Turkiye introduces new personal tax regime

• On 4 June 2026, Turkiye published Law No. 7582 in the Official Gazette, introducing a new personal tax regime that includes a 20-year exemption for certain foreign-sourced income of individuals becoming tax-resident in Turkiye on or after 1 January 2026, a reduced 1% inheritance and gift tax rate for qualifying inherited assets and an asset repatriation mechanism available until 31 July 2027.
• The foreign income exemption applies to individuals who have not had residence or tax liability in Turkiye during the prior three calendar years and whose income is derived from abroad, representing a significant policy shift that may enhance Turkiye's attractiveness for internationally mobile individuals, high-net-worth taxpayers and cross-border business activity.
• The law also introduces employee-related measures, including an increase in the exempt amount for share-based incentives granted by technology startups, shorter claw-back holding periods, salary tax relief for employees of qualified service centers and an expanded Istanbul Finance Center regime for all participants employing internationally experienced personnel.
• Businesses and employers should assess these measures, including by evaluating eligibility criteria and compliance requirements.

Turkiye has enacted a new law (Law No. 7582) introducing a comprehensive set of tax measures targeting individuals, including a long-term exemption regime for foreign-sourced income of newly resident individuals, preferential inheritance tax treatment and an asset repatriation mechanism.

The law was published in the Official Gazette on 4 June 2026.

Background

Under the Turkish tax system, individuals who are considered tax-resident in Turkiye are generally subject to income tax on their worldwide income.

New law

The legislation introduces several measures affecting individuals and employee-related taxation, as summarized below.

Foreign income exemption regime for new residents (Article 20/D)

A new provision grants an income tax exemption for foreign-sourced income and gains of individuals who become tax-resident in Turkiye on or after 1 January 2026, provided that:

• They have not had residence or tax liability in Turkiye during the last three calendar years prior to becoming resident.
• The income is derived from abroad.

The exemption applies for a period of 20 years.

Preferential inheritance and gift tax treatment

The law introduces a favorable inheritance tax rule for individuals benefiting from the above regime.

Accordingly, if assets are transferred by inheritance within the eligibility period, a reduced inheritance and gift tax rate of 1% will apply.

This represents a significant reduction, when compared to the standard inheritance tax rates applicable to transfers by inheritance (which are progressive and can reach up to 10%, depending on the value of the estate).

Employee-related measures

Adjustments to share-based incentive regime for technology startups

The law amends the existing income tax exemption regime applicable to share-based incentives granted by technology startups. (For background, see EY Global Tax Alert, Turkiye provides income tax exemption on share-based incentive plans of technology startups, dated 7 August 2024).

The exemption amount has been increased from the employee's annual gross salary to two times that amount. In addition, the holding periods relevant for the claw-back mechanism have been shortened, as illustrated below:

In essence, the maximum exemption period has been reduced from 12 years to 6 years, accelerating the timeline under which previously exempted benefits become taxable upon disposal of shares.

Qualified service centers and salary tax relief

The law introduces a new framework for "qualified service centers," defined as companies:

• Operating in at least three countries
• Deriving at least 80% of their annual revenue from foreign related parties

These centers provide centralized services to group companies, including:

• Financial, treasury and risk management services
• Reporting, compliance and audit support
• Digital transformation, IT and data services
• Legal, human resources (HR), branding and training services
• Research and development (R&D), technical support, procurement and product testing

Employees working in these centers (qualified personnel) may benefit from partial income tax exemption on salaries, up to either:

• 3x gross minimum wage
• 5x gross minimum wage for certain designated regions or structures

Expansion of Istanbul Finance Center (IFC) income tax exemption

The law expands the scope of the income tax exemption regime available in the Istanbul Finance Center (IFC), which was previously limited to financial institutions, to cover all IFC participants.

Under this regime, employees who have not worked in Turkiye during the three years prior to starting employment at the IFC and who have relevant professional experience abroad may benefit from partial income tax exemption on their salary as follows:

• 60% exemption for employees with at least 5 years of overseas experience
• 80% exemption for employees with at least 10 years of overseas experience

This change broadens the applicability of the regime and enhances the attractiveness of the IFC framework for internationally experienced workforce.

Asset repatriation scheme

The law introduces an asset repatriation (wealth amnesty) mechanism allowing individuals to bring previously undisclosed assets into the Turkish financial system.Under this regime, individuals may declare cash, gold, foreign currency, securities and capital market instruments held abroad or domestically but not recorded in statutory books. Declared assets must be transferred to Turkiye or deposited with Turkish financial institutions within a specified period. A tax is applied at rates ranging from 0% to 5%, depending on how long the assets are held in certain instruments.

Provided the conditions are met, no tax audit or reassessment is conducted in relation to declared assets.

The regime is available until 31 July 2027.

What is new?

The introduction of a long-term exemption regime for foreign-sourced income applicable to individuals becoming tax resident in Turkiye as of 1 January 2026 represents a significant policy shift, bringing the system closer to non-domiciled (aka "non-dom") type regimes.

The combination of foreign income exemption, significantly reduced inheritance tax burden, targeted employment incentives and asset-repatriation opportunities suggests a broader policy objective to attract internationally mobile individuals, high-net-worth taxpayers and cross-border business activity.

Individuals and employers should assess eligibility and evaluate the implications for cross-border income structuring, compensation arrangements and wealth planning strategies.

For additional information concerning this Alert, please contact:

Kuzey Yeminli Mali Musavirlik A.S., Istanbul

• Didem Erdem, PAS Tax Partner
• Tamer Turkyilmaz, PAS Tax Director
• Selcan Gumrukcu, PAS Tax Manager

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor