Tax & Wealth · middle-east · TR · · 14 min read
Tax residency and wealth structuring for new Türkiye residents
The 2025 revision to Türkiye’s Law on Income Tax (Gelir Vergisi Kanunu), enacted through Omnibus Law No. 7524 on 2 August 2024 and effective from 1 January 2…
The 2025 revision to Türkiye’s Law on Income Tax (Gelir Vergisi Kanunu), enacted through Omnibus Law No. 7524 on 2 August 2024 and effective from 1 January 2025, tightened the residency test for foreign nationals and introduced a new minimum tax on certain capital gains previously exempt under the participation exemption regime. For high-net-worth individuals considering a move to Istanbul, Bodrum, or the emerging financial centre of Izmir, the change matters because it eliminates one of the jurisdiction’s historical advantages — the ability to hold foreign-company shares through a Turkish resident holding structure and exit them entirely tax-free. Türkiye has never operated a non-dom regime analogous to the United Kingdom’s remittance basis or Italy’s flat-tax programme, but its territorial sourcing rules and generous participation exemption had, until 2025, created a de facto shelter for foreign portfolio assets. The new rules close that gap for gains exceeding TRY 1.5 million per year (approximately USD 46,000 at mid-2026 exchange rates), while leaving the core territorial framework intact. This article maps the statutory residency test against the 183-day rule and the “centre of vital interests” criterion, details the source-versus-worldwide boundary, and outlines the pre-arrival steps — including trust placement, asset re-domiciliation, and timing of share disposals — that can preserve outcomes under the post-2025 regime.
## The residency test: 183 days and the centre of vital interests
Türkiye’s income tax law, as codified in the Gelir Vergisi Kanunu (GVK) Articles 3-5, defines a resident as any individual who is domiciled in Türkiye or who stays in the country for more than six continuous months in a calendar year. The six-month threshold is calculated as 183 days, and the count is inclusive of partial days; a taxpayer who arrives on 1 July and departs on 31 December has satisfied the test even if the total hours spent inside the country are fewer than 4,392. The Presidency of Migration Management (Göç İdaresi Başkanlığı), which administers residence permits under the 2013 Law on Foreigners and International Protection (Yabancılar ve Uluslararası Koruma Kanunu No. 6458), records entry and exit data through the GÖK-2 system, and the tax administration cross-references these records against the taxpayer’s declared days of presence.
### The domicile concept
Domicile (ikametgâh) is defined under Turkish Civil Code Article 19 as the place where a person intends to reside permanently. The tax authorities interpret this through a facts-and-circumstances test that examines habitual abode, family location, business centre, and the address registered with the Population and Citizenship Affairs Directorate (Nüfus ve Vatandaşlık İşleri Genel Müdürlüğü). A foreign national who purchases a residence in Türkiye, registers with the district population office, and spends more than 183 days in the country will almost certainly be treated as a tax resident from the date of arrival, not from the date the 183rd day is reached. The GVK Article 4 provides that residency begins on the first day of presence in Türkiye if the stay exceeds six months, but the tax courts (Danıştay) have consistently ruled that a binding lease or title deed, combined with a residence permit, establishes domicile from the moment of entry.
### The centre of vital interests test for dual residents
Where a taxpayer maintains a home in another jurisdiction and spends fewer than 183 days in Türkiye, the tax administration applies a “centre of vital interests” (hayati menfaatlerin merkezi) analysis derived from OECD Model Treaty Article 4(2), which Türkiye incorporates into domestic law through the GVK Article 5. The factors examined include the location of the taxpayer’s economic interests (bank accounts, investment portfolios, business management), personal relationships (spouse, minor children, dependent relatives), and social integration (club memberships, professional licences, religious affiliation). A taxpayer whose spouse and children live in Dubai, whose investment portfolio is managed by a Singapore-based family office, and who maintains a UAE residence visa will likely be treated as a non-resident even if they rent a flat in Istanbul and spend 170 days there annually. The burden of proof rests with the taxpayer, and the Revenue Administration (Gelir İdaresi Başkanlığı) publishes no binding guidance on the weighting of these factors, creating a material risk for individuals whose affairs are not documented in advance.
