Turkey introduced a significant new tax incentive in 2026 for individuals who become tax residents in the country.
The new regime can be particularly attractive for foreign investors, international executives, entrepreneurs and other individuals relocating to Turkey while continuing to receive income from abroad.
However, the exemption is subject to specific conditions. Understanding the distinction between foreign-source income and Turkish-source income is therefore essential.
What Is the 20-Year Income Tax Exemption in Turkey?
Law No. 7582 introduced Repeated Article 20/D (Mükerrer Madde 20/D) into Turkish Income Tax Law No. 193.
Under this provision, individuals who become tax residents in Turkey may benefit from an income tax exemption on qualifying income and earnings obtained outside Turkey for a period of 20 years.
The regime applies to qualifying individuals who become resident in Turkey from 1 January 2026 onwards.
The objective is to make Turkey more attractive to internationally mobile individuals, investors and professionals who wish to establish their residence in the country while maintaining sources of income abroad.
Who Can Benefit from the 20-Year Tax Exemption?
The exemption is based primarily on tax residency and previous tax status, rather than nationality.
Consequently, being a foreign citizen does not automatically entitle an individual to the exemption.
To qualify, an individual must generally:
- become considered resident in Turkey for Turkish income tax purposes;
- have had no domicile in Turkey during the three preceding calendar years; and
- have had no Turkish tax liability during those three preceding calendar years, subject to certain exceptions provided by law.
These conditions must be carefully reviewed before relying on the exemption.
The Three-Calendar-Year Rule
One of the most important eligibility requirements concerns the individual’s situation before becoming resident in Turkey.
The individual must not have had a domicile or tax liability in Turkey during the three calendar years preceding the year in which they become resident.
Importantly, the legislation refers to calendar years rather than simply a rolling period of 36 months.
For example, an individual becoming resident in Turkey in 2027 would generally need their Turkish domicile and tax situation during the preceding calendar years to be reviewed in order to determine whether the exemption can apply.
Previous connections with Turkey should therefore be examined carefully before an application is made.
Are All Previous Turkish Tax Liabilities Disqualifying?
No.
The legislation provides an important exception.
Previous Turkish tax liability resulting from certain categories of Turkish-source income does not necessarily prevent an individual from benefiting from the 20-year exemption.
In particular, previous tax liability arising from:
- rental income from immovable property;
- income from movable capital; or
- capital gains
may not prevent the individual from qualifying for the exemption.
This distinction is particularly relevant for foreigners who already owned property or investments in Turkey before deciding to become resident in the country.
By contrast, other forms of previous Turkish tax liability may affect eligibility and should be assessed individually.
What Income Is Covered by the Exemption?
The 20-year exemption concerns income and earnings derived outside Turkey.
Depending on the circumstances and applicable source rules, this may include categories such as:
- income from foreign investments;
- dividends received from foreign companies;
- interest generated abroad;
- rental income from real estate located outside Turkey;
- capital gains arising from qualifying foreign assets;
- certain foreign commercial or professional income; and
- other qualifying income whose source is outside Turkey.
The source of the income is therefore fundamental.
Simply receiving money into a foreign bank account does not necessarily make the income foreign-source. The underlying activity, asset, investment or transaction must be analysed under Turkish tax rules.
What Income Is Not Covered?
The exemption should not be interpreted as a general 20-year exemption from taxation in Turkey.
It applies to qualifying foreign-source income and earnings.
Income considered to have its source in Turkey remains subject to the ordinary Turkish tax rules.
For example, income connected with employment or professional activities physically carried out in Turkey may require particular attention, even where the employer or client is located abroad.
Similarly, rental income from Turkish real estate, income generated by Turkish activities and other Turkish-source income do not become automatically tax-free merely because the taxpayer qualifies for the 20-year foreign-income exemption.
Do Exempt Foreign Earnings Have to Be Declared in Turkey?
Under Repeated Article 20/D, income and earnings falling within the exemption are not included in the annual Turkish income tax return.
