Inheritance and Transfer Tax

The Legal Nature and Application of Inheritance and Transfer Tax under Law No. 7338

Introduction

Inheritance and transfer tax is a type of tax levied on the acquisition of property through inheritance or gratuitous transfer upon a person's death. In Turkey, this tax is regulated by the Inheritance and Transfer Tax Law No. 7338 ("VİVK"), enacted in 1959. The law covers both transfers due to death (such as inheritance and wills) and gratuitous transfers made during lifetime (such as gifts, donations, lottery winnings, etc.). The inheritance and transfer tax is a wealth tax aiming to balance property rights and inheritance rights with public finance. In fiscal law, this tax is based on the principle of taxing wealth as an indicator of an individual's financial capacity. Unlike taxes based on income or expenditure, inheritance tax is directly levied on the transfer of wealth and is therefore a direct tax.

The inheritance and transfer tax law, in force for over 60 years, is one of the oldest regulations in the Turkish tax system. Although it has undergone changes over time due to economic conditions (especially adjustments in the tariff in 1998 and 2007), its fundamental structure has remained intact. This article examines the legal nature of inheritance and transfer tax based on Law No. 7338, its application in Turkey, and the issues encountered in practice. The development section discusses the subject, base, rates, exemptions, and exclusions of the tax; the theoretical foundations and its relation to the Tax Procedure Law (VUK) are evaluated. Additionally, a comparative perspective is presented by examining inheritance tax regulations in Europe, especially Germany and France; the issue of international double taxation and related agreements are also analyzed. Throughout the review, Supreme Court decisions and doctrinal views are referenced to provide a comprehensive perspective.

Subject and Legal Nature of the Tax

The subject of inheritance and transfer tax is the transfer of property located in Turkey through inheritance (due to death by inheritance, wills, inheritance contracts, etc.) or gratuitous acquisition from one person to another. The law includes movable and immovable assets and rights over them (such as usufruct rights, receivables) within the scope of the tax. The concept of gratuitous transfer covers acquisitions by gift or any other means without consideration; however, compensations for material or moral damages are not considered gratuitous. Thus, the passing of the deceased’s estate to heirs or the gratuitous transfer of property by a living person constitutes a taxable event. The taxable event occurs either at the moment of death or when the gift transaction is legally completed.

Tax liability arises for heirs who do not renounce the inheritance in cases of inheritance transfers, and for persons acquiring property gratuitously in gratuitous transfers. According to the Turkish Civil Code, heirs become taxpayers upon acceptance of the estate (after the three-month rejection period). The taxpayer, according to legal terminology, is the "acquirer" of the property. Thus, inheritance and transfer tax is a tax on the transferee (not the transferor); the tax is paid by the person who acquires the property gratuitously, not the person who transfers it.

The personal and territorial scope of the law is also decisive. Inheritances acquired abroad by Turkish nationals are also subject to tax. However, foreign nationals who inherit property located abroad and who do not reside in Turkey are not subject to this tax in Turkey. This regulation reflects a mixed application of nationality and territoriality principles: Turkish citizens are taxed on gratuitous transfers worldwide, while foreigners are taxed only on transfers of property located in Turkey (with some exceptions). In particular, with respect to immovable property, under the principle of territoriality, immovable properties in Turkey are always subject to Turkish inheritance tax; however, for foreign heirs, the principle of reciprocity applies. Indeed, Supreme Court decisions have held that restrictions may be imposed if a foreign country does not grant the same rights to Turkish citizens. (For example, in the past, it was ruled that Greek nationals could not inherit immovable properties in Turkey due to restrictions in their home country.)

