Income Tax Exemption for Twenty Years and the Requirement to Be Deemed Resident in Türkiye
Introduction
Repeated Article 20/D of Income Tax Law No. 193 (“ITL”), introduced by Article 4 of Law No. 7582 on Amendments to Certain Laws dated 21 May 2026, provides, subject to certain conditions, for a twenty-year income tax exemption for income and gains derived outside Türkiye by individuals deemed resident in Türkiye. The procedures and principles governing the exemption are set out in Income Tax General Communiqué No. 333 (“Communiqué”), published in the Official Gazette dated 4 July 2026 and numbered 33300.[1]
The exemption applies to individuals deemed to have become resident in Türkiye on or after 1 January 2026. One of the key conditions is that the individual must not have been domiciled in Türkiye or, as a general rule, subject to tax in Türkiye during the three calendar years preceding the date on which they are deemed to have become resident in Türkiye. This requirement raises significant questions of interpretation for individuals who have an officially registered address in Türkiye but live abroad in practice.
The private tax ruling issued by the Istanbul Revenue Office on 13 October 2026 under reference No. E-62030549-120-1372289 (“Ruling”) addresses the relationship between address registration records and actual living circumstances in determining the date on which an individual is deemed to have become resident. After outlining the key conditions of the exemption and the concept of residence, this article examines the scope of the Ruling, its evidentiary aspects and its interaction with immigration law.[2]
Scope of the Exemption and Eligibility Conditions
Repeated Article 20/D of the ITL applies solely to individuals. Income and gains derived outside Türkiye fall within the scope of the exemption, while Turkish-source income is taxed under the general provisions. No annual income tax return is required for exempt income; where a return is filed for other income, exempt income is not included in that return. Expenses and costs relating to exempt income are not taken into account in determining taxable income in Türkiye. Taxes paid abroad on such income cannot be credited against income tax assessed in Türkiye.
The Law expressly provides that existing tax registrations arising from income from immovable property, income from movable capital or capital gains derived in Türkiye before becoming eligible for the exemption do not prevent an individual from benefiting from it. Accordingly, it is necessary to examine not only whether a tax registration exists, but also the category of income from which it arises.
Individuals wishing to benefit from the exemption must apply to the tax office authorized to assess their tax and obtain a “Certificate of Exemption for Income and Gains Derived Abroad”. As a general rule, the application must be submitted by the end of the calendar year in which the individual is deemed to have become resident in Türkiye. For individuals deemed to have become resident in November or December, the deadline is extended to the end of February of the following year. The tax office examines the applicant’s domicile and taxpayer status during the preceding three calendar years, whether the applicant meets the condition of being deemed resident in Türkiye as at the application date, and whether the application has been submitted within the prescribed period.
Deemed Residence in Türkiye and the Determination of Domicile
Since Repeated Article 20/D of the ITL does not separately define deemed residence, the general principles set out in Article 4 of the ITL apply. Accordingly, individuals who are domiciled in Türkiye or who stay in Türkiye for more than six months within a calendar year, disregarding temporary absences, are deemed resident in Türkiye. These two criteria apply as alternatives. Article 5 of the ITL sets out exceptions for certain temporary stays. [3]
Article 19 of the Turkish Civil Code, to which Article 4 of the ITL refers, defines domicile as the place where an individual resides with the intention of remaining permanently. Accordingly, the legal determination of domicile cannot be reduced to a review of administrative records alone. Where an individual actually lives and the circumstances demonstrating their intention to settle become particularly relevant where registered information differs from the actual situation. Nevertheless, address registration remains relevant; any discrepancy must be explained with concrete evidence.[4]
Assessment of the Ruling Dated 13 October 2026
The applicant stated that they had settled in Türkiye as of 24 August 2026 and asked whether their actual center of life, intention to settle, periods of presence in Türkiye and other concrete evidence could be taken into account alongside their domicile records in Türkiye when determining the date on which they were deemed to have become resident. The tax authority assessed the matter under Article 4 and Repeated Article 20/D of the ITL and Article 19 of the Turkish Civil Code.
