20-Year Income Tax Exemption for Foreign-Source Income in Türkiye

Pursuant to Article 4 of the Law No. 7582, published on 21 May 2026, income and earnings derived abroad by qualifying individuals have been brought within the scope of an income tax exemption.

Furthermore, the General Communiqué on Income Tax No. 333, published on 4 July 2026, sets the procedures and principles regarding the implementation of the exemption.

Within the framework of the above regulations, this article provides information on the key areas of the exemption.

Scope of the Exemption

Article 4 of Law No. 7582 introduced the following provision into Income Tax Law No. 193:

“Repeated Article 20/D – Income and earnings derived abroad by individuals who are deemed to be resident in Türkiye shall be exempt from income tax for a period of twenty years, provided that such individuals did not have a domicile or tax liability in Türkiye during the last three calendar years previously the date on which they became resident in Türkiye. The fact that individuals within the scope of the first paragraph had tax liability in Türkiye prior to becoming subject to this Article due to real estate capital income, movable capital income or capital gains derived in Türkiye shall not prevent them from benefiting from this exemption. No annual income tax return shall be filed in respect of the income and earnings covered by the first paragraph. When an annual income tax return is submitted due to other income, such exempt income and earnings shall not be included in the return. Expenses and costs which are related to the income and earnings covered by the exemption shall not be considered in determining taxable income and earnings. Taxes paid in foreign countries with respect to the income and earnings covered by this exemption may not be offset from the income tax assessed in Türkiye. If it is subsequently determined that the conditions for the exemption were not met, the taxes that were not assessed shall be defined as unpaid tax.”

Accordingly, individuals demand to benefit from the exemption must satisfy all of the following conditions:

• be deemed to be resident in Türkiye. That means induvial become resident in Türkiye  after 1 January 2026
• have had neither a domicile nor tax liability in Türkiye during the last three calendar years previous the date on which they became resident in Türkiye; and
• derive income from sources outside Türkiye.

Furthermore, only individual taxpayers are eligible to benefit from the exemption. Corporate income taxpayers are not entitled to benefit from this exemption.

Application Procedure

Taxpayers who wish to benefit from the exemption are required to apply to the competent tax office by the end of the calendar year in which they become resident in Türkiye. Those who become resident during the last two months of the calendar year (November and December) must apply by the end of the second month of the following calendar year to obtain the “Certificate of Exemption for Income and Earnings Derived from Abroad” in respect of the income and earnings covered by the exemption.

Upon application, the tax authorities will verify whether the applicant had a domicile or tax liability in Türkiye during the last three calendar years prior to becoming resident in Türkiye and whether the applicant is deemed to be resident in Türkiye. Following confirmation that the applicant had neither a domicile nor tax liability in Türkiye, has become resident in Türkiye, and has submitted the application within the prescribed period, the applicant will be able to obtain the Certificate of Exemption.

In case it is determined that a taxpayer has benefited from the exemption despite not satisfying the applicable conditions, the under-assessed tax relating to such income shall be collected by the competent tax office together with a tax penalty and late payment interest. Therefore, fully compliance with all statutory requirements about benefiting from the exemption is important thing for taxpayers.

Example 1: A taxpayer who became resident in Türkiye on 12 May 2028 started a retail clothing business in Türkiye on 30 October 2028 and applied to the competent tax office for a Certificate of Exemption on 15 November 2028.

As it was determined that the taxpayer had neither tax liability nor a domicile in Türkiye during the last three calendar years preceding the acquisition of Turkish tax residency (i.e., 2025, 2026 and 2027), a Certificate of Exemption will be issued for the taxpayer’s application.

Example 2: Taxpayer (B) became resident in Türkiye on 2 March 2028 and applied to the competent tax office for a Certificate of Exemption on 1 May 2030.

The tax office determined that taxpayer (B) had neither tax liability nor residence in Türkiye during the 2025, 2026 and 2027 calendar years. However, since the taxpayer failed to apply by the end of 2028, which was the calendar year in which Turkish tax residency was established, the Certificate of Exemption will not be issued.

Example 3: Taxpayer (D) had a domicile in Türkiye during the 2022 calendar year. However, after leaving Türkiye on 10 November 2024, the taxpayer had a domicile in Türkiye during the 2027 calendar year and applied to the competent tax office for a Certificate of Exemption on 9 November 2027.

Since the taxpayer was resident in Türkiye during the 2024 calendar year, the taxpayer shall not be issued a Certificate of Exemption.