In terms of legal nature, inheritance and transfer tax is a wealth tax levied on the transfer of wealth. It complies with the "financial capacity" principle in Article 73 of the Constitution, as the increase in wealth obtained through inheritance or gift is considered an indicator of the ability to pay tax. In doctrine, it has been emphasized that the financial purpose of inheritance tax is limited, whereas its social purpose is more pronounced. Indeed, it is argued that this tax functions to ensure fairness in income distribution and to somewhat share the intergenerational transfer of large wealth with society. Although its share in public finance is low (amounting to only a fraction of total tax revenues in Turkey), inheritance tax is maintained due to its social function. However, due to difficulties in practice and collection costs, discussions about abolishing the tax have occasionally arisen. Indeed, at the end of the 1990s, the repeal of Law No. 7338 was even debated, but it never materialized. This issue will be revisited in the theoretical evaluation and conclusion sections.

Determination of the Tax Base and Tax Procedure

The tax base of inheritance and transfer tax is determined based on the values of the transferred assets as defined by law. The law refers to the provisions of the Tax Procedure Law (“TPL”) for the calculation of the tax base. According to Article 10 of the Inheritance and Transfer Tax Law (“ITTL”), the value of assets transferred through inheritance or gratuitous acquisition is determined according to the provisions of the TPL. For example, the property tax value of real estate, the stock exchange price or nominal value of securities, and the balance sheet values of commercial enterprises are taken as the basis. This aims to align the tax base as closely as possible with the real value of the inherited assets.

When determining the tax base, certain debts and expenses of the deceased or donor may be deducted. Article 12 of the law regulates these deductible items. Accordingly: (i) valid debts of the deceased supported by documents, including tax debts in the case of inheritance; (ii) debts related to the asset in gratuitous transfers and corresponding tax liabilities; (iii) inheritance and transfer taxes paid in foreign countries for assets owned by Turkish citizens abroad (limited to the declared value) and debts attributable to those assets; (iv) funeral expenses, including burial and announcement costs, can be deducted from the tax base. For example, credits the deceased owed to banks or unpaid tax debts to the tax office can be shown in the declaration and deducted by heirs. Similarly, if inheritance tax was paid abroad on an asset owned by the deceased, this amount is deducted from the tax in Turkey regarding the same asset. This method aims to alleviate double international taxation. However, this deduction cannot exceed the declared value of the asset in Turkey; thus, even if the foreign tax is high, the maximum deduction is limited to the asset’s value.

In gratuitous transfers, debts related to the transferred asset are also considered in determining the tax base. For example, if a gifted real estate is subject to a mortgage debt, this debt can be deducted from the tax base. Debts of the deceased that are disputed (subject to litigation or enforcement proceedings) may be deducted only if finalized; the waiting period for finalization cannot exceed 10 years, otherwise deduction is not allowed.

There is a close relationship between the inheritance and transfer tax and the Tax Procedure Law in terms of tax assessment and collection procedures. The inheritance and transfer tax is assessed based on a declaration system; taxpayers must submit declarations within the periods specified by law. The ITTL specifies declaration periods depending on the place of death and whether heirs are present. For example, if death occurs in Turkey and heirs are also in Turkey, the declaration must be submitted within four months following the death; if heirs are abroad, the deadline is six months. If death occurs abroad, the deadlines are reversed; six months if heirs are in Turkey, four months if heirs are in the same foreign country, and eight months if heirs reside in a different foreign country. In cases of declared death (absence), the declaration must be submitted within one month from the date the declaration of absence is entered in the death registry. In gratuitous transfers, the declaration must be submitted within one month from the legal acquisition date of the asset (completion of the donation). For winnings from games of chance, lotteries, and competitions, the institution withholding the tax submits the declaration by the 20th day of the following month on behalf of the winner.

As a result of the declaration system, the general provisions of the TPL also apply to inheritance tax. For example, if an undervaluation is later detected, additional assessments may be made; if the tax is not paid on time, late payment interest accrues under Law No. 6183 on the Procedure for Collection of Public Receivables. The Council of State rulings emphasize that the taxpayer’s fault is not required for the application of late payment interest in inheritance and transfer tax; interest accrues if the tax is not paid on time after assessment. The Council of State also upheld penalties imposed under the TPL for late or incorrect declarations (e.g., the rejection of the annulment request for a penalty imposed on a taxpayer who failed to declare a car acquired through a foreign donation contract on time). The TPL also introduces certain specific applications for inheritance tax; for instance, it allows additional time extensions beyond the initial declaration deadline. All these aspects demonstrate that inheritance and transfer tax operates within the general tax procedural law framework.

