Türkiye's 20-Year Income Tax Exemption for New Residents: Repeated Article 20/D of the Turkish Income Tax Code

With Law No. 7582, published in the Official Gazette of 4 June 2026, the Turkish legislator has introduced an incentive that is remarkable even by international standards: individuals who become tax resident in Türkiye under certain conditions are exempt from income tax on their income earned outside Türkiye for a period of twenty years (Repeated Article 20/D of the Turkish Income Tax Code — GVK). The provision forms part of a broader package designed to attract highly qualified professionals, investors and Turkish citizens living abroad to Türkiye.

This article outlines the core concepts underlying the exemption, the conditions for benefiting from it, its scope and limits, and the further tax instruments that should be considered alongside it when planning a relocation to Türkiye.

The Core Concept: Turkish Tax Residence and Unlimited Tax Liability

The starting point of the exemption is the distinction drawn by Turkish income tax law between unlimited and limited tax liability. Individuals who are considered resident in Türkiye are subject to unlimited tax liability and are, as a rule, taxed in Türkiye on all income earned both inside and outside the country — that is, on their worldwide income. Individuals who are not resident in Türkiye (limited taxpayers) are taxed only on their Turkish-source income. Repeated Article 20/D is a statutorily limited and defined exception to this worldwide income principle.

Whether a person is considered resident in Türkiye is determined under Article 4 GVK by two alternative tests; meeting either one is sufficient:

The domicile test: A person whose domicile (ikametgâh) is in Türkiye is considered resident. Domicile within the meaning of the Turkish Civil Code is the place where a person has settled with the intention of remaining permanently. What matters is not the length of physical presence but the transfer of the centre of one’s life to Türkiye; the acquisition or rental of a home, the relocation of the family and the concentration of social and economic ties in Türkiye are all taken into account.
The physical presence test: A person who stays in Türkiye continuously for more than six months within a calendar year is also considered resident, even without a Turkish domicile. Temporary absences (such as short trips abroad) do not interrupt this period.

Article 5 GVK adds an important correction: business people, scientists, experts, officials and press correspondents who come to Türkiye for a specific and temporary assignment, as well as persons staying for education, medical treatment, rest or travel purposes, are not considered resident even if they stay for more than six months. A lengthy physical stay in Türkiye therefore does not automatically trigger unlimited tax liability; the purpose and character of the stay are decisive.

At the international level, double taxation treaties come into play: where a person qualifies as resident in both Türkiye and the other contracting state under their respective domestic laws, the tie-breaker rules of the treaty (permanent home, centre of vital interests, habitual abode, nationality) determine which state is treated as the state of residence for treaty purposes. When planning a relocation to Türkiye, this analysis must be carried out separately from, and in addition to, the domestic-law assessment.

Conditions for the Exemption

Benefiting from the exemption under Repeated Article 20/D requires three conditions to be met cumulatively:

Tax residence in Türkiye: The person must qualify as resident in Türkiye under the tests described above and thus become subject to unlimited tax liability. The exemption is aimed not at limited taxpayers but at persons who genuinely move the centre of their life to Türkiye.
No tax nexus with Türkiye in the preceding three calendar years: In the last three calendar years before becoming resident, the person must have had neither a domicile nor a tax liability in Türkiye. The law provides an important relief here: a prior tax liability based solely on rental income, investment income or capital gains does not preclude the exemption. This distinction is of central importance for persons holding Turkish real estate or securities for investment purposes and for Turkish citizens living abroad.
Residence established on or after 1 January 2026: The exemption applies to persons who become resident in Türkiye on or after 1 January 2026. Persons who were already resident in Türkiye before that date are outside its scope.

Scope and Key Technical Features

The income earned outside Türkiye by qualifying individuals is exempt from income tax for twenty years, without limitation as to the type of income.

The exemption is available exclusively to individuals; companies and other legal entities cannot benefit from it. Income earned by individuals within Türkiye likewise falls outside the exemption; the ordinary tax obligations continue to apply to such income in full.

The key technical features of the regime are as follows:

No annual tax return is filed for the exempt income; where a return is filed on account of other income, the exempt income is not included in it.
Expenses and costs relating to the exempt income are disregarded in determining taxable income.
Taxes paid abroad on the exempt income cannot be credited against Turkish income tax.
If it is subsequently established that the conditions were not met, the taxes not assessed are collected under the tax loss (vergi ziyaı) rules.
The implementing rules were set out in Income Tax General Communiqué No. 333, published in the Official Gazette of 4 July 2026.

The regime is complemented by an inheritance tax advantage: for transfers upon death occurring during the exemption period, the inheritance tax rate applicable to qualifying persons is only 1%. Compared with the standard progressive schedule, this makes the regime additionally attractive from a wealth succession planning perspective.

The Application Requirement: Exemption Certificate and Deadline

The exemption does not apply automatically. Under General Communiqué No. 333, persons wishing to benefit must apply to the competent tax office for an 'Exemption Certificate for Income Earned from Abroad' by the end of the calendar year in which they became resident in Türkiye — or, where residence was established in the last two months of the calendar year, by the end of the second month of the following year. In the application procedure, the tax office verifies the person's domicile and tax liability status for the preceding three calendar years as well as their residence in Türkiye. Late applications are refused; the application deadline is therefore a cut-off period capable of causing a loss of rights and must be factored into the relocation timeline from the outset.