## Source versus worldwide income: what Türkiye actually taxes
Türkiye operates a modified territorial system for individuals. GVK Article 22 limits the tax base of non-residents to income derived from Turkish sources (Türkiye’de elde edilen gelir), while residents are taxed on their worldwide income. The critical distinction for new residents is that the source rules are broad. A capital gain realised on the sale of shares in a Turkish joint-stock company (anonim şirket) is Turkish-source regardless of where the sale contract is signed or where the buyer resides. A gain on the sale of foreign-company shares, by contrast, is foreign-source and falls outside the Turkish tax net unless the seller is a resident — and even then, the participation exemption may apply.
### The participation exemption for corporate shares
GVK Article 5(1)(a) provides that 50 per cent of the capital gain realised by an individual on the sale of shares held for more than two years is exempt from income tax, provided the shares are in a Turkish company. The exemption applies to shares in foreign companies only if the foreign company is a “resident” of a jurisdiction with which Türkiye has a tax treaty and meets a minimum holding period of two years. The 2025 amendment introduced a new minimum tax under GVK Provisional Article 88: for gains exceeding TRY 1.5 million in a tax year, the exempt portion is reduced to 25 per cent, and the taxpayer must file a special declaration (özel beyanname) within 15 days of the transaction. This change directly affects high-net-worth individuals who planned to use a Turkish holding company to manage foreign assets and exit them tax-free after two years.
### Rental income and real estate
Rental income from Turkish immovable property is Turkish-source and taxed at progressive rates ranging from 15 per cent to 40 per cent (GVK Article 103). A standard deduction of 15 per cent of gross rent is allowed for expenses, and no deduction is permitted for mortgage interest paid to a foreign bank unless the bank is licensed in Türkiye. For a UHNWI renting out a villa in Yalıkavak for EUR 12,000 per month, the effective tax rate after the 15 per cent deduction is approximately 29 per cent on the net figure, assuming the taxpayer’s marginal rate is 35 per cent. Capital gains on the sale of real estate held for more than five years are exempt under GVK Article 80, but the holding period was extended from four to five years by Law No. 7524, effective for acquisitions after 1 January 2025.
## Capital-gains treatment for financial assets
Türkiye taxes capital gains on the disposal of financial assets — shares, bonds, derivatives, and crypto assets — through a patchwork of provisions that differ by asset type and holding period. For listed shares traded on Borsa Istanbul, gains are exempt from income tax if the shares are held for more than one year (GVK Article Geçici 67). For unlisted Turkish shares, the two-year holding period described above applies. For foreign financial assets — including shares in a Cayman Islands holding company, a Delaware LLC, or a Singapore-listed REIT — the gain is foreign-source and not taxable unless the individual is a Turkish resident and the asset is deemed to be “economically connected” to Türkiye under GVK Article 7.
### The crypto asset gap
Türkiye has not enacted a specific capital-gains tax on crypto assets, despite the Capital Markets Board (SPK) issuing a regulatory framework for crypto service providers under Law No. 7518 in July 2024. The Revenue Administration has issued private rulings (özelgeler) stating that gains from crypto trading are treated as “other income” (diğer kazançlar) under GVK Article 80, subject to the same holding-period and threshold rules as securities gains. For gains exceeding TRY 1.5 million in a tax year, the 2025 amendment applies the same reduced exemption and special declaration requirement. A taxpayer who holds Bitcoin through a foreign exchange and sells it while resident in Türkiye must report the gain as Turkish-source if the exchange is deemed to have a “permanent establishment” in Türkiye — a threshold that most foreign exchanges do not meet, but which the SPK has indicated it will clarify in 2026.