Tax Schedule and Rates

Inheritance and transfer tax applies a progressive rate schedule. However, the law distinguishes between inheritance acquisitions and gratuitous acquisitions (gifts, donations, etc.) with separate rate schedules. The rates are comparatively lower for inheritance acquisitions, while gratuitous acquisitions incur higher rates. According to Article 16 of the law, tax rates for inheritance acquisitions range from 1% to 10% across different tax base brackets, while the same brackets are taxed at rates between 10% and 30% for gratuitous transfers. For example, in 2021, the portion up to TRY 380,000 was taxed at 1% for inheritance and 10% for gratuitous acquisitions; higher brackets had ascending rates up to 10% for inheritance and 30% for gratuitous transfers. The tax brackets and amounts are updated yearly according to revaluation rates; as of 2025, the first bracket has increased to TRY 2,400,000, with similar updates to the brackets and rates.

The law grants a special reduced rate for gifts between close relatives. According to Article 16, if a person receives gratuitous assets from a parent, spouse, or child (except for adopted children), half of the stated rates for gratuitous transfers applies. For example, if a father donates assets worth TRY 1 million to his son, instead of the usual 10% first bracket rate, a 5% rate applies. This provision encourages intra-family gifts or at least reduces the tax burden. In contrast, inheritance acquisitions are not subject to different rates based on the closeness of kinship; all heirs are taxed under the same schedule. In this respect, Turkish inheritance tax differs from countries like Germany and France that apply degree-based tariff differences (this will be discussed further in the comparative section below).

Additionally, a special rate applies to winnings from games of chance, lotteries, and sweepstakes. The law fixes the inheritance and transfer tax rate for such gains at 20%. In practice, for major lottery winnings, tax is withheld at source at 20%. These types of gains are considered exceptional gratuitous transfers and taxed at a separate rate.

For tax calculation, the declared tax base is divided into brackets, and each bracket is taxed at the corresponding rate; the taxes are then summed (a bracketed tariff system applying a single rate to the entire amount within the bracket). After assessment, the tax is usually paid over 3 years in installments (Article 17). The law requires payment or provision of collateral for inheritance and transfer tax for real estate transfers as a condition for registration at the land registry. Real estate can only be registered in the name of heirs after the inheritance and transfer tax is paid (or collateral is provided).

Exemptions and Exceptions

In inheritance and transfer tax, the concept of an exception refers to goods or amounts that are partially exempted (excluded) from tax, whereas exemption refers to persons or entities that are not considered taxpayers at all. Law No. 7338 contains provisions regarding both.

The main exceptions are listed in Article 4 of the Inheritance and Transfer Tax Law (VİVK). The important ones can be summarized as follows:

Personal and Household Items: Household items inherited, personal belongings of the deceased, and family heirlooms such as paintings, swords, medals with sentimental value are exempt from inheritance tax. This provision excludes the daily-use items of the deceased from taxation, aiming to levy tax mainly on wealth elements with higher economic value.
Exemption Amounts for Spouses and Children: A certain portion of the inheritance shares of the deceased’s descendants (children, grandchildren; including adopted children) and spouse are exempted from tax by law. The amount introduced in the 1994 amendment was 400,000,000 Turkish Lira (old currency), initially equivalent to 161,097 TL in the new currency. This amount is adjusted annually according to revaluation rates. For 2021, the exemption amount per child or spouse was 334,534 TL, and if the spouse was the sole heir, it was 669,479 TL. By 2025, inflation has significantly increased these exemption amounts, with approximately 2,316,000 TL per spouse or child. If there are no descendants of the deceased, the exemption for the spouse’s share is applied at double the amount. These exemptions reduce the tax burden in inheritance and ensure that small or medium-sized inheritances remain exempt from tax.
Traditional Gifts and Dowry Items: Gifts, dowry items, and customary presents traditionally given on occasions such as weddings and engagements (excluding real estate) are exempt from tax. This ensures no tax liability arises from jewelry or gifts given on such occasions.
Charitable Donations (Sadaka): All types of unconditional charitable donations are exempt.
General Exemption for Gratuitous Transfers Inter Vivos: All lifetime donations below a certain amount are exempt from tax. The law originally set this exemption at 10,000,000 old Turkish Lira (equivalent to 3,711 TL new currency), which is increased annually. In 2021, this exemption was 7,703 TL, and by 2025 it rose to 53,339 TL. Donations under this annual threshold do not require tax declaration.
Exemption for Competition and Lottery Prizes: A certain amount of cash or goods won in competitions and lotteries is exempt from tax. In 2021, this amount was 7,703 TL, and by 2025 it has been updated to 53,339 TL. Amounts exceeding this threshold are taxed at 20%. Additionally, prizes from campaigns that do not rely purely on chance (such as collecting newspaper coupons) are not subject to inheritance and transfer tax.
Exemptions Related to Martyrs and Veterans: The value of all property inherited by the spouse, children, parents of a martyr who died in duty or war is exempt up to an additional amount equal to the exemption granted to spouses and children. For example, heirs of a martyr may benefit from an exemption twice the normal exemption limit. Furthermore, pensions granted to widows and orphans, retirement bonuses, marriage bonuses, and payments to disabled veterans and martyr orphans are exempt from inheritance tax.
Other Exceptions: Property subject to a return condition in donations (if the donee dies before the donor, the property returns to the donor according to the Turkish Code of Obligations Article 292) is exempt. Transfers of immovable properties registered as cultural and natural assets located abroad are also exempt. State contributions to individual retirement systems that have been vested are not subject to inheritance tax. Additionally, naked ownership transfers (where usufruct rights are not transferred) are not taxed as long as they remain in naked ownership.

Exemptions are regulated in Article 3 of the VİVK. The law fully exempts certain persons and institutions from inheritance and transfer tax. The main exemptions are:

Public Institutions: The state, municipalities, social security institutions, pension funds, public-benefit associations, political parties, and related legal entities exempt from corporate tax are exempt from inheritance and transfer tax. These institutions pay no tax when they become heirs or recipients of donations.
Public Benefit Foundations and Institutions: Legal entities established for public benefit purposes in science, culture, art, education, health, religion, charity, sports, etc., and which do not seek profit are also exempt. Thus, donations or wills made in favor of charities, foundations, and associations are not taxed, encouraging social benefit.
Diplomatic Exemption: Diplomats such as ambassadors and consuls of foreign states in Turkey, along with their family members of the same nationality, are exempt from inheritance tax based on reciprocity. For example, if a foreign ambassador dies in Turkey, their heirs are exempt from tax if the foreign country extends the same exemption to Turkish diplomats. However, this exemption does not apply to foreigners who inherit from Turkish citizens or reside in Turkey.

The provisions on exceptions and exemptions aim to alleviate the tax burden for social and economic reasons. In practice, even in cases falling under these rules, tax declarations often remain mandatory. For example, inheritance declarations must be submitted even if the inherited assets fall below the exemption threshold. However, in gratuitous lifetime transfers under the exemption amount, no declaration is required. (For instance, a person receiving donations worth 50,000 TL in one year does not need to file a declaration if this amount is below the exemption threshold for that year.)

Comparative View with European Countries

The application of inheritance and transfer tax varies significantly from country to country. Although most European countries have inheritance or wealth transfer taxes, some have abolished these taxes over the years. For example, countries like Austria, Sweden, and Norway have completely eliminated inheritance tax, while countries such as Belgium and Spain apply quite high tax rates. Below, by focusing especially on Germany and France, the main differences compared to inheritance tax in Turkey will be outlined. In this context, tax rates, exemptions, and taxation approaches have been examined comparatively.

