Turkey: Crucial development for foreigners on real estate investments for citizenship purposes

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The Regulation Amending the Regulation on the Implementation of the Turkish Citizenship Law entered into force by being published in the Official Gazette on January 6, 2022 and numbered 31711 (“Regulation”). The regulation introduced important changes in the procedures for acquiring Turkish citizenship through investment.

What does the regulation say?

  • For obtaining citizenship through capital or real estate investments, the Turkish Citizenship Law Implementation Regulations set certain limits in US dollars. While other foreign currencies within these limits are accepted, the phrase “or the corresponding Turkish lira” has been deleted. Thus, foreigners must now invest in a foreign currency to be able to claim citizenship under capital or real estate investments.
  • In order to meet the investment requirements, foreign nationals are now obliged to exchange the foreign currency invested through a bank operating in Turkey prior to the transaction and, thus, convert the amount into Turkish Lira.
  • Subsequently, the bank concerned is obliged to exchange the foreign currency through the Central Bank of the Republic of Turkey (“CBRT“).
  • CBRT will keep the corresponding investment in Turkish Lira for a period of three years. The CBRT will keep the relevant investment in deposit accounts in Turkey for investment-related transactions through Turkish deposit accounts, and in government debt instruments in Turkey for investment-related transactions through instruments Turkish debt. The procedures and principles regarding this matter will be determined by the CBRT.
  • In addition, the relevant ministries and public institutions, which are responsible for identifying the investment condition determined in accordance with the regulations, will determine their own procedures and principles regarding these obligations.

Conclusion:

According to the Turkish Statistical Institute, there were over 45,000 sales of residences to foreigners in 2019 and over 40,000 in 2020. With the effects of the COVID-19 pandemic diminishing in 2021, that number passed 50,000 in November. With the recent changes, given the exchange rate fluctuations experienced in Turkey in recent months, the goal may be to take advantage of the growing demand more effectively by increasing the demand for the Turkish lira and supporting the foreign exchange reserves of the CBRT. In this context, the forthcoming regulations in this area must be closely monitored.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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