Overall, citizenship is the manifestation of the legal link between the individual and the country.1 A substantial number of countries, especially looking out for their international interests, offer simplified citizenship acquisition to individuals contributing extraordinary benefits to them. In other words, when certain national interests come into play, countries have not insisted on general conditions for citizenship acquisition or they have proposed simplified conditions.2,3

In general, the acquisition of Turkish citizenship comes true in two ways: inherent acquisition and subsequent acquisition.4 Additionally, the subsequent acquisition of citizenship becomes a reality in three various ways. These can be explained as the acquisition through the official decision of the competent authority, acquisition through adoption, and acquisition through selection.5

Also, the acquisition of citizenship through the official decision by competent authority can be explained in three different ways: through the reacquisition, through the general process, and through the exceptional pathway.6 According to Directive No. 5627 Article 20, about the execution of the Turkish Citizenship Law, fixed capital investment is one of the exceptional pathways of acquisition of citizenship.7

What Are The Conditions of Gaining Citizenship Through Fixed Capital Investment?

According to Directive No. 5627, Article 20, the first requirement for the acquisition of citizenship through fixed capital investment is that the investment must have a minimum value of 500,000 dollars. This investment can be realized in US dollars or an equivalent amount of Turkish liras corresponding to the value of 500,000 dollars.8

For instance, an applicant can choose to make this investment in the form of 500,000 dollars or an amount in Turkish liras corresponding to the value of 500,000 dollars. So, an applicant conducting a fixed investment in the amount of 13.487.67 Turkish liras will also fulfill this requirement. Currently, 1 US dollar is equal to 26,98 Turkish liras.

According to International Protection Law For Foreigners Article 31/1 referred by the Turkish Citizenship Law, Article 12/1-b, only making a fixed capital investment is not enough to gain Turkish citizenship. It is understood from the wording of the article that, in addition to making this investment, the applicant has to obtain a short–term residence permit.

However, even if the applicant fulfills both of these two conditions, the citizenship application can still be rejected. In conclusion, making the necessary amount of investment and obtaining a short-term residence permit is enough to gain Turkish citizenship through an exceptional process.9

At the same time, foreigners completing these conditions shouldn't pose a danger to national security and public order.10

Also Read: How to immigrate to Turkey?

Who Can Make This Application?

Pursuant to Article 20/2 of the regulation on the implementation of Turkish Citizenship Law, foreigners making a fixed capital investment may obtain Turkish citizenship through the exceptional process as stipulated in Turkish Citizenship Law, Article 12/1-(b). In the referred provision, those who can benefit from this situation are individuals who have obtained short-term residence under Article 31/1-(j), Law No. 6458, holders of the turquoise card, their foreign-national husband/wife, foreign-national spouse's children, and their dependent minor children.11

For this reason:

  • Individuals obtaining short-term residence permit under the Article 31/1-(j) of Law No. 6458,
  • Holders of the turquoise card,
  • Above-mentioned individuals' foreign-national spouses,
  • Foreign-national spouse's children and their dependent minor children,

Individuals above mentioned can apply for Turkish citizenship.

What Are The Necessary Documents For The Investment?

Necessary documents for these investments are regulated under Article 20 of Regulation No. 5627 and on the website of the Ministry of Industry and Technology.

Individuals applying for citizenship through fixed capital investment will add the following documents and make an application on the official website of the Ministry of Industry and Technology.

In the annex of the application signed by the applicant:

  • Investment information document filled without any omissions.
  • Photocopy of the pages including personal identifying information.
  • Statement of signature of the applicant.
  • A warrant of attorney (if applying through a representative).
  • If this investment is made by a legal entity, the trade register entry showing the partnership structure and capitalization belonging to this legal entity.
  • Special purpose report approved by a certified public accountant (showing capital receipts and fixed capital investment amount).
  • Letter of commitment stating applicant's interests in a legal entity making fixed capital investment won't be transferred, won't be increased and the essential fixed investment items for application won't be sold during a three-year period.
  • Foreign exchange deposit account related to foreign currency brought from abroad for the purpose of making fixed investment and a bank receipt indicating the conversion of investment into Turkish liras on behalf of the investor.
  • Making an amendment to the articles of association (related to not transferring and not increasing the shares of fixed capital investment by the applicant).
  • Activity certificate for the certified public accountant's report.12

According to Regulation No. 5627, Article No. 20/3 the following documents will be requested from the applicant who wants to gain Turkish citizenship through fixed capital investment:

