Important changes in the rules for obtaining Turkish citizenship by investment
Several important changes were announced in the laws of granting Turkish citizenship by investment in January 2022, and the changes mentioned below are effective as of the 24th of the same month.
Under these changes, many Arab investors will have to review their investment plans, and they also have to be more careful, not to mention that they need professional guidance given that the procedures and required documents have become more complex.
In this article, we return to the most important changes related to the most preferred investment options, namely, real estate investments and cash deposits in a bank account.
Foreign investors who completed their payments to real estate sellers before the date of January 24, 2022 are exempt from the new rules and are subject to the old rules, but if these investors have paid only some installments, the old rules apply, while the remaining installments are subject to the new rules, which is what was included The new exchange mechanism
What has changed in the rules of real estate investment?
Currently, the payment mechanism has two stages under a system established between Turkish banks and the Central Bank of the Republic of Turkey: foreign investors are obligated to exchange the foreign currency they invest in their Turkish bank accounts in Turkish lira before making the necessary payments to property sellers, after which they must send payments to sellers of real estate. Real estate in Turkish lira they get through the previous exchange transaction.
Moreover, the above-mentioned exchange will be processed under a new exchange option intended for those wishing to obtain Turkish citizenship by investment, and banks will make this new option available to their foreign clients.
In fact, Turkish banks in which foreign investors have accounts will also be obligated to transfer the disbursed amount to the Central Bank of the Republic of Turkey, and to provide a specific document on this transaction to foreign investors.
According to the conditions imposed by the new laws, this document must be included in the citizenship application with the invoices for payments to real estate sellers, and this means that the Turkish authorities have added another document to the list of documents required of foreign investors to obtain citizenship.
It is also important to determine the amount obtained from the exchange process in Turkish lira according to the new exchange mechanism with the exact payments made to sellers of real estate determined, and the sale price written on the title deeds should be identical to the authorized amount, otherwise the investment will be incompatible with the terms of citizenship under Investment laws and citizenship application will be rejected.
The above rules mean that the funds allocated for real estate investments must first be deposited in a Turkish bank account in a foreign currency (US dollars and other currencies), because they must then be converted into Turkish lira.
The question is: What if foreign investors had to deposit an amount in Turkish lira or actually deposit it in their bank accounts? In this case, there is no clear rule in the new regulations. Rather, this problem can be solved by converting the deposited amount in Turkish lira into US dollars (or euros or sterling), and then converting it back into Turkish lira through the new exchange mechanism, and obtain the necessary document proving that this transaction was carried out in accordance with the new rules.
The new rules also indicate that payments transferred directly from a foreign investor’s bank account abroad to the real estate seller’s account in Turkey are no longer accepted, and that these payments must be made through a Turkish bank, and all the above-mentioned transactions and payments can be made by a representative or A duly authorized lawyer with a power of attorney, foreign investors who find it difficult to open a bank account in Turkish banks can resort to this option as long as they trust their representatives or lawyers.
Foreign investors who completed their payments to real estate sellers before the date of January 24, 2022 are exempt from the new rules and are subject to the old rules, but if these investors have paid only some installments, the old rules apply, while the remaining installments are subject to the new rules, which is what was included The new exchange mechanism.
What has changed in the rules regarding depositing money into a bank account?
Two major changes occurred:
- Previously, it was possible to deposit 500,000 US dollars or its equivalent in any other foreign currency or Turkish lira to be able to apply for citizenship by investment, but at present the deposited funds should be 500,000 US dollars or its equivalent in euros or Only the pound sterling, while deposits in Turkish lira are rejected.
- The deposited funds are converted into Turkish Lira and remain in this currency for 3 years.
It must be noted that it is still possible for foreign investors to keep their money deposited in Turkish lira and reap the benefits that may arise from their capital invested in various financial instruments. In return, they cannot take advantage of the financial instrument recently announced by the Turkish Presidency and the Turkish Ministry of Treasury and Finance that protects Turkish Lira deposit accounts from foreign currency fluctuations.
The main rationale behind the aforementioned changes in the rules for obtaining Turkish citizenship by investment is to strengthen efforts to reduce the dominance of the dollar in the Turkish market and protect the value of the Turkish lira.