The 20-Year Income Tax Exemption for Individuals Settling in Turkey

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1. Introduction

Law No. 7582 on Amendments to Certain Laws, published in the Official Gazette of 4 June 2026 (No. 33270), added a new Repeated Article 20/D to Income Tax Law No. 193 ("GVK") through its Article 4. Under this provision, income and earnings derived abroad by individuals who had no prior domicile or tax liability in Turkey are exempt from income tax for 20 years following the date on which they become resident in Turkey, subject to the conditions set out below.

The procedures and principles for implementation were set out in General Communiqué on Income Tax No. 333, published in the Official Gazette of 4 July 2026 (No. 33300) ("the Communiqué"). This article addresses the scope of the exemption, the conditions for benefiting from it, the application procedure, and the points requiring attention, with direct reference to the relevant law and communiqué provisions.

This exemption is of particular relevance to individuals who have lived abroad for an extended period and are considering settling in Turkey or acquiring Turkish citizenship, as it substantially reduces, under certain conditions, the full tax liability that would otherwise follow from becoming a Turkish resident. As explained below, however, the conditions for benefiting are interpreted narrowly, and failure to meet them carries significant consequences.

2. The General Rule: The Tax Consequence of Being Resident in Turkey

Article 3 of the GVK sets out the basic rule of full tax liability:

"The following individuals shall be taxed on the entirety of the income and earnings they derive within and outside Turkey: 1. Those who are resident in Turkey (…)" — GVK, Art. 3/1

"Being deemed resident" in Turkey is defined in Article 4 of the same law by reference to two separate criteria:

"The following persons shall be deemed resident in Turkey: 1. Those whose domicile (ikametgah) is in Turkey (domicile being the places specified in Article 19 et seq. of the Civil Code); 2. Those who reside continuously in Turkey for more than six months within a calendar year (temporary absences do not interrupt the period of residence in Turkey)." — GVK, Art. 4

Article 5 of the GVK sets out two categories of persons who are not deemed resident in Turkey notwithstanding the six-month rule in Article 4: (i) persons of business, scientific, or technical background, experts, officials, press and broadcast correspondents, and persons in a similar position, who come to Turkey for a specific and temporary duty or task, as well as those coming for education, medical treatment, travel, or rest; and (ii) persons who have been detained or have remained in Turkey for reasons beyond their control, such as arrest, conviction, or illness (GVK, Art. 5). Conversely, individuals who are not deemed resident in Turkey are taxed, under Article 6, only on income and earnings derived in Turkey (limited tax liability) (GVK, Art. 6).

Under this general framework, once an individual becomes resident in Turkey, their worldwide income — including foreign-source income — becomes taxable in Turkey as a rule. Repeated Article 20/D introduces a limited, conditional exception to this general rule.

3. The Text of the New Exemption

Repeated Article 20/D, added to the GVK by Article 4 of Law No. 7582, reads as follows:

"Tax exemption for income and earnings derived abroad: Repeated Article 20/D — Income and earnings derived outside Turkey by individuals deemed resident in Turkey shall be exempt from income tax for twenty years, provided that they had no domicile and no tax liability in Turkey in the three calendar years preceding their being deemed resident.

A prior tax liability in Turkey, on the part of individuals falling within the first paragraph, arising from rental income from immovable property, income from movable capital, or capital gains, before falling within the scope of this article, shall not prevent them from benefiting from this exemption.

No annual return shall be filed for the income and earnings falling within the first paragraph; where a return is filed on account of other income, such income shall likewise not be included in that return.

Expenses and costs relating to the income and earnings within the scope of the exemption shall not be taken into account in determining taxable income and earnings.

Taxes paid abroad on account of the income and earnings within the scope of this exemption may not be credited against income tax assessed in Turkey.

Where it is subsequently established that the conditions for the exemption were not met, the taxes not assessed shall be deemed to have been lost to the treasury (vergi ziyaı).

The Ministry of Treasury and Finance is authorised to determine the procedures and principles for the implementation of this article." — GVK, Repeated Art. 20/D (added by Art. 4 of Law No. 7582)

The legislator further provided that this article enters into force on its date of publication, to apply to individuals deemed resident in Turkey as of 1 January 2026 (Law No. 7582, Art. 14/a).

4. Conditions for Benefiting from the Exemption

Article 3 of the Communiqué sets out the conditions for benefiting from the exemption in concrete terms. Three conditions must be met together.

