The owner of a Delaware LLC, a Dutch BV or a British Ltd who moves to Turkey in 2026 reads the new twenty-year exemption and sees their dividends in it. They are right about the dividends. Communiqué 333, which implements repeated Article 20/D of the Income Tax Law, gives as its own example a resident receiving dividends from a Spanish company and confirms they are exempt and undeclared.
What the owner usually does not read is Article 3 of the Corporate Tax Law, which has never cared where a company was incorporated if the place where its business is actually managed is Turkey. A personal exemption does not reach a company. If the company follows you here in substance, it becomes a Turkish taxpayer, and the dividends it then pays you stop being foreign. This page sets out the three ways a foreign company can be pulled into the Turkish net by its owner's move, the treaty rules that decide who wins when two states claim it, and the sequence that keeps a holding structure on the right side of the line.
Sources, checked 9 September 2026. Corporate Tax Law No. 5520, Articles 3, 7 and 32; Income Tax Law No. 193, Articles 7, 8, 75 and repeated Article 20/D; Income Tax General Communiqué Series No. 333 (Official Gazette 33300, 4 July 2026), Article 3(10) and Example 11; Tax Procedure Law No. 213, Article 156; Presidential Decision 9286 (Official Gazette 32760, 22 December 2024); the income tax treaties of Turkey with the United States (1996), the United Kingdom (1986), Germany (2011), the Netherlands (1986) and Canada (2009), Articles 4, 5 and 10 read from the official texts.
What the exemption gives a company owner
Repeated Article 20/D exempts, for twenty years, the income obtained outside Turkey by a person who becomes settled here from 2026 with no Turkish domicile or income tax liability in the three preceding calendar years. Dividends from a company resident abroad are income obtained outside Turkey. So are gains on the sale of its shares, interest on loans you have made to it, and rent from property it lets to you at arm's length abroad. Communiqué 333 Example 11 walks through a resident with Turkish rent and Turkish dividends on one side and Spanish dividends and Monegasque rent on the other: the foreign items are exempt and stay off the return; the Turkish items are taxed as before.
Two boundaries come with it. Article 3(10) of the communiqué limits the exemption to natural persons; no company benefits. And the exemption is defined by the source of the income, not by the passport of the payer. A dividend is foreign because the company paying it is a foreign-resident company. The moment the company is not, the dividend is not. That is why the rest of this page is about the company. The personal conditions and the certificate deadline are on our page on the twenty-year exemption.
The line the exemption cannot cross: Article 3 of the Corporate Tax Law
Article 3(1) makes a company fully liable to Turkish corporate tax on its worldwide profits if either its legal centre or its business centre is in Turkey. Article 3(5) defines the legal centre as the seat named in the company's constitutional documents. Article 3(6) defines the business centre as "the centre where transactions are actually concentrated and managed in terms of the business". Either is enough. A company incorporated in Wilmington with its articles pointing to Wilmington has its legal centre there; if its business is actually run from an apartment in Cihangir, it has its business centre here, and paragraph (1) is satisfied.
The consequences arrive in order. The company pays corporate tax at 25% under Article 32(1) on its worldwide profit, on a Turkish return, with Turkish books. Its dividends are then dividends of a Turkish-resident company: withholding at 15% under Presidential Decision 9286 when it distributes, and income obtained in Turkey in your hands, which repeated Article 20/D does not touch. The certificate you obtained in the year you arrived is intact and irrelevant to that income.
| Shares held from Turkey | Company managed from Turkey | |
|---|---|---|
| Company's status | Foreign-resident | Turkish-resident by business centre (Art. 3(1), (6)) |
| Company's tax | Home-country tax only | Turkish corporate tax at 25% on worldwide profit (Art. 32(1)) |
| Your dividends | Foreign-source; exempt for twenty years under Art. 20/D | Turkish-source; 15% withholding and outside Art. 20/D |
| Gains on selling the shares | Foreign-source; within Art. 20/D | Shares in a Turkish-resident company; ordinary Turkish rules |
What makes a business centre
The statute gives the definition and not a checklist, and I will not invent one. What the definition points at is the place where the decisions that constitute the business are actually taken and carried out: where the directors decide, where contracts are approved and signed, where the bank mandates are operated, where staff and suppliers are directed, where the books are kept and the strategy is set. A single-director company whose single director now lives in Turkey and does all of that from here has moved its business centre with him, however many registered-office invoices are still paid abroad.
