Türkiye's new tax landscape: what private clients need to know

1. For Residents: Foreign participation exemptions and asset repatriation programme

1.1. Foreign participation exemption

Presidential Decree No. 11257 significantly enhances the foreign participation exemption. It reduces the minimum shareholding threshold, which is one of the conditions for benefitting from foreign participation exemption, from 50% to 20%. This development is particularly significant for private clients holding stakes in foreign companies. The reduced 20% threshold broadens eligibility for both individual and corporate shareholders across a wide range of holding structures, including joint ventures, co-investment platforms, and private equity structures.

The second important change increases the exemption percentage for qualified dividends derived from foreign participations from 50% to 80%. For Turkish tax resident legal entities that are shareholders in foreign entities , the corporate income tax exemption rate on dividend income derived has been increased from 50% to 80%, subject to standard conditions. This meaningful increase reduces the effective tax on qualifying foreign subsidiary income.

For individuals, the existing 50% exemption on qualifying foreign-source dividends continues to apply, subject to standard conditions.

Both changes apply retroactively to tax periods commencing on or after 1 January 2026.

1.2. Asset repatriation programme

According to the newly enacted Law No. 7582, both individual and corporate taxpayers may declare previously undeclared or unrecorded assets to banks or brokerage institutions in Türkiye until 31 July 2027 and benefit from tax audit protection for such assets, provided all conditions are met.

The law aims to encourage taxpayers to repatriate foreign assets to Türkiye and provides an opportunity for taxpayers with undeclared local or domestic assets to regularise their position. By offering a targeted tax audit exemption, the law provides investors with greater certainty regarding their potential tax exposure on such assets.

Which assets are eligible for assets repatriation programme?

Eligible assets include cash, gold, foreign currency, securities, and other capital market instruments.

The declaration and asset regularisation process

The declaration must be made to banks or brokerage institutions located in Türkiye. A difference from previous amnesty programmes is that the Turkish government has chosen to allow declarations to be made directly to banks or brokerage institutions rather than to the tax authority.

Once the declaration has been made, the declared foreign assets must be transferred to accounts opened at Turkish banks or brokerage institutions within two months. Unrecorded assets in Türkiye must be deposited immediately. For the remittance of physical assets—such as gold—evidence that the assets have been remitted to Türkiye must be provided through customs declaration documents..

What are the tax implications?

Declared and repatriated assets are subject to a standard tax rate of 5%, which is withheld by banks or brokerage institutions in Türkiye and paid to the tax authority on behalf of the taxpayers. However, the tax rate may be reduced if assets are committed to investment in certain financial assets, such as government domestic debt instruments, lease certificates, or venture capital investment funds for specified holding periods. Thus, the tax rate is reduced to:

• 0% for 5 years or more investment commitment
• 1% for 4 years or more investment commitment
• 2% for 3 years or more investment commitment
• 3% for 2 years or more investment commitment
• 4% for 1 year or more investment commitment

For declarations made between 1 January 2027 and 31 July 2027, the above tax rates will be increased by 0.5 percentage points. If the declaration period is extended by presidential decree beyond 31 July 2027, the rates will be increased by an additional one percentage point.

Other important aspects

The tax paid is non-deductible and cannot be offset. Losses from disposal of declared assets are also non-deductible. No stamp duty applies to such declarations. An important consideration for corporate taxpayers that keep their books on a balance sheet basis is that they must record the declared assets in their books and open a special fund account. The restrictions on this account apply for two years from notification. During this period, no withdrawals are permitted, except for capital contributions or transfers of the account as part of tax-neutral reorganisations. In addition, the relevant assets will not be subject to taxation upon liquidation of the business. Also, it is important to note that the tax audit protection covers only assets within the scope of the declaration.

2. Internationally mobile individuals considering relocation

2.1. 20-year foreign-sourced income exemption

Türkiye has taken a significant step away from worldwide taxation for 20 years on foreign-sourced income for some individuals who relocate to Türkiye. The new regime is particularly relevant for HNWIs and UHNWIs seeking to relocate, either permanently or temporarily, given the uncertainties around global tax policies and residency requirements.

Law No. 7582 introduces a 20-year income tax exemption on all foreign-sourced income and gains for individuals who become resident in Türkiye, provided they did not have tax residency in Türkiye during the three calendar years immediately preceding the year in which they first become resident. The provision applies to individuals deemed resident in Türkiye from 1 January 2026 onwards.

During this time, foreign income is not declared in Türkiye and is fully excluded from any tax rate calculations. Under progressive taxation, only Turkish-source income is subject to personal income tax at rates ranging from 15% to 40%. Foreign income covered by the 20-year exemption is ignored when determining the applicable marginal tax bracket.

