Türkiye’s 20-Year Foreign Income Tax Exemption: What You Need to Know About Law No. 7582

Türkiye’s 20-Year Foreign Income Tax Exemption: A Complete Guide to Law No. 7582

Authored by: Attorney Mert Veysel Yılmaz, Founding Attorney at Yılmaz Attorneys

On 4 June 2026, Türkiye published one of the most significant tax reforms in its modern history. Law No. 7582 introduces a 20-year income tax exemption on foreign-source income for individuals who relocate to Türkiye — positioning the country alongside Italy, Greece and Portugal as a destination for globally mobile professionals, investors and entrepreneurs.

But Türkiye’s version is notably more generous: a longer duration, no mandatory annual flat charge, and a reduced 1% inheritance tax rate for qualifying individuals. Combined with the country’s existing citizenship-by-investment programme and competitive cost of living, this regime is attracting serious international attention.

This guide explains how the exemption works, who qualifies, what income is covered, how to apply, and what to watch out for.

What Is the 20-Year Foreign Income Exemption?

Law No. 7582 inserts a new repeated Article 20/D into Income Tax Law No. 193 (GVK mükerrer 20/D). The core rule is straightforward:

If you become a Turkish tax resident after 1 January 2026 and meet certain conditions, your foreign-source income and gains are fully exempt from Turkish income tax for 20 continuous years.

This means dividends from foreign companies, rental income from overseas property, capital gains on foreign securities, interest from foreign bank accounts, and income from businesses operated abroad — all potentially tax-free in Türkiye for two decades.

Who Qualifies?

The eligibility requirements are clear but strict:

1. You must become a Turkish tax resident from 1 January 2026 onwards. This means either establishing a domicile (ikametgah) in Türkiye or staying continuously for more than six months in a calendar year.

2. Three-year look-back condition: In the three calendar years before you become resident, you must not have had (a) a domicile in Türkiye, and (b) full tax liability (tam mükellefiyet) in Türkiye.

3. You must apply within the legal deadline and obtain the official Foreign Income and Gains Exemption Certificate (Yurt Dışından Elde Edilen Kazanç ve İratlar İçin İstisna Belgesi) from your competent tax office.

An important nuance: if you owned Turkish real estate or had limited Turkish-source passive income (like rental income) while living abroad, this does not automatically disqualify you — provided you were not domiciled in Türkiye and did not have full tax resident status during the look-back period.

The regime applies equally to foreign nationals relocating to Türkiye and Turkish citizens returning after extended periods abroad, as long as the three-year non-residence condition is met.

How to Apply

The application process involves the following steps:

1. Verify your eligibility: Confirm you became a Turkish tax resident on or after 1 January 2026, with no Turkish residence or disqualifying tax liability in the prior three calendar years.

2. Submit your application to the competent tax office in your jurisdiction.

3. Tax office verification: The authority will verify that you meet all conditions and applied within the deadline.

4. Receive your certificate: Upon approval, the tax office issues your Foreign Income and Gains Exemption Certificate.

Critical deadlines:

• Standard deadline: By 31 December of the year you become a Turkish tax resident.

• Extended deadline: If you gain residency in November or December, you may apply until 28 February of the following year.

What Income Is Covered?

The exemption covers “income and earnings obtained abroad” (Türkiye dışında elde edilen kazanç ve iratlar). While the Law does not provide an exhaustive list, professional analyses interpret this broadly to include:

• Foreign dividends and distributions

• Interest from foreign bank accounts and bonds

• Rental income from overseas property

• Capital gains on foreign securities, crypto assets, and investments

• Business income from operations conducted abroad

• Foreign freelance or consulting income (where services are economically utilised abroad)

What is NOT covered: Income from work physically performed in Türkiye, business profits from Turkish operations, or salaries from Turkish employers remain taxable under standard progressive rates (15–40%), regardless of the exemption.

The Remote Work Question

This is one of the most important practical points — and one that many commentators gloss over:

If you perform work while physically present in Türkiye, that income is considered Turkish-sourced and is NOT covered by the exemption — even if your client or employer is based abroad.

This means a digital nomad or remote worker sitting in Antalya and billing a company in London is earning Türkiye-source income in the eyes of Turkish tax law. That income is taxable at standard progressive rates.

The exemption is designed for truly foreign-source income: dividends, foreign rental income, capital gains on overseas investments, and business profits from operations you conduct outside Türkiye. If you run a foreign company and manage it from abroad (or have managers abroad running it), the profits may qualify. If you’re doing the work from your living room in Istanbul, they likely do not.

Further administrative guidance from the Ministry of Treasury and Finance is expected on borderline cases — particularly around management and control, digital business models, and intellectual property income. Until then, conservative structuring and careful documentation of where value-creating activities occur are strongly recommended.

How the 20-Year Period Works

• The clock starts when you establish residency — not when you apply or register.

• Only relocations from 1 January 2026 onwards qualify. Earlier moves cannot retroactively benefit.

• The Law does not currently address what happens if you temporarily leave Türkiye and return — practitioners treat the 20-year window as fixed from the initial residency date, pending further clarification.

Tax Filing and Compliance

Exempt foreign-source income is not declared on your Turkish income tax return. Even if you file a return for Türkiye-source income (such as local employment), exempt foreign items are excluded entirely.

Important compliance points:

• Expenses related to exempt foreign income cannot be deducted against taxable Turkish-source income.

• Foreign taxes paid on exempt income cannot be credited against Turkish tax.