The reverse is also true. A company with a board that meets and decides abroad, managers who run the operation abroad, an office and staff abroad, and an owner in Turkey who receives reports and dividends, is a company whose owner has moved and whose business centre has not. The question is one of fact, and the facts are the ones you create in the twelve months before and after the move. This is the reason the corporate side of a relocation file is planned before the flight and not after the first Turkish tax audit letter.
When two states both claim the company
Suppose Turkey says the business centre is here and the home state says the company is resident there because it was incorporated there. Both are entitled to say it under their own law; the treaty decides which of them may treat the company as its resident for treaty purposes. The five treaties I have read for the owners who most often ask me do not agree with each other.
| Treaty | Dual-resident company tie-breaker (Article 4) |
|---|---|
| United States (1996), Art. 4(3) | Deemed resident of the State in which it has its place of incorporation |
| Canada (2009), Art. 4(3) | Deemed resident only of the State in which it has been incorporated; otherwise mutual agreement |
| United Kingdom (1986), Art. 4(3) | Deemed resident of the State in which its place of effective management is situated |
| Netherlands (1986), Art. 4 | Place of effective management, unless the competent authorities agree otherwise |
| Germany (2011), Art. 4(3) | The competent authorities endeavour to settle it by mutual agreement; absent agreement the company is treated as resident of neither State for the purposes of the Agreement's benefits |
The American and Canadian rules hand the company back to its state of incorporation even if it is run from Istanbul. The British and Dutch rules hand it to Turkey if that is where it is effectively managed. The German rule hands it to nobody until the two administrations agree, which is a poor place to keep a company.
Two cautions about what a tie-breaker does. It allocates treaty residence and therefore treaty benefits; it does not repeal Article 3 of the Corporate Tax Law or the Turkish filing obligations that follow from it. A US company run from Turkey remains a US resident under the treaty and will, in a dispute, be entitled to the treaty's protection against Turkish taxation of its worldwide profits, but establishing that is a procedure, not an automatic result, and the Turkish administration is entitled to start from its own Article 3. And Article 4(1) of each treaty defines a resident by reference to liability "by reason of domicile, residence, place of management, place of incorporation, or any other criterion of a similar nature", which is exactly the language that lets Turkey assert the claim in the first place.
The second route in: a permanent establishment created by you
A company can stay foreign-resident and still owe Turkish tax on part of its profit, if it has a permanent establishment here. Article 3(3)(a) of the Corporate Tax Law taxes a non-resident company on commercial profits earned through a place of business or a permanent representative in Turkey. Article 156 of the Tax Procedure Law defines a place of business as any place allocated to or used in the activity, and its list is long enough to include an office in a flat. Article 8 of the Income Tax Law, which Article 3(4) of the Corporate Tax Law imports, defines the permanent representative as a person bound to the enterprise by a service or agency contract and authorised to carry out commercial transactions on its behalf.
The treaties narrow this. Under the US treaty's Article 5(4) and the UK treaty's Article 5, a dependent agent creates a permanent establishment where he "has and habitually exercises" an authority to conclude contracts in the name of the enterprise; preparatory and auxiliary activity does not count. An owner who signs the company's customer contracts from Turkey is a textbook dependent agent. An owner who receives dividends and reads reports is not. Between the two sits most of the real cases, and the answer turns on what is signed, where, and by whom.
A permanent establishment has a second cost that owners rarely price. It ends the wage exemption for any employee of the company who lives in Turkey, because Article 23(14) of the Income Tax Law requires an employer that carries on no income-generating activity here. The mechanics are set out in our page on remote work and the source rule.
The third route: the controlled foreign company rule for individuals
Turkey's controlled-foreign-company rule is usually described as a corporate rule, because it sits in Article 7 of the Corporate Tax Law. It is not only that. A paragraph added to Article 75 of the Income Tax Law in 2007 provides that where the conditions of Article 7 are met together, the profits of foreign subsidiaries controlled by Turkish-resident individuals, directly or indirectly, alone or jointly, through at least 50% of the capital, dividend rights or voting rights, are deemed dividends received in the year that includes the month in which the subsidiary's accounting period closes, whether or not distributed.
Article 7 sets three cumulative conditions on the subsidiary: at least 25% of its gross revenue is passive, meaning interest, dividends, rent, licence fees, securities gains and the like not earned through a commercial, agricultural or professional activity with proportionate capital, organisation and staff; its total effective tax burden on its commercial balance-sheet profit is below 10%; and its gross revenue in the year exceeds the foreign-currency equivalent of 100,000 lira, a threshold written in 2006 and not indexed. A personal holding company in a low-tax jurisdiction that collects dividends and interest is the target the rule was drawn for.
