Turkey 2026: 20‑year Foreign‑income Tax Exemption & Asset Repatriation, a Commercial Guide

Law No. 7582, published in the Resmî Gazete on 4 June 2026 (Official Gazette No. 33270), fundamentally reshapes the foreign income tax exemption Turkey offers to qualifying new residents and returning citizens. The legislation introduces two headline measures: a 20‑year exemption from Turkish income tax on foreign‑source earnings for eligible individuals, and a parallel asset‑repatriation regime, widely known as “Asset Peace” or the wealth amnesty 2026, that permits taxpayers to declare overseas holdings at favourable rates. Together, these provisions create an immediate decision window for multinational employers considering executive relocation, private investors weighing capital repatriation, and corporate groups restructuring inbound holdings.

This guide translates the tax mechanics into the commercial, payroll, immigration and contract‑drafting actions that CFOs and General Counsels need to execute now.

Executive Summary and TL;DR Decision Checklist

Before diving into statutory detail, here is the three‑point decision framework for senior leadership teams:

1. Qualify. The 20‑year expatriate tax exemption Turkey now offers applies only to individuals who become Turkish tax residents on or after 1 January 2026 and who were not tax‑resident in Turkey during the preceding three calendar years. Foreign‑source dividends, capital gains, rental income, royalties and salary earned abroad all fall within scope, but any Turkish‑source income remains fully taxable under ordinary progressive rates.
2. Act on repatriation. The Asset Peace window opened on 4 June 2026. Under the General Tebliğ (Seri No:1) issued by the Gelir İdaresi Başkanlığı (GIB) on 4 July 2026, taxpayers may declare foreign‑held cash, foreign currency, gold, equities and bonds via the EK‑1 form filed through a Turkish bank or intermediary institution. Applicable tax rates range from 0 % to 5 %, depending on whether declared assets are converted into Turkish lira and held for prescribed periods.
3. Red flags. Turkish‑source income is excluded from the exemption. Controlled‑foreign‑company (CFC) rules still apply. Anti‑money‑laundering checks remain in force for all repatriated assets. Employers who restructure payroll without updating withholding schedules risk back‑assessments and penalties.

The sections below unpack each of these points and convert them into actionable checklists, contract language guidance and due‑diligence protocols.

How Law No. 7582 Works, Headline Changes in Plain Language

The 20‑Year Foreign‑Income Exemption

Law No. 7582 amends the Income Tax Law (Gelir Vergisi Kanunu) to insert a new provision granting a blanket exemption from Turkish income tax on all foreign‑source income for a continuous period of 20 tax years. The exemption starts from the calendar year in which the individual first becomes a Turkish tax resident. During this period, dividends received from non‑Turkish companies, capital gains on foreign securities, offshore rental income, interest from foreign bank accounts and salary paid by a non‑Turkish employer for work performed outside Turkey are all excluded from the Turkish tax base. Turkish‑source employment income, Turkish rental income and gains on Turkish assets remain taxable at normal progressive rates (up to 40 %).

Inheritance and Transfer Tax Relief

An accompanying amendment reduces the inheritance and transfer tax rate to a flat 1 % on foreign‑source assets transferred by individuals benefiting from the 20‑year exemption. This measure is designed to encourage not only relocation but also longer‑term wealth structuring in Turkey, and it applies to gratuitous transfers, including gifts and bequests, made during the exemption period.

Asset Repatriation, Varlık Barışı at a Glance

The asset peace Turkey regime under Law No. 7582 adds Temporary Article 19 to the Corporate Tax Law and creates a parallel pathway for individuals. The reporting window opened on 4 June 2026 and, per the implementing tebliğ, runs through 31 July 2027. Declared assets that are repatriated and converted into Turkish lira, then held for at least one year, attract a 0 % tax rate. Assets declared but retained in foreign currency or kept abroad attract rates of up to 5 %. Below is a simplified timeline of the key legislative milestones.

Who Qualifies for the Foreign Income Tax Exemption Turkey Offers

The Three‑Year Non‑Residence Test

The core eligibility gate is a retrospective residency check. To claim the exemption, an individual must demonstrate that they were not a Turkish tax resident during the three full calendar years immediately preceding the year in which they first establish Turkish tax residency. For someone relocating to Turkey in 2026, this means they must not have been tax‑resident in Turkey in 2023, 2024 or 2025. Turkish nationals returning from abroad can qualify, provided they meet this test, nationality is not a disqualifying factor.

