Company Formation in Turkey
With the experience of setting up companies for nearly 100 international clients, FMC Group is pleased to provide you professional support combined with profound consulting to establish your presence in Istanbul, Ankara, a free trade zone, or any other location in Turkey.
- Company Formation and Registration for Foreigners in Turkey
- Setting up a company in Turkey with FMC Group
- Limited Liable and Joint Stock Companies in Turkey
- Turkish Branch and Liaison Office
- Provisions of the Turkish Liaison Office Operations
- Company Set Up in Turkey
- FAQ on Company Formation in Turkey
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Company Formation and Registration for Foreigners in Turkey
Foreign natural and legal persons can make direct investments in Turkey by
- founding a company,
- establishing a branch,
- acquiring shares in an existing company outside the stock exchange, or
- acquiring shares on the stock exchange, thereby obtaining equity participation of at least 10% or voting rights of the same amount.
Foreign companies can also open liaison offices in Turkey. The peculiarity of a liaison office is that the activity area is restricted, and it may not conduct any commercial activity. A liaison office can employ staff and, due to its partial legal capacity, can also acquire property (e.g. a car). Employees of a liaison office are exempt from income tax provided the salary is paid in foreign currency. But the establishment of a liaison office is subject to the approval of the Directorate General for Foreign Investments at the Ministry of Economy in Ankara.
Setting up a company in Turkey with FMC Group
We support our clients in setting up their presence in Turkey through forming the below possible options depending on your strategic decisions:
- Limited Liability Company (LTD) Formation
- Joint-Stock Company (AS) Formation
- Branch Office Formation
- Liaison Office Formation
In addition to these, if you are looking for a virtual office, we can provide an office address and manage the incoming and outgoing mail of your company.
Limited Liable and Joint Stock Companies in Turkey
In Turkey, all international investors have the same rights and liabilities as the local investors according to the Turkish Direct Foreign Investment regulation’s equal treatment principle. Hence, foreign investors can incorporate or participate in all types of companies in Turkey which are available for Turkish investors.
The most common legal entity types are Limited liable (LTD) and joint-stock companies (AS). For both entities, shareholders’ liabilities are limited to their capital subscribed. However, LTD companies’ shareholders are also personally liable without limitation for the company’s tax payment obligations. However, they are not liable for the capital contributions of the other shareholders that have not yet been paid up.
Requirements for LLC (Ltd.)
- Minimum Shareholder: 1
- Board of Directors: Min. 1, at least one of the shareholders will be appointed as managing director
- Minimum capital requirement: TRY 10,000
- Since 1999, managing directors and shareholders of the LLC have unlimited personal liability for the company’s tax and social security payment obligations. However, they are not liable for the unpaid capital contributions of the other shareholders.
Requirements for Stock Company (AŞ)
- Minimum Shareholder: 1
- Board of Directors: Min. 1
- Minimum capital requirement: TRY 50,000
- Registered capital for non-public AS: TRY 100,000
For both legal entities,
- Shareholders or Directors can be companies or individuals. There is no restriction about nationality or residency for them.
- At least ¼ of the capital must be paid up to a bank account upon formation. The remaining ¾ must be transferred within two years after registration.
- Permissible capital contributions are money, claims, movable property, land, companies, industrial property rights, copyrights, securities, concessions, mining rights, and other rights of economic value, as well as rights of use and use of movable property and land.
By giving power of attorney to professional consultants, the company setup can be done without your attendance in Turkey. However, in principle the legal authorities have the right to ask for the attendance of the managing directors. Besides, being in Turkey for notary processes can speed up the time to incorporate.
Turkish Branch and Liaison Office
The other two options for local presence in Turkey can be branch and liaison offices. They are not separated Turkish legal entities. As an integrated part of the abroad legal entity, they are representing their head offices in Turkey.
A branch office can supply and invoice goods and services in Turkey. All activities of the Turkish branch are subject to Turkish taxation. Therefore, is the accounting of the branch office a consolidated part of the headquarters’ accounting.
A liaison office represents a suitable means of starting to operate in Turkey with your own staff, provided that the business transactions can be settled directly between the Turkish customers and the parent company abroad. The liaison office itself is not permitted to issue invoices or generate any revenue. It is an office that strictly generates only expenses (costs such as salaries and travel expenses of the employees, rent, etc.), that is, a contact office with a limited activity area. All costs are borne by the parent company abroad.
