Türkiye's 20-year exemption on foreign income

For most of the last decade a Turkish passport and a Turkish tax position were separate decisions, often deliberately kept apart. Investors took the citizenship and arranged their tax affairs somewhere else. Law No. 7582 is the first time those two decisions point in the same direction.

The rule itself is short. An individual who becomes a Turkish tax resident, and who in the three calendar years beforehand had neither a domicile nor a tax liability in Türkiye, may keep twenty years of foreign-source income outside the Turkish income tax base. There is no annual return for that income, and no fee for the privilege.

The rules that decide who actually receives the benefit arrived a month after the law, in the implementing communiqué. Those are the rules that matter in practice.

Who qualifies

Three conditions have to be satisfied together.

Condition	What it means
New tax residency	You become a Turkish tax resident on or after 1 January 2026
Three-year clean period	No domicile in Türkiye and no Turkish tax liability in the three calendar years immediately before residency begins
Application	A claim filed with the tax office by 31 December of the year in which residency begins

What falls inside the exemption

The statute uses a broad formulation covering income and revenues arising outside Türkiye, without narrowing the category. In practice that covers dividends from foreign companies, capital gains on foreign assets, rental income from property abroad, interest and other investment returns from foreign sources, royalties, business and professional income earned abroad, and salary paid by a non-Turkish employer for work performed outside Türkiye.

Where the exemption applies, that income is not declared in Türkiye at all. If you file a Turkish return for other reasons, exempt foreign income is not added to it.

What stays taxable

Everything Turkish-source. Rent from a Turkish apartment, fees for professional work performed in Türkiye, salary under a Turkish employment contract, gains on Turkish assets — all taxed in the ordinary way at progressive rates. The exemption draws a line at the border, not around the person.

Two further points are easy to miss. Expenses and costs relating to exempt income are disregarded in computing taxable income; you cannot claim the deductions while excluding the income. And foreign taxes paid on exempt income are not creditable against Turkish tax — logically enough, since there is no Turkish tax on it to credit against, but it matters when you model a structure that spans several jurisdictions.

The inheritance tax point

Alongside the income tax exemption sits a reduction of inheritance and transfer tax to a flat one percent on foreign-source assets transferred by individuals benefiting from the regime, during the exemption period. For families whose wealth sits largely outside Türkiye, this is arguably the more consequential half of the reform, and it receives a fraction of the attention.

How it compares

Preferential regimes for new residents are not new. What is unusual here is the combination of length and cost.

Regime	Term	Annual cost
Türkiye	20 years	None
Italy — flat tax on foreign income	Up to 15 years	A flat annual substitute tax, revised upward since introduction
Greece — non-domiciled regime	Up to 15 years	A flat annual charge, plus a minimum investment commitment
Portugal	The original regime is closed to new applicants; its replacement is narrower in scope	—

Risks worth taking seriously

The exemption is claimed rather than granted on inspection, which means the conditions can be revisited later. A subsequent finding that the three-year test was not met exposes the taxpayer to assessment with penalties and interest, on income they never declared because they believed they did not have to. That is a materially worse position than having declared and paid.

Two practical consequences follow. First, the non-residence position should be documented at the outset and kept, not reconstructed years later from memory. Second, the boundary between Turkish-source and foreign-source income needs to be drawn deliberately in advance — particularly for anyone who will continue to work, consult or hold directorships after relocating.

Sequencing with citizenship

The two decisions interact but are not the same. Buying property does not make you a Turkish tax resident, and becoming a tax resident does not require citizenship. What has changed is that arranging both, in the right order, is now considerably more attractive than arranging either alone. Where a client is contemplating both, the order in which residency begins relative to the tax year is not a formality — it determines the application deadline and, in some cases, whether the three-year test is met at all. Our page on citizenship by investment covers the other side of that decision.

Common questions