We would like to explain an important topic with a unique example. An important amendment to Turkish citizenship, especially citizenship for foreign investors, was enacted in March 2021. As a result of this development, the current process has become more complicated. We would like to summarize the process with a simple but powerful example.The regulations governing Turkish citizenship by investment have undergone some major amendments. The vast majority of these amendments are related to real estate interests. Therefore, foreigners considering real estate investments in Turkey to obtain Turkish citizenship should proceed with caution after the amendments. These amendments impose certain basic restrictions on the admissibility of real estate assets when applying for naturalization. As a result, the naturalization process has become more difficult. Therefore, international investors now more than ever need to work with legal experts to complete the investment and naturalization process.
Here are the latest changes:
Prior to the amendment, it was illegal to buy real estate from foreigners. The rule that foreign investors applying for Turkish citizenship had to buy real estate from Turks remains in force. However, a new restriction has now been added, which prohibits the purchase of real estate from the spouse and children of foreigners. According to the real meaning of this new law, Turkish citizens married to foreigners are not allowed to sell their real estate to foreign investors applying for Turkish citizenship. In addition, foreign investors must also determine whether the Turkish property owner is married to a foreigner, which may be unsettling for both parties.From this perspective, this provision is quite restrictive for Turkish nationals born in Turkey. Therefore, I believe that the legislature intended this new provision differently and it must be interpreted differently. We have not received any clarification on this issue. Therefore, I must admit that this new provision is somewhat confusing. We will get more information about it soon.Suppose a foreigner sells real estate to a Turk, who subsequently sells it to another foreign investor. In this case, the final investor will not encounter any difficulties and can use the property to apply for naturalization. However, there are now new necessary restrictions on this option. Suppose the previous foreign property owner has the same nationality as the last foreign property owner (the last investor). In this case, the previous investor cannot use the property to apply for citizenship, even if they purchased it from a Turkish person. However, for this restriction to take effect, one condition needs to be met: the sale of the property by the previous foreign owner to the Turkish owner must have occurred after January 1, 2018. If the initial property transfer occurred before that date, the last investor will not face any difficulties.
Explain with a simple example
A Russian (Dimitri) owns a property in Istanbul. On January 3, 2018, he sold the property to a Turkish individual or company. Then, in June 2021, another Russian (Borris) purchased the property from the current Turkish owner. In this case, Borris will not be able to apply for citizenship through the property.Apply for citizenship through the property. If Borris was Belarusian instead of Russian, or if the initial sale took place on January 1, 2018 instead of January 13, 2018, Borris would be allowed to apply for citizenship using the property. If aforeign investor purchases real estate from a Turkish company, none of the partners in that company may have the citizenship of the investor. In other words, the investor must investigate the latest partnership arrangements of the Turkish real estate business from which the property is purchased. Previously, this prohibition applied only to companies in which the investor, spouse or children were partners. Now, the scope of this restriction has been expanded
Let me explain this with another example:
In Istanbul, Malik (a Palestinian) buys a Fiat car from XXX Ltd. XXX Ltd. has two partners: Bilal (a Turkish) and Siddique (a Palestinian). Then, since Siddique is a partner in the company, Malik will not be able to use the real estate to apply for citizenship.The most important difference is that real estate that was previously used as an acceptable investment for a naturalization application cannot be used for another naturalization application. However, if only part of the real estate was used for naturalization purposes, then that part will no longer qualify, but the rest will still qualify.Out of curiosity, another subtle and vague guideline may inspire possible dangers for foreign investors. Suppose that the real estate used for the naturalization application is transferred again to the previous owner after the three-year freezing period ends. In this case, the Turkish Citizenship Office may launch an investigation to determine whether the parties engaged in a fraudulent transaction determined in advance. If Turkish officials determine that the transaction was planned and dishonest, they can retroactively revoke citizenship.I have some criticisms of this new regulation. First, the regulations provide foreign investors with the opportunity to sell the real estate after three years. Therefore, it does not matter whether the property is sold back to the original owner or to someone else. In addition, the regulation does not provide any further information. We do not know how this investigation will be conducted, nor what criteria the authorities will use to determine whether a fraudulent sale has occurred. The existing wording of the regulation violates the basic premise of ‘legitimacy of punishment’. I hope that this restriction will be clarified in the future.For now, the safest option for foreign investors who have obtained Turkish citizenship and whose three-year period has expired is to not sell their real estate to the previous owner. Asis known, preliminary real estate sales contracts are considered eligible investments for Turkish citizenship applications. These contracts are signed for real estate development projects that are still under construction and cannot be sold. Suppose that the preliminary real estate sales contract is for naturalization purposes and the real estate project is not completed when the three-year freeze period expires. In this case, the investor may sell (transfer) his contract to a third party (another investor). This does not usually jeopardize the foreign investor’s naturalization process.However, the new restriction changes this situation. If such a sale occurs, the Turkish Citizenship Office may open an investigation into the transaction to determine whether the parties have prepared a fraudulent transfer. If the Turkish authorities determine that the initial real estate sale transaction transfer was a scam, then citizenship may be revoked retroactively by the authorities.All my criticisms of restriction No. 6 apply equally to restriction No. 7. During the real estate sales process, foreign investors must swear that no false or fraudulent documents were submitted, and if so, they will bear full responsibility. Even without such a declaration, the Turkish authorities have a legal basis to revoke a foreigner’s Turkish citizenship if inaccurate or fraudulent documents were submitted. However, by making the declaration mandatory, the Turkish authorities directly demonstrate the general obligations of investors. Foreign investors must especially avoid submitting misleading real estate price evaluations.In conclusion, I must admit that the new regulations have added a lot of additional pressure on international investors and their lawyers. Due to the new restrictions, obtaining Turkish citizenship through the real estate investment process requires more due diligence. In addition, some of the new guidelines may be questioned for being too strict and imprecise. The ambiguity caused by these restrictions will make international investors and lawyers run around until things become more precise. It is safer for overseas investors to work with professional legal experts in this area. Their legal advisors should conduct a thorough preliminary investigation.Toinvest allows you to evaluate quality real estate projects on our website. You can contact us and ask us your questions by email. We will keep you informed and support you in your real estate investment.
