Repatriating Investment Funds After the Three-Year Hold: Blokaj Release and Transfer Abroad

The Blokaj Mechanism

Under the deposit route to Turkish citizenship, a minimum of USD 500,000 is placed with a bank operating in Türkiye and subject to BDDK regulation, and is held under a blockage (blokaj) for three years. The blockage is evidenced by a commitment letter issued by the bank to the BDDK confirming that the funds will not be withdrawn for the three-year term. It is that instrument, rather than the deposit alone, which satisfies the regulatory requirement.

The blockage restricts withdrawal of the capital. It does not deprive the account holder of visibility over the account. In our practice, clients retain direct online banking access to the account throughout the holding period, which allows the position to be verified at any time rather than taken on assurance.

When the Three Years Begin

The three-year period runs from the date the blockage is placed on the account — not from the date of the Presidential Decree conferring citizenship. Because the citizenship decision commonly follows the deposit by a year or more, the two dates can be widely separated, and the difference is not marginal.

Consider the ordinary sequence: a blockage placed in May of one year, with citizenship conferred by Presidential Decree in December of the following year. The funds become free in May of the third year after the blockage — which is a date roughly eighteen months earlier than an investor calculating from the Decree would expect. Investors who measure the period from the wrong starting point routinely leave capital blocked well beyond the term the regulation actually requires.

The Central Bank Conversion Requirement

A feature of the deposit route that materially affects the economics, and which is often not appreciated at the outset, concerns the currency in which the funds are held. Under the applicable Presidential Decision, foreign-currency amounts used for the qualifying investment must be sold to a bank operating in Türkiye and converted into Turkish lira at the Central Bank (TCMB) rate, with the Turkish-lira proceeds held for the three-year period.

The consequence is that what is held under blockage for three years is the Turkish-lira amount, not the original foreign currency. Movements in the exchange rate over the holding period therefore fall on the investor. This is a structural characteristic of the route rather than a matter of bank selection, and it is a central consideration when comparing the deposit route against the real-estate route, where the asset held is the property itself.

Release and Transfer Abroad

Once the three-year term has run, the blockage is lifted and the funds cease to be restricted. Türkiye does not impose a general exchange-control prohibition on transferring funds abroad, and there is no requirement that the capital remain in the country after the holding obligation has been discharged.

Transfers are nonetheless executed through the banking system, which is subject to the anti-money-laundering framework of Law No. 5549 and MASAK regulation. The bank will apply customer due diligence and will require documentation supporting the origin of the funds and the basis of the transfer. Funds whose entry into Türkiye is documented — supported by the foreign-exchange purchase records and the account history created at the time of the original investment — present a coherent evidentiary trail. This is one of the reasons the documentation created at the outset of a case matters at its conclusion, several years later.

Return on the Deposit During the Term

The blocked funds are held as a deposit and may earn interest according to the terms agreed with the institution. Interest income arising in Türkiye is subject to withholding at source under the Income Tax Law. Whether and how that income is further reportable depends on the investor's tax residency status, which is assessed separately and may itself have changed during the three-year period.

The Exit Is Part of the Structure

The deposit route is frequently presented as concluding with the Presidential Decree. In substance the arrangement continues for three years from the blokaj and ends with the release and disposition of the capital. Investors who treat the release as a foreseeable stage — with the documentation, banking relationship and tax position organised accordingly — encounter a materially simpler process than those who approach it only when the term expires.

This article provides general information on Turkish law and does not constitute legal or tax advice. The treatment of funds on release depends on the specific facts of the case, including the documentation created at the time of investment and your tax residency at the time of transfer. To review the position of a deposit held under the citizenship route, book a consultation with Av. Abdulsamed Burak Turak.