  • A letter of application indicating the request.
  • A passport or a similar record showing the individual's nationality, if the applicant is stateless, a document showing this situation.
  • Certificate of material status and marriage certificate (if the applicant is married), separation deed (if the applicant is divorced), and dead certificate of the individual's spouse (if the applicant is widowed).
  • Birth certificate showing the personal identifying information of the individual or a certificate such as an identity register copy and if the applicant is married, an identity register copy or a similar document certifying the family bonds of the spouse and the children.
  • If the individual has first or second-degree relatives having Turkish citizenship, an identity register copy belonging to these citizens, obtained from the system by the relevant authorities.
  • If the birth date lacks information about the day and month of the birth, a document obtained from the competent authorities of the applicant's country, if the document can not be obtained, a signed declaration accepting processing in accordance with Article No. 39 of Law No. 5490.
  • A receipt showing that the service charge has been paid to the revenue office.

Application authorities will compile a file including the aforementioned files. The compiled file will be sent to the ministry for the purpose of making a decision. In accordance with Regulation No. 5627, applications of individuals who are applying for citizenship in accordance with Articles 12/b and 12/c of Law No. 5901, may be received by the ministry if deemed necessary. Additionally, the mentioned files may also be compiled by the ministry.

Article 20 of Regulation No. 5627, it is stipuşated that the acquisition of citizenship through fixed capital investment will be made under the scope of Article 12/b of Law No. 5901. Accordingly, if deemed necessary, the aforementioned documents belonging to the individuals applying for Turkish citizenship may be directly compiled by the ministry.

How Should The Investment be Documented?

The necessary documents for the application process were mentioned above. Now, it will be explained in detail how investments will be documented. Firstly, a document called an "investment information form" will be completed. The necessary information must be provided in this document:

  • Personal information of the applicant (passport number, nationality, contact information, foreigner identification number).
  • Information of the company (corporate name, contact information, tax office with which it is affiliated and tax ID number, its capital and partnership structure).
  • And finally, information about fixed investment (subject of the investment / services and goods produced within the investment / information about the production capacity within one year, location of the investment applicant's shake in the fixed capital investment).13

Another document that needs to be prepared is "Certified Public Accountant Report". The information included in this report is as follows:

  • Certified public accountant's registration and chamber number.
  • Some personal information of the certified public accountants conducting the review (name, surname, address, affiliated chamber).
  • Information of the taxpayer (name and surname, occupation, address, tax office, tax number, phone number).
  • The date and the number of the agreement forming the basis of the investment are stated and the examination period and the subject are specified.
  • Some general information will be included in the final stage. This information includes the subject of examination and details related to the company (such as trade registry gazette samples for matters like registration and changes in the partnership structure).
  • The scope of the company's activities is described (providing information about production and manufacturing activities, specifying the number of employed personnel, and adding capacity report if available).
  • Information about the company's capital and partners is provided (the partnership structure is presented in the form of a table and the shares of all partners are written).
  • Contact information of individuals responsible for accounting and finance matters in the company is provided.
  • According to Tax Procedure Law, information regarding the legally required accounting books is provided.
  • Information regarding the alignment of the company's records with the recording structure in the Tax Procedure Law and compliance with general accounting principles outlined General Communique on Accounting System Application is provided.
  • Information about declarations that the company is obligated to submit (whether these declarations are submitted within the specified timeframe and whether the accrued taxes have been paid) is provided.
  • Financial statements are included (in the case of acquiring an existing company or becoming a partner through the capital increase, financial statements are provided for the date of investment or application).
  • Information about the company's paid-in capital is provided, including the capital contributed by the applicant to the company and the date on which this capital was introduced. Trade registry gazettes concerning the establishment of the company, partnership, and capital increases are also appended to the report. Furthermore, details about whether the applicant partner and the other partners owe any debts to the company and if they do, the amount of the debt is disclosed.
  • Information regarding fixed investment is presented (initially information about the company's commercial name, address, tax number, and affiliated chamber of commerce-industry is provided. Subsequently, details concerning the names and surnames and the share percentages of the involved partners are revealed).
  • A fixed investment table is prepared, all fixed investment items are listed and their amounts are indicated in Turkish liras and summed up.
  • A Foreign Exchange deposit account receipt issued under the name of a fixed investor is presented, indicating the sale of foreign currency to the bank. Additionally, a summary sheet is prepared to illustrate the transformation of capital translated from Turkish liras to USD into fixed investment (this table includes, the receipt's date, exchange rate, amount of foreign currency, the number of Turkish liras and their totals. These receipts are verified by the bank and submitted).14
  • In case of a discrepancy between the values in the balance sheet and those recorded in the land registry, the cause of this is explained in the report, and an expenditure summary is prepared.
  • In the event of acquiring or partially purchasing an existing company, a detailed summary is prepared for fixed investment after the date of acquisition or partnership.
  • A fixed investment table is prepared (this table includes the trade name, tax office, and account number of the invoice issuer, the date of the invoice issued, the invoice's serial and sequence number, details about the fixed investment items, their amounts, and the total sum. When calculating the total amount of investments the following items are added to the table; if the investment involves purchasing land, the purchase price of the land is included, if the buildings and warehouses are constructed or purchased for production, their amounts are added, expenses for machinery, vehicles and equipment related to goods and service production are recorded, and a fixed investment table is prepared. Items that do not require expenditure are not included in this table).
  • If requested by the ministry, notarized copies of all or some of the above-mentioned invoices will be required.
  • The conclusion section of the certified public accountant's report includes the applicant's nationality, name, percentage of ownership in the partnership, affiliation with the tax office, ID number, company name, investment date, applicant's name, the amount of the investment, information about whether the applicant has any debts, the date of report issuance is specified and the verification and determination of the applicant's fixed capital investment are confirmed, signed or stamped with a seal.
  • Additionally, the report's appendices comprise a copy of the chamber registration, a copy of the trade registry gazette, passport and ID photocopies, signatıre declaration, copies of land and property titles, current account statements, and documents such as receipts demonstrating the sale of foreign currency.15

