We’d want to use unique examples to explain an important subject. A significant amendment addressing Turkish citizenship, notably for foreign investors, was issued in March 2021. The present procedure has gotten more sophisticated as a result of this progress. We want to summarize the process with a simple yet powerful examples.
The regulations governing Turkish citizenship by investment have undergone some significant revisions. The vast majority of these modifications are tied to real estate interests. As a result, foreigners considering making real estate investments in Turkey to get Turkish citizenship should be cautious following the amendments. They impose certain essential constraints on the admissibility of real estate assets for citizenship applications. So, the citizenship procedures have become more difficult. As a result, international investors must now collaborate with legal specialists more than ever to complete their investments and citizenship procedures.
The following are the most recent changes:
Before the amendments, it was illegal to acquire real estate from a foreigner. Foreign investors seeking Turkish citizenship were required to purchase real estate from Turkish people, which remains in effect. However, there is currently an additional restriction saying that buying real estate from a foreigner’s spouse and children is not permissible. According to the real sense of this new law, a Turkish citizen married to a foreigner will not sell their real estate to a foreign investor seeking Turkish citizenship. Furthermore, a foreign investor will have to determine whether or not the Turkish property owner is married to a foreigner, which may be upsetting for both parties.
This regulation is quite limiting for Turkish nationals born in Turkey when seen from this perspective. As a result, I believe the legislature intended something different with this new regulation, which must be construed differently. We haven’t been able to get any clarity on this subject yet. So, I must acknowledge that this new clause is somewhat perplexing. We will be able to get more information about it soon.
Suppose a foreigner sells real estate to a Turkish person, subsequently selling it to another foreign investor. In that case, there is no difficulty for the final investor, and they can utilize that real estate to apply for citizenship. However, there is now a new and essential constraint on this option. Suppose the previous foreigner property owner has the same nationality as the final foreigner property owner (the last investor). In that case, the previous investor cannot utilize that real estate for the citizenship application, even if they buy it from a Turkish person. However, there is one more requirement for this limitation to be effective: The prior foreign property owner’s sale to the Turkish property owner must occur after January 1, 2018. If the initial property transfer happened before that date, the last investor would not face any difficulties.
Let’s explain this case with simple case file:
A Russian (Dimitri) owns property in Istanbul. On January 3, 2018, he sold it to a Turkish individual or firm. Then, in June 2021, another Russian (Borris) purchased the property from the present Turkish owner. In this case, Borris will be unable to petition for citizenship
through this real estate. If Borris was Belarusian rather than Russian, or if the initial sale occurred on 01.01.2018 rather than 13.01.2018, Borris would be allowed to use this property for citizenship purposes.
If a foreign investor purchases real estate from a Turkish firm, no one of that company’s partners should be of the investor’s nationality. In other words, The investor must investigate the most current partnership arrangement of the Turkish real estate business from whom they purchase real estate. Previously, this prohibition applied exclusively to companies where the investor, spouse, or children were partners. The restriction’s reach has now been extended.
Let me explain it clearly with another example:
In Istanbul, Malik (Palestinian) purchases a fiat from XXX Ltd. Company. XXX Ltd. Company has two partners: Bilal (Turkish) and Siddique (Palestinian). Then, because Siddique is a partner in the corporation, Malik will be unable to use this real estate for the citizenship application.
The most significant difference is that real estate that has previously been utilized as an acceptable investment for a citizenship application cannot be used for another citizenship application. However, if only a portion of the real estate was utilized for citizenship purposes, that portion will no longer be eligible, but the remaining portions will be.
Out of curiosity, another delicate and ambiguous guideline may stimulate foreign investors’ possible dangers. Suppose the real estate utilized for the citizenship application is transferred to the prior owner again after the three-year blocking period expires. In that case, the Turkish Citizenship Office may launch an investigation to determine if the parties engaged in a predetermined fraudulent transaction. If Turkish officials decide that the transaction was planned and dishonest, they can revoke citizenship retrospectively.
This new regulation has my criticism. Primarily, these rules provide foreign investors the opportunity to sell their real estate after three years. As a result, it shouldn’t matter if the property is sold back to the former owner or someone else. Moreover, the regulation does not provide any further information. We don’t know how this investigation will go or what criteria the authorities will use to determine whether or not a fraudulent sale occurred. The existing phrasing of the regulation violates the fundamental premise of “legality of penalties.” I am hopeful that this restriction will be clarified in the future.
For the time being, the safest choice for foreign investors who obtained Turkish citizenship and whose three-year term has elapsed is not to sell their real estate to the prior owners.
Preliminary real estate sale contracts, as is well known, are regarded as eligible investments for Turkish citizen applications. These contracts are formed for real estate developments still under construction and cannot be sold. Suppose the preliminary real estate sale contract was utilized for citizenship purposes, and the real estate project has not been completed by the time the three-year blocking period expires. In that case, the investor may sell (transfer) their contract to a third party (another investor). It usually does not jeopardize the foreign investor’s citizenship proceedings.
However, the new limits altered the situation. If such a sale happens, the Turkish Citizenship Office may launch an investigation into the transaction to determine if the parties engaged in a prepared fraudulent transfer. If the Turkish authorities determine that the transfer of the initial real estate sale deal was set and scheming, the citizenship may be revoked retrospectively by authorities.
All of my criticisms of the restriction outlined in number 6 apply equally to number 7. During the sale of real estate, the foreign investor must swear that no wrong or deceptive documents were presented, and if any were, they would face full responsibility. Even in the absence of such a declaration, the Turkish authorities had a legal basis for revoking a foreigner’s Turkish citizenship if an inaccurate or fraudulent document was submitted. However, by imposing such a disclosure, the Turkish authorities directly evidence the investor’s general duty. Foreign investors, in particular, must avoid misleading real estate price appraisal reports.
Finally, I must confess that the new rules have added a lot of extra stress for international investors and their attorneys. With the new restrictions, obtaining Turkish citizenship through real estate investment procedures would need significantly more due diligence. Furthermore, some of the new guidelines may be challenged for being overly stringent and imprecise. The ambiguity caused by these restrictions will tire international investors and attorneys until things become more precise. Overseas investors would be safer working with professional legal specialists in this subject. Their legal counsel should conduct a thorough preliminary investigation.
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