Turkey’s New 1% Inheritance Tax Rule: A Hidden Benefit of the 20-Year Tax Exemption

Most discussions surrounding Turkey’s recently enacted tax package have focused on the new 20-year exemption for qualifying foreign-source income.

However, one of the most interesting provisions may be receiving far less attention.

The legislation also introduces a special inheritance and transfer tax regime that may reduce the applicable tax rate to just 1% for certain individuals benefiting from the new foreign income tax exemption framework.

For internationally mobile families, entrepreneurs, investors, and high-net-worth individuals, this development could become one of the most attractive aspects of the new Turkish regime.

What Is the New 1% Inheritance Tax Rule?

Under the newly enacted legislation, individuals benefiting from Turkey’s 20-year foreign income tax exemption regime may also become eligible for a special inheritance and transfer tax rate of 1% in relation to qualifying wealth transfers during the exemption period.

This represents a significant departure from the standard inheritance and transfer tax rates that generally apply under Turkish law.

As a result, long-term residents benefiting from the new regime may potentially transfer wealth to future generations under substantially more favorable conditions.

Why Is This Important?

Inheritance taxation has become an increasingly important consideration for internationally mobile families.

Many investors spend considerable effort optimizing income taxes while paying little attention to succession planning and wealth transfer issues.

However, inheritance taxes can significantly impact the preservation of family wealth over generations.

For this reason, many international investors evaluate not only income tax rates but also estate planning and inheritance tax rules when selecting a jurisdiction for long-term residence.

Turkey’s new framework may therefore attract attention from individuals seeking both tax efficiency and long-term wealth planning opportunities.

Who May Benefit?

Although every situation requires individual analysis, the special regime is generally intended for individuals who:

• relocate to Turkey,
• satisfy the requirements of the new foreign income tax exemption framework,
• and maintain eligibility during the applicable exemption period.

One of the key conditions of the broader regime is that the individual must generally not have been resident or subject to Turkish tax liability during the previous three calendar years before becoming a Turkish tax resident.

How Does This Relate to the 20-Year Tax Exemption?

The new inheritance tax provision forms part of the same legislative package that introduced Turkey’s 20-year foreign income tax exemption.

As a result, investors may wish to evaluate:

• tax residency planning,
• foreign-source income,
• asset repatriation opportunities,
• citizenship options,
• inheritance planning,
• and family wealth preservation

as part of a single long-term strategy.

Could This Be Relevant for International Families?

Potentially yes.

The new framework may be particularly interesting for:

• entrepreneurs,
• founders,
• investors,
• family offices,
• internationally mobile individuals,
• and families with substantial foreign assets.

For these individuals, inheritance taxation is often as important as income taxation when evaluating long-term relocation decisions.

Important Questions Still Require Analysis

As with any newly enacted legislation, practical implementation remains important.

Several issues may require further clarification, including:

• the exact scope of qualifying transfers,
• interaction with international tax treaties,
• treatment of foreign assets,
• family structures and holding companies,
• and succession planning involving multiple jurisdictions.

Professional advice should always be obtained before implementing any estate planning strategy.

Frequently Asked Questions

Does Turkey now have a general 1% inheritance tax?

No.

The special 1% rate appears to be linked to the new foreign income tax exemption framework and should not be confused with Turkey’s ordinary inheritance tax rules.

Does the rule apply to everyone?

No.

Eligibility depends on satisfying the statutory conditions of the new regime.

Can foreign investors benefit?

Potentially yes, depending on their residency status, tax position, and compliance with the relevant requirements.

Why is this attracting attention?

Because inheritance taxation is often a major component of international wealth planning and succession strategies.

Legal Support for International Investors

Gozkaya Legal advises foreign investors, entrepreneurs, internationally mobile individuals, and families regarding Turkish tax-related legal matters, company formation, residence planning, real estate investments, and cross-border legal structures.

For further information regarding Turkey’s new inheritance tax regime or the 20-year foreign income tax exemption, please contact us directly.