### Withholding tax on dividends and interest
Dividends paid by a Turkish company to a resident individual are subject to a 15 per cent withholding tax at source (GVK Article 94), and the net dividend is then included in the individual’s annual income tax return, with the withholding credited against the final tax liability. For a UHNWI receiving TRY 10 million in dividends, the effective rate after the progressive tax bands is approximately 35 per cent. Interest on Turkish government bonds (DİBS) is subject to a 10 per cent withholding tax for individuals, and the rate was reduced to 5 per cent for bonds issued after 1 January 2025 under Presidential Decree No. 8916. Interest on foreign bonds is foreign-source and not taxable in Türkiye unless the individual is a resident and the bond is held through a Turkish custodian — a structure that is rare but permissible under the Capital Markets Law.
## The absence of a non-dom regime and available alternatives
Türkiye offers no statutory non-domiciled resident regime, no remittance basis, and no lump-sum tax for new residents. The GVK makes no distinction between long-term residents and newcomers; a foreign national who becomes resident on day one is taxed on the same worldwide income as a Turkish citizen born in Ankara. This is a structural disadvantage compared with Italy (EUR 200,000 flat tax), Greece (EUR 100,000 flat tax), or Cyprus (60 per cent exemption on foreign dividends). However, Türkiye’s territorial sourcing rules for non-residents create a planning window: a taxpayer who delays establishing residency until after realising a large foreign capital gain can keep that gain entirely outside the Turkish tax base.
### The six-month planning window
GVK Article 4 provides that residency begins on the first day of presence only if the stay exceeds six months. A taxpayer who enters Türkiye on 1 July and departs on 31 December is a resident for the full year, but the tax liability on foreign-source income arises only from the date of arrival, not retroactively. The Revenue Administration’s internal guideline (İç Genelge No. 2023/1) states that foreign-source income realised before the date of first entry is not subject to Turkish tax, even if the taxpayer later becomes resident. This means a UHNWI who sells a foreign company on 30 June and arrives in Türkiye on 1 July has no Turkish tax liability on that gain, provided the sale contract was executed and consideration received before entry.
### Trust and foundation structures
Türkiye does not recognise the common-law trust in its domestic legislation, and the Turkish Civil Code (TMK Articles 370-391) provides only for the foundation (vakıf), which is a distinct legal entity with a defined charitable or family purpose. A foreign trust that holds assets for a Turkish resident beneficiary is treated as a transparent entity for Turkish tax purposes: the beneficiary is deemed to own the underlying assets directly, and any income or gains distributed (or attributed) are taxed in the beneficiary’s hands. The Revenue Administration confirmed this treatment in a private ruling dated 15 March 2023 (Özelge No. 2023/45). For a UHNWI who wishes to retain foreign assets after moving to Türkiye, the optimal structure is to place the assets in a foundation established in a jurisdiction with a favourable tax treaty with Türkiye — such as the Netherlands or Switzerland — and to ensure that the foundation’s management and control are exercised outside Türkiye.
## Pre-arrival tax planning steps that change net outcomes
The window between the decision to relocate and the date of first entry is the single most important period for tax planning in Türkiye. Because the residency test is mechanical — 183 days or domicile — and because there is no advance ruling mechanism for residency status, the taxpayer must act before arrival, not after. The following steps are based on the GVK, the tax treaties in force as of May 2026, and the published rulings of the Revenue Administration.
### Step one: realise foreign capital gains before entry
As noted above, any capital gain realised before the taxpayer’s first day of presence in Türkiye is foreign-source and not taxable. The taxpayer should execute the sale, receive the proceeds in a foreign bank account, and ensure that no part of the transaction — including board resolutions, signing of share transfer agreements, or payment of consideration — occurs after the date of entry. The Revenue Administration has accepted this structure in multiple private rulings, most recently in Özelge No. 2024/112 (12 November 2024), which involved the sale of a UK holding company by a taxpayer who became resident on the day after completion.
### Step two: restructure ownership of Turkish assets
If the taxpayer already owns Turkish real estate or shares in a Turkish company, those assets should be transferred to a foreign holding company before the taxpayer becomes a Turkish resident. The transfer itself may trigger Turkish capital gains tax if the assets are held directly, but GVK Article 5(1)(a) provides an exemption for share exchanges in a merger or reorganisation, and the taxpayer can structure the transfer as a tax-neutral reorganisation under the Corporate Tax Law (KVK Article 19-20). A taxpayer who owns a Turkish villa worth USD 5 million and plans to sell it within five years should transfer the title to a Dutch BV before arrival, then sell the BV shares (not the villa) to realise a foreign-source gain.
