Turkey’s 20-Year Tax Exemption for Returning Residents: What Foreign Investors and Returning Turks Need to Know.
President Erdogan has unveiled one of the most far-reaching tax reform packages in Turkey’s recent investment history. For individuals living abroad, the headline is unmistakable: a 20-year exemption on foreign-sourced income, paired with a 1% inheritance tax. Below, our team at Oznur & Partners breaks down exactly who qualifies, what changes, and how this reshapes the legal landscape for those considering relocation, citizenship, or asset transfer to Turkey.
President Recep Tayyip Erdogan delivers the keynote address at the Turkiye Century Strong Center for Investment Program, Dolmabahce Working Office, Istanbul, 24 April 2026.
Step into the Dolmabahce Working Office on the afternoon of 24 April 2026, and you would have heard the soft hum of camera shutters give way to a single, weighted sentence. Standing before an audience of business leaders, foreign investors, and the press, the President announced what may become the most consequential tax incentive package for cross-border individuals Turkey has introduced in a generation. The room understood it immediately: this is not a minor adjustment. This is a redrawing of the map.
For families weighing a return to Istanbul, for foreign professionals considering Turkish residency, for global entrepreneurs eyeing the Bosphorus as a regional headquarters, the announcement reads like an invitation written in legal ink. Twenty years. Foreign-sourced income. Untaxed. The simplicity of the headline conceals a complex framework that any prospective resident must understand before acting.
The Core Announcement: A 20-Year Tax Window
The President introduced the package as part of the Turkiye Century Strong Center for Investment Program. The central provision is straightforward in its statement, but layered in its application:
Individuals residing abroad who have not been Turkish tax residents in the past three years, upon relocating to Turkey, will not be taxed on foreign-sourced income or earnings for a period of 20 years. Only domestic Turkish income, where it exists, will be subject to taxation.
Layered onto this is a second, equally consequential measure: the inheritance tax (veraset yoluyla intikal vergisi) for individuals falling within this regime will be applied at a rate of 1%, a dramatic departure from Turkey’s standard progressive inheritance tax structure, which can otherwise climb to 10% on larger estates.
Who Qualifies? The Three-Year Non-Residency Rule
The eligibility threshold is precise, and understanding it is where most strategic planning begins. The regime is targeted at three principal groups:
- Turkish citizens living abroad (the diaspora): Members of the Turkish community in Germany, the Netherlands, the United Kingdom, the United States, the Gulf, and elsewhere who have not been registered as Turkish tax residents for at least the last three calendar years.
- Foreign nationals considering Turkish residency or citizenship: Individuals from any nationality who meet the non-residency condition and choose to relocate. This dovetails directly with Turkey’s existing citizenship-by-investment program.
- Returning entrepreneurs and high-net-worth individuals: Persons whose primary income streams remain offshore, including capital gains, dividends from foreign holdings, rental income on overseas property, royalties, or pension distributions from foreign jurisdictions.
The three-year non-residency requirement is designed to prevent the regime from being used as a re-domiciliation loophole by persons who have only briefly stepped outside the Turkish tax net. It is a substantive eligibility test, and the documentation required to evidence it will be central to any application.
What Foreign-Sourced Income Actually Covers
The scope of foreign-sourced income is broader than many initial readers assume. Based on the announcement and its alignment with existing Turkish tax law principles, the exemption is expected to encompass:
- Employment income earned for work performed outside Turkey
- Dividends and interest from foreign companies or foreign bank accounts
- Capital gains from the sale of foreign-listed securities, foreign real estate, or stakes in foreign entities
- Rental income from properties located abroad
- Pension and retirement distributions from foreign schemes
- Royalties and intellectual property income sourced from outside Turkey
Turkish-sourced income, such as salary from a Turkish employer, profits from a Turkish-registered company, or rental income from property in Istanbul or Antalya, remains subject to ordinary Turkish income tax. The line between foreign-sourced and domestic will, in some structures, require careful legal analysis. This is the territory where pre-arrival planning matters most.
The Inheritance Tax Reduction: A Quiet Revolution
Less prominent in the headlines but arguably more transformative for estate planning is the 1% inheritance tax provision. Turkey’s standard inheritance and gift tax operates on a progressive scale, with significant tax exposure on estates passing between generations. For a family with substantial offshore wealth, the prospect of repatriating to Turkey under a 1% inheritance tax regime fundamentally alters the multi-generational calculation.
For our clients at Oznur & Partners’ inheritance practice, this is the kind of structural change that triggers a complete review of existing estate plans. Wills drafted under the assumption of standard Turkish inheritance taxation, trust structures established offshore precisely to avoid Turkish tax exposure, and even succession planning across multiple jurisdictions may now warrant reconsideration.
