Status of the law as at 17 September 2026
Türkiye has introduced a significant new tax regime aimed at attracting internationally mobile individuals to the country. Law No. 7582, published on 4 June 2026, introduced Article 20/D of the Turkish Income Tax Law, which provides, subject to certain conditions, a 20-year Turkish income tax exemption on foreign-source income and gains for individuals who become Turkish tax residents. The reform is supplemented by a special inheritance tax regime applicable to qualifying transfers during the exemption period.
The reform is particularly significant because it represents a departure from the general Turkish taxation principle under which tax residents are ordinarily subject to Turkish income tax on their worldwide income. Under the new regime, qualifying new residents can, for twenty years, exclude eligible foreign-source income and gains from the Turkish income tax base.
However, the concept of “zero tax” on foreign income should be approached with caution. The regime is highly dependent on the taxpayer’s circumstances, the nature and source of the income, the individual’s previous tax residence and the interaction with the tax rules of other jurisdictions.
- A major change: becoming tax resident in Türkiye no longer necessarily means immediate taxation of worldwide income
The general rule remains unchanged. Individuals who are tax resident in Türkiye are generally subject to Turkish income tax on their worldwide income.
The new Article 20/D introduces a significant exception.
Individuals may qualify for the regime where they:
- become tax resident in Türkiye on or after 1 January 2026;
- have not had a domicile in Türkiye or been subject to full Turkish income tax liability during the three calendar years preceding their relocation; and
- derive income or gains from sources outside Türkiye.
Where the conditions are met, qualifying foreign-source income and gains are exempt from Turkish income tax for twenty years.
The legislation also provides that the exempt income does not have to be reported in the Turkish annual income tax return. Even where the taxpayer must file a return in respect of other income, the exempt foreign-source income is not included in that return.
The regime is therefore not simply a reduced-rate mechanism. It constitutes a temporary exclusion of qualifying foreign-source income from the Turkish income tax base.
- Which types of income may be covered?
The new regime applies to income and gains obtained outside Türkiye. Depending on the circumstances and the applicable source-of-income rules, this may include, in particular:
- dividends from foreign companies;
- interest and other foreign investment income;
- capital gains arising from foreign assets;
- rental income from real estate located outside Türkiye; and
- certain business or professional income derived from abroad.
This is what makes the regime particularly relevant to international entrepreneurs, investors and high-net-worth individuals.
For example, an individual holding an international investment portfolio, foreign company participations or real estate located outside Türkiye may potentially continue to receive income from those assets without Turkish income tax applying for the duration of the exemption period, provided that the relevant income qualifies as foreign-source income.
However, the source of the income is critical.
The fact that income is paid by a foreign company, transferred to a foreign bank account or denominated in a foreign currency does not, by itself, necessarily establish that the income is foreign-source income for Turkish tax purposes.
This issue is particularly relevant to employment and professional income. Turkish tax rules generally look at the activity actually performed, and remuneration for work performed in Türkiye may raise different questions from passive investment income generated abroad.
- One of the regime’s principal attractions: international wealth and investment
The economic attractiveness of the regime becomes particularly apparent for individuals whose future income remains largely generated outside Türkiye.
International entrepreneurs
An entrepreneur managing a group whose operations remain predominantly outside Türkiye may be able, subject to the relevant rules, to relocate personally to Türkiye without automatically bringing all foreign investment income within the Turkish income tax net.
International investors
Individuals holding foreign shares, securities, bonds or other investments may benefit from the exemption in respect of qualifying foreign-source investment income and capital gains.
International real estate investors
Rental income derived from real estate located outside Türkiye may also fall within the foreign-source income exemption, subject to the applicable source rules.
International executives and professionals
The regime may also be attractive to certain internationally mobile executives and professionals, although this category requires considerably more detailed analysis because the place where services are physically performed can affect the source and taxation of employment income.
In practical terms, the reform appears designed not merely as an immigration incentive but as part of a broader strategy to attract international capital, entrepreneurs, qualified professionals and internationally oriented business activity. The Turkish Investment and Finance Office has expressly presented the 2026 reform package as a means of attracting international companies, foreign capital and qualified talent.
- A potentially significant inheritance tax benefit
The reform is not limited to income tax.
Law No. 7582 provides that, where an individual benefits from the Article 20/D exemption, assets transferred by inheritance during the applicable exemption period are subject to inheritance tax at a rate of 1%.
This should nevertheless be understood precisely.
The 1% rate is not a general inheritance tax rate applicable to all estates in Türkiye. It is a special regime linked to taxpayers benefiting from Article 20/D and applies during the corresponding exemption period.
For international families holding substantial assets, this provision may nevertheless become an important element of long-term estate and succession planning.