The Ruling states that Turkish citizens who, despite having a registered domicile in Türkiye, substantiate that they have lived abroad for more than six months under a residence or work permit may, in principle, be regarded as having their domicile abroad. It therefore indicates that having a registered address in Türkiye does not, on its own, mean that the condition of having no domicile in Türkiye during the preceding three calendar years has been breached. However, individuals must also document that they permanently returned to Türkiye and became deemed resident on or after 1 January 2026.
The Ruling is significant in indicating that automatic conclusions should not be drawn solely from address registration. However, the tax authority’s approach is framed by explanations concerning Turkish citizens who document that they have lived abroad under a work or residence permit. It would therefore be inappropriate to extend this assessment directly to all individuals with different citizenship and residence statuses. The fact that private tax rulings concern specific applications and factual circumstances must also be taken into account.
Relationship Between Tax Residence and Immigration Status
Obtaining a residence permit in Türkiye is not a separate statutory prerequisite for establishing tax residence under Article 4 of the ITL. For tax purposes, deemed residence is determined by reference to the criteria concerning domicile or presence in Türkiye under the relevant legislation. In practice, however, the circumstances surrounding foreign individuals’ lawful presence and actual settlement in Türkiye may overlap with the facts relevant to assessing tax residence.
For this reason, it would be appropriate to assess residence permits, actual residence, address registration records and the tax residence position asserted in a consistent manner. Although such coordination does not, in itself, create an entitlement to the exemption, it may assist in providing evidence in future disputes. The role of foreign residence or work permits in documenting actual living circumstances in the Ruling also illustrates the importance of this distinction.
Subsequent Review and the Importance of Evidence
Repeated Article 20/D of the ITL provides that, if it is subsequently established that the exemption conditions were not met, any tax that was not accrued will be deemed to constitute a tax loss. Accordingly, obtaining an exemption certificate does not entirely rule out a subsequent examination of whether the initial conditions were satisfied. It is important to support the applicant’s residence status at the time of application and the records relating to the preceding three calendar years with appropriate documentation.
A distinction must, however, be drawn between the initial conditions not having been met in the first place and a change in the individual’s residence status after they have started benefiting from the exemption. In the latter case, the tax treatment may be assessed separately under the general provisions in light of the changed status. The twenty-year exemption period increases the practical importance of this distinction and of documenting the grounds for the application.
Conclusion
The exemption introduced by Repeated Article 20/D of the ITL represents a significant tax measure for individuals settling in Türkiye. Its application nevertheless requires careful examination not only of whether the income is foreign-source, but also of the date on which the individual is deemed to have become resident in Türkiye and the conditions relating to the preceding three calendar years.
The Ruling dated 13 October 2026 demonstrates that, for certain individuals who have a registered address in Türkiye while actually living abroad, the administrative record may not, on its own, be decisive.
Accordingly, although deemed residence under tax law and a residence permit under immigration law are distinct legal concepts, consistency between the underlying facts and supporting documentation will be important. In view of possible examinations during the twenty-year period, accurately determining and documenting the date of settlement and the conditions relating to prior periods at the outset will be important for legal predictability.
- Income Tax Law No. 193, Repeated Article 20/D; Income Tax General Communiqué No. 333, Official Gazette dated 4 July 2026, No. 33300, Articles 2–6. https://www.gib.gov.tr/mevzuat/kanun/433/teblig/11874
- Private tax ruling issued by the Istanbul Revenue Office dated 13 October 2026, No. E-62030549-120-1372289. Accessed: 19 October 2026. https://gib.gov.tr/mevzuat/kanun/433/ozelge/39058
- Income Tax Law No. 193, Articles 4 and 5.
- Turkish Civil Code No. 4721, Article 19.
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