Citizenship Applications Based on Real-Estate Investments
Until the recent framework changes, Turkey had a very strict policy when it came to granting citizenships to foreigner, and especially did not grant citizenships based on any kind of investment. The reasons for such strict policy vary, although it is widely accepted that this was due to the unique geographic position of Turkey and the instability of the region to its east. In any case, until recently an investment or direct immigration inquiry did not open any direct channels for immigration. However, this regime was changed with the Council of Ministers decision No. 2016/9601, published at the Legislative Journal dated January 12, 2017, which implemented a new policy regarding citizenship applications. With these changes, purchasing real estate investment funds and/or venture capital investment funds now allows foreigners to obtain citizenship.
II.SUMMARY OF RECENT FRAMEWORK CHANGES
a) Amendments Made in Early 2017
As noted above, the Council of Ministers adopted a new decision which amended the ‘Regulation on Amending the Regulation Regarding the Implementation of Law of Turkish Citizenship’ and therefore introducing a new policy for citizenship applications. With this new policy, the Turkish Government has introduced the option of obtaining a Turkish Citizenship via making an investment in Turkey, similar to other countries in the world, although with certain reservations. Although the criteria for such investment were later amended again, the initial framework changes set forth that the foreigners who satisfy at least one of the below note investment requirements may be granted a citizenship, subject to the approval and an administrative decision of the Council of Ministers:
a) Foreigners who make a fixed capital investment of a minimum $2.000.000;
b) Foreigners who purchase a real estate property with a minimum value of $1.000.000 (such property shall also have an annotation of no-sale for at least 3 years at the relevant title registry);
c) Foreigners who generate employment at least 100 individuals;
d) Foreigners who deposit a minimum of $3.000.000 to banks that operate in Turkey with the condition to keep such deposit in the relevant bank for at least 3 years
e) Foreigner who purchase a minimum of $3.000.000 public borrowing vehicles and keep in reserve for at least 3 years
It should be noted once again that these criteria have been changed again and therefore are not currently valid.
b) Latest Amendments Made in 2018
Following the currency and economic crises in mid-2018, the USD/TRY exchange rate increased drastically and TRY went down nearly 40%. This currency crises also affected the real-estate market and the previously established criteria for foreign purchases. Due to the devaluation of the Turkish currency, the government decided to lower the investment thresholds to make these investments more viable.
Accordingly, a new regulation was published at the Legislative Journal dated September 19, 2018, once again amending the Regulation Regarding the Implementation of Law of Turkish Citizenship. As per this latest amendment, the current criteria for Turkish citizenship eligibility is as follows:
a) Foreigners who make a fixed capital investment of a minimum $500.000;
b) Foreigners who purchase a real estate property with a minimum value of $250.000 (such property shall also have an annotation of no-sale for at least 3 years at the relevant title registry);
c) Foreigners who generate employment at least 50 individuals;
d) Foreigners who deposit a minimum of $500.000 to banks that operate in Turkey with the condition to keep such deposit in the relevant bank for at least 3 years
e) Foreigner who purchase a minimum of $500.000 public borrowing vehicles and keep in reserve for at least 3 years
III. ELIGIBILITY AND APPLICATION
Considering the recent framework changes, foreigners shall be eligible to apply for a Turkish citizenship with one of the investment options noted above, with the real estate purchase being the quickest and cheapest option. However, the back to back changes in the criteria for such application procedures over the past 2 years have caused some confusion as to the eligibility of those who purchased properties before the recent changes.
As noted above, the minimum property value for citizenship applications was initially set as $1.000.000, which was then decreased to $250.000 with the latest amendments dated September 19, 2018. However, the Regulation did not explicitly state what would happen if a property was purchased for $250.000 (or for less than $1.000.000) before the recent changes were implemented (and therefore the criteria was set forth as $1.000.000 at the date of the purchase but was later decreased to $250.000). To resolve this confusion, the Ministry of Environment and Urban Planning published the Circular No: 2018/15-1791 dated October 15, 2018. According to this Circular, with regards to citizenship application procedures, for properties purchased between January 12, 2018 and September 18, 2018 the minimum value threshold shall be $1.000.000, whereas for properties purchased after September 18, 2018, such value threshold shall be $250.000.
Accordingly, foreigners who purchased a property in Turkey between January 12, 2018 and September 18, 2018 for at least $1.000.000, and those who purchased a property in Turkey after September 18, 2018 for at least $250.000 shall be eligible to apply for a Turkish citizenship. Moreover, Since the Regulation references Article 12 of the Law of Turkish Citizenship for such citizenship applications, the foreign investors’ spouses and children under the age 18 shall also be directly eligible for a citizenship application. However, the application procedures themselves are quite complex and great care should be taken during the purchase of the property in order to satisfy all the criteria and procedures for such application process.