- The three-year look-back requirement: a key eligibility filter
The regime is not available to anyone who simply decides to move to Türkiye.
One of its central conditions is that the individual must not have had a domicile in Türkiye or have been subject to full Turkish tax liability during the three calendar years preceding the move.
This condition is particularly important in international mobility cases.
An individual who has recently lived in Türkiye, or whose circumstances have previously resulted in Turkish full tax liability, may therefore fall outside the regime.
There is, however, an important distinction. The legislation expressly provides that having previously been subject to Turkish taxation solely in respect of certain Turkish-source income — such as rental income, investment income or capital gains — does not, by itself, prevent access to the exemption.
The analysis must therefore distinguish between:
a genuine previous tax residence or full tax liability in Türkiye, which may prevent access to the regime,
and
limited previous Turkish tax obligations relating to particular categories of Turkish-source income, which do not necessarily prevent eligibility.
This distinction is likely to be highly relevant in practice.
- The regime applies to individuals, not to companies
Another important point is that Article 20/D is a regime applicable to individual taxpayers.
It does not make foreign companies tax-exempt in Türkiye and does not mean that profits generated by a Turkish business become tax-free simply because its shareholder benefits from Article 20/D.
Türkiye has introduced separate incentives for businesses, including the new Qualified Service Center regime, which is subject to a different set of conditions. Eligible centers serving related companies in at least three countries may benefit from substantial deductions in respect of qualifying foreign-source profits.
The interaction between:
individual → Turkish company → foreign company → foreign-source income
therefore remains a central issue in any international structuring exercise.
- First limitation: Turkish-source income remains taxable
The regime does not create a general tax exemption in Türkiye.
Income considered to be Turkish-source income remains subject to the ordinary Turkish tax rules.
A taxpayer benefiting from Article 20/D may therefore have both exempt and taxable income at the same time:
| Type of income | Potential treatment |
| Dividends from a foreign company | Potentially exempt under Article 20/D if foreign-source |
| Rental income from property located abroad | Potentially exempt if foreign-source |
| Capital gains on qualifying foreign investments | Potentially exempt if foreign-source |
| Rental income from Turkish real estate | Ordinary Turkish tax regime |
| Employment income relating to work performed in Türkiye | Requires analysis under Turkish source rules |
| Income from a business carried on in Türkiye | Ordinary Turkish tax regime |
The distinction does not depend simply on where the payment is received or which bank account is used. The crucial issue is the tax source of the income.
- Second limitation: Türkiye does not eliminate taxation in the source country
This is arguably the most important point in any international tax analysis.
The Turkish exemption only means that Türkiye does not levy income tax on qualifying income covered by Article 20/D.
It does not mean that the country in which the income arises loses its own taxing rights.
An individual resident in Türkiye who receives:
- rental income from French real estate;
- certain dividends from French companies;
- professional income connected with an activity carried out in France; or
- certain capital gains falling within French domestic or treaty rules,
must therefore analyse separately the tax treatment in France and under the applicable tax treaty.
France and Türkiye are parties to a bilateral tax treaty designed to prevent double taxation.
The Turkish legislation also expressly provides that foreign taxes paid in respect of income covered by the exemption cannot be credited against Turkish income tax, precisely because the relevant income is exempt in Türkiye.
The appropriate approach is therefore to assess the overall international tax burden, rather than simply focusing on the Turkish tax rate.
- Third limitation: the risk of incorrectly characterising income as foreign-source
The principal practical difficulty with the new regime may prove to be not the existence of the exemption itself, but its application to particular categories of income.
Consider, for example, a French entrepreneur who becomes Turkish tax resident and owns a French company.
Three very different situations may arise.
Scenario 1: the individual is primarily an investor
The individual does not personally operate the business but simply owns shares in the French company and receives dividends.
The dividends may potentially qualify as foreign-source investment income under Article 20/D, subject to the applicable Turkish and treaty rules.
Scenario 2: the individual manages the company from Istanbul
The situation becomes considerably more complex.
The place where the individual performs their activities, the nature of their functions, the remuneration received, the applicable treaty provisions and potential consequences for the underlying company all need to be analysed separately.
Scenario 3: the individual establishes and operates a business in Türkiye
Income generated by an activity actually carried on in Türkiye cannot simply be characterised as foreign-source income because customers, shareholders or bank accounts are located abroad.
The distinction between an international investor and an individual actively conducting business from Türkiye is therefore fundamental.
- Fourth limitation: the regime does not remove the need to establish Turkish tax residence
Paradoxically, access to the regime requires the individual to become tax resident in Türkiye.