Germany

In Germany, inheritance and transfer tax (Erbschaftsteuer) is applied at the federal level and follows a system that varies according to the degree of kinship between the deceased and the heir. The tax legislation classifies heirs into three different tax classes:

Class I: Spouse, registered life partner, children (including adopted), and grandchildren.
Class II: Siblings, nephews/nieces, step-parents, in-laws (son/daughter-in-law), and similar relatives.
Class III: All other persons (non-relatives) and legal entities.

Broad tax exemptions are granted for each class. For example, spouses benefit from a €500,000 exemption, and each child has a €400,000 exemption. Parents and grandchildren also benefit from certain exemption amounts (€200,000 for grandchildren, €100,000 for parents). For Classes II and III, exemption amounts are lower (generally only €20,000). Inheritances above these exemption amounts are subject to progressive tax rates. Rates start from 7% for the closest relatives (Class I) and can go up to 30%, while for more distant relatives or unrelated persons (Class III), rates start at 30% and can reach as high as 50%. For example, for spouses and children, tax brackets progress as 7% up to €75,000, 11% between €75,000–300,000, 15% between €300,000–600,000, and up to 30% on amounts exceeding €26 million. In contrast, Class III rates are 30% at the low bracket and up to 50% at the highest bracket.

Germany also provides significant exemptions and exceptions. For example, household and personal items are exempt from tax up to €41,000 for close relatives. There are special discounts and exemptions for family businesses and farms. Furthermore, if the deceased’s family home is transferred to the spouse and is used as a residence for at least 10 years, it is completely exempt from tax. This regulation aims to facilitate the intergenerational transfer of family homes.

Compared to Turkey, inheritance tax in Germany is applied at higher rates and differentiated based on kinship degree. While Turkey applies a single low-rate tariff for the entire inheritance (%1–10), in Germany, close relatives pay no tax up to a certain exemption amount, and the amount exceeding this is taxed progressively. For example, an inheritance of €500,000 passed to a spouse in Germany is tax-free (due to exemption), whereas in Turkey, the tax could reach approximately the 10% bracket. Conversely, for very large wealth transfers (e.g., €50 million inheritance), Germany applies up to a 30% tax, while Turkey’s inheritance tax is capped at 10%. Another important difference is that in Germany, heirs may deduct the debts of the deceased and funeral expenses from the inheritance (a standard deduction of €10,300 is applied if not documented), whereas in Turkey, similar deductions are allowed but without a fixed standard amount.

France

Inheritance and transfer tax in France (“droits de succession”) is a system that includes many exemptions in favor of direct-line heirs (spouses and children), while imposing very heavy rates on distant relatives and non-relatives. The most important feature is that spouses are completely exempt from inheritance tax. Following a reform in 2007, inheritance tax was abolished for spouses and registered partners under PACS (civil solidarity pact). Therefore, the surviving spouse does not pay any tax in France regardless of the amount inherited.

For children and parents, a tax exemption of €100,000 per person is granted. Each child can receive up to €100,000 tax-free from the deceased parent. Amounts exceeding this threshold are taxed with a progressive scale ranging from 5% to 45%. For example, if a child inherits €500,000 in France, the first €100,000 is exempt, and the subsequent portions are taxed at increasing rates: 5% up to €8,072, 10% for the next €4,037, 15% for the next €3,823, 20% up to €552,324, 30% for the part above €552,000, 40% for the part exceeding €902,838, and 45% for amounts above €1,805,677. Thus, for very large sums, the tax burden can reach up to 45%.

For siblings, nephews, and other more distant relatives, the tax rates are higher in France. Siblings benefit from only a €15,932 exemption, with tax rates between 35% and 45% on amounts exceeding this exemption. Nephews, uncles, aunts, and relatives up to the fourth degree have a very low exemption of €7,967, and a flat 55% tax applies on amounts above this. For non-relatives (friends, partners, etc.) or relatives beyond the fourth degree, the exemption is only a small amount of €1,594, and a uniform 60% tax rate applies to the remaining inheritance. Therefore, France is one of the countries that impose the highest inheritance tax rates outside close family members.

