Turkey 20-Year Tax Exemption and 1% Inheritance Tax Advantage for Foreign Investors

Turkey has introduced one of the most significant tax incentives in recent years for foreign investors, high-net-worth individuals, entrepreneurs, and families considering relocation.

With the enactment of Law No. 7582 on 4 June 2026, Turkey introduced a new tax regime offering a 20-year exemption on certain foreign-source income, together with a highly attractive 1% inheritance and transfer tax rate under specific conditions.

For investors considering Turkish Citizenship by Investment, this development may be just as important as the citizenship program itself.

What Is the Turkey 20-Year Tax Exemption?

Under the newly introduced Article 20/D of the Turkish Income Tax Law, qualifying individuals who become tax residents of Turkey may benefit from a 20-year exemption on certain income earned outside Turkey.

In simple terms, eligible individuals may reside in Turkey while enjoying significant protection from Turkish taxation on qualifying foreign-source income.

The purpose of the legislation is to attract international investors, entrepreneurs, business owners, and globally mobile families to establish long-term ties with Turkey.

Who Can Benefit From the Turkey 20-Year Tax Exemption?

To qualify for the new regime, an individual generally must:

• Become resident in Turkey on or after 1 January 2026;

• Have had no domicile in Turkey during the previous three calendar years;

• Not have been subject to Turkish unlimited tax liability during the same period.

These requirements are designed to attract new residents rather than individuals who have recently lived in Turkey.

As a result, the legislation is particularly relevant for:

• Foreign investors;

• International business owners;

• Family offices;

• Entrepreneurs relocating to Turkey;

• Turkish Citizenship by Investment applicants;

• High-net-worth individuals seeking long-term wealth planning solutions.

Which Types of Income May Qualify?

The legislation broadly refers to income and gains derived outside Turkey.

Potential qualifying income may include:

• Dividends received from foreign companies;

• Foreign bank interest;

• Foreign investment portfolio income;

• Rental income from overseas real estate;

• Capital gains from foreign shares and investments;

• Foreign business income;

• Income generated through international commercial activities.

However, each case should be reviewed individually, particularly where tax treaties, corporate structures, and cross-border investments are involved.

Turkish-Source Income Remains Taxable

The Turkey 20-Year Tax Exemption applies only to foreign-source income.

Income generated within Turkey remains subject to ordinary Turkish tax rules.

Examples include:

• Rental income from Turkish real estate;

• Income generated through Turkish businesses;

• Professional income earned in Turkey;

• Turkish employment income;

• Income from Turkish commercial activities.

Therefore, careful tax planning is essential when establishing tax residency in Turkey.

Why Is This Important for Turkish Citizenship by Investment Applicants?

Many applicants under the Turkish Citizenship by Investment Program already own international businesses, overseas investment portfolios, foreign real estate, and global income-producing assets.

Previously, moving to Turkey often required a detailed review of potential tax consequences.

Under the new rules, eligible investors may potentially:

• Obtain Turkish citizenship;

• Relocate to Turkey;

• Maintain international investments;

• Benefit from a favorable tax framework on qualifying foreign income.

This makes Turkey increasingly attractive not only as a citizenship destination but also as a long-term wealth management and family planning jurisdiction.

The Most Important Advantage: 1% Inheritance Tax

While the foreign income exemption has attracted significant attention, many international investors view the inheritance tax provisions as even more valuable.

Under the new regime, individuals benefiting from the Turkey 20-Year Tax Exemption may also benefit from a reduced inheritance and transfer tax rate of only 1% for qualifying transfers occurring during the exemption period.

For wealthy families, inheritance planning is often one of the most important components of long-term wealth preservation.

A low and predictable inheritance tax rate can significantly reduce the cost of transferring assets to future generations.

Comparing the Old System and the New System

Under the ordinary Turkish inheritance and transfer tax system, inheritance tax is calculated using progressive rates.

Depending on the value of inherited assets, effective tax burdens can increase significantly as estate values rise.

Although exemptions and family circumstances affect the final calculation, large estates may face substantial inheritance tax liabilities.

The new regime introduces a much more predictable framework by effectively reducing the applicable rate to 1% for qualifying individuals.

Example 1: USD 400,000 Citizenship Property

Consider an investor who acquires a USD 400,000 property in Turkey through the Turkish Citizenship by Investment Program.

Under the new rules, if the investor qualifies for the exemption regime and passes away during the exemption period, the inheritance tax applicable to the transfer of that property may effectively be limited to approximately 1%.

For a property valued at USD 400,000, this could translate into an inheritance tax burden of approximately USD 4,000.

Example 2: USD 500,000 Bank Deposit or Investment Portfolio

Now consider another investor who holds:

• USD 500,000 in a Turkish bank deposit;

• A pension investment account (BES);

• Or a qualifying investment fund portfolio.

Under the ordinary inheritance tax system, the eventual tax burden could be substantially higher depending on the size of the estate and family structure.

Under the new regime, the same USD 500,000 investment portfolio may potentially be transferred to heirs with an inheritance tax burden of approximately USD 5,000.

Why This Matters for Wealth Planning

Many foreign investors evaluate citizenship and residency programs not only from a mobility perspective but also from a wealth preservation perspective.

The ability to transfer those assets to future generations under a predictable 1% inheritance tax framework can create substantial long-term advantages.

For this reason, the legislation should not be viewed solely as a tax incentive. It is also a powerful wealth planning and succession planning tool.

Is Turkey Becoming a Wealth Planning Hub?

Turkey is increasingly positioning itself as more than a citizenship destination.

When combined with:

• Turkish Citizenship by Investment;

• Strategic geographic location;

• Strong banking infrastructure;

• International business opportunities;

• The new 20-year foreign income exemption;

• The 1% inheritance tax advantage;

Turkey becomes an increasingly attractive jurisdiction for international families seeking long-term stability and efficient wealth planning.

This is particularly relevant for investors from China, Hong Kong, Singapore, the Middle East, Europe, and other regions seeking alternative residency and citizenship solutions.

Conclusion

The Turkey 20-Year Tax Exemption represents one of the most significant developments in Turkish tax legislation for international investors.

Together with the new 1% inheritance tax regime, the legislation creates attractive opportunities for foreign investors, entrepreneurs, and families seeking long-term residency, wealth preservation, and succession planning solutions.

For Turkish Citizenship by Investment applicants, the benefits may extend far beyond obtaining a second passport. The new framework may also provide substantial tax and estate planning advantages for future generations.

As every investor's circumstances are different, professional legal and tax advice should be obtained before establishing tax residency in Turkey or making investment decisions.