Provisions of the Turkish Liaison Office Operations
Permission will be granted to liaison offices for 3 years by the Ministry in first applications, within the scope of activity submitted. The liaison offices who would like to extend their activity durations should apply to the General Directorate of Incentive Application and Foreign Capital before their duration of activity ends.
Liaison Office can be set up with the activities of Market Research and Introducing goods and services as well. But the permission of liaison offices does not get a further extension with the activity of Market Research and Introducing goods and services of Foreign Company. Getting an extension will be possible with choosing one or more of the below-given activities.
To get an extension, the company has to give details about activity in the past, liaison office future plans and targets, existing and future expenses, a number of employees. The Ministry evaluates the application of chosen activity with consideration of given details. Depending on this information, extensions with durations as given below can be granted.
The Liaison Offices must be run in the scope of activity that has been declared to the Economy Ministry. If the activities are determined out of this scope Liaison Office can be closed down by authority and tax penalties may arise.
As the liaison office is not allowed to have trade activities, it is only required to do simple accounting and does not have to pay corporate income tax in Turkey. The costs are charged to the parent company abroad. Also, as an incentive granted by the Turkish government, the employees are exempt from income tax as long as proof is furnished that they are being paid with foreign exchange transfers from abroad.
The main drawback of a liaison office is that the VAT of the costs incurred in Turkey cannot be deducted, whether in Turkey or abroad. However, the advantages presented by simple expense accounting and the tax savings generally outweigh the disadvantages by far.
A company car or the required office equipment can be purchased and registered in the name of the liaison office. Also, a liaison office allows the employees to be properly enrolled in the social security system.
Company Set Up in Turkey
Generally, companies in Turkey are set up in the following steps:
- To register a company in Turkey, foreign as well as Turkish investors have to sign the articles of association in front of a Turkish notary. This can be done with the notaries in Turkey or with Turkish notaries at the global Turkish consulates. But the articles of association have to be entered into the government system MERSİS
- If the partners are legal entities, the signature is provided by their legal representatives or authorized representatives.
- An application is then made to the respective Chamber of Commerce for entry in the commercial register on behalf of the shareholders. The commercial register checks whether the partnership agreement complies with the Turkish commercial law.
- Both the notary and the chamber of commerce require official documents from the shareholders. (Excerpt from the commercial register for legal entities, passport photocopies for natural persons) These must be translated with a notarial certification.
- For entry into the commercial register, the notarized documents of the appointed managing directors and their signature certifications are also required.
- The newly founded company is then registered with the tax office by submitting the office rental agreement.
- When the establishment is published in the official journal of the commercial register and the tax number is issued, the company is deemed to have been established.
- After the establishment of the company, the Ministry of Economic Affairs in Ankara must be informed, and the company must be registered with the Social Insurance Agency and the Ministry of Labor.
We are providing all necessary document samples, handle all the formalities in Turkey in your name and guide you competently through the process. Please feel free to call us at any time for unbinding free consultancy and guidance on company formation in Turkey.
It will be a pleasure for us to handle your company registrations in Turkey!
Company Names in Turkey
The company name should contain the object of the operation and the description of the legal form. The words “Türk”, “Türkiye”, “Cumhuriyet” and “Milli” may only be added to a company with the approval of the Council of Ministers.
FAQ on Company Formation in Turkey
Q: Is company registration in Turkey possible without a Turkish shareholder?
A: Yes, company setup can be done without Turkish shareholders. All shareholders can be resident abroad.
Q: How many shareholders do we need for Company formation in Turkey?
A: The Limited Liability companies can be registered with one or more shareholders. The partners can be private persons or legal entities.
Q: Do I need to attend personally the company set up in Turkey?
A: We can handle the whole setup process in line with your approval with your power of attorney. In this way, you do not need to be physically in Turkey.
Q: Is it necessary to rent an office for company registration in Turkey?
A: Yes, you have to an official rent agreement for the company registration process. However, you can benefit from our virtual office services if necessary.
Q: Do I need a working permit or residency permit for the establishment of a company in Turkey?
Q: Can I get a residency by founding a company in Turkey?
A: No, the formation of a company in Turkey is completely independent of the working permit or residency procedures. The formation can be done without these permits.
Q: Is it necessary to have an accountant in Turkey?
A: Yes, after company registration you need to have an accountant for completing the tax registration and following the tax procedures.