Pursuant to the regulations introduced under the Regulation on the Implementation of the Turkish Citizenship Law (“Regulation”), foreign investors are allowed to acquire Turkish citizenship by way of an exceptional procedure through investments in participation shares of real estate investment funds (“REIF”) or venture capital investment funds (“VCIF”). The same investment model may also be used for applications for short-term and long-term residence permits.
Within this framework, an application for citizenship may be filed provided that participation shares of a REIF or VCIF with a minimum amount of USD 500,000 or its equivalent in foreign currency are purchased and that such investment is held for at least three years.
Principles Regarding Investment Requirements
Under the Regulation, certain procedures and principles must be fulfilled for the investment process to be deemed valid. Accordingly, prior to the investment, the foreign currency to be used must be sold to a bank operating in Türkiye and transferred by the relevant bank to the Central Bank of the Republic of Türkiye. The participation shares of the REIF or VCIF must then be purchased using the Turkish Lira obtained through this transaction.
In addition, the investment must be made through funds approved by the Capital Markets Board of Türkiye (“CMB”).
Blocking and Central Securities Depository (CSD) Process
In order to secure that the participation shares acquired within the scope of the investment are held for a minimum period of three years, such shares must be blocked under the “Citizenship Blocking Sub-Account” at the Central Securities Depository of Türkiye (“CSD”).
Although the blocking may be lifted upon the investor’s request, the lifting of the block, or the sale or transfer of the participation shares, shall be deemed as a breach of the investment condition forming the basis of the citizenship application.
Furthermore, if any in rem right, attachment, injunction, or any encumbrance limiting ownership rights exists over the participation shares, the three-year holding requirement shall be deemed not to have been fulfilled.
Application Process for the Certificate of Eligibility
Prior to applying for citizenship or a residence permit, a “Certificate of Eligibility” must be obtained from the CMB in order to evidence that the investment conditions have been satisfied.
Within this scope, upon the investor’s application, the CMB verifies through the CSD whether the investment meets the conditions set forth in the Regulation, and if the conditions are satisfied, issues the certificate of eligibility.
Three-Year Holding Requirement and Value Fluctuations
For the investor to acquire Turkish citizenship, the relevant participation shares must be held continuously for a period of three years starting from the date on which the minimum investment requirement is met.
However, any decrease in the investment value below USD 500,000 due to exchange rate fluctuations or market conditions does not affect the citizenship application or acquisition.
Likewise, value decreases arising from the internal operations of the fund are not considered a breach of the minimum investment requirement.
General Assessment
Acquiring citizenship through REIF and VCIF participation shares offers a more flexible investment model and may proceed operationally faster compared to direct real estate acquisition. Nevertheless, due to the technical and administrative requirements involved, it is important that the investment and application process be carried out carefully and with professional support.
Entry into Force and Implementation
The relevant regulations are currently in force, and applications are processed before the Capital Markets Board, the Central Securities Depository, and the relevant authorities in accordance with the procedures and principles summarized above.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