Where the taxpayer is required to submit an annual return because of other taxable income, the qualifying exempt foreign income is not included in the taxable income declared in that return.
This can significantly simplify the Turkish income tax position of qualifying new residents with substantial foreign-source income.
Can Expenses Related to Exempt Income Be Deducted?
No.
Expenses and costs relating to income covered by the 20-year exemption cannot be taken into account when calculating other taxable income in Turkey.
In other words, taxpayers cannot benefit from the exemption on the foreign income while simultaneously using expenses associated with that income to reduce their Turkish taxable base.
What About Taxes Already Paid Abroad?
Another important point concerns foreign tax credits.
Where foreign income falls within the 20-year exemption, taxes paid abroad in relation to that exempt income cannot generally be credited against Turkish income tax.
This is logical because the corresponding foreign income is itself excluded from Turkish income taxation under the exemption.
Nevertheless, the interaction between Turkish domestic legislation and applicable double taxation agreements should always be reviewed according to the taxpayer’s individual circumstances.
Is the Exemption Only Available to Foreign Citizens?
No.
Although the regime is particularly attractive to foreigners relocating to Turkey, nationality itself is not the determining criterion.
The relevant questions concern whether the individual becomes resident in Turkey and whether the conditions relating to their previous domicile and Turkish tax liability are satisfied.
Therefore, a foreign citizen moving to Turkey may potentially qualify, but so may a Turkish citizen who has lived abroad and subsequently returns to Turkey, provided that the statutory requirements are fulfilled.
This makes the regime broader than a simple “expatriate tax exemption”.
How Long Does the Exemption Last?
The exemption is available for a period of 20 years for qualifying individuals.
This unusually long duration makes the regime particularly relevant for individuals planning a long-term relocation to Turkey.
However, the benefit should not be viewed in isolation. Tax residency, the location of assets, employment arrangements, business activities and the nature of each source of income should be considered before relocating.
Why Is the New Regime Important for International Mobility?
Turkey generally applies the principle that resident individuals may be subject to Turkish income tax on their worldwide income.
For internationally mobile individuals, becoming Turkish tax resident could therefore traditionally create Turkish tax exposure on income received from several countries.
The new 20-year exemption creates a major exception for qualifying new residents by removing eligible foreign-source income and earnings from the Turkish income tax base.
It may therefore be particularly relevant for:
- international investors;
- entrepreneurs relocating to Turkey;
- executives with investments or assets abroad;
- individuals receiving foreign rental or investment income;
- high-net-worth individuals considering Turkish residence; and
- Turkish nationals returning after an extended period abroad.
Tax Planning Before Moving to Turkey
Individuals considering relocation should ideally review their tax position before becoming resident in Turkey.
In particular, it may be necessary to analyse:
- the individual’s domicile during the previous three calendar years;
- whether they had any Turkish tax liability during this period;
- the nature of any previous income generated in Turkey;
- whether future income will qualify as foreign-source income;
- the individual’s assets and investments outside Turkey; and
- the impact of any applicable double taxation agreement.
A review performed before relocation can help determine whether the individual meets the conditions for the exemption and identify income that may remain taxable in Turkey.
Turkey’s new 20-year income tax exemption for foreign-source income represents an important development in the country’s taxation of internationally mobile individuals.
Introduced by Law No. 7582 and incorporated into Income Tax Law No. 193 through Repeated Article 20/D, the regime can provide substantial tax advantages to qualifying individuals becoming resident in Turkey.
However, the exemption is not automatic and does not cover all income.
Eligibility depends in particular on the individual’s previous domicile and Turkish tax status, while the exemption itself is limited to qualifying income and earnings derived outside Turkey.
Foreign nationals, international executives, investors and returning Turkish citizens considering relocation to Turkey should therefore review their tax position before establishing Turkish tax residency.
Set Idari Destek can assist international companies and individuals in understanding Turkish payroll, employment and tax requirements when relocating employees or establishing activities in Turkey.