The Other Pillars of the Package: Asset Repatriation, Exporters, and Global Companies
The 20-year exemption and the 1% inheritance tax address only the individual side of the package. The corporate and capital dimensions of the same framework are equally broad:
- Asset repatriation: Cash, gold, and securities held abroad may be transferred into Turkey within a defined window at a low, preferential tax rate. The exact rate and window will be set out in the forthcoming legislation, but the policy direction is clear: Turkey wants foreign-held assets repatriated, and it is willing to make the legal pathway financially attractive.
- Corporate tax cuts for exporters: The general 25% corporate tax rate is being reduced to 9% for manufacturer-exporters and 14% for other exporters. For foreign investors who already export through, or intend to establish, a Turkish operating company, this is a direct incentive to structure activity through a Turkish entity.
- Istanbul Finance Center (IFM) and transit trade: Earnings from transit trade and intermediary activity in cross-border buying and selling will be 100% exempt from corporate tax within IFM. The same activities outside IFM will benefit, for the first time, from a 95% exemption, extending a previously IFM-exclusive incentive nationwide.
- Regional management center incentive for global companies: Multinationals relocating their regional management headquarters to Turkey will be able to deduct 100% of qualifying earnings within IFM, and 95% outside it, for a 20-year horizon. A wage exemption is also being introduced for qualified employees of these structures, subject to defined conditions.
- Single Window (Tek Durak Buro): Coordinated by the Presidential Investment and Finance Office, a new Single Window structure will consolidate all investment processes, from company formation, residency and work permits, to tax and social security registration, environmental impact assessments, and incentive approvals, into a single point of contact. For foreign investors, this means shorter timelines and greater procedural predictability.
Legal Status of the Reform: Announcement vs. Enacted Law
It is essential to note that, as of this writing, the package is an announcement of legislative intent. The President stated that comprehensive legislation will be submitted to the Grand National Assembly (TBMM) shortly. Until that legislation is enacted, the exact text of the eligibility criteria, the documentation requirements, the definition of foreign-sourced income for the purposes of the 20-year window, and the procedural steps for claiming the regime will not be finalized.
This means two things for anyone considering action:
- Strategic positioning can begin now, particularly the documentation of non-residency status, the structuring of foreign assets, and the legal review of existing arrangements.
- Definitive applications must wait for the legislation, and prospective applicants should expect implementation regulations, guidance from the Revenue Administration (Gelir Idaresi Baskanligi), and likely a transitional period.
Strategic Implications for Foreign Investors and Returning Citizens
For our international clientele, the implications cluster around several decision points. A French entrepreneur with a holding company in Luxembourg, considering Turkish residency for lifestyle reasons, now confronts a materially different tax calculus than they did a week ago. A Turkish-American family in New York, where the parents have not been Turkish tax residents in over a decade, can now contemplate generational wealth transfer to Turkey under a 1% inheritance regime. A British investor weighing whether to combine the citizenship-by-investment route with relocation now has a 20-year tax horizon that arguably outperforms several competing residency programs in the Mediterranean and the Gulf.
None of these decisions, however, should be made without legal review. Tax residency is determined not only by intention but by the practical reality of where one lives, works, and maintains economic ties. Double tax treaties between Turkey and the prospective applicant’s home jurisdiction will continue to apply. And the interaction between this new regime and existing Turkish tax law, including the asset declaration regime, the capital gains rules, and the controlled foreign company provisions, will require careful integration.
How Oznur & Partners Can Help
Our firm advises foreign nationals, Turkish citizens abroad, and international families on the full spectrum of legal questions surrounding relocation to Turkey. Whether your considerations begin with Turkish citizenship by investment, the immigration and residency permit framework, the structuring of inheritance and succession across multiple jurisdictions, or the corporate vehicles and company formation that may sit alongside personal relocation, our team can help you evaluate this announcement against your specific position. While the new Single Window structure will streamline residency, tax registration, and investment approval processes, knowing which application to file, when, and with what documentation remains a matter requiring competent legal representation.
The window between announcement and enactment is, in our experience, the most strategically valuable phase. It is the moment to organize documentation, review existing structures, and prepare the legal groundwork, so that when the legislation is published, action can be immediate and well-founded.
Frequently Asked Questions
What is Turkey’s new 20-year tax exemption announced on April 24, 2026?
Turkey’s new 20-year tax exemption removes Turkish income tax on foreign-sourced income and earnings for individuals who relocate to Turkey, provided they have not been Turkish tax residents in the past three years. Only domestic Turkish income remains taxable. The exemption was announced by President Erdogan as part of the Turkiye Century Strong Center for Investment Program and is to be enacted by legislation submitted to the Turkish Parliament.