In France, usufruct rights (life interest) on real estate inherited can be granted to the surviving spouse as part of tax planning. The spouse may choose to take the usufruct for life on part of the inheritance while the bare ownership passes to the children; in this case, children pay less tax on the part they do not fully own. Inheritance tax must be declared and paid within six months in France (this period may extend to 12 months if the death occurs abroad). Due to the heavy tax burden, life insurance policies are quite common in France; life insurance payouts up to €152,500 are exempt from inheritance tax.

A general comparison between Turkey and France illustrates two opposite approaches. Turkey applies relatively low rates regardless of the degree of kinship, while France completely exempts spouses and heavily taxes transfers outside the immediate family. For example, in France, an heir inheriting €1 million from a friend faces about 60% tax, whereas in Turkey the rate is only 10% for the same situation (friends also pay inheritance tax in Turkey). On the other hand, for children, France has progressive tax after a €100,000 exemption, while Turkey applies a maximum of 10% tax after an exemption of around 2.3 million TRY (about €100,000). France grants full tax exemption to spouses, whereas in Turkey only limited exemptions apply to the spouse's share (double exemption if there are no descendants). It is also notable that France does not offer tax exemptions to non-married partners (only legal marriage or PACS).

Overview of Other European Countries

Many European countries apply inheritance tax rates based on the degree of kinship. For example, in Italy, inheritance tax is 4% for spouses and children, with exemptions up to €1 million; 6% for siblings; and 8% for more distant relatives. In Spain, rates vary by region but can range from 7.65% up to 81% (such as in the Andalucía region). Belgium also has regional differences, with rates reaching up to 80% at the highest bracket. The UK applies an estate tax on the deceased’s total assets instead of inheritance tax; as of 2025, there is a £325,000 exemption followed by a flat 40% inheritance tax.

As seen, Turkey’s inheritance tax rates between 1% and 10% are well below the European average. However, exemption amounts in Turkey have traditionally been lower compared to Europe (especially before 2023, when Turkey’s exemptions were smaller compared to the approximately €100,000 exemptions in Europe). A 2018 comparison of 35 European countries found that 24 have inheritance or gift taxes, with Turkey having one of the lowest maximum rates at 10% for inheritance. This confirms that inheritance tax in Turkey mainly serves a symbolic and limited fiscal purpose.

Double Taxation Issue and International Agreements

When inheritance transfers are considered at an international level, double taxation can emerge as a significant problem. If a person owns assets in multiple countries or heirs reside in different countries, similar tax claims may arise both in the deceased’s country and in the heir’s country. This situation can lead to the same inheritance being taxed twice, significantly reducing the inheritance’s value. To prevent this problem, countries have developed double taxation avoidance agreements or domestic provisions allowing tax credits for taxes paid abroad.

Turkey, as mentioned above, applies a unilateral measure to prevent double taxation in inheritance and transfer taxes through Article 12 of the Law: inheritance tax paid in a foreign country is deducted from the tax base calculated on the same assets in Turkey. This effectively creates a tax credit mechanism. For example, if a Turkish citizen pays inheritance tax in Germany on assets located there, this tax is deducted from the amount declared in Turkey. However, the deductible amount is limited to the amount of tax payable in Turkey on those assets; any excess is not refunded. This method is Turkey’s unilateral domestic legal solution and does not rely on reciprocal agreements with other countries.