How does the application process work?

To qualify for the exemption, individuals must apply for an exemption certificate from the tax authority by the end of the calendar year in which they become resident (or by the end of the second month of the following year if they become resident in the last two months of the calendar year). The tax authority will verify that the applicant had no tax residency in Türkiye during the three preceding calendar years.

It should be noted, however, that prior income tax liability arising solely from Türkiye-sourced income on real property, securities, or capital gains will not prevent an individual from qualifying for the exemption. This means that individuals who previously held Turkish real estate or securities and paid tax on the related income may still qualify for the exemption on foreign-sourced income going forward. However, if the income liability arises from employment income, it could prevent such an individual from qualifying for the exemption, necessitating a case-by-case analysis to determine entitlement.

Scope of the exemption

The exemption applies exclusively to foreign-sourced income and gains; Türkiye-sourced income remains fully taxable. For example, an individual benefiting from the exemption who earns rental income from a Turkish property must continue to declare and pay tax on that income, whilst foreign rental income is exempt. Also, as it is mentioned in the draft Communiqué, if the individual benefiting from the exemption provides services from Türkiye to non-Turkish residents, such income would not benefit from exemption, will be considered Türkiye-sourced income and remains fully taxable in Türkiye.

Inheritance tax benefits

The regime also provides reduced inheritance tax on worldwide assets during the exemption period, with a preferential 1% rate applying. This is a significant departure from the progressive rates ordinarily applicable, which currently reach up to 10% for sizeable assets. This adds a meaningful succession planning dimension for private clients relocating to Türkiye.

Practical examples (from draft Communiqué No: 333)

Example 1: An individual who relocates to Türkiye on 12 May 2028 and has previously owned a Turkish apartment generating rental income (on which tax was paid) may still obtain the exemption certificate, provided they had no tax residency in Türkiye during 2025, 2026, and 2027. The prior real property income does not disqualify them from the exemption on foreign-sourced income.

Example 2: For an individual with residency in the United Arab Emirates who relocates to Türkiye on 15 September 2028. During 2025, 2026, and 2027, this individual had no tax residency or domicile in Türkiye. They may apply for the exemption certificate by the end of 2028. Once obtained, they can exclude all foreign-sourced income (such as dividends from foreign companies, rental income from properties outside Türkiye, and capital gains on foreign investments) from their Turkish tax return, whilst remaining subject to tax on any Turkish-sourced income.

Example 3: For an individual benefiting from the exemption earns income from multiple sources: rental income from a Turkish property (€50,000), dividend income from a Spanish company (€100,000), and rental income from a property in Monaco (€80,000), only the Turkish rental income is subject to Turkish tax. The Spanish dividends and Monaco rental income are exempt and should not be included in the Turkish tax return.

Example 4: For an individual considered resident in Turkey as of 23 July 2028 who received salary income during the 2026 calendar year from an employer based in Turkey. The salary income was subject to withholding taxes. Because this individual obtained salary income within the three calendar years preceding their classification as resident in Turkey (and was classified as a limited liability taxpayer during that time, and the nature of income is not mentioned above), an exemption certificate cannot be issued, and they will not be able to benefit from the exemption.

Important considerations

For individuals considering structuring their affairs in reliance on this regime, the long-term nature of the exemption makes legal certainty and the protection of acquired rights especially critical. Before considering relocation, it is advisable to undertake proper wealth planning and to consider potential tax exposure, either exit tax or inheritance tax in the event of death, from the perspective of the home country.

Additionally, individuals should carefully consider the legal requirements for obtaining a residence permit in Türkiye, as this is a prerequisite for establishing tax residency and qualifying for the exemption.

Also, in practice, similar to the abolished UK Non-Dom regime, financial institutions may need to segregate accounts of individuals benefiting from the 20-year tax exemption to ensure foreign-sourced income and Turkish-sourced income are separated. This is important because taxpayers would generally declare only their Turkish-sourced income.

3. For families and businesses seeking a regional hub

3.1. Qualified service centres

Law No. 7582 introduces a new framework for "qualified service centres" under the Turkish Foreign Direct Investment Law. A qualified service centre carries out specified qualifying activities including financial advisory, strategic management, treasury management, funding, budgeting, reporting, compliance, audit, digital transformation, legal advisory, investment and data analytics, branding, HR, training, procurement, technical support, and R&D coordination.

Establishing a Qualifying Service Provider

To qualify, a service provider must satisfy three core requirements. First, it must be structured as a capital company serving related entities or a corporate group. Second, it must maintain active operations across at least three countries. Third, at least 80% of its annual revenue must derive from providing qualified services to foreign parties.

What are the benefits of the qualified service center regime?

