Turkey’s New 20-Year Foreign Income Tax Exemption
(Law No. 7582)
A Practical Guide for Foreign Entrepreneurs, Investors and Remote Workers
Turkey has introduced a significant new tax incentive for individuals who are considering relocating their personal, professional or investment life to Turkey. With Law No. 7582, a new foreign income tax exemption regime has been introduced under Article 20/D of the Turkish Income Tax Law, offering a potential 20-year exemption for qualifying foreign-source income.
This development is important because Turkey has historically taxed resident individuals on their worldwide income. In other words, once a person becomes a Turkish tax resident, their income earned both inside and outside Turkey may generally fall within the scope of Turkish taxation. The new regime creates an important exception to this principle for eligible individuals who have not previously been resident or tax registered in Turkey within the relevant period.
The regulation appears to target internationally mobile individuals, foreign entrepreneurs, investors, consultants, remote business owners and professionals who are considering Turkey as a long-term base. For these individuals, tax residency is often one of the most important factors when deciding where to live, work and manage international business operations.
The new regime may present a valuable opportunity for a broad range of internationally mobile individuals, including foreign nationals as well as Turkish citizens returning from abroad who satisfy the statutory eligibility requirements. Depending on the circumstances, the exemption may apply not only to business income generated through foreign companies, but also to certain categories of foreign-source income, such as investment income, rental income, capital gains and other qualifying foreign earnings.
However, the application of the exemption is not automatic. Whether a particular income qualifies depends on a careful analysis of the relevant legislation, the nature and source of the income, the taxpayer’s residency status, the ownership and business structure (where applicable), and the developing administrative guidance. Each case should therefore be assessed individually before relying on the exemption.
What Changed Under Law No.7582?
Law No. 7582, published in the Official Gazette on 4 June 2026, introduced one of the most significant changes to Turkey’s international tax framework in recent years. The legislation added Article 20/D to the Turkish Income Tax Law, establishing a new tax incentive aimed at attraccting internationally mobile individuals, foreign investors and Turkish citizens returning from abroad.
At the heart of the reform is a 20-year exemption from Turkish income tax for qualifying foreign-source income earned by eligible individuals who become tax residents in Turkey and satisfy the statutory conditions. The objective is to encourage individuals to relocate to Turkey without immediately becoming subject to Turkish taxation on their qualifying income.
In addition to the foreign income tax exemption, Law No. 8582 also introduced a preferential inheritance tax regime. Individuals benefiting from Article 20/D may, during the exemption period, benefit from a reduced 1% inheritance and transfer tax on qualifying assets acquired through inheritance. This complementary measure reflects the broader objective of encouraging long-term relocation and wealth preservation in Turkey.
While the legislation establishes the overall legal framework, many practical aspects of its implementation continue to develop through administrative guidance. As a result, careful legal and tax planning remains essential before relying on the new regime.
Who Can Benefit?
Law No. 7582 is not limited to foreign nationals. The regime may also be relevant for Turkish citizens who have been living abroad and are considering returning to Turkey, provided they satisfy the statutory conditions.
In practice, the regime may be relevant for the following categories of individuals:
| Category | Why It May Be Relevant |
|---|---|
| Foreign nationals relocating to Turkey | Individuals who have not previously been resident in Turkey or registered as a taxpayer during the relevant period. |
| Turkish citizens living abroad | Turkish citizens who have lived outside Turkey for the relevant period may also fall within the scope of the regime if they meet the residency and tax registration conditions. |
| Entrepreneurs and business owners | Individuals operating businesses outside Turkey may benefit where their income structure can be properly analyzed and supported as foreign-source income. |
| Investors | Individuals receiving foreign-source dividends, interest, capital gains or other investment income may potentially benefit from the exemption. |
| Digital nomads and remote professionals | Remote workers and consultants may be interested in the regime, although this group requires careful analysis due to income sourcing rules and developing administrative guidance. |
| Retirees | Individuals receiving foreign pension income or other foreign-source passive income may also need to assess whether the exemption can apply to their circumstances. |
The key point is that the regime does not apply automatically simply because a person moves to Turkey. The individual’s prior residence history, tax registration status, source of income and overall structure must be reviewed before relying on the exemption.
Eligibility Requirements
To benefit from the foreign income tax exemption introduced under Article 20/D, several core conditions must be assessed carefully.
Tax Residency in Turkey
The regime is relevant for individuals who become tax residents in Turkey. Under Turkish tax principles, tax residency is generally linked to residence, domicile and physical presence. Therefore, a person planning to relocate to Turkey must first determine whether and when they will become a Turkish tax resident.
This timing is important because the exemption applies to qualifying individuals once they become resident in Turkey and meet the statutory requirements.
The Last Three Calendar Years Requirement
One of the most important conditions is that the individual must not have had residence or tax registration in Turkey during the last three calendar years before becoming resident in Turkey.
This requirement is particularly important for:
- Turkish citizens returning from abroad;
- foreign nationals who previously lived in Turkey;
- individuals who previously held a Turkish tax number or tax registration;
- individuals who spent significant time in Turkey before relocation.
The analysis should not be limited to nationality. A Turkish citizen living abroad may still qualify if the statutory conditions are met, while a foreign national may fail to qualify if they had residence or tax registration in Turkey during the relevant period.
4.3 Domicile and Residence
Domicile and residence are separate but connected concepts. For the purposes of the exemption, it is important to examine whether the individual had a legal or factual residence connection with Turkey during the relevant period.
This may involve reviewing:
- previous residence permits;
- address registrations;
- tax records;
- time spent in Turkey;
- family and economic ties;
- whether the person maintained a permanent home in Turkey.
Each case should be reviewed individually, especially for individuals who frequently travel between Turkey and other countries.
Income Must Be Foreign-Source Income
The exemption applies to qualifying foreign-source income. This means that identifying the source of income is central to the analysis.
Foreign-source income may include, depending on the circumstances:
- foreign dividends;
- foreign interest income;
- foreign rental income;
- capital gains from foreign assets;
- income from foreign businesses;
- certain pension or investment income.
Where the position is uncertain, a Private Tax Ruling (Özelge) from the Turkish Revenue Administration may be considered before implementing the structure.
Conclusion
Law No. 7582 represents one of the most significant developments in Turkey’s tax legislation for internationally mobile individuals in recent years. While the new regime creates valuable opportunities, eligibility depends on each individual’s particular circumstances and should be assessed carefully before any relocation or restructuring takes place.
As the legal framework and administrative practice continue to evolve, obtaining professional advice before relying on the exemption remains essential.
How Zen Law Partners Can Help
At Zen Law Partners, we advise international individuals, entrepreneurs, investors and businesses on relocating to Turkey and navigating the legal and tax implications of the new Article 20/D regime.
Our services include:
- Strategic tax and relocation planning;
- Eligibility assessments under Law No. 7582;
- Written legal assessments tailored to your circumstances;
- Private Tax Ruling (Özelge) applications before the Turkish Revenue Administration;
- Residence permit and immigration services;
- Ongoing legal support for individuals and international businesses relocating to Turkey.
As every case is unique, we recommend obtaining tailored legal advice before making any relocation or tax planning decisions. If you are considering moving to Turkey or would like to assess whether you may benefit from the new 20-year foreign income tax exemption, our team would be pleased to assist you.
Att. İdil Zeynep Yağlıca
30 June 2026
zeynep@zenlawpartners.com