4.1. No domicile or tax liability in Turkey in the preceding three calendar years

The individual must have had, throughout the three calendar years preceding the year in which they are deemed resident, neither a domicile in Turkey (within the meaning of GVK Art. 4/1) nor any tax liability in Turkey (Communiqué, Art. 3/1). An example in the Communiqué illustrates how narrowly this condition is applied: for a person deemed resident in Turkey on 23 July 2028, having received withholding-taxed wage income (stopaja tabi ücret geliri) from a single employer in Turkey in just one of the preceding three calendar years — 2026 — already constitutes "having had a tax liability" and bars the issuance of an exemption certificate (Communiqué, Art. 3/1, Example 6). For this reason, anyone with any tax connection to Turkey in any one of the preceding three years should have their eligibility carefully assessed on the facts.

The one exception is set out in the fifth paragraph of the article (see Section 3 above): a prior tax liability arising from rental income from immovable property, income from movable capital, or capital gains does not affect eligibility (Communiqué, Art. 3/5, Example 5) — a practically important carve-out for individuals who hold Turkish real estate but do not reside in Turkey.

4.2. Being deemed resident in Turkey as of the application date

To benefit from the exemption, the individual must actually be deemed resident in Turkey as of the date of application (Communiqué, Art. 3/2).

4.3. Temporal scope

The exemption applies only to individuals deemed resident in Turkey as of 1 January 2026 (Communiqué, Art. 3/3; Law No. 7582, Art. 14/a). Individuals who became resident before that date fall outside the scope of the provision.

5. The Exemption Certificate and Application Procedure

Actually benefiting from the exemption depends not only on meeting the substantive conditions, but also on a timely application made in the correct form.

Under paragraph four of Article 3 of the Communiqué, taxpayers wishing to benefit from the exemption must:

"(…) apply to the competent tax office and obtain the 'Exemption Certificate for Income and Earnings Derived Abroad' (İstisna Belgesi) set out in Annex-1, by the end of the calendar year in which they are deemed resident, or, for those deemed resident in the last two months of a calendar year, by the end of the second month of the following calendar year." — Communiqué, Art. 3/4

This deadline is strict and operates as a forfeiture period (hak düşürücü süre). As the Communiqué's Example 2 illustrates, a taxpayer deemed resident in Turkey on 2 March 2028, who otherwise met the three-calendar-year condition, applied for the certificate only on 1 May 2030 — well after the deadline of end of 2028 — and was denied the exemption certificate on that ground alone. Accurately establishing the date of becoming resident and closely tracking the application deadline are therefore preconditions for benefiting from the exemption.

Upon application, the tax office verifies (i) whether the applicant had a domicile or tax liability in Turkey in the preceding three calendar years, (ii) whether they are deemed resident in Turkey, and (iii) whether the application was filed within the deadline; the Exemption Certificate is issued once these conditions are confirmed (Communiqué, Art. 4).

6. Scope of the Exemption: Which Income Is Covered, and Which Is Not

Income and earnings derived in Turkey remain subject to the ordinary tax regime regardless of whether the individual benefits from the exemption (Communiqué, Art. 3/7). The procedural rules in paragraphs three to five of the article (see Section 3 above) are illustrated in the Communiqué with the following examples:

• Rental income received by an exempt taxpayer from a property located in Turkey does not fall within the exemption (Communiqué, Art. 3/7, Example 9).

• Income from independent professional services performed in Turkey is not covered, even where the client is resident abroad (Communiqué, Art. 3/7, Example 10).

• By contrast, dividends from a foreign company and rental income from a property located abroad, received by the same person, are covered by the exemption (Communiqué, Art. 3/7, Example 11).

Finally, only individuals may benefit from the exemption; corporate taxpayers fall outside the scope of this provision (Communiqué, Art. 3/10).

7. Subsequent Loss of, or Failure to Meet, the Conditions

Paragraph six of the article expressly addresses cases where it is later established that the conditions for the exemption were not met (see Section 3 above). Article 5 of the Communiqué implements this rule: for taxpayers found to have benefited from the exemption without meeting its conditions, the under-assessed tax is collected together with a tax loss penalty (vergi ziyaı cezası) and default interest (Communiqué, Art. 5/1). As illustrated in the Communiqué's Example 12, where an audit conducted after the exemption certificate has been issued reveals undeclared commercial activity in earlier years, the certificate is cancelled retroactively as of its original issue date, with associated tax, penalty, and interest liability for the years concerned.

Separately, Article 6 of the Communiqué addresses the position of a certificate holder who subsequently ceases to be resident in Turkey by reference to the general rules (GVK Art. 3 and 6): such a person's foreign-source income would in any event not be taxable in Turkey, under the ordinary rule for limited tax liability (Communiqué, Art. 6/1).

In short, holding an exemption certificate does not exempt the taxpayer from ongoing scrutiny; the conditions must remain demonstrably satisfied at all times.

