Turkey Investment Income Guide 2026

Dividend Income — Taxation

Withholding at source: Dividends distributed by Turkish resident companies to individual shareholders are subject to 15% withholding tax (stopaj) at the time of distribution. The company deducts and remits this to the tax office on behalf of the shareholder. For corporate shareholders resident in Turkey, the withholding rate is 0% (dividends received are exempt from corporate tax). For non-resident shareholders, the rate is 15% unless reduced by an applicable double tax treaty.

Individual shareholder IIT treatment: After the 15% withholding, 50% of the net dividend received is included in the individual's annual IIT return (the balance of 50% is exempt). The included amount is subject to progressive IIT rates (15–40%), and the 15% withholding already paid is credited against the computed tax. If the credit exceeds the tax due, the excess is refunded.

Example: TRY 100,000 gross dividend → 15% withholding (TRY 15,000) → net TRY 85,000. 50% of net = TRY 42,500 included in IIT. IIT on TRY 42,500 at brackets (say 20%) = TRY 8,500. Withholding credit of TRY 15,000 → refund of TRY 6,500.

Interest Income — Withholding Rates

Interest income in Turkey is generally subject to final withholding tax (stopaj), which is the final tax — no additional return is required unless the taxpayer elects otherwise or has other income requiring a return:

• Government bonds and Treasury bills (TL): 0% withholding (effective 2026, previously 10%)
• Government bonds and Treasury bills (foreign currency): 0% withholding
• Corporate bonds: 10% withholding
• Bank deposits (TL): 0–15% depending on term (longer-term deposits have reduced rates — e.g., 3–6 months: 10%, 6–12 months: 7%, 12+ months: 3%, 24+ months: 0%) (2026 rates subject to adjustment by Presidential Decree)
• Bank deposits (foreign currency): 5–20% depending on term
• Repo gains (TL): 15% withholding
• Repo gains (FX): 15% withholding
• Investment fund participation certificates (bond/equity funds): 0–15% depending on fund type and holding period effective 2026

Interest income subject to final withholding is not included in the annual IIT return. However, if the total interest income (excluding withholding-taxed amounts) exceeds the exemption threshold, or if the taxpayer opts to file, the income must be declared.

Government Bond and Repo Exemptions

Interest income from government bonds and Treasury bills benefits from a 0% withholding rate for TL and FX instruments. This means the full interest amount is received tax-free at source. Additionally, gains from trading government bonds are exempt from IIT if the bonds were held for more than 1 year (or if the withholding has been applied). Repo (repurchase agreement) transactions are subject to a 15% flat withholding rate, which is final. No further IIT is due on repo income.

Currency-protected deposits (KKM): The Kur Korumalı Mevduat scheme (now being phased out, 2026) offered tax advantages including 0% withholding on interest and exchange rate differentials. Check GİB for the current status.

BIST (Stock Exchange) Gains

Holding period > 2 years: Gains from the sale of BIST-listed shares held for more than 2 years are exempt from income tax. This exemption applies to both residents and non-residents (subject to certain conditions). The holding period is calculated from the date of acquisition.

Holding period ≤ 2 years: Gains are treated as "other income" and included in the annual IIT return if they exceed the exemption threshold (TRY 96,000 estimated for 2026). Gains below the threshold are not taxable. Several factors such as the frequency of trading may cause the tax office to reclassify the activity as a business, subjecting the gains to full IIT without the exemption.

IPO shares: Shares acquired through IPOs may qualify for a 50% exemption if held for at least 1 year, or 75% exemption if held for at least 2 years from the IPO date. The exemption applies to the gains on those specific shares.

Investment Funds — Taxation

Turkish investment funds (menkul kıymet yatırım fonları, emeklilik yatırım fonları) are subject to specific tax rules:

• Participation (bond) funds: 10% withholding on distributions (may vary by fund type)
• Equity funds (hisse senedi fonları): 0% withholding if the fund's equity allocation exceeds 50% of its portfolio
• Pension funds (BES): 0% withholding on investment returns; contributions benefit from a 30% government top-up (devlet katkısı) up to certain limits. Withdrawals from BES before age 56 are subject to a 15% exit tax on the accumulated government contribution
• Real estate investment funds and REITs (GYO): Dividends are exempt from withholding at the fund level; distributions to individual investors are subject to 0% withholding.

Foreign Investment Income

Turkish tax residents must declare foreign investment income (dividends, interest, capital gains from foreign brokerage accounts). Foreign tax credits are available for taxes paid abroad under double tax treaties. The credit is limited to the Turkish tax attributable to the foreign income. Unilateral foreign tax credit (without treaty) is also available for certain types of foreign income. Foreign capital gains are included in the annual IIT return and taxed at progressive rates (15–40%). The 2-year holding period exemption may apply to foreign publicly traded shares if they meet the conditions.

FAQs

Is dividend income from Turkish REITs (GYO) taxable?

Dividends from GYO (Gayrimenkul Yatırım Ortaklığı) are exempt from corporate tax at the fund level and distributions to individual investors are generally subject to 0% withholding and are exempt from IIT. However, confirm with GİB for the latest treatment.

Do I need to file a return if I only have deposit interest?

No, if all your investment income is subject to final withholding (stopaj), no annual return is required. Only file if you have other income (salary, rental, etc.) that requires a return or if you want to claim refundable tax credits.

How are foreign dividends taxed?

Foreign dividends received by Turkish residents are included in the annual IIT return at their gross amount. Foreign withholding tax (if any) can be credited against Turkish IIT under the applicable double tax treaty or unilateral credit provisions. No "50% exemption" applies to foreign dividends (the 50% exemption is specific to Turkish-source dividends).

What is the KKM (currency-protected deposit) tax status?

The KKM scheme is being phased out as of 2026. The interest and FX gains were generally subject to 0% withholding. Existing accounts may continue under the original terms until maturity. Check GİB for the current transitional rules.

Disclaimer

This guide provides general information about Turkish investment income taxation for the 2026 tax year. Rates and thresholds are estimated based on the most recent published data and may change by Presidential Decree. Always consult with a qualified Turkish tax advisor or GİB for advice specific to your situation. InvestmentKit does not provide tax advice.