The ordinary Turkish residence rules therefore remain important. Under Turkish domestic rules, residence may arise, among other circumstances, where an individual has their permanent home in Türkiye or, in certain cases, stays in Türkiye for more than six months during a calendar year.
At the same time, an individual may potentially remain connected to another country for tax purposes.
This means that the interaction between Turkish domestic law and the tax treaty with the individual’s former country of residence must be carefully considered.
For a French resident, for example, the question should not simply be:
“Can I become a Turkish tax resident?”
The more important question is:
“On what date does my French tax residence cease, on what date does Turkish tax residence arise, and how does the France–Türkiye tax treaty resolve any potential dual-residence situation?”
The timing of the relocation can therefore be as important as the destination itself.
- Administrative compliance is an essential component of the regime
The exemption is not merely a theoretical entitlement.
The Turkish implementing rules published in July 2026 provide for a specific exemption certificate procedure, requiring eligible taxpayers to obtain the relevant document from the Turkish tax administration.
The implementing Communiqué also sets out application requirements and deadlines. This makes administrative compliance a key element of the planning process.
This point should not be underestimated.
The legislation provides that, if it is subsequently determined that the conditions for the exemption were not satisfied, the Turkish tax that was not assessed may be treated as tax loss and become payable, together with the applicable consequences under Turkish tax law.
The regime should therefore be documented and implemented before, or at the time of, the relocation rather than treated as a benefit that can simply be claimed retrospectively.
- Which taxpayers may find the regime particularly relevant?
Without suggesting that the regime is appropriate for every internationally mobile individual, certain profiles clearly warrant detailed analysis.
These include individuals who:
- have substantial financial assets outside Türkiye;
- receive significant investment income from foreign sources;
- own international real estate;
- operate businesses whose economic activities and revenues remain predominantly outside Türkiye;
- are internationally mobile entrepreneurs or executives; or
- have lived outside Türkiye for a substantial period and are considering relocating to the country.
Conversely, the relative benefit may be much more limited where most future income is expected to arise from activities physically conducted in Türkiye.
- The reform forms part of a broader international investment strategy
The 2026 reform should also be considered in the context of a broader Turkish strategy to attract international investment and economic activity.
Law No. 7582 introduced several measures alongside the individual foreign-income exemption.
One of the most notable is the Qualified Service Center regime, aimed at encouraging multinational groups to locate regional and global management, coordination and support functions in Türkiye. Eligible centers serving related companies in at least three countries may deduct 95% of qualifying foreign-source profits from their corporate tax base, with a potential 100% deduction for qualifying centers operating in the Istanbul Financial Center and designated industrial zones, subject to the statutory conditions.
Other measures concern international trading activities, the Istanbul Financial Center and the attraction of qualified international personnel. Taken together, the reforms demonstrate that the individual tax exemption is part of a wider strategy designed to position Türkiye as a hub for international investment, finance, trade, talent and high-value corporate services.
Conclusion: a powerful regime, but one requiring a genuinely international analysis
Türkiye’s new expatriate tax regime represents a significant development in the international tax landscape.
Its originality lies not simply in reducing the Turkish tax burden, but in introducing a temporary 20-year exemption for qualifying foreign-source income and gains of newly resident individuals.
For an internationally mobile taxpayer with substantial foreign assets or foreign-source income, the potential benefits can therefore be considerable. Qualifying foreign income may remain outside the Turkish income tax base for twenty years, while a special 1% inheritance tax rate may apply to qualifying transfers during the relevant exemption period.
However, the regime should not be presented simply as a “20-year zero-tax regime”.
The key issues are the source and nature of the income, the taxpayer’s residence history, the interaction with the taxpayer’s former country of residence, the applicable tax treaty and the structuring of the underlying assets and activities.
For a French taxpayer in particular, a robust analysis should be conducted in four stages:
(1) determine the French tax residence before the move;
(2) establish the date and basis of Turkish tax residence;
(3) analyse the source and nature of each category of income; and
(4) apply the France–Türkiye tax treaty to determine the final allocation of taxing rights.
The new Turkish regime may therefore constitute a highly significant planning opportunity for internationally mobile individuals, but its effectiveness depends on the taxpayer’s entire international tax and asset structure, rather than on Turkish domestic law alone.
Main sources
Law No. 7582, published in the Turkish Official Gazette on 4 June 2026.
Income Tax General Communiqué No. 333, published on 4 July 2026, setting out the implementation procedures for the exemption.
EY Global – “Türkiye introduces new personal tax regime”, 8 June 2026.
PwC – Türkiye Individual Tax Summary, reviewed 9 September 2026.
Turkish Investment and Finance Office – “Powerhouse for Investments” Reform Package, 4 June 2026.