Example 4: Taxpayer (L), who became deemed to be resident in Türkiye on 12 May 2026, applied to the competent tax office for a Certificate of Exemption on 1 December 2026.

Following the examination conducted by the competent tax office, it was determined that taxpayer (L) had neither a tax liability nor a domicile in Türkiye during the 2023, 2024 and 2025 calendar years. Accordingly, based on the taxpayer’s application, a Certificate of Exemption was issued on 1 December 2026.

During a tax audit conducted in 2027, it was determined that the taxpayer had carried out unregistered commercial activities and had derived commercial income. Consequently, the competent tax office ex officio established the taxpayer’s tax liability for the 2025 and 2026 calendar years in respect of such commercial income.

Since it was determined that the taxpayer should have been registered as a taxpayer for the 2025 and 2026 calendar years and, therefore, did not satisfy the conditions for the exemption, the Certificate of Exemption shall be over as of 12 May 2026. Furthermore, the tax that was under-assessed due to the foreign-source income not declared for the relevant years shall be collected by the competent tax office with a tax penalty and late payment interest.

Provisions Regarding Tax Returns and Expenses

Individuals falling within the scope of the exemption are not required to file an annual income tax return in respect of the income and earnings covered by the exemption. In case an annual income tax return is required to be filed due to other sources of income, such exempt income and earnings shall not be included in the tax return.

Only income and earnings derived from foreign sources fall within the scope of this exemption. Accordingly, income and earnings derived in Türkiye shall not be subjected to the exemption. Taxpayers benefiting from the exemption shall continue to fulfil their tax obligations in respect of income and earnings derived in Türkiye.

Expenses and costs which are related to the exempt income and earnings shall not be considered in determining taxable income and earnings.

Taxes paid in foreign countries in respect of the income and earnings covered by this exemption may not be offset from the income tax assessed in Türkiye. Furthermore, the exemption is available only to individual taxpayers, and corporate income taxpayers are not entitled to benefit from this exemption.

Circumstances That Do Not Prevent Eligibility for the Exemption

The fact that individuals falling within the scope of the exemption have previously been subject to tax in Türkiye in respect of the following types of income shall not prevent them from benefiting from the exemption.

These types of income are:

• real estate capital income derived in Türkiye;
• movable capital income; and
• gains from appreciation.

Example 5: Taxpayer (H), who benefits from the exemption, derives real estate capital income and movable capital income in Türkiye and earns rental income from immovable property located abroad.

Since the rental income derived from the taxpayer’s foreign immovable property falls within the scope of the exemption, it shall not be included in the annual income tax return to be filed in respect of the taxpayer’s income derived in Türkiye.

Example 6: Taxpayer (K), who benefits from the exemption, derives TRY 600,000 of annual real estate capital income from immovable property owned in İstanbul during 2026, and TRY 500,000 of dividend income from a Turkish resident corporation. Taxpayer (K) also receives dividend income from a company resident in Spain and rental income from immovable property owned in Monaco.

The taxpayer’s real estate capital income and dividend income derived in Türkiye shall not fall within the scope of this exemption, whereas the dividend income and rental income derived from abroad shall qualify for the exemption.

Accordingly, no annual income tax return shall be filed in respect of the foreign-source dividend income and rental income covered by the exemption. Furthermore, such exempt foreign-source income shall not be included in the annual income tax return to be filed for the taxpayer’s real estate capital income and dividend income derived in Türkiye.

Example 7: A taxpayer who became deemed to be resident in Türkiye on 12 May 2028 has been deriving rental income in Türkiye and filing annual income tax returns since 7 May 2026.

Provided that the taxpayer applies for a Certificate of Exemption by the end of the 2028 calendar year and satisfies the applicable conditions, the fact that the taxpayer has been subject to tax in respect of real estate capital income shall not prevent the issuance of the Certificate of Exemption.

Example 8: A taxpayer who became deemed to be resident in Türkiye on 23 July 2028 derived employment income from a single employer, subject to withholding tax, during the 2026 calendar year.

Since the taxpayer derived employment income during the three calendar years preceding the date on which they became deemed to be resident in Türkiye, a Certificate of Exemption shall not be issued, and the taxpayer shall not be eligible to benefit from the exemption.

Conclusion

The exemption introduced under the Income Tax Law has been explained above for individuals who demand and arrange benefiting from the exemption. As the timeline stipulated under the implementation of the exemption constitutes an important element of the exemption, it is essential that individuals wish to benefit from the exemption make their decisions at the appropriate time, considering the limitations and requirements stated in the legislation.