8. Related Provision: Reduced Rate under the Inheritance and Transfer Tax

Article 2 of Law No. 7582 added the following paragraph to Article 16 of Inheritance and Transfer Tax Law No. 7338 (Veraset ve İntikal Vergisi Kanunu), dated 8 June 1959:

"For those benefiting from the income tax exemption under Repeated Article 20/D of Income Tax Law No. 193, a rate of 1% shall apply to any transfer of property by inheritance occurring within the period provided for that exemption." — Law No. 7338, Art. 16 (paragraph added by Art. 2 of Law No. 7582)

This provision means that where a person benefiting from the Repeated Article 20/D exemption dies within the 20-year exemption period, a fixed rate of 1% applies to property passing to their heirs, instead of the general tariff under Law No. 7338. The precise scope of this rule — whether it applies only to the foreign assets covered by the exemption, or to the entirety of the estate passing to the heir — is not expressly limited in the text of the provision; this is a point that should be treated with caution pending clarification through communiqués under the Inheritance and Transfer Tax Law or administrative rulings.

9. Relevance to Turkish Citizenship and Real Estate Investment Processes

This exemption is not, in itself, a citizenship or residence permit regime; it is a pure income tax exemption. The conditions for acquiring Turkish citizenship through investment are governed separately, under Citizenship Law No. 5901 (Türk Vatandaşlığı Kanunu) and its Implementing Regulation. That said, for individuals acquiring — or considering acquiring — a residence permit or citizenship through real estate investment in Turkey, advance planning of the tax obligations arising upon becoming resident is worth attention; Repeated Article 20/D is a relevant consideration in that planning for those without a Turkish tax connection in the preceding three years.

As our firm's practice is limited to Turkish citizenship, real estate law, and immigration matters, individuals should seek support from a certified public accountant or an independent tax law specialist for concrete tax planning and filing matters.

10. Frequently Asked Questions

Do I need to have never been in Turkey before? No. The GVK does not require "never having been in Turkey"; it requires no domicile and no tax liability in Turkey in the three calendar years preceding residency (GVK, Repeated Art. 20/D, para. 1). An earlier connection to Turkey, outside that three-year window, does not bar the exemption.

I own property in Turkey and declare rental income; can I still benefit? The GVK does not exclude, from the outset, individuals whose only prior Turkish tax liability arises from rental income, income from movable capital, or capital gains (GVK, Repeated Art. 20/D, para. 2). Other types of liability — such as wages or commercial income — may, however, bar the exemption, per the examples in the Communiqué.

Does the exemption apply automatically, or must I apply for it? An application is required. A taxpayer must apply to the competent tax office and obtain the Exemption Certificate by the end of the calendar year in which they are deemed resident (or, if deemed resident in the last two months of that year, by the end of the second month of the following year) (Communiqué, Art. 3/4).

Does this also exempt my income earned in Turkey? No (see Section 6 above). Income derived in Turkey remains subject to the ordinary tax regime.

Can I credit foreign tax paid against Turkish tax? No. The GVK expressly does not permit taxes paid abroad on exempt income to be credited against income tax assessed in Turkey (GVK, Repeated Art. 20/D, para. 5).

11. Conclusion

This 20-year exemption offers an important tax planning tool for individuals newly resident in Turkey who had no Turkish tax connection in the preceding three years. Its application is, however, subject to strict deadlines and to significant consequences — a tax loss penalty and default interest — where the conditions are not met. Individuals intending to rely on the exemption are advised to carefully document their date of becoming resident and their Turkish connections during the preceding three-year period, and to conduct the application process on time and under the guidance of a qualified tax advisor.

This article is translated from the original Turkish text. Turkish legal terms and the names of laws are kept in parentheses at first use.

This article is based on the provisions of Repeated Article 20/D of Income Tax Law No. 193, Law No. 7582, and General Communiqué on Income Tax No. 333 as in force on their respective dates of publication, and is provided for general informational purposes; it does not constitute binding legal opinion or tax advice on any specific matter. As the relevant legislation may be amended, readers are advised to consult the competent tax office or a certified public accountant / tax lawyer for up-to-date guidance and an assessment of their individual circumstances.

Reference

1. Income Tax Law No. 193 (Gelir Vergisi Kanunu), Art. 3, 4, 5, 6, Repeated Art. 20/D (Official Gazette: 06.01.1961 – No. 10700)

2. Law No. 7582 on Amendments to Certain Laws (Bazı Kanunlarda Değişiklik Yapılmasına Dair Kanun) (Adopted: 21.05.2026; Official Gazette: 04.06.2026 – No. 33270), Art. 2, 4, 14

3. General Communiqué on Income Tax No. 333 (Official Gazette: 04.07.2026 – No. 33300)

4. Inheritance and Transfer Tax Law No. 7338 (Veraset ve İntikal Vergisi Kanunu), Art. 16 (Official Gazette: 15.06.1959 – No. 10231)

5. Turkish Civil Code No. 4721 (Türk Medeni Kanunu), Art. 19 et seq. (referenced for the definition of domicile)