Income Types Covered

• Dividends and profit distributions from non‑Turkish entities
• Capital gains on foreign‑listed or privately‑held securities and real estate outside Turkey
• Salary and employment income paid by a non‑Turkish employer for services rendered abroad
• Rental income from foreign real property
• Interest and royalties sourced outside Turkey
• Passive investment income (fund distributions, insurance proceeds) earned offshore

What Is Excluded

Any income sourced from Turkey, employment in a Turkish company, rent from Turkish property, gains on Borsa İstanbul‑listed securities, remains subject to standard Turkish income tax. The exemption is designed to attract capital and talent inbound; it does not shelter domestic earnings.

Practical Fact Patterns

• Expatriate CEO. A UK‑resident executive who has never been a Turkish tax resident relocates to Istanbul in September 2026. Their London‑sourced portfolio income, US dividends and deferred compensation from their prior employer all fall within the 20‑year exemption. Their new Turkish‑contract salary does not.
• Returning Turkish citizen. A Turkish national who has lived and paid taxes in Germany since 2019 returns in March 2026. They pass the three‑year non‑residence test. Their German rental income and Swiss bank interest become exempt for 20 years once they re‑establish Turkish tax residency.
• Digital nomad. A freelance developer who becomes tax‑resident in Turkey in 2026, having spent the prior three years in Portugal, can exempt all client fees received from non‑Turkish clients for foreign‑performed work. However, fees from Turkish clients remain taxable.

How to Claim the Exemption, Procedural Steps and Documentation

Tax Registration and Residency Confirmation

Qualifying individuals must register with the local tax office (vergi dairesi) in their district of residence. At registration, they should declare their intention to claim the foreign income tax exemption Turkey provides under Law No. 7582 and submit documentation proving non‑residence during the three preceding calendar years. Accepted evidence typically includes foreign tax residence certificates, de‑registration confirmations from foreign tax authorities and passport entry/exit stamps.

Required Forms and the EK‑1 Declaration

The GIB General Tebliğ (Seri No:1) prescribes the EK‑1 form as the standard declaration for asset repatriation. For the income‑exemption claim itself, individuals must file their annual income‑tax return separating exempt foreign‑source income from taxable Turkish‑source income. The EK‑1 form is relevant when the individual also wishes to repatriate foreign assets under the wealth amnesty 2026 provisions. The form is filed through a Turkish bank or licensed intermediary institution, not directly with the tax office.

Employer Payroll Steps

Where the relocating individual is employed by a Turkish entity, the employer must adjust payroll withholding to reflect two streams: taxable Turkish‑source salary (subject to standard withholding at progressive rates) and exempt foreign‑source components (for example, retained overseas board fees or deferred compensation). Employers should obtain written confirmation from the individual’s tax adviser that the three‑year non‑residence test is satisfied before adjusting withholding schedules.

Deadlines at a Glance

Annual income‑tax returns in Turkey are due by 31 March of the following year. Individuals claiming the exemption for the 2026 tax year must file by 31 March 2027 and segregate exempt income. For the asset‑repatriation track, the EK‑1 declaration deadline is 31 July 2027.

Asset Repatriation (Wealth Amnesty), Mechanics, Rates and Bank Process

What Assets Qualify

The repatriation of assets Turkey now facilitates covers a broad range of holdings:

• Cash and foreign currency held in overseas bank accounts
• Gold and precious metals held abroad or in foreign vaults
• Equities, bonds and fund units held through foreign brokerages
• Domestic assets that were previously unrecorded on the taxpayer’s Turkish balance sheet

The Reporting Window

Under the GIB General Tebliğ (Seri No:1), the reporting window runs from 4 June 2026 to 31 July 2027. Declarations made after 31 July 2027 will not qualify for the preferential rates unless the government exercises its statutory power to extend the window.

Tax Rates by Holding Commitment

Bank and Intermediary Process

The EK‑1 form must be submitted to a Turkish bank or capital‑markets intermediary, not directly to the GIB. The receiving bank verifies identity, applies anti‑money‑laundering checks (including MASAK screening) and transmits the declaration to the relevant tax office within five business days. The taxpayer pays the applicable tax to the bank, which remits it to the Treasury. Once the tax is paid, declared assets receive a legal shield: they cannot be used as a basis for tax audits or assessments regarding prior periods.