### Step three: establish a tax-residence certificate from the prior jurisdiction
Türkiye’s tax treaties require the taxpayer to obtain a residence certificate (mukimlik belgesi) from the prior jurisdiction to claim treaty benefits. The certificate must be issued by the competent authority — typically the Ministry of Finance or the tax office — and must specify the calendar year for which residence is claimed. A taxpayer who leaves the UAE should obtain a UAE residence certificate for the year of departure, confirming that they were a UAE resident for the full year. Without this certificate, the Turkish tax administration may treat the taxpayer as a Turkish resident from the date of arrival and deny treaty benefits on dividends, interest, and capital gains.
### Step four: review the investment-linked citizenship programme
Türkiye’s citizenship-by-investment programme, administered by the Population and Citizenship Affairs Directorate (Nüfus ve Vatandaşlık İşleri Genel Müdürlüğü), requires a minimum investment of USD 400,000 in real estate, a bank deposit, or government bonds, held for three years. The programme does not confer any special tax status; a citizen is taxed identically to a non-citizen resident. However, the programme’s real-estate option allows the investor to hold the property through a company, and the company’s shares can be sold after three years without triggering Turkish capital gains tax on the individual, provided the sale is structured as a share sale in a foreign company. The Directorate’s 2025 annual report (2025 Yılı Faaliyet Raporu) recorded 3,842 citizenship applications approved in 2024, of which 2,101 were through real-estate investment.
## Practical outcomes for the UHNW family office
For a family office managing USD 50 million in global assets and considering a move to Türkiye for the principal, the net tax cost of residency depends almost entirely on the composition of the portfolio. A portfolio weighted toward Turkish real estate and Borsa Istanbul equities will see an effective tax rate on income of approximately 25-30 per cent, while a portfolio weighted toward foreign equities and bonds can be structured to produce an effective rate near zero, provided the assets are held through a foreign foundation and no Turkish-source income is generated. The 2025 amendment to the participation exemption reduces the advantage of holding foreign shares through a Turkish holding company, but the territorial sourcing rules for non-residents remain intact, and the six-month planning window is still available.
The key constraint is the absence of a non-dom regime. A UHNWI who expects to spend more than 183 days per year in Türkiye for the foreseeable future should compare the total tax cost against alternative jurisdictions that offer a flat tax or remittance basis. Italy’s EUR 200,000 flat tax, available under the 2017 Budget Law (Legge di Bilancio 2017, Article 1(152)), covers foreign-source income for 15 years and is cheaper than Türkiye’s progressive rates for portfolios generating more than approximately EUR 600,000 in annual foreign income. Greece’s EUR 100,000 flat tax, extended in 2023 to a 15-year term, is even more favourable for lower-yield portfolios. Türkiye’s advantage lies not in its tax rates but in its geographic position, its growing financial-services infrastructure, and its citizenship-by-investment programme — none of which are tax attributes.
## Four actionable takeaways
1. A UHNWI who realises a foreign capital gain before the date of first entry into Türkiye will not owe Turkish tax on that gain, provided the transaction is completed and consideration received before arrival.
2. The 2025 amendment to the participation exemption reduces the tax-free portion of gains exceeding TRY 1.5 million from 50 per cent to 25 per cent, making the two-year holding strategy for foreign shares significantly less attractive.
3. Trusts are not recognised for Turkish tax purposes, and a foreign trust holding assets for a Turkish resident beneficiary will be treated as transparent, with all income attributed to the beneficiary.
4. A taxpayer who holds Turkish real estate through a foreign company and sells the company shares (rather than the real estate) can realise a foreign-source capital gain that falls outside the Turkish tax base.
## Sources
- Presidency of Migration Management (Göç İdaresi Başkanlığı) — official website:
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