investment portfolios, family wealth structures, or passive income streams located outside Türkiye.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