• You must maintain documentation proving your eligibility — evidence of three-year non-residence, proof of foreign source for each income stream, and records of any Turkish-source activities.

What Happens If You Don’t Actually Qualify?

If the tax authorities later determine that the conditions were not met, the consequences are serious:

• Retroactive tax assessments for all relevant periods

• Tax loss penalties (vergi ziyaı cezası)

• Late payment interest

This makes proper legal advice at the outset essential — not optional.

The 1% Inheritance Tax

Law No. 7582 also amends the Inheritance and Gift Tax Law to offer a flat 1% inheritance tax rate for individuals benefiting from the Article 20/D exemption. Under the standard regime, Turkish inheritance tax rates are progressive and can reach up to 10% on larger estates.

For the duration of your 20-year exemption period, inheritances passed to your heirs are taxed at just 1% — an exceptionally favourable rate by global standards and a significant estate planning opportunity.

Asset Repatriation: The Varlık Barışı Window

Law No. 7582 introduces a new asset repatriation programme (varlık barışı) running until 31 July 2027. This allows individuals and companies to declare offshore and unrecorded domestic assets and bring them into the Turkish financial system at reduced tax rates.

How the rates work:

• 0% tax if assets are held in qualifying Turkish instruments for 5 years

• 1% tax for a 4-year holding commitment

• 2% tax for 3 years

• 3% tax for 2 years

• 4% tax for 1 year

• 5% default rate with no holding commitment

Rates increase by 0.5% for declarations made after 1 January 2027. Assets must be transferred to Turkish bank or brokerage accounts within two months of declaration. In return, no tax inspection or assessment will be made based solely on declared amounts.

For individuals relocating under Article 20/D, combining both programmes offers a powerful strategy: regularise existing offshore wealth at minimal cost while enjoying ongoing tax-free foreign income.

Corporate Incentives Under Law No. 7582

The Law also introduces significant corporate tax incentives relevant for entrepreneurs and business owners:

• 12.5% corporate tax rate for income from manufacturing activities (by companies with an industrial registry certificate) and agricultural production, effective from 2027.

• 95% corporate tax deduction on transit trade income — buying goods abroad and selling abroad without importing to Türkiye (100% for Istanbul Finance Center participants).

• Qualified Service Centres: Companies providing services (financial advisory, treasury, risk management, digital transformation, R&D, legal, HR, and more) to affiliated companies in 3+ countries, deriving 80%+ revenue from foreign affiliates, enjoy a 95–100% corporate tax deduction for 20 years plus wage tax exemptions for qualified staff up to 3–5x the gross minimum wage.

How Türkiye Compares to Other Non-Dom Regimes

Who Is This Regime For?

• Turkish expatriates considering a return after years abroad

• Foreign entrepreneurs running location-independent businesses with foreign-source revenue

• High-net-worth individuals with diversified global portfolios and succession planning needs

• Investors whose income is predominantly from foreign dividends, capital gains, and rental income

• Retirees with foreign pensions, investment portfolios, and property income abroad

It is not designed for individuals whose primary income comes from Turkish employment or local business operations.

Important Considerations Before You Relocate

• Exit taxes: Many countries impose capital gains or departure taxes when you cease to be a tax resident.

• Continued tax obligations: US citizens remain taxable on worldwide income regardless of residence.

• CFC rules: Your home country may attribute foreign company profits to you personally.

• CRS and FATCA: Automatic exchange of information means your home country will be informed of Turkish accounts.

• Legal certainty over 20 years: Political and fiscal pressures can lead to changes, as seen with non-dom regimes elsewhere.

What Secondary Regulations Are Still Expected?

Key practical details are still pending from the Ministry of Treasury and Finance:

• Detailed documentation requirements for the three-year non-residence condition

• Guidance on borderline income (management from Türkiye, digital platforms, IP licensing)

• Coordination between tax offices and immigration authorities

• Rules on interruptions during the 20-year period

We are monitoring these developments closely and will update this guide as regulations are published.

Yılmaz Attorneys: Your Advisors for Law No. 7582

The 20-year foreign income exemption is a landmark development for anyone considering relocating to Türkiye. But navigating it properly requires integrated advice across tax, immigration, corporate structuring, and compliance — exactly the kind of cross-border work our firm was built for.

At Yılmaz Attorneys, we exclusively serve the international community in Türkiye. Our founding attorney, Mert Veysel Yılmaz, registered with the Antalya Bar Association under no. 5241, has counseled more than 400 clients from over 40 countries on immigration, citizenship, corporate, and property matters — and is currently pursuing a Master’s in Law and Technology at Tilburg University in the Netherlands, expanding the firm’s EU and Dutch law capabilities.

Whether you are a returning Turkish expat, an international entrepreneur, or an investor evaluating Türkiye as a new base, we can help you:

• Assess your eligibility under Article 20/D and guide you through the application process

• Structure your income streams to maximise the exemption

• Coordinate residence permits, work permits, or citizenship applications

• Plan estate and succession matters under the 1% inheritance rate

• Liaise with your foreign advisors to manage exit tax and cross-border compliance risks

Contact Yılmaz Attorneys today for a consultation on how Law No. 7582 applies to your situation.

Disclaimer: This guide is for informational purposes only and does not constitute legal or tax advice. Law No. 7582 is newly enacted and subject to implementing regulations. For advice tailored to your specific circumstances, consult a qualified attorney and tax advisor. Laws and regulations are subject to change.