AML Safeguards

Despite the favourable rates, asset peace Turkey declarations remain subject to full anti‑money‑laundering scrutiny under Law No. 5549 and MASAK (Financial Crimes Investigation Board) regulations. Banks may refuse declarations where the source of funds cannot be substantiated, and MASAK retains authority to investigate suspicious transactions independently of the amnesty.

Commercial Implications, Employers, Relocation and the HR Checklist

Secondment vs. Local Hire

The tax incentives for foreigners Turkey has introduced change the cost calculus for multinational employers. A seconded executive who remains on a foreign payroll, with their foreign‑source salary exempt for 20 years, may be materially cheaper to deploy than a locally hired executive whose full salary is subject to Turkish withholding. However, the secondment route triggers questions around permanent establishment, social‑security treaty coordination and Turkish labour‑law compliance. Employers should model both scenarios before committing.

Immigration, Social Security and Benefits

Relocation to Turkey requires a work permit (for non‑Turkish nationals) and enrolment in the Turkish social‑security system (SGK). The following checklist summarises the key steps:

• Work permit. Apply through the Ministry of Labour and Social Security; processing takes 30–60 days. Exempt‑income status does not waive work‑permit requirements.
• SGK registration. Employees must be registered with SGK within 30 days of their employment start date. Employer and employee social‑security contributions apply regardless of the income‑tax exemption.
• Bilateral social‑security agreements. Turkey has agreements with over 30 countries. Where applicable, a certificate of coverage from the home country may exempt the employee from Turkish SGK contributions for up to five years.
• Residence permit. Non‑Turkish nationals need a residence permit. This is typically obtained alongside (or as a consequence of) the work permit.

Remuneration Packaging and Contract Drafting

Employment contracts for relocating executives should be updated to reflect the dual‑income structure. Key drafting considerations include:

• Gross‑up clauses. If the employer guarantees a net salary, the contract must specify which income streams are expected to be exempt and allocate the tax risk if the exemption is later challenged.
• Indemnity provisions. Include indemnities covering the employer’s exposure if the three‑year non‑residence test is found not to have been met and back‑taxes are assessed.
• Share‑plan treatment. Equity awards vesting during the exemption period may or may not qualify as “foreign‑source” depending on where the services were performed. Contracts should allocate this risk explicitly.
• Clawback mechanics. If the employee leaves Turkey before completing a minimum residency period, the employer may wish to claw back relocation costs. Tie clawback to actual tax benefit realised.

Structuring Inbound Investment and Tax Planning for the Foreign Income Tax Exemption Turkey Provides

When to Restructure Holdings

Inbound investor tax Turkey planning now centres on a key timing question: should foreign holding structures be liquidated and assets repatriated under the amnesty, or retained offshore while the investor benefits from the 20‑year exemption on foreign‑source income? The answer depends on the investor’s exit horizon, the applicable double‑tax treaty network and whether the assets generate active business income (which may trigger CFC rules) or passive returns (which are cleanly exempt).

Controlled Foreign Company Considerations

Turkey’s CFC rules (Article 7 of the Corporate Tax Law) attribute the undistributed profits of low‑taxed foreign subsidiaries to the Turkish‑resident shareholder. The 20‑year exemption does not override CFC attribution. Industry observers expect the Revenue Administration to issue further guidance clarifying the interaction between the two regimes. Until then, investors holding controlling stakes in offshore entities should assume that CFC income remains taxable in Turkey and plan accordingly.

Permanent Establishment Risk

Relocating senior decision‑makers to Turkey may inadvertently create a permanent establishment for their foreign employer. If the executive has authority to conclude contracts on behalf of the foreign entity, Turkey could assert taxing rights over the entity’s profits. This risk should be assessed and mitigated, through limited powers of attorney, dual‑signature requirements or restructured reporting lines, before the relocation takes effect.