The last document that needs to be prepared is a "commitment letter".

  • In this document, the applicant guarantees, that if a certificate of compliance is issued in their name, they will not sell or transfer the investment for three years, they will not perform capital decrease at all.16

What Should Fixed Capital Investment be Realized?

If a company is entirely purchased or if an investor becomes a partial partner in this company, fixed capital investments made after these dates will be taken into consideration. In the event of fixed capital investment realized by the purchased or partnering company before the existence of the partnership and the taking over of an existing investment, these items will not be taken into consideration for evaluating the application.17

Where and How Should This Investment be Made?

Fixed investment may be made in the following ways:

  • Land can be purchased. In this case, the purchase price of it is evaluated as an investment.
  • If the construction or purchase of buildings related to the production of goods and services and auxiliary operations, such as administrative buildings, and warehouses, is involved, these will also be evaluated within the scope of the fixed capital investment.
  • Machine, tool, and equipment expenses related to the production of goods and services and the total amount of all these expenses should be evaluated as fixed investments.18

If real estate is purchased, it may also be evaluated as a fixed investment. However, a condition is stipulated for this: this investment should be related to the production of goods and services.

Also Read: Turkish Citizenship By Investment.

How Will The Investment Items be Calculated?

Real estate and transportation (including vehicle rental operations) that are not directly related to these investment operations will not be included in the fixed investment items.

When calculating these items, the following aspects are taken into account:

  • Long-term assets included the company's balance sheet.19
  • Inventory stocks.20
  • Lands and buildings directly related to the operations of the company.

The evaluation of these items will be based on the report of a certified public accountant.

If the investment items include land vehicles, vessels, aircraft, construction equipment, and farm machinery, the ministry may request that an annotation be added to their registration indicating that these assets will not be sold for three years from the date of application for the registration.21

Working assets (including stocks) are not assumed to be a fixed investment.22

Can The Issued Capital of The Company be Evaluated as Fixed Capital Investment?

The gap between the total capital and the unpaid capital is equal to the paid capital.23 In other words, issued capital is the portion of the committed amount by the company's shareholders that has been paid.

If the total amount of issued capital, which is 500,000 US dollars as stipulated in the regulations, is paid in full without any borrowing, and if the company subsequently invests additional funds above this amount as a fixed capital investment, then this investment can be regarded as a fixed investment.

However, merely issuing capital does not qualify as a fixed capital investment. Issued capital, once invested by the company's partner, transforms into capital owned by the company. It attains the status of a fixed capital investment only if the company subsequently designates it as much. Except this, issued capital is not evaluated as a fixed investment.24

In this case, the amount of this capital investment must be at least 500,000 USD or its equivalent in Turkish liras, corresponding to the share of the applying partner in the company's partnership.25

For instance, if a company consists of two partners and one of them is the person applying for Turkish citizenship, the additional investment made by the company must be worth at least 1,000,000 USD. This ensures that the applicant's share of the partnership is 500,000 USD or more.