Additionally, Turkey has some bilateral agreements, especially consular agreements aimed at facilitating inheritance transfers. For instance, according to the Turkish-German Consular Agreement dated May 28, 1929, the transfer and tax procedures of small inheritances in the contracting countries are facilitated through consulates. The Turkish Supreme Court (Yargıtay), based on the 1994 consular agreement between Turkey and Turkmenistan, overturned a decision related to the transfer of inheritance of a Turkmen citizen to the treasury, ruling that the inheritance must be delivered to the heirs according to the agreement. This example illustrates the role of bilateral agreements in protecting heirs’ rights. However, Turkey has very limited comprehensive bilateral tax treaties (double taxation avoidance agreements) specifically covering inheritance tax. Generally, tax treaties between countries focus on income and corporate taxes and exclude inheritance and transfer taxes from their scope. Therefore, preventing double taxation in inheritance tax is often managed through domestic legislation.

At the European Union level, there is no harmonized regulation on inheritance tax; member states maintain their own tax policies. However, the EU has made some efforts to alleviate double taxation issues in cross-border inheritances. There are EU Recommendations and European Commission studies encouraging member states to prevent double inheritance taxation through agreements or national measures. Indeed, inheritance tax agreements have been signed between some countries such as Germany, France, Sweden, the USA, Switzerland, and Denmark. For example, there is a special inheritance tax agreement between Germany and France that prevents double taxation, allowing inheritance assets to be taxed in only one country. A similar agreement exists between Germany and the USA. These agreements typically grant taxing rights either to the deceased’s country of residence or the country where the assets are located, with the other country waiving its right to tax, thus eliminating double taxation.

Turkey does not have a comprehensive international tax treaty specifically on inheritance tax. However, the general double taxation avoidance agreements (DTAA) to which Turkey is a party, although they usually exclude inheritance tax, may have indirect effects. Some agreements may include special provisions regarding inheritance tax, but most do not cover it. Therefore, in cross-border inheritance cases involving Turkey, judicial authorities usually intervene to resolve disputes. The aforementioned Supreme Court decisions have resolved conflicts based on reciprocity and consular agreements. Nevertheless, with increasing international inheritance cases due to globalization, it is possible that Turkey might consider negotiating inheritance tax-specific agreements with certain countries in the medium term.

Judicial Decisions and Doctrinal Views

The jurisprudence related to inheritance and transfer tax has played an important role in the interpretation and application of the law. Particularly, decisions by the Court of Cassation (Yargıtay) and the Council of State (Danıştay) have clarified the application of certain provisions of the law to concrete cases.

The Court of Cassation has primarily been involved in international inheritance disputes, issuing rulings that determine how the law applies in inheritance transfers involving foreign elements. For example, in a 2004 decision by the 2nd Civil Chamber of the Court of Cassation, it was ruled that Greek heirs could not inherit immovable property in Turkey from their deceased relatives due to restrictions imposed by Greek law on Turks acquiring immovables. This ruling was based on the principle of reciprocity, concluding that Greek citizens could not benefit from inheritance rights in Turkey. Similarly, in its 2007 and 2010 decisions, the Court of Cassation evaluated consular agreements and reciprocity conditions regarding inheritance acquisition by foreign nationals, establishing provisions for transfer or registration to heirs instead of transfer to the treasury. Although these rulings are not directly related to inheritance tax, they form the legal basis for the transfer and ownership of inheritance, thus also defining the subject of the tax (since if heirs cannot receive the inheritance, no tax arises).

The Council of State has mainly developed case law on tax technicalities. For instance, in a 1998 ruling of the 7th Chamber, objections by heirs residing abroad to delay interest penalties imposed due to late submission of inheritance declarations were rejected. The court emphasized that under Law No. 6183, the imposition of delay interest is mandatory regardless of taxpayer fault. In another case, the Council of State annulled a tax administration penalty for smuggling, which was applied due to undervaluation of real estate sales by a Turkish citizen living abroad and transferring the difference abroad, ruling that undervaluation in sales is not considered an inheritance or donation but a separate tax evasion offense. Furthermore, the Council of State rejected a claim for exemption from inheritance tax for a specially equipped vehicle donated to a disabled person living abroad, stating that there is no statutory exemption for the disabled, that assets acquired abroad by Turkish citizens (including vehicles) are subject to tax, and that the penalty for failure to comply with declaration deadlines was lawful. These rulings show that the judiciary strictly interprets the exceptions and exemptions of the law and does not extend non-statutory exemptions.

