Turkey is making international headlines with an ambitious tax promise, and at the same time offers are circulating for a Turkish passport through investments of 400,000 or 500,000 US dollars. At first glance this sounds like a complete package: relocate, invest, live tax-free for 20 years. The reality is more nuanced, and it is precisely the points that rarely appear in the promotional material that determine whether the move makes financial sense for you.
This article provides an honest assessment of the key aspects.
The 20-Year Model Has Been Announced
In spring 2026, the Turkish government presented a tax package under which individuals who have not been tax resident in Turkey in the previous three years would, after relocating, pay no Turkish tax on foreign income for 20 years; inheritance and gifts would be taxed at a flat rate of one percent. The critical caveat: this is a political announcement, not enacted legislation. Until the model actually comes into force, it remains unclear in what form and with what details it will arrive. Anyone basing a costly and barely reversible relocation solely on this prospect is taking a significant risk. The recommended approach is therefore proactive planning that allows for implementation once the law comes into force, without making irreversible decisions in the meantime.
The Real Cost Lies in Germany, Not in Turkey
Many interested parties focus on the Turkish advantages and overlook the fact that the cost-intensive step is the departure from Germany itself. Once residence and habitual abode in Germany end, regulations come into effect that operate independently of which destination country you choose and whether you obtain a passport there.
Exit Taxation under § 6 AStG
Anyone who holds at least one percent in a corporation, such as a GmbH, and has been subject to unlimited tax liability in Germany for at least seven of the past twelve years triggers a deemed disposal of those shares upon departure. This means: the tax authority treats it as if you had sold your shares and taxes the hidden reserves, without any money actually flowing to you. Since the 2022 reform, the previously available indefinite interest-free deferral no longer applies in such cases; the tax is due immediately or payable in seven annual instalments, generally against security. Since Turkey is not an EU or EEA state, no additional relief is available. In 2026, reporting and procedural obligations were further tightened.
Extended Limited Tax Liability under § 2 AStG
Here lies the real twist of the Turkey constellation: the very tax exemption that makes Turkey attractive can lead Germany to classify Turkey as a low-tax territory. For German nationals who were subject to unlimited tax liability for at least five of the last ten years and retain significant economic interests in Germany, this means: Germany can access certain income for up to ten years after departure. The advantage that makes Turkey attractive is therefore simultaneously the factor that can extend German access. Anyone who fails to plan for this risks unexpected tax consequences.
Inheritance and Gift Tax: The Five-Year Trap
The Turkish one percent on inheritances sounds appealing. However, for German nationals, extended unlimited inheritance tax liability continues for five years after departure. During this period, the Turkish rate offers no protection against German taxation.
Passport, Residence, Tax Residency: Three Different Things
A common misconception: that a Turkish passport automatically brings the tax advantages. This is not the case. Citizenship and residence status are acquired through the investment. Whether you become tax resident in Turkey depends on where your actual centre of life is located, and German unlimited tax liability only ends once you genuinely give up your residence and habitual abode in Germany. A dwelling that remains available to you in Germany can be sufficient to maintain full tax liability, regardless of how many days you spend in Istanbul. Both sides require substance, not a structure that exists only on paper.
The Double Taxation Agreement Protects – But Not Without Limits
The double taxation agreement between Germany and Turkey distributes taxation rights and uses tie-breaker criteria to determine where you are considered resident. It cannot override exit taxation, because the triggering event occurs before the change of treaty residency takes place. And it only protects to the extent that you are genuinely resident in Turkey. For types of income that Turkey may not tax at all in future, delicate questions regarding fall-back clauses may also arise, questions that can only be answered reliably once the final Turkish legislative text is available.
The Right Sequence Is Everything
From all of this, a clear practical logic follows: first, the German starting position is calculated and structured, covering exit taxation, extended limited tax liability, the five-year inheritance tax period, and any intention to return. Only then is the Turkish component introduced, as a complement, once it is legally reliable. Anyone who proceeds in the reverse order, guided by the 20-year promise, risks triggering costly German consequences before the Turkish advantage is secured.
How BAŞKAN Supports You
This precise combination of the German and Turkish sides is our core competence. We have specialised in the German-Turkish and international tax landscape for over three decades, advise in German, Turkish and English, and monitor developments in both countries continuously. We tell you honestly what holds today, what remains subject to change, and in what sequence you should proceed, so that an idea becomes a sound and workable concept.
International tax planning does not begin with the destination country, but with your own starting position. If you would like to understand what relocation would mean for you specifically, we are available for an initial consultation.
This article is intended for general information purposes and does not replace individual advice tailored to your specific circumstances.
