Turkey exempts new residents from foreign income tax for 20 years

Turkey's 20-year exemption on foreign income

Turkey's Grand National Assembly passed an incentive package May 21 that exempts qualifying new residents from Turkish income tax on foreign-source income for 20 years. The president has up to 15 days to publish the law in the Official Gazette before it formally enters into force.

The exemption covers foreign dividends, interest, rental income from non-Turkish property and capital gains on foreign assets, per professional summaries of the enacted text. Turkish-source income still gets taxed at standard progressive rates of 15% to 40%. The package also drops inheritance and gift tax for qualifying individuals to a flat 1%, down from the usual 1% to 30% scale.

Who can claim the holiday

Applicants must have had no Turkish domicile and no Turkish tax liability in the three calendar years before becoming a Turkish tax resident. The rule applies to foreign nationals and to Turkish citizens returning after an extended period abroad, provided they meet the same three-year clean slate test.

Existing Turkish tax residents are shut out of the 20-year holiday. Tourists and short-stay visitors aren't the target either, because the benefit only kicks in once an individual becomes tax resident, typically by spending 183 or more days in Turkey or meeting other residency tests.

The regime sits alongside a separate service-export incentive upgraded by Presidential Decree No. 11257 and published April 30. That decree raised the deduction on qualifying exported services from 80% to 100%, which can drive the effective rate to zero for software, engineering, design and similar work performed in Turkey for non-resident clients.

What movers should do next

Anyone planning a move should treat the start date and transition rules as provisional until the Gazette text and Revenue Administration guidance appear. Some prior draft provisions referenced applicability from Jan. 1, 2026, but the final wording will govern.

Practical steps include:

• Secure a residence permit and establish Turkish tax residency.
• Gather foreign residence and tax records covering the prior three calendar years.
• Confirm with a Turkish tax adviser whether income is classified as foreign-source under the exemption or as exported services under the 100% deduction regime.

Read our full Turkey guide for the complete picture on residency, taxes and recent visa updates.