In What Way The Investments Should be Made?

Foreign investors should realize the investment through the capital increase and prove that the investment is turned into a fixed investment.26

In this context, the foreign investor can also realize this investment by partially becoming a partner in a non-public company or by completely purchasing it, instead of creating a facility from scratch.

In this case, in order to prove that the partially owned or completely purchased company is worth 500,000 USD or the equivalent in Turkish liras, an authorized authority may request a company valuation report.27

Can Fixed Capital Investment be Disposed of Freely?

Individuals obtaining Turkish citizenship through fixed capital investment cannot transfer their shares to any natural or legal person, cannot decrease their capital, and cannot sell the fixed assets identified as part of the fixed capital investment for a minimum of three years from the issuance date of the certificate of eligibility.2829

How Will The Application Evaluation Phase be Processed?

This application is examined by the General Directorate of Incentive Practices and Foreign Capital. If it is determined that the necessary conditions are met, a conformity determination letter will be sent to the applicant by the relevant department, as well as to the Directorate General of Migration Management of the Ministry of Interior and the General Directorate of Population and Citizenship Affairs.

If the applicant has submitted the application with missing documents and information, a written notification will be sent to them regarding this matter. If the incomplete information and documents are not completed within a period of one (1) month from the date of this notification, the application will be rejected.30

How Will The Inspection Process Take Place After The Application?

The ministry may conduct on-site inspections for the purpose of verifying the investment after the application. Additionally, even after granting the applicant the certificate of conformity, the ministry can perform on-site inspections without prior notice to assess the current state of the investment. In such cases, the company officials are obligated to provide the information and documents requested by the delegation appointed by the ministry during the inspection.31

Circumstances Where The Process of Turkish Citizenship Transactions Will be Suspended

If a forged or misleading document has been issued and used for an application, when detected by the authorities, the process of citizenship transactions for the applicants will be halted. Furthermore, for individuals who have applied with forged or misleading documents, even if they meet the conditions at a later date when they apply again, these will not be taken into consideration.

Regarding the applicants who have acquired citizenship, after necessary assessments, if it is determined that the relevant fixed capital investment has been transferred before the expiration of a 3-year period from the application date or if it is below the minimum amount, this situation will be reported to the ministry.32

Also Read: New Rules & Processes For Property-Based Citizenship in Turkey.

Sources

  • KAYA, Talat, "A Critical Perspective on Citizenship by Investment Practice in Light of Global Examples", Inonn University Faculty of Law Journal, Vol. 12, No. 1, 2021, pp. 115-132.
  • YILMAZ, Alper Cagri, "The Phenomenon of Investor Citizenship in Comparative Law and Turkish Law", Bulletin of International Law and Private International Law, Vol. 38, No. 1, 2018, pp. 191-216.
  • KUTLU, Huseyin Ali, "Intellectual Capital: Is It Reportable in the Turkish Accounting System?", Journal of Economics and Administrative Sciences Faculty, Vol. 27, No. 1, 2009, pp. 235-257.
  • TORE, Nazli, "Residence and Citizenship Through Investment", Journal of the Turkish Academy of Justice, Vol. 11, No. 39, 2019, pp. 83-108.
  • NURDOGAN, Ali Kemal / OZTURK, Mustafa, "Temporary Protection Status and the Right to Citizenship of Syrians in Turkey", Journal of Süleyman Demirel University Faculty of Economics and Administrative Sciences, Vol. 23, No. 3, 2018, pp. 1163-1172.
  • BILGE, Ozge, "Concept of Citizenship and Assessment of Concepts Affecting Citizenship Law", Journal of Security Studies, Vol. 22, No. 1, 2020, pp. 129-150.
  • CUBAN, Mikail Enes, "Comparative Study of Acquiring Citizenship Through Investment in Turkish, British, and Maltese Legal Systems", Master's Thesis (Published), Marmara University, Institute of European Studies, Department of European Union Law, Istanbul, 2022.
  • GOLCUKLU, Ilyas, "Acquiring Turkish Citizenship Through Investment in Light of Current Developments: Issues and Proposed Solutions", Public and Private International Law Bulletin, Vol. 40, No. 1, 2020, pp. 125-141.