In doctrine, various views have been put forward on inheritance and transfer tax. Some authors argue that this tax does not impose excessive restrictions on inheritance rights but rather is legitimate and necessary as a tool to ensure justice in wealth distribution. From this perspective, inheritance is a form of economic gain acquired without labor and is naturally taxed under the principle of ability to pay. It is argued especially as a means of the social state principle that taxing large wealth transfers can reduce income inequality. Another view holds that inheritance tax constitutes double taxation, since the wealth has already been subject to various taxes (income, wealth, consumption) during the lifetime, and taxing it again upon death creates duplication. Proponents of this view emphasize the negative economic effects of the tax (such as liquidity problems in intergenerational transfer of family businesses) and argue for its abolition or reduction. Indeed, in Turkey, inheritance tax abolition has occasionally been debated, especially in the early 2000s due to its low fiscal yield. Nevertheless, considering the social benefits, complete abolition was avoided, although the tariff was left unadjusted against inflation for years, resulting in a de facto reduction in importance. Recent adjustments have significantly increased exemption amounts, making the tax affect only very large estates. This effectively represents a gradual easing of the inheritance tax through implicit policy.

The Turkish doctrine also criticizes the language and systematics of Law No. 7338. Due to its antiquity, the law’s language is considered heavy and difficult to understand, causing difficulties for taxpayers. A recent study found the readability of the law to be “difficult” and recommended modernization by simplifying long sentences and adapting it to contemporary Turkish. Such criticisms underscore the necessity of clarity in tax legislation and the modernization of the law.

Conclusion

The inheritance and transfer tax applied under Law No. 7338 constitutes the primary tool for taxing wealth transfers in Turkish law. As a wealth tax by nature, it reflects the social dimension of inheritance rights and aims for those with financial power to contribute to societal sharing. Although in force for more than sixty years, the law’s core structure has been preserved, with tariff and exemption updates reflecting changing economic conditions. Today, inheritance tax has become a modest fiscal instrument with high exemption thresholds and low rates. Its share in total tax revenues remains minimal, highlighting its symbolic function in wealth distribution justice and social state principles.

In-depth analysis shows that the Turkish inheritance and transfer tax system differs from its European counterparts by its simple and uniform structure. Unlike Germany and France, which apply complex kinship-degree-based tariffs, Turkey adopts a straightforward approach applying the same rates to all heirs. This approach facilitates ease of application and calculation but lacks higher exemptions for close relatives. However, increased exemption amounts in recent years have effectively provided a broad tax-free zone for close kin. Additionally, Turkey’s tax rate capped at 10% positions it as a low inheritance tax country from the perspective of international investors and wealth holders.

Internationally, the increasing cross-border inheritance cases also affect Turkey. To prevent double taxation, besides the provision in the law, Turkey may need to conclude comprehensive inheritance tax treaties in the future. Agreements with European countries with significant Turkish populations could protect taxpayers and enhance interstate cooperation. As observed in Court of Cassation decisions, in the absence of bilateral agreements, resolving issues judicially is possible but causes time and effort losses.

Ultimately, two main trends stand out regarding the future of inheritance and transfer tax: on the one hand, ongoing discussions on its complete abolition or further reduction due to low fiscal returns; on the other hand, increased recognition of inheritance taxes as a social justice tool amid rising wealth inequality. Turkey has so far pursued a balancing policy, maintaining the tax without burdening the budget. Simplifying the law’s language, resolving application uncertainties, and incorporating clarifications established by administrative and judicial decisions into legislation will strengthen the position of this tax within the modern tax system. In conclusion, inheritance and transfer tax under Law No. 7338 will continue to serve the principles of generality and equality of law and fiscal policy objectives, as long as it remains a legally sound, clear, and fair instrument.

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Fatih Mehmet Tercan, Attorney at Law