Issuance of the certificate does not preclude later scrutiny: if it is subsequently established that the conditions were not met, the certificate is revoked with retroactive effect and the under-assessed taxes are collected together with a tax loss penalty and default interest. Particularly where Turkish residence is based on the domicile test, it is therefore essential that the domicile in Türkiye is established genuinely and in a demonstrable manner.

The Concept of "Income Earned Outside Türkiye": The Real Limit of the Exemption

The concept that determines the scope of the exemption is that the income must be earned outside Türkiye. Where income is earned for Turkish tax purposes depends not on where the paying customer is located or from which country the payment originates, but on source rules specific to each type of income. For business and professional income, the decisive factor is essentially the place where the activity is carried out.

The practical consequence is this: income that a Turkish-resident person earns from a professional or business activity actually performed in Türkiye is — even where the client is located abroad and payment is made from abroad — as a rule treated as earned in Türkiye and does not qualify for the exemption. General Communiqué No. 333 makes this explicit by way of example: the professional income of an engineer operating in Türkiye who provides consultancy services to clients resident abroad is not exempt. Activity-based income can benefit only where the activity or the income structure has been arranged accordingly; this requires a separate legal assessment in each individual case.

By contrast, income items that by their nature typically qualify for the exemption include:

dividends from foreign shareholdings and companies,
interest and similar investment income from assets held with foreign banks and financial institutions,
rental income from real estate located abroad,
capital gains from the disposal of foreign securities and assets,
pensions paid from abroad.

The second essential limit arises from the prohibition on crediting. The exemption means only that Türkiye waives its own taxing right; the source state’s taxing right under its domestic law and the applicable double taxation treaty remains unaffected. Since taxes paid in the source state cannot be credited in Türkiye either, the true economic value of the exemption can only be established through an analysis of each income item, taking the source-state taxation into account.

Alternative Instruments for Activities Carried Out from Türkiye

For persons who will earn their income from an activity actually carried out in Türkiye, Repeated Article 20/D is not the appropriate instrument; Turkish tax law does, however, offer other significant options for this profile:

The service export deduction (Article 89/13 GVK): Turkish-resident taxpayers who provide services from Türkiye to persons and businesses resident abroad may, for the service types listed in the law (including architecture, engineering, design, software, medical reporting, bookkeeping, call centre services, product testing, certification, data storage, data processing and data analysis), deduct 80% of the resulting income from their tax base. This requires that the service be used exclusively abroad and that the entire income be transferred to Türkiye by the filing deadline. Whether a given activity falls within one of the statutory categories is a question of characterisation to be assessed in each individual case.

Qualified service centres and corporate structures: In the same package, Law No. 7582 also regulated the "qualified service centre" model: corporations providing intra-group services to groups operating in at least three different countries and deriving at least 80% of their revenue from related companies abroad receive a corporate income tax deduction of 95% (100% in certain zones) on such foreign-source profits, together with an income tax exemption for the salaries of qualified personnel. For individuals and groups with an international structure, a corporate arrangement may in some cases be more advantageous than personal tax residence.

Which instrument is appropriate depends on the type of income, the structure of the client portfolio, where the activity is actually carried out and the scope for restructuring the income. Designing a structure that makes maximum, legally secure use of the statutory options is the subject of a comprehensive tax opinion.

Taxation in the Country of Departure

A relocation to Türkiye is never solely a matter of Turkish tax law. The proper termination of unlimited tax liability in the country of departure, the question of treaty residence, and continuing rules such as — under German law — the extended limited tax liability (§ 2 AStG), which can apply for up to ten years to German nationals moving to a low-tax jurisdiction, must be analysed before the move. Whether claiming the twenty-year Turkish exemption triggers such provisions is a factor that requires separate assessment.

At GEMS Schindhelm, we carry out the Turkish tax and legal analysis together with our in-house audit and tax advisory practice; for the German, Austrian and other European perspectives, we work in coordination with the respective country offices of the Schindhelm Alliance.

Key Points for an Initial Assessment

When assessing the exemption and the alternative instruments in the context of a planned relocation to Türkiye, the following points are decisive at the first stage:

whether a domicile or a tax liability (other than for rental, interest, dividend or capital gains income) existed in Türkiye in the last three calendar years,
whether the income derives predominantly from passive sources (dividends, interest, rent, pensions, investment returns) or from an activity actually performed,
from where the activity will actually be carried out after the move,
whether the income will continue to be taxed in the source country,
ensuring that the deadline for applying for the exemption certificate, running from the date residence is established, is not missed.

For persons whose income derives predominantly from passive sources, Repeated Article 20/D — combined with the 1% inheritance tax rate — offers a regime that is highly competitive even by international standards. For persons with activity-based income, the decisive question is instead which instrument should be used, and how the income structure and business model should be arranged.

This article is for general information purposes only and does not constitute legal or tax advice. Administrative practice on Repeated Article 20/D is still evolving and details may change. Individual advice should always be obtained before taking decisions in a specific case.

Author: Serkan Yılmaz