Turkish Law Blog

Acquisition of Turkish Citizenship by Investment

Kazım Çınar Kazım Çınar/ Istanbul Medeniyet University
31 January, 2019
810

In General

Citizenship is described as the political and legal connections that connect people to States.[1] No doubt having a Turkish passport does have certain benefits to its holders especially for its geographic and political conditions making it a gate for the Europe. On the other hand the value of the immovable property over the years has increased consistently.

The types of citizenship are two-fold: acquisition of citizenship at birth and acquisition of citizenship through naturalization. Acquisition of Turkish citizenship through naturalization in principle occurs with the decision of the competent authority considering the conditions regulated by Article 11 of the Turkish Citizenship Code[2] (hereinafter referred as TCC). These are; 1) being in the age of majority and having the capacity to act either according to his/her own national law or, if he/she is stateless, according to Turkish law, 2) having been resident in Turkey without interruption for five years preceding the date of his/her application, 3) verifying his/her determination to settle down in Turkey with his/her behaviours, 4) not having an illness posing a threat to public health, 5) being of good moral character, 6) being able to speak a sufficient level of Turkish, 7) having an adequate income or profession to support himself/herself and his/her dependants in Turkey, 8) not having in a situation constituting an obstacle to national security and public order. It should be noted, however, that the fulfillment of these conditions does not confer a person an absolute right to acquire citizenship.

On the other hand, in certain exceptional circumstances, Turkish citizenship can be acquired without the conditions mentioned above.

Exceptional Situations

Those who have the right to exceptional acquisition of Turkish citizenship have been counted under Art.12 of TCC and regarding provisions of the Governing Regulation of Turkish Citizenship Code[3]. Four groups of people may acquire Turkish citizenship by the Presidential decision provided that they not are in a situation constituting an obstacle to national security and public order. These are; a) Persons who have brought industrial plants into Turkey or have rendered or are being considered to render in future outstanding services in the scientific, technological, economic, social, sporting, cultural and artistic fields and about whom a reasoned offer has been made by the relevant ministries; b) persons who have a residence permit in accordance with Art.31(j) of Law on Foreigners and International Protection[4] and a Turquoise Card holder and their foreign spouse, their minor and unaccompanied child. c) Persons whose naturalization has been considered necessary; d) Persons who have been recognized as göçmen (immigrants pursuant to the Law No.5543)

Acquisition of Turkish Citizenship by Investment

The above-mentioned Art.31 regulates the residence permit of investors who have invested a certain amount determined by the Presidency and their spouses and children without any working condition. On the other hand Art.12 (1) of TCC supports the acquisition of Turkish citizenship by investment.

The lower limits of investment have been concreted by the Governing Regulation of Turkish Citizenship Code. On the other hand, those limits of investment to be able to have the right to apply to acquire Turkish citizenship exceptionally have changed in September 2018. The minimum numbers has decreased by the latest developments which are related with the government policy towards construction and finance sectors. According to the Art.20 of the Governing Regulation, the foreigners may acquire Turkish citizenship exceptionally;

a. by the fixed capital investment valued at least 500.000 US Dollars or the equivalent in another currency provided that it is confirmed by the Ministry of Industry and Technology,

Fixed capital investment refers to physical assets such as machinery, installations, vehicles, buildings or technology. The latter makes contributions to economic growth by capital accumulation of countries and hence production capacity and increase in employment. The government aims to motivate international investors bringing in direct investment instruments at least a certain amount, which is 500.000 US Dollars. Before the legal amendment in September 2018, the lower limit for fixed capital investment was $2.000.000.

b. by the purchase an immovable property valued at least 250.000 US Dollars or the equivalent in another currency provided that the immovable will be put an annotation not to be sold for 3 years and it is confirmed by the Ministry of Environment and Urbanization

The condition/opportunity of purchase an immovable property has become the most attractive and popular one, when the regarding changes in the Governing Law of TCC disclosed. The public discussions and criticism have been gathered on the latter. It is very simple, aside from other procedural stages, purchasing any kind of immovable property valued $250.000 or more, give a person the right to apply Ministry of Interior to acquire Turkish citizenship.

The reason that makes the process easier than other investment tools counted in ongoing paragraphs of Art.20 of the Governing Regulation is that one does not have to wait a certain period of time, instead after/during purchasing, an annotation not to be sold for 3 years will be put. However, for instance one may apply to acquire Turkish citizenship by investment after keeping three years of money (valued at least 500.000 US Dollars or equivalent) in the banks operating in Turkey in accordance with the sub-paragraph (ç) of the Article. Considering Art.704 and 998 of Turkish Civil Code, the elements considered immovable property are; a) Land, b) Independent and permanent rights recorded on a separate page in the land registry, c) Independent sections registered in condominium register. Before the September 2018 amendments, the lower limit in context of purchasing immovable property was $ 1.000.000 in order to apply Turkish citizenship by investment.

c. by the creation of employment of 50 people and its confirmation by the Ministry of Family, Labor and Social Security