Who qualifies for the 20-year tax exemption in Turkey?
Eligibility requires that the individual has not been registered as a Turkish tax resident during the three years immediately preceding their relocation to Turkey. This applies to Turkish citizens living abroad, foreign nationals seeking residency or Turkish citizenship, and returning entrepreneurs whose income streams are predominantly foreign-sourced. Documentation evidencing non-residency during the qualifying period is expected to be central to the application process.
What types of income are covered by the 20-year foreign income exemption?
The exemption is expected to cover foreign-sourced employment income, dividends and interest from foreign accounts and companies, capital gains from foreign securities and real estate, rental income from properties abroad, foreign pension distributions, and foreign royalty income. Turkish-sourced income, including salary from Turkish employers, profits from Turkish companies, and rental income from Turkish property, remains subject to ordinary Turkish income tax.
How does the 1% inheritance tax work under the new package?
Individuals who qualify for the 20-year regime will be subject to inheritance and gift tax (veraset yoluyla intikal vergisi) at a flat rate of 1%, rather than Turkey’s standard progressive inheritance tax that can reach 10%. This significantly reduces the tax cost of multi-generational wealth transfer for families relocating to Turkey under this regime, and it will require many existing estate plans to be reviewed and restructured.
How does the corporate tax change for exporters?
Under the same package, the general 25% corporate tax rate is being reduced to 9% for manufacturer-exporters and 14% for other exporters. This reduction is directly relevant to foreign investors who establish, or already operate, a Turkish company engaged in exports. It is a separate incentive from the individual 20-year exemption and is subject to its own eligibility criteria.
What is the Single Window (Tek Durak Buro), and how does it affect foreign investors?
The Single Window is a new investor service structure to be coordinated by the Presidential Investment and Finance Office. Company formation, residency and work permits, tax and social security registration, environmental impact assessments, and incentive approvals will be processed from a single point of contact. For foreign investors, this means shorter procedural timelines and greater predictability, although competent legal representation remains essential to ensure applications are correctly prepared.
Is the 20-year tax exemption already in force in Turkey?
No. As of April 25, 2026, the package is an announcement of legislative intent. President Erdogan stated that comprehensive legislation will be submitted to the Grand National Assembly. Implementation regulations, eligibility documentation requirements, and the definitive scope of foreign-sourced income will be determined when the law is enacted and the Revenue Administration publishes its guidance.
Can foreign investors combine the 20-year exemption with Turkish citizenship by investment?
The two regimes are structurally complementary. Citizenship by investment grants Turkish nationality based on qualifying real estate, capital, or deposit investments, while the 20-year exemption operates on tax residency criteria. A foreign investor who acquires Turkish citizenship and subsequently establishes Turkish tax residency, having not been a Turkish tax resident in the prior three years, would in principle be able to access both regimes. Legal review is essential to confirm eligibility based on the final legislation.
What should I do now if I am considering relocating to Turkey?
The most valuable steps before legislation is enacted are documentation and structuring. This includes confirming and evidencing your non-resident status for the past three years, reviewing the structure of your foreign-held assets, examining existing wills and estate plans against the new 1% inheritance regime, and assessing how double tax treaties between Turkey and your home jurisdiction will apply. Working with an experienced Turkish lawyer ensures that when the legislation is published, your position is ready for immediate action.
How does Turkey’s 20-year tax exemption compare to other residency tax regimes?
Turkey’s regime is among the longest-duration foreign income exemptions globally. Italy’s flat tax regime for new residents runs for up to 15 years, Greece’s non-dom regime runs for 15 years, and Portugal’s former NHR regime ran for 10 years. The 20-year horizon, combined with the 1% inheritance tax and Turkey’s strategic geographic position, positions the regime as competitive at the upper end of the European and Mediterranean residency-based tax planning landscape.
Speak With Our Team
If you are weighing a relocation to Turkey, structuring an inheritance across multiple jurisdictions, or planning a citizenship-by-investment application, our lawyers can help you understand exactly how the new regime applies to your circumstances. Contact Oznur & Partners to arrange a confidential consultation with our tax and immigration team.
This article is prepared by the legal team at Oznur & Partners, an Istanbul-based law firm advising international clients on tax, immigration, citizenship, corporate, and inheritance matters in Turkey. The content is provided for general informational purposes and does not constitute legal advice. The legislative package described above is an announcement; final scope and procedure will be determined upon enactment.
Sources: President’s address at the Turkiye Century Strong Center for Investment Program, Dolmabahce Working Office, 24 April 2026; reporting by Anadolu Agency, Sozcu, TRT Haber, and the Presidential Communications Directorate.