Turkey is preparing a tax‑incentive package that would allow new residents to exempt foreign‑source income and capital gains from Turkish tax for up to 20 years. The proposal was announced on 24 April 2026 by President Recep Tayyip Erdogan and still requires parliamentary approval.
Proposed structure
- Eligibility – Individuals who have not been Turkish tax residents for the three preceding years may relocate to Turkey and qualify for the exemption.
- Scope of exemption – All foreign‑source income and capital gains would be untaxed in Turkey for a 20‑year period. Only income sourced in Turkey would remain subject to Turkish tax.
- Inheritance and gift tax – Qualifying residents would benefit from a reduced 1 % rate on inheritance and gift taxes.
- Current resident tax rates – Turkish resident individuals are taxed on worldwide income under a progressive system ranging from 15 % to 40 %.
Wider investment package
The tax holiday is part of a broader reform aimed at attracting foreign businesses and high‑net‑worth individuals. Additional measures announced include:
- Corporate tax reduced to 9 % for manufacturing exporters.
- Corporate tax reduced to 14 % for other exporters.
- Expanded tax advantages for firms operating through the Istanbul Financial Center.
- Creation of a “one‑stop office” to streamline investment procedures.
Comparison with European regimes
| Country | Type of regime | Benefit period | Key condition |
|---|---|---|---|
| Italy | Lump‑sum tax | Up to 15 years | – |
| Greece | Non‑dom regime | Up to 15 years | €100 000 annual flat tax on foreign income |
| Portugal | NHR 2.0 (IFICI) | 10 years | – |
| Turkey (proposed) | Foreign‑income exemption | 20 years | No annual lump‑sum tax; exemption applies to all foreign income |
If enacted, Turkey’s 20‑year exemption would be longer than the comparable periods in Italy, Greece and Portugal, though the final legal text will define the exact parameters.
Interaction with Turkey’s citizenship‑by‑investment program
- Investment threshold – Real‑estate purchase of USD 400 000 (subject to a three‑year holding period).
- Current focus – Speed of processing, family inclusion, and passport mobility.
- Potential added appeal – The long‑term foreign‑income tax exemption could make Turkey attractive to investors seeking both residency/citizenship and a low‑tax environment for overseas earnings.
Practical considerations for prospective residents
- The incentive is not yet law; parliamentary approval and the final legislative wording are still pending.
- Eligibility hinges on a three‑year non‑resident history; applicants must verify their tax residency status.
- Only Turkish‑source income will be taxable; careful planning is required to separate foreign and domestic income streams.
- The reduced 1 % inheritance/gift tax rate applies only to qualifying individuals; other inheritance tax rules remain in force.
Outlook
If the proposal passes in its current form, Turkey would join a small group of jurisdictions offering a long‑term exemption on foreign‑source income, positioning itself as a competitive option for globally mobile investors alongside Italy, Greece and Portugal. Until parliamentary approval is secured, the incentive remains a proposal and its exact terms may change.
Source article: outboundinvestment.com
