Foreign Dividends and Interest in Turkey: 0% for 20 Years

The 20-year exemption under Law 7582 reads as one line in the tax code, but its sharpest application for most clients we see is the simplest one: foreign dividends and interest, taxed at zero, for two decades.

If you are sitting on a global stock portfolio, an offshore holding company that pays you out, a bond ladder run from a foreign broker, or a private-credit fund based in Cayman or Luxembourg, this is the part of the law that does the heavy lifting. Live in Turkey, meet the clean-slate test, and the Turkish tax on that income line goes to 0%.

What counts as foreign-source

For Article 20/D purposes, a dividend is foreign-source when the paying entity is not a Turkish company. The vehicle’s flag is what matters:

• A US C-corporation distribution
• A UK Plc dividend
• A Dutch BV or Luxembourg SARL profit distribution
• A Singapore Pte Ltd dividend
• A Cayman LP or BVI Ltd payout from your offshore holding stack
• Distributions from foreign mutual funds, ETFs and investment trusts

All of the above feed the exempt bucket. The same logic applies to interest: foreign bank deposits, foreign government and corporate bonds, intercompany loans booked offshore, and yield from foreign fixed-income funds all sit on the foreign-source side of the line and ride free on the Turkish side.

What does not count

One line, but it matters. A dividend from a Turkish AŞ or limited şirket is Turkish-source. So is interest on a Turkish bank deposit (yes, including TL and FX deposits at a Turkish bank), profit from a Turkish operating business, and rent from your Istanbul apartment. These stay on the ordinary tax scale, 15% to 40% for individuals, 25% for corporates.

The planning rule writes itself: keep your earning structures offshore, and use Turkey for living, holding and family. People who try to repatriate their operating company into a Turkish holding to “simplify” usually destroy more in tax than they save in admin.

The CFC question, on the table

Turkey has controlled-foreign-corporation rules that can attribute the undistributed income of a low-taxed foreign company to a Turkish resident shareholder. Read literally, that could blunt the dividend exemption for HNW clients who own most of an offshore holding company.

The dominant reading among Turkish tax practitioners as of June 2026 is that Article 20/D overrides the CFC attribution for income inside its scope. The Treasury’s implementing communiqué is what will settle it definitively, and at the time of writing not every edge case had been addressed in writing. We are tracking this and will update this page each quarter. If your stack relies on the CFC override working as expected, get a written opinion from a Turkish tax advisor on your specific facts before you move.

A passive Turkish shareholder of a foreign company does not, by itself, fall foul of the three-year clean-slate test either. Holding shares is not the same as running an active Turkish business.

A worked example

Take a UK leaver, age 52, $5M global portfolio:

• $3M in US and global equities yielding $90,000 in dividends a year
• $2M in foreign-denominated bonds and bank deposits yielding $100,000 in interest

Total annual passive income: $190,000.

Under the UK as a normal resident, that would attract roughly £56,000 in dividend and savings tax once the basic allowances are used. Under Italy’s flat-tax regime, €200,000 a year is the headline. Under the Turkish 20-year exemption, the Turkish tax on that $190,000 is $0. Filed nowhere on the Turkish return.

Foreign withholdings are unchanged: US dividend payers still withhold 15% on the qualifying US dividends under the US-Turkey treaty, UK dividend withholding stays at nil, and the rest depends on each treaty. Turkey going to 0% does not refund those, but it removes any additional Turkish layer.

Run the same arithmetic over twenty years and the savings move past $1M for a portfolio of this size, before compounding. For a portfolio twice that, double it.

Where this sits in the bigger plan

The exemption is a residence benefit, not a passport one. You do not need to invest in citizenship to claim it; you need to become a Turkish tax resident in fact under the clean-slate test. That said, most of the people we work with are pairing the two: the $400,000 real-estate route buys the citizenship and provides the home that anchors the residence, and the 20-year, 0% clock starts running from the move.

If your investment side leans toward funds rather than property, the $500,000 investment-fund route buys the same passport but does not, on its own, drive tax planning. The two decisions are separate: how you qualify for citizenship is one question, and where your foreign income gets taxed is another. The exemption answers the second question regardless of which route you take, as long as you live here.

The full conditions, the clean-slate test, and the list of what is and isn’t covered sit on the main 20-year tax exemption page.

This is general information, not tax advice. The CFC point in particular is fact-specific. Confirm your structure with a Turkish tax advisor before you wire anything.

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If your income stack is mostly foreign dividends and interest, the Turkish answer for 2026 is sharper than anything else on the table. Tell us what your portfolio looks like, and we’ll map the citizenship, the residence and the 20 years against your actual numbers.