Turkey has moved one of its most closely watched tax reforms a significant step forward.
On May 21, 2026, Turkey’s Parliament passed legislation granting eligible new residents a 20-year exemption from Turkish taxation on qualifying foreign-source income, alongside a preferential 1% inheritance and gift tax rate. The measure forms part of a broader reform package announced by President Recep Tayyip Erdoğan earlier this year to attract international capital, businesses, and globally mobile individuals.
The proposal attracted significant attention when it was first unveiled, largely because of its duration. Once published in the Official Gazette and brought into force, the regime would offer one of the longest foreign income tax exemptions currently available to new residents in Europe.
The legislative process is not yet complete. Erdoğan now has 15 days to promulgate the law and publish it in the Official Gazette. Once published, the focus will shift from parliamentary approval to practical implementation, including how Turkey defines qualifying residents, foreign-source income, and compliance requirements.
For investors, entrepreneurs, and internationally mobile families, the legislation represents a notable development. It introduces a long-term tax incentive that could become an important consideration for those evaluating relocation, residency, and investment opportunities in Turkey.
What Has Turkey’s Parliament Passed?
Turkey’s Parliament has passed legislation introducing a 20-year exemption from Turkish taxation on qualifying foreign-source income and gains for individuals who relocate to Turkey and meet the eligibility requirements.
Reuters reported that the wider legislative package also includes corporate tax reductions, incentives for repatriating assets held abroad, and extended tax advantages for certain financial services exports.
For qualifying individuals, the headline benefit is straightforward: eligible foreign-source income and gains will not be subject to Turkish income tax for up to 20 years.
This is a significant change because Turkish tax residents are generally subject to taxation on their worldwide income. The new regime creates a special exception for qualifying new residents by distinguishing foreign-source income from Turkish-source income.
Who Qualifies for the 20-Year Tax Holiday?
According to details reviewed by PwC Turkey, the regime applies to individuals who have not been domiciled in Turkey and have not been subject to Turkish tax liability during the previous three calendar years.
The framework is designed to attract individuals relocating to Turkey after a period outside the Turkish tax system.
The key eligibility criteria include:
- The individual must not have been domiciled in Turkey during the previous three calendar years.
- The individual must not have had Turkish tax liability during the previous three calendar years.
- The individual must meet the requirements established under the new framework.
Further guidance will be important in clarifying how domicile, tax liability, and residency status will be assessed in practice.
What Income Is Exempt?
The exemption applies to qualifying foreign-source income.
At this stage, further implementation guidance will be important in clarifying how foreign-source income will be defined and administered in practice. The legislation establishes the principle of a foreign-source income exemption, but investors and advisors will be looking for additional details once the law is formally published and supporting guidance is issued.
What is clear is that the exemption does not extend to Turkish-source income.
Income earned within Turkey remains subject to the country’s existing tax framework. Domestic income continues to be taxed at progressive rates ranging from 15% to 40%.
The 1% Inheritance and Gift Tax Rate
The legislation also reduces inheritance and gift tax for qualifying individuals to a flat 1%.
Under Turkey’s standard inheritance and gift tax framework, rates increase progressively depending on the value transferred and can reach as high as 30%.
The new rate therefore represents a substantial reduction and may be particularly relevant for high-net-worth families considering succession planning, estate planning, and intergenerational wealth transfers.
For many internationally mobile families, tax planning extends beyond annual income. The treatment of inherited and gifted assets can play an important role in long-term jurisdictional decisions.
Part of a Wider Investment Package
Turkey’s personal tax incentive is not an isolated measure.
Reuters reported that the same legislative package reduces the corporate tax rate for manufacturing companies from 25% to 12.5%, introduces a scheme allowing money, gold, foreign exchange, and securities held abroad to be brought into Turkey until July 31, 2027, and extends a 100% corporate tax exemption on financial services export income at the Istanbul Financial Centre until 2047.
PwC’s review of the draft legislation also highlighted measures involving qualified service centers, Istanbul Financial Center incentives, reduced corporate taxation, and provisions designed to encourage capital currently held abroad to return to Turkey.
Taken together, the package extends beyond individual taxation and includes a range of measures affecting businesses, exporters, financial services activities, and assets held outside the country.
What Could This Mean for Turkey’s Citizenship by Investment Program?
Turkey already operates an established Citizenship by Investment Program, including a real estate investment route that continues to attract international applicants.
The new tax regime introduces an additional consideration for investors evaluating Turkey.
Citizenship, residence, and tax residency are separate concepts. An individual can hold Turkish citizenship without becoming a Turkish tax resident, and a person can become a Turkish tax resident without pursuing citizenship.
For investors considering relocation, however, the new framework may increase Turkey’s appeal beyond citizenship and real estate considerations alone.
Previously, Turkey’s investment migration offering was often discussed in the context of real estate investment, citizenship acquisition, family inclusion, and its strategic location. The 20-year foreign income tax holiday adds a new tax consideration for investors evaluating Turkey as a potential long-term base.