Unemployment is another universal problem of states and qualified investors that create employment areas are generally accepted option for conferring citizenship around the globe. Because the Regulation does not give details, any kind of employment from chief executive officer to operation workers could be evaluated in context of the latter. Needless to say, the number of the shareholders of a company in which invested and the annual turnover of the company or similar indicators does not matter for the citizenship application.

d. by money deposits to banks operating in Turkey valued at least 500.000 US Dollars or the equivalent in another currency provided that they must keep three years and it is confirmed by Banking Regulation and Supervision Agency of Turkey (BDDK)

Money deposit to banks operating in Turkey is another vehicle to acquire Turkish citizenship exceptionally. It is undoubtedly not a direct investment that makes a direct contribution to state economy; instead it aims economic growth by capital accumulation. An alien who deposit money stated in this Regulation does not give a right to apply to acquire Turkish citizenship directly, he or she is needs to keep three years in the bank and may apply after the said process.

e. by the purchase of government debt instruments for a period of three years valued at least 500.000 US Dollars or its equivalent in another currency and its confirmation by the Ministry of Treasury and Finance.

When the government cannot meet its public expenditures with its normal income or due to the necessity of economic fiscal policy or extraordinary circumstances such as war, it can obtain public revenues by borrowing from the private sector or foreign countries. In this regard, public borrowing might be seen a temporary financing tool in theory. However in practice, government debt instruments have wider scope of application in conformity with modern treasury theories. States may refer from the debt instruments for certain reasons including long-term investments and increase in public expenditures. Primary government debt instruments in Turkey are government debt securities, the Central Bank Liquidity Securities, Revenue Partnership Securities, Income Indexed Securities, asset and mortgage covered securities and public bonds. Any of the said instruments might be purchased for the citizenship acquisition considering the investors’ primary business areas.

f. by the holding real estate investment fund participation or venture capital investment fund participation shares valued at least 500.000 US Dollars or the equivalent in another currency on the condition that they hold at least three years and its confirmation by the Capital Markets Board.

These two instruments stated in Art.20/2(e) are investment partnerships regulated and controlled by Capital Markets Board of Turkey. These instruments have been benefitted especially for bigger projects as a financing device. Real estate investment fund is an asset established within the fund rules by portfolio management companies and real estate portfolio management companies which hold an operating license from the Capital Markets Board in order to manage the portfolios composed of assets and transactions specified in the Communiqué, with the money collected from qualified investors in return for fund units, in compliance with fiduciary ownership principles.[5] The fund does not have a legal entity in principle, however it is deemed to have a legal entity limited to the registration and amendment to the title deed, and to the withdrawal and correction procedures according to the Communiqué.

Real estate funds are allowed to operate only in management of portfolios of assets, rights and transactions stated below:

  • Real estates and property rights
  • Private and public debt instruments, and shares of joint-stock companies established in Turkey, including those in the privatization process
  • Foreign private and public debt instruments and joint-stock company shares tradable within the framework of provisions of Decree No. 32 on Protection of the Value of Turkish Currency
  • Time deposit and participation account
  • Investment fund units
  • Repo and reverse repo transactions
  • Warrants and certificates
  • Lease certificates and real estate certificates
  • Settlement and Custody Bank Money transactions
  • Cash collaterals and premiums of derivative transactions
  • Specially designed foreign investment instruments and loan participation notes deemed appropriate by the Board
  • Other investment instruments deemed appropriate by the Board

On the other hand venture capital investment fund is an asset established under fund rules with limited term, by portfolio management companies and venture capital portfolio management companies which hold an operating license given by the Capital Markets Board in order to manage the portfolios composed of assets and transactions counted in the Communiqué, with money and/or capital stocks collected from qualified investors in return for fund units, in accordance with fiduciary ownership principles.[6] The latter does not have a legal entity, too. The operable assets, rights and transactions are similar with those which are counted above. The goal of venture capital investment fund in essence is to provide the resources to entrepreneur companies with development potential.

 

[1] For definitons please see Gülin Güngör, Tabiiyet Hukuku (Law of Nationality), Ankara, 2018, p.1; Ergin Nomer, Türk Vatandaşlık Hukuku (Turkish Citizenship Law), Ankara, 2017, p.3; Bronwen Manby, Citizenship Law in Africa, New York, 2016, p.ix.

[2] OJ 12.06.2009, N.27256.

[3] OJ 06.04.2010, N.27544.

[4] OJ 11.04.2013, N.28615.

[5] Article 4 of the Communique on Principles of Real Estate Investment Funds, prepared by Capital Markets Board of Turkey. OJ 03.01.2014, N.28871. Also see http://www.cmb.gov.tr/Sayfa/AltSayfa/95

[6] Article 4 of the Communiqué on Principles Of Venture Capital Investment Funds, prepared by Capital Markets Board of Turkey. OJ 02.01.2014, N.28870. Also see http://www.cmb.gov.tr/Sayfa/AltSayfa/96.

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