There is no direct tax on wealth under Turkish law. Some taxes, however, are applied on particular elements of wealth such as motor vehicle tax, gift and inheritance tax and real estate tax.

  1. Real Estate Tax

Real estate tax is applied to owning real estate, where the taxpayer is the building or land owner, the owner of any usufruct over the real estate or any person that uses the real property.

Municipalities determine and assess the real property tax rates.

The building tax rate is 0.2%, though this rate may fall to 0.1% for residences. The land tax rate is 0.1% and applied separately from the building tax. For parceled lands, the tax rate is 0.3%. In some metropolitan cities, rates twice as high as the standard tax rates are applied.

  1. Gift and Inheritance Tax

Turkish law imposes inheritance tax on transfers of assets (i) that belong to a Turkish citizen through inheritance; (ii) that belong to a Turkish citizen through a gratuitous succession; or (iii) in Turkey to a person (an individual or a legal entity) with inheritance or gratuitous succession.

The Gift and Inheritance Tax Law (the "GITL") regulates the taxation of inheritance and succession of an estate. "Asset" is the movable and real property that can constitute the subject of an estate, and all other types of rights and receivables that constitute the estate. Turkish citizens' assets acquired abroad through inheritance or gratuitous succession, are also subject to the gift and inheritance tax.

Turkish law treats company shares as movable property, and the GITL regulates the taxation of gratuitous succession of company shares. First, company shares are valued to calculate the tax rates arising out of the succession of company shares. Valuation of the listed shares is made based on the last trading value of the shares in the three years prior to death. If the company shares are not listed or have not been traded within the last three years, the valuation will be made based on the shares' nominal values.

Credit accounts, deposit accounts or cash bank accounts are also subject to the GITL. Banks and brokerage companies must inform the authorities immediately if they discover one of their clients has died. Valuation of the deposit account is considered, together with interest yielded until the day of valuation. Foreign currencies are calculated using the current market rate. If this rate is unavailable, the currency will be calculated under the exchange rate that the Ministry of Finance has determined.

  1. Taxpayers

The real person or legal entity that has acquired property through inheritance or through gratuitous succession is the gift and inheritance taxpayer.

Under the GITL, a Turkish citizen's worldwide assets are subject to the gift and inheritance tax, and a foreign citizen residing in Turkey is subject to gift and inheritance tax if that person inherits property in Turkey.

  1. Scope and application of the gift and inheritance tax

Assets (movable properties, real properties and any other rights and receivables that may be included in the estate) (i) owned by Turkish nationals and (ii) in Turkey, are subject to the gift and inheritance tax.

Gift and inheritance tax becomes applicable upon transferring assets (i) through inheritance, or (ii) by any other means of gratuitous succession. The term “inheritance” refers to intestate succession and testamentary succession, including disposals with a will or agreement of inheritance. The term “gratuitous succession” refers to acquisitions that result from donations or occur through any gratuitous transfers. Indemnities paid in return for a tangible or an intangible injury are not treated as “gratuitous succession.”

The terms for the submission of a tax declaration for gift and inheritance tax vary depending on several factors, including whether the death occurs in Turkey while the heir/legatee is abroad, or whether the death occurs abroad while the heir/legatee is in a third country.

  1. Accrual of the gift and inheritance tax and tax rates

Inheritance tax is paid over the value of any assets in Turkey from the opening of the estate. Tax for gratuitous succession is paid over the value of any assets in Turkey from acquisition of the assets. The tax is calculated by reference to each individual’s inheritance rather than over the estate in its entirety. Two persons, each of whom inherits a part of the estate, will each pay tax on their own share. Even if each inherits the same share, they may pay different tax amounts due to the value of the inherited assets and their relationship with the donor/deceased.

The overall value of the part of the estate inherited is calculated under the tax authorities' guidelines. In principle, the gift and inheritance tax is payable within three years and in two installments per year upon the accrual of the tax.

As of January 1, 2015, the tax base brackets and rates are:

Tax Base
(Based on the value of the inherited asset)

Inheritance Tax Rate (%)

Gratuitous Succession Tax Rate (%)

on TRY 200,000

1

10

additional TRY 480,000

3

15

additional TRY 1,060,000

5

20

additional TRY 1,900,000

7

25

amount above TRY 3,640,000

10

30

The tax base is updated annually, and tax rates vary based on the taxable inheritance and on the relationship between the donor/deceased and the recipient/heir/legatee.

Finally, if gratuitous succession is provided to an individual by his/her parents, spouses or children, then half of the rates stated above would apply.

  1. Exemptions

Public administrations, pension and social solidarity funds, social security institutions, associations established for public benefit, political parties and organizations exempt from corporate tax established by those parties; organizations owned by legal entities established for public benefit, such as scientific, cultural, artistic, public health, education, religion, charity, resettlement or athletic purposes; and according to the reciprocity principles, ambassadors, chargé d’affaires, consuls (excluding honorary consulates) of foreign states appointed in Turkey; state nationals who are appointed to an official assignment in Turkey or appointed as officers in embassies and consulates, and the family members of those persons listed here, are exempt from the gift and inheritance tax under Turkish law.