References

1. Tore, Nazlı, 'Residence and Citizenship Through Investment', Journal of the Turkish Academy of Justice, Vol. 11, No. 39, 2019, p. 84; Bilge, Ozge, 'An Evaluation on the Concept of Citizenship and Concepts Affecting Citizenship Law', Journal of Security Studies, Vol. 22, No. 1, 2020, p. 131.

2. Yilmaz, Alper Çagri, 'The Phenomenon of Investor Citizenship in Comparative Law and Turkish Law', Bulletin of International Law and Private International Law, Vol. 38, No. 1, 2018, p. 192.

3. Kaya, Talat, 'A Critical Perspective on Citizenship by Investment Practice in Light of Global Examples', Inonu University Faculty of Law Journal, Vol. 12, No. 1, 2021, pp. 117-118.

4. Article 5 of the Law No. 5901 on Turkish Citizenship states, "Turkish citizenship is acquired by birth or subsequently."

5. Article 9 of Law No. 5901 on Turkish Citizenship states, "Subsequently acquired Turkish citizenship is obtained through a decision of the competent authority, adoption, or the exercise of the right to choose."

6. Nurdogan, Ali Kemal / Ozturk, Mustafa, "Temporary Protection Status and the Right to Citizenship of Syrians in Turkey", Journal of Suleyman Demirel University Faculty of Economics and Administrative Sciences, Vol. 23, No. 3, 2018, p. 1164

7. Article 20, subparagraph 2(a) of the Regulation on the Implementation of the Turkish Citizenship Law No. 5627 states, "Performed a fixed capital investment of at least 500,000 US Dollars or its equivalent in foreign currency as determined by the Ministry of Industry and Technology."

8. Article 20, subparagraph 2-(a) of the Regulation on the Implementation of Law No. 5627 on Turkish Citizenship states, "Performed a fixed capital investment of at least 500,000 US Dollars or its equivalent in foreign currency as determined by the Ministry of Industry and Technology..."

9. Golcuklu, Ilyas, "Acquiring Turkish Citizenship Through Investment in Light of Current Developments: Issues and Proposed Solutions", Public and Private International Law Bulletin, Vol. 40, No. 1, 2020, pp. 132-133.

10. Article 12, subparagraph 1 of Law No. 5901 on Turkish Citizenship states, "Foreigners specified below may acquire Turkish citizenship upon the decision of the President, provided that they do not pose a threat to national security and public order."

11. Article 12, subparagraph 1-(b) of the Law No. 5901 on Turkish Citizenship states, "Foreigners who have obtained a residence permit in accordance with Article 31, paragraph (j) of the Law No. 6458 dated 4/4/2013 on Foreigners and International Protection, as well as holders of Turquoise Cards and their foreign spouse, and their foreign dependent or underage children, are eligible to acquire Turkish citizenship."

12. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)"

13. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p.3.

14. Deposits in foreign currency opened at commercial banks are referred to as foreign currency deposits.

15. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 4-9.

16. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 10.

17. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 2.

18."Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 2.

19. For instance, machinery, equipment, etc.

20. "An item registered under a place or a person, which must not be lost and is used for official purposes or in that specific task, transferred from one official to another."

21. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 2.

22. Current assets: These are essential assets that are in the form of cash or can be easily converted into cash.

23. Kutlu, Huseyin Ali, "Intellectual Capital: Can It Be Reported in the Turkish Accounting System?", Journal of Economics and Administrative Sciences Faculty, Vol. 27, No. 1, 2009, p. 253

24. This information was acquired from the Ministry of Industry and Technology (444 1 100).

25. Cuban, Mikail Enes, "Comparative Analysis of Acquiring Citizenship Through Investment in Turkey, the United Kingdom, and Malta Legal Systems", Master's Thesis (Published), Marmara University, Institute of European Studies, Department of European Union Law, Istanbul, 2022, p. 43.

26. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 2.

27. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 1, "With the amendment published in the Official Gazette numbered 31711 dated January 6, 2022, it has been stipulated that foreign nationals who have made a fixed capital investment of 500,000 US Dollars or its equivalent in foreign currency as determined by the Ministry of Industry and Technology can be granted citizenship upon the proposal of the Ministry of Interior and the decision of the President."

28. Examples of fixed assets include: installations, immovable properties, and movable properties permanently allocated to a commercial business.

29. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 2.

30."Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 2.

31."Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 2.

32. "Principles and Procedures Regarding Fixed Capital Investments": (https://www.sanayi.gov.tr/destek-ve-tesvikler/yatirim-tesvik-sistemleri/md9703011618)", p. 2.

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