Tax Planning
Planning Around Turkey’s New Foreign-Income Tax Exemption
Turkey has introduced a 20-year income tax exemption for foreign-source income of individuals who were non-residents for at least three calendar years—here’s how resident realignments and eligibility affect you.
By NomadicTax Research Team • 5-8 min read • August 14, 2026
## What’s New in Turkey’s Tax Law
- Turkey enacted **Law No. 7582**, published on **4 June 2026**, which added a new income tax exemption: **real persons** who are newly “residents” in Turkey and who had **neither residence status nor tax liability** in Turkey during the **preceding three calendar years** will be exempt from Turkish income tax on **income and revenue earned outside Turkey**, for **20 years** starting from date of residence.([gib.gov.tr](https://gib.gov.tr/mevzuat/kanun/433/teblig/11874?utm_source=openai))
- To benefit, individuals must obtain an **“Exemption Certificate”** by applying to their tax office (it’s called “İstisna Belgesi”) within the rules specified. Also, **foreign taxes paid** on those earnings *cannot* be credited against Turkish tax under this exemption.([gib.gov.tr](https://gib.gov.tr/mevzuat/kanun/433/teblig/11874?utm_source=openai))
- The exemption is **effective from 1 January 2026** for those who became residents in that year and meet the qualification criteria.([gib.gov.tr](https://gib.gov.tr/mevzuat/kanun/433/teblig/11874?utm_source=openai))
## Who Qualifies?
- People who previously had **no residence status** and **no tax liability** in Turkey for the **last three calendar years** before becoming resident.
- Must be “resident” under local rules (i.e., having a legal domicile or staying in Turkey over threshold). The application must show those three prior years free of Turkish residence or tax status.([gib.gov.tr](https://gib.gov.tr/mevzuat/kanun/433/teblig/11874?utm_source=openai))
## What Is Exempt, What Is Not
| Type of Income | Treatment Under Exemption |
|---|---|
| Foreign-source wages, dividends, interest, royalties, capital gains | **Fully exempt** from Turkish income tax when it qualifies under law No. 7582, for 20 years. |
| Foreign taxes paid (e.g. withholding abroad) | **Not deductible or creditable** in Turkey under this exemption. |
| Income from Turkish real estate, value increases, local-source income | Not part of the exemption unless separately covered—they remain taxable under the usual rules. |
## Practical Steps: Applying and Using the Exemption
1. **Determine the date you become a “resident”** under Turkish law. If that date is in 2026, then 1 January 2026 is the reference. |
2. **Gather proof** that you had no tax residency nor liability in the last three full calendar years before your resident status—submission of documents like tax certificates or proof of foreign residence is often needed. |
3. **Apply for the İstisna Belgesi** at your tax office by year-end if required. Without the certificate, the exemption won’t apply. |
4. **Maintain careful records** of your foreign-source income—earning statements, bank records, etc.—so that you can substantiate what’s exempt. |
5. **Watch for post-approval changes**—if it’s discovered that the criteria were not met (e.g., you had tax liability before), the tax skipped during exempt years becomes due plus penalties.([gib.gov.tr](https://gib.gov.tr/mevzuat/kanun/433/teblig/11874?utm_source=openai))
## Example Scenario
Sara moved to Turkey on 5 July 2026, having lived and paid taxes in the UK until 31 December 2025. She applies and gets her exemption certificate in August 2026. From **1 January 2026**, all her income from abroad—say from investments or rental property—is tax-free in Turkey for 20 years. But if it turns out she had a tax file open in Turkey in 2024, this jeopardises eligibility.
## Key Risks & Planning Tips
- **Residency-start date matters**. There might be ambiguity depending on when “resident” status is deemed official. Documentation is crucial. |
- **Foreign tax treaties**—check if Turkey has a double tax treaty that could help or conflict. |
- **Exchange rate fluctuations**—income counted in foreign currency may affect how you report or convert values. |
- **Potential intention test**—Turkish authorities may look beyond formal dates to when you intended to be a resident. |
## Bottom Line
For individuals who move to Turkey and meet the “previous non-residence/tax liability for 3 years” requirement, there’s a powerful tool for optimizing tax exposure: the new foreign income exemption. But acting timely, applying correctly, and verifying your history are essential.