Following tax amnesty programmes of 2011 and 2016 (and to a limited extent that of 2017), Turkey has adopted Law no.7143 on 18 May 2018 bringing into effect a new tax amnesty programme for Turkish taxpayers.
Under the new programme, apart from other tax receivables, undeclared assets (including money, gold, foreign currency, securities and other capital market instruments) held abroad can be regularised:
- without being subjected to taxation if assets are repatriated to a bank or intermediary company account in Turkey by 31 July 2018, or
- by paying a 2% tax over the value of the assets (vs. Turkey’s standard income tax rates which range from 15% to 35%) if transferred to Turkey after that date.
The regularisation needs to be made by 31 November 2018 and the assets need to be repatriated into Turkey within 3 months after the declaration.
The programme foresees that the origin of the assets being regularised will not be questioned and no tax inspections will be initiated or penalties imposed against the taxpayer.
Additionally, any income derived by Turkish clients (including that derived until 31 October 2018) from the sale of participation shares of foreign entities, dividends from companies located abroad and commercial income generated through non-Turkish permanent establishments is exempt from income tax if transferred to Turkey by 31 December 2018. Moreover, income derived from the liquidation of entities located abroad is exempt from income tax if liquidation profits are transferred to Turkey by the end of 2018.
Turkish clients with undeclared assets should not miss this opportunity to regularise their tax situation and, when this is required, restructure their wealth through valid and robust wealth planning solutions which are fully compliant with the Turkish tax, legal and regulatory framework.
This is particularly important as this may be the last opportunity for Turkish clients to regularise their tax situation before Turkey starts to receive information, under the OECD’s Common Reporting Standard, on financial accounts Turkish tax residents hold abroad.
One of the solutions which Turkish private banking clients may consider is international unit-linked life insurance. This is a fully recognized wealth planning tool in Turkey which, if properly structured, may provide the client with a great degree of flexibility and a tax efficient treatment.
Indeed, international unit-linked life insurance meets overall objectives and needs of Turkish high net worth individuals in terms of:
- providing full tax deferral during the life of the contract,
- access to international investment opportunities,
- possibility to maintain the existing investment strategy with the same financial advisors,
- asset and investor protection through a State-controlled policyholder protection regime in Luxembourg,
- estate and succession planning capabilities,
- international recognition of the solution in case the client would relocate in the future and
- efficient treatment of multi-jurisdictional tax and legal issues in cross-border situations with family members spread across different countries.
Discover our cross-border wealth solutions !
By Pablo Pecina
Senior Wealth Planner
Lombard International Assurance
If you have any questions or require further information regarding our solution for Turkish clients, please contact your usual Lombard International Assurance representative or email us.