Overview
A recent amendment to Turkish tax legislation introduces a significant incentive for individuals relocating to Türkiye. Under this amendment, income and earnings derived outside Türkiye by individuals who have not been Turkish tax residents during the preceding three calendar years are exempt from Turkish income tax for a period of twenty years.
To determine the precise scope of this exemption, it is first necessary to outline the structure of the Turkish Income Tax Law No. 193 and, on that basis, to identify the individuals who may qualify for the exemption.
Taxpayer Categories under Law No. 193
Turkish Income Tax Law No. 193 distinguishes between two categories of taxpayers:
- Full taxpayers — individuals whose domicile is in Türkiye; individuals who reside continuously in Türkiye for more than six months within a calendar year (temporary absences do not interrupt this period); and Turkish citizens residing abroad in connection with their employment or official duties.
- Limited taxpayers — individuals who do not fall within any of the categories above and are accordingly not considered resident in Türkiye.
Full taxpayers are subject to Turkish income tax on their worldwide income, encompassing both Turkish-source and foreign-source earnings. Limited taxpayers, by contrast, are taxed exclusively on income earned within Türkiye.
Scope of the Exemption
The exemption is available to foreign individuals who were not resident in Türkiye during the preceding three calendar years but who subsequently establish residence in Türkiye and thereby acquire full taxpayer status. Foreign individuals who remain non-resident, and who therefore retain limited taxpayer status, are already outside the scope of Turkish income tax on foreign-source income under existing law; such individuals therefore derive no additional benefit from this exemption and accordingly fall outside its scope.
For these purposes, a “calendar year” denotes a continuous twelve-month period commencing on 1 January and concluding on 31 December.
Illustrative Application
Where an individual becomes subject to Turkish income tax as a full taxpayer by establishing residence in Türkiye on 4 June 2026, that individual must satisfy the non-residency requirement throughout the entirety of calendar years 2023, 2024, and 2025 in order to qualify for the exemption. In other words, non-residency must be established from 1 January 2023 onward — not merely from 4 June 2023.
Categories of Taxable Income
Law No. 193 identifies seven categories of income subject to Turkish income tax:
- Business income
- Agricultural income
- Employment income
- Professional (self-employment) income
- Real estate capital income
- Movable capital income
- Other income and earnings
Prior Turkish tax liability arising from real estate capital income, movable capital income, or capital gains realized in Türkiye does not disqualify an otherwise eligible foreign individual from the exemption. For instance, tax liabilities incurred during the preceding three calendar years in connection with the leasing or sale of Turkish real estate, or the receipt of interest income, do not preclude eligibility. (The application of these principles may be further refined depending on the specific type of income involved.)
Taken as a whole, the exemption is designed to encourage high-net-worth individuals to relocate to Türkiye and invest there.
Illustrative Examples
Example 1 — Movable Capital Income / Capital Gains
A foreign entrepreneur receiving dividends from shareholdings in a United States company relocates to Türkiye. Gains subsequently derived from the sale of those U.S. shares will not be subject to Turkish tax for twenty years.
Example 2 — Professional Income
A foreign self-employed lawyer practicing business in Slovakia relocates to Türkiye. The professional income earned in Slovakia will not be subject to Turkish tax for twenty years.
Example 3 — Business Income
A foreign merchant acting as a commission agent in maritime trade in Italy relocates to Türkiye. The business income earned from those commission activities in Italy will not be subject to Turkish tax for twenty years.
Example 4 — Movable Capital Income (Interest)
A foreign depositor holding bank deposits in Switzerland relocates to Türkiye. The interest income earned on those Swiss deposits will not be subject to Turkish tax for twenty years.
Example 5 — Real Estate Capital Income
A foreign real estate investor owning numerous apartments and commercial premises in the United Arab Emirates relocates to Türkiye. The rental income derived from those UAE properties will not be subject to Turkish tax for twenty years.
Procedural Treatment
No annual tax return is required in respect of income and earnings covered by the exemption. Where a tax return is nonetheless required due to other taxable income, exempt income need not be included in that return.
Accordingly, a foreign individual who relocates to Türkiye and earns income solely from foreign sources has no Turkish tax return filing obligation with respect to such income for twenty years. Where a return is required on account of Turkish-source income, foreign-source income covered by the exemption need not be reported within it for the same twenty-year period.
Deductibility and Foreign Tax Credit Restrictions
Expenses and costs attributable to exempt income and earnings may not be taken into account in determining taxable income. Accordingly, expenses and costs relating to exempt foreign-source income earned by a foreign individual resident in Türkiye may not be deducted against the tax base of Turkish-source income.
Taxes paid in foreign jurisdictions on income and earnings covered by the exemption may not be credited against Turkish income tax assessed on taxable income. Foreign taxes paid on exempt foreign-source income and earnings therefore cannot be offset against Turkish income tax computed on Turkish-source income.
Inheritance and Transfer Tax Treatment
For individuals whose foreign-source income and earnings are exempt from Turkish income tax under this provision, inheritance transfers occurring during the exemption period will be subject to inheritance and transfer tax at a reduced rate of only 1%.
Effective Date and Application
These amendments entered into force on 4 June 2026 and apply to individuals deemed resident in Türkiye as of 1 January 2026.