Corporate taxpayers providing qualified services within the qualified service centre regime could benefit from a 95% deduction in corporate income tax base for income derived exclusively from abroad. Alternatively, a 100% deduction applies for those operating in the Istanbul Financial Centre or designated industry zones. This deduction is valid for 20 accounting periods from the commencement of operations. The deduction applies only if income is remitted to Türkiye by the tax return deadline. Corporate income tax incentives are effective from 1 January 2026 tax periods onwards.

Special incentive for employment

In addition to the corporate tax deduction, there is a special incentive for salaries paid to qualified personnel working to provide qualified services. Salaries paid to qualified service personnel are exempt from income tax for up to three times the gross minimum wage (approximately 99,090 TL – about 1,850 euros – per month in 2026). For qualified service centers operating within the Istanbul Financial Centre or in designated industrial zones, this exemption is enhanced to five times the gross minimum wage (approximately 165,150 TL – about 3,075 euros – per month in 2026). This salary exemption also extends to stamp tax, providing additional cost savings for employers.
For salaries exceeding these thresholds, the portion above the exemption limit is subject to income tax at the applicable progressive tax rates.

Practical examples

Example 1 – Qualified service centre with standard incentives: A multinational family group establishes a qualified service centre (assume it is a single family office) in Istanbul to provide treasury, financial reporting, and compliance services to its operating companies in Germany, France, and Spain. The centre earns 10 million TL – about 190,000 euros – in foreign-sourced income from these services. Provided the income is transferred to Türkiye by the tax return deadline and all other conditions are met, 95% of this income (9.5 million TL – about 176,000 euros – ) is deductible from the centre's corporate income tax base. Additionally, qualified personnel employed at the centre earning up to three times the gross minimum wage (approximately 99,090 TL – about 1,850 euros – per month in 2026) are exempt from income tax on that portion of their salary.

Example 2 – Qualified service centre in Istanbul financial centre: A single family office operating as a qualified service centre within the Istanbul Financial Centre with a participant certificate provides investment advisory, strategic planning, and fund management services to related entities in the United States, Singapore, and the United Kingdom. The centre earns 15 million TL – about 280,000 euros – from these activities. Because it operates within the Istanbul Financial Centre, 100% of this income (rather than 95%) is deductible from the corporate income tax base, provided it is transferred to Turkey by the tax return deadline. Qualified personnel at this centre benefit from an enhanced salary exemption: income tax is exempt on salaries up to five times the gross minimum wage (approximately 165,150 TL – about 3,075 euros – per month in 2026).

Relevance for families and businesses

This framework is of particular relevance for high-net-worth families considering Türkye as hub for a single family office or a similar structure to provide intra-group services across multiple jurisdictions. It is also equally relevant for financial institutions, banks, and other businesses seeking to set up a regional hub for coordination, treasury, shared services, and management functions serving foreign group companies.

Deloitte's View

In combination, Presidential Decree No. 11257 and Law No. 7582 effect a step change in Türkiye's private client and investment tax landscape.

1. For HNWIs already based in Türkiye, the enhanced foreign participation exemption and asset repatriation programme offer a timely opportunity to review existing structures and consider whether remitting unreported foreign income and/or assets may now be advantageous. We recommend that HNWIs planning to benefit from these initiatives communicate with their advisers to assess the scope and implications, as asset review requirements should be evaluated on a case-by-case basis.
2. For internationally mobile individuals, the 20-year foreign-sourced income exemption, coupled with the flat 1% inheritance tax rate, positions Türkiye as a competitive jurisdiction globally for inbound relocation. Given the uncertainties around the world and the Middle East, in particular, the 20-year foreign-sourced income exemption could present an appealing opportunity for both mid-term and long-term planning. However, the consequences of relocation may extend to home jurisdictions, including potential exit tax exposure or complications arising from dual tax residency status if tax residency in the home country has not been properly ceased. We recommend that private clients engage with their advisers promptly to assess how these measures interact with their broader objectives before taking action.
3. For families and businesses, the qualified service centre framework and expanded Istanbul Financial Centre incentives provide a commercially workable route for locating family office, treasury, and regional coordination functions in Türkiye. However, location selection should not be based solely on tax considerations. A comprehensive assessment is essential, taking into account regulatory requirements, general tax considerations including the effective tax rate, Pillar 2 and qualified domestic minimum top up tax implementations, access to qualified human resources, alignment with wider family or business plans, compliance and reporting obligations, and other operational factors. We recommend that families and businesses work closely with their advisers to evaluate Türkiye as a location from all these perspectives before committing to establishing operations there.
   

This article is co-authored by Yuce Cagatay, Partner Tax, Deloitte Türkiye