How this interacts with the twenty-year exemption is the one point on which I will not give you a confident answer. A deemed dividend from a foreign company is, in character, a dividend from a company resident abroad, which is the category Communiqué 333 Example 11 exempts. The communiqué does not mention the controlled-foreign-company deeming at all. I would not build a structure on the assumption that the exemption neutralises Article 7, and I would not assume the opposite either; it is a question to put to the administration by ruling before the first accounting period closes, not after.
The three structures, priced
| Structure | Corporate residence (Art. 3) | Permanent establishment (Art. 3(3), VUK 156) | CFC deeming (GVK 75, KVK 7) | Your dividends under Art. 20/D |
|---|---|---|---|---|
| Operating company abroad with its own management; you hold shares from Turkey | Stays abroad | None, if you sign nothing for it here | Not met where revenue is active | Exempt |
| Single-director company you now run from Turkey | Business centre moves to Turkey | Absorbed into full liability | Not relevant once resident | Not foreign; taxed |
| Company abroad whose Turkish customers you sign up from Turkey | Stays abroad on the facts | Dependent-agent PE for the Turkish business | Not met | Exempt, but the company pays Turkish tax on the PE's profit |
| Passive holding company in a low-tax state, no staff, mostly dividends and interest | Depends on where decisions are taken | None | Met if the three conditions hold | Unsettled as to deemed dividends |
The sequence that works
The order matters more than any single step. First, the company's management is documented where it is: board minutes, signing authority, bank mandates and the office lease in the home state, before the owner's move. Second, the owner's role is defined in writing as shareholder and, at most, non-executive; if the owner must keep signing, the signing happens outside Turkey and the contracts say so. Third, Turkish customers, if any, are contracted by the company's staff abroad, not by the owner from here. Fourth, the exemption certificate is applied for in the year of settlement, as the twenty-year rule requires. Fifth, dividend timing is set with the certificate and the home-state withholding in view: the treaty caps on dividends paid to an individual resident in Turkey are 20% under the US, UK, Dutch and Canadian treaties, and the exemption in Turkey does nothing to reduce the tax the paying state is entitled to keep.
None of this is exotic. It is the same discipline any group applies to keep a subsidiary's residence where it was intended, applied to a company whose only director has decided to live by the Bosphorus.
Whose side we are on, and how we are paid
Almost everyone who will help you structure this move is paid by the structure. The offshore formation agent earns on the entity, the relocation adviser on the package, and the bank on the deposits that follow. None of that is improper, but it decides what each of them can afford to tell you about Article 3(6).
We take no commission from formation agents, banks, developers or relocation firms, in any form, on any file. The fee you pay us is our only income from your matter, and it does not rise if you move or if you incorporate. Because our position does not move with the structure, telling you that your existing company will become Turkish-resident the day you start running it from here costs us nothing to say.
In the file, that means we read the company's constitutional documents and its last year of board decisions before we say where its business centre is, we map your own signing authority against the dependent-agent test in the treaty that applies to you, and we put the answer in writing before you register an address.
One boundary, stated plainly. We are lawyers, not licensed investment advisers and not your home-country tax agents. We do not advise on the corporate or tax law of the state where your company is incorporated beyond what its treaty with Turkey says. What we protect is the Turkish position: the company's residence as Turkey will assess it, the permanent-establishment exposure, and your own exemption and its deadline.
Before you move the company with you
Send us the company's articles, a note of who signs what and from where, and the facts of your own last three calendar years. We will tell you whether the company stays abroad on those facts, whether anything you do from Turkey creates a permanent establishment, and whether the twenty-year exemption is open to you. Our corporate work is described on the corporate law page, our tax work on the international tax page, and the Turkish company alternative on company formation in Turkey for foreigners. Owners weighing the same question on the Adriatic side will find the Montenegrin counterpart in permanent establishment versus tax residence in Montenegro.
What this page does not settle
It does not settle whether the controlled-foreign-company deeming in Article 75 is displaced by the twenty-year exemption; the communiqué is silent and I have said so. It does not settle how the Turkish administration will weigh a particular pattern of decisions in deciding where a business centre is; the statute gives a definition, not a threshold. It does not settle the home state's view of a company whose owner has left. And it does not settle whether the company should move with you, which is a business decision before it is a legal one.