Holdco Structuring

The likely practical effect of Law No. 7582 will be to accelerate the use of Turkey as a regional holding‑company jurisdiction. An individual who relocates to Turkey and receives dividends from a Dutch or UK intermediate holding company can do so tax‑free for 20 years. Combined with Turkey’s extensive double‑tax treaty network (over 85 treaties in force), this creates a compelling structure for investors managing Middle Eastern, Central Asian or African portfolios. Legal counsel should map the treaty network against the investor’s asset locations and model withholding‑tax leakage at each level.

M&A, Due Diligence and Commercial Contracts

Due‑Diligence Checklist for Declared Assets

In any acquisition of a Turkish target, or of a business owned by a Turkish‑resident individual, the buyer must now inquire whether the seller has declared assets under the wealth amnesty 2026 regime. Key DD items include:

• Has the seller filed an EK‑1 declaration? If so, obtain a copy and verify the tax was paid.
• Were all foreign assets disclosed, or do undeclared assets remain that could trigger future audits?
• Has the one‑year holding commitment (for the 0 % rate) been met, or is it still running?
• Is there any pending MASAK investigation related to the declared assets?

Representations, Warranties and Purchase‑Price Adjustments

Transaction documents should include:

• Tax compliance warranty. The seller warrants that all asset‑repatriation declarations are accurate and complete, all applicable taxes have been paid, and no audit or investigation is pending.
• Purchase‑price adjustment. If post‑closing audits reveal undeclared assets or incorrectly claimed amnesty rates, the buyer should have a right to adjust the purchase price or claim against an escrow.
• Escrow and holdback. A portion of the purchase price (typically 5–10 %) should be held in escrow for 12–18 months to cover potential tax assessments arising from the amnesty declarations.

Disclosure Drafting

Sellers should be required to disclose all EK‑1 filings and related correspondence in the data room. For the international commercial law practitioner advising on cross‑border deals, the interaction between Turkish amnesty declarations and foreign anti‑avoidance rules (such as GAAR or CRS reporting) must be mapped jurisdiction by jurisdiction.

Compliance, Timelines and Penalties, Reporting Obligations by Actor

The table below summarises who must file, what they file and the key timing for each category of actor under Law No. 7582 and the GIB General Tebliğ (Seri No:1).

Penalties for non‑compliance follow the standard Turkish tax penalty regime: a 50 % late‑filing surcharge on underpaid tax, plus interest calculated at the legally prescribed monthly rate. In cases of deliberate misrepresentation, criminal sanctions under Article 359 of the Tax Procedure Law may apply.

Conclusion and Recommended Next Steps

Law No. 7582 represents the most significant tax incentive for foreigners Turkey has offered in decades. For multinational employers, inbound investors and returning Turkish nationals, the foreign income tax exemption Turkey now provides, combined with the asset‑repatriation regime, opens a narrow but high‑value planning window. Decision‑makers should act on the following five‑step plan:

1. Screen eligibility. Confirm whether each potential relocating individual passes the three‑year non‑residence test and map their income sources (foreign vs. Turkish).
2. Model the numbers. Run parallel cost models for secondment, local hire and hybrid structures, factoring in SGK, immigration costs, gross‑up exposure and the 20‑year exemption benefit.
3. File EK‑1 declarations early. If repatriating assets, file through a Turkish bank before the 31 July 2027 deadline; prioritise TRY conversion for the 0 % rate.
4. Update contracts. Amend employment agreements, share‑plan documentation and investor side letters to reflect dual‑income structures, indemnities and clawback mechanics.
5. Integrate into M&A DD. For any pending or anticipated transaction involving a Turkish target, add amnesty‑declaration diligence to the DD checklist and build price‑adjustment and escrow protections into transaction documents.

Early movers will capture the full benefit of the 20‑year window. The asset‑repatriation route, in particular, is time‑limited, and the most favourable rates require prompt action and TRY conversion. The Global Law Experts lawyer directory connects businesses with qualified Turkish commercial counsel who can advise on structuring, compliance and transactional implementation.

Sources

1. Resmî Gazete, Law No. 7582 (Official Gazette No. 33270, 4 June 2026)
2. Gelir İdaresi Başkanlığı (GIB), Announcement re: Law No. 7582
3. Gelir İdaresi Başkanlığı, General Tebliğ (Seri No:1) on Asset Repatriation
4. TÜRMOB, Resmî Gazete No. 33270 (backup official publication)
5. Invest in Türkiye, Tax Guide
6. TBMM (Grand National Assembly), Law Record for Law No. 7582