Turkey’s 20-Year Tax Relief and Service Apartments in Istanbul: One Investment Step—Two Outcomes

Amid fluctuations in the financial hubs of the Persian Gulf, investors have started looking more actively for a steadier jurisdiction to place their capital. Turkey has moved quickly: the country has introduced a regime of 20-year exemption from tax on foreign-source income for individuals who become tax residents of Turkey. It’s one of the most generous solutions available anywhere in the world.

The key question is where exactly to allocate capital. And this is where Istanbul stands out as the perfect magnet: Turkey’s largest international city, a mature real-estate infrastructure, and one of the fastest paths to citizenship.

The tax relief is the headline. But it’s Istanbul that makes the strategy truly practical.

How the “tax holiday” works

The logic is straightforward: if a person becomes a tax resident of Turkey and, during the previous three years, had neither a Turkish domicile nor Turkish tax obligations, then foreign income and capital gains are excluded from the Turkish tax base for 20 years.

Importantly, this regime includes no minimum investment requirements and no language or nationality restrictions. In practice, the decisive factor is simply resident status.

Citizenship/residency can be supported through different routes—via a citizenship-by-investment program, by obtaining a residence permit, or through a work permit. This stage requires careful planning.

Another advantage is retroactivity: the relief applies from January 1, 2026. That means those who have already become residents this year fall under the regime without any extra steps.

Why this matters right now

Timing is on Turkey’s side. Developments around the regional conflict (in particular, Iran) have increased uncertainty for the Persian Gulf’s financial centers. Capital that previously treated Dubai and GCC countries as a “default option” began seeking alternatives with a more reliable legal and tax framework.

Turkey designed its package to capture this demand. If market behavior follows how earlier attractive tax regimes in Greece, Italy, and the GCC countries worked, investor interest from the United States and Europe could grow in the near term.

But tax benefits don’t mean much without a stable way to live in the country. This is where the value of the Turkish model becomes even more pronounced.

The Turkey citizenship program is among the most popular direct citizenship options by application volume: since 2018, more than 13,000 main applicants have received naturalization. Unlike schemes that require long-term physical presence, citizenship under the program is granted without the need to prove residence and without language requirements.

There are different entry routes—from real-estate purchases starting at roughly USD 400,000 to options involving fixed capital, bank deposits, government bonds, shares in funds, or private pension plans (thresholds depend on the category and participation procedure).

For most investors, real estate is the most logical choice. The minimum threshold is USD 400,000 for holding the property for three years. Such an asset can both increase in value and generate income. However, returns can vary significantly—from city to city and even between different addresses within the same city.

Why service apartments are a “smart entry” into Istanbul

Istanbul is Turkey’s most active real-estate market and one of the most popular destinations for international buyers. But even here, results depend on how you use the property.

A typical apartment usually works through capital appreciation and/or long-term rentals. By contrast, professionally managed service apartments let you structure the investment differently: using a short-stay rental model with a service level that helps keep demand and income stable.

In a city with a large tourism flow (on average around 16 million tourists per year), the key factors are: booking channels, maintaining occupancy, and operating the property regardless of whether the owner is personally present.

Over the past decade, the service-apartment model has moved from a niche into a mainstream offering across Europe, GCC markets, and East Asia. The reasons are simple: investors prefer assets where management and revenue are built into the product, and demand is rising for solutions that align with tightening short-term rental regulations through professional operators.

In Europe, one notable player in this segment is Ando Living. Founded in 2019, the company operates lifestyle service-apartment properties. According to company reporting, its management division already works with more than 2,000 apartments in Portugal, hosts guests over 500,000 times, and processes more than 175,000 bookings through its own revenue-management system. The combined impact for owners is estimated at roughly USD 85 million thanks to a yield-management approach.

Ando Living’s Istanbul project—Ando Living Tomtom House—is located in the Beyoğlu district, in the historic Tomtom neighborhood. The location works well for both “living” and investment: nearby are Galataport, Karaköy, Galata, and İstiklal Avenue. The area benefits from steady foot traffic year-round and a high concentration of galleries, design shops, and restaurants.

The strategy isn’t about a single factor—it’s about combining them. For an investor using the tax relief, the property must meet all of the following at once:

• meet citizenship requirements;
• preserve and support value;
• generate income even when the owner is outside Turkey.

In a highly demanded area, service apartments can cover all three needs at once. A regular apartment typically covers at most two.

What to consider before making a decision

There are at least two points worth verifying in advance so the strategy doesn’t end up “on paper.”

First, the tax relief is tied to Turkish tax residency and a “clean” lookback period: no Turkish tax history within the last three years. If you had tax ties to Turkey recently, you’ll need to confirm eligibility before planning on the exemption.

Second, at the time this article was prepared, the Turkish Ministry of Finance had not yet published an explanatory document that would define operational details in depth—including how the rules apply to different visa types/statuses. As a result, some practical aspects may be clarified later.

For US citizens, it’s also important to consider the IRS position: US taxpayers are taxed on worldwide income regardless of residency. Therefore, the Turkish relief can be only one element within a broader tax strategy, not a complete “protection” on its own.

Invest smarter—live globally

In the end, Turkey offers a rare combination: one of the longest and most generous special tax regimes, a direct citizenship program, and a strong real-estate market in one of the most visited cities on Earth.

Investors who can “capture” this combination typically choose assets that continue earning even when the owner is outside Turkey. Managed service apartments in a high-demand area of Istanbul solve exactly this challenge.

Contact Ando Living to learn more about service apartments in Istanbul and across Europe.

If you’re viewing Turkey as a steady place to allocate capital, don’t focus only on real estate—look at the tax framework too. The 20-year exemption from tax on foreign income for new Turkish tax residents makes the strategy especially compelling, and the real key is getting your status right (residency/ citizenship by investment/ work authorization). Want a clear plan that connects tax benefits with service apartments in Istanbul? Work with Digital Nomad: https://digital-nomad.gr/en/goldenvisa.

Our Telegram channel about various types of Greek residence permits, digital nomad programs, and the Greek Golden Visa: @digitalnomadgr