In this post, I’m going to explain the legal requirements set by Turkish authorities for establishing a business.
We have deep knowledge of these Turkish rules because at FMC Group, we have been helping clients with market research, company formation, account management, and employee leasing for twenty-seven years.
This post covers all essential requirements, as well as some other requirements for special industries.
Let’s get started.
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Co-author
In this post, I’m going to explain the legal requirements set by Turkish authorities for establishing a business.
We have deep knowledge of these Turkish rules because at FMC Group, we have been helping clients with market research, company formation, account management, and employee leasing for twenty-seven years.
This post covers all essential requirements, as well as some other requirements for special industries.
Let’s get started.
Author
Co-author
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Alp Atasoy
Sales and Business Development Consultant
For company formation in Turkey, there are four most important requirements that must be completed for properly incorporating the business. These are equally necessary for limited liability companies (LLCs) and joint stock companies. However, branch offices and liaison offices have less strict rules:
Company formation is governed by the Turkish Commercial Code, but your company is considered registered only after Trade Registry registration. The TCC is a law that comprises a set of rules for company formation, and the Trade Registry is a Turkish authority that registers businesses.
Foreigners can own 100% of Turkish companies. There are two main types of legal structure that most businesses register for. A limited liability company is for small businesses and needs 50,000 capital. A joint stock company (A.Ş.) has to be established with a minimum 250,000 TRY capital of which 25% must be paid upfront. A.Ş. is best suited for large businesses that need scalability and capital investors.
The Trade Registry is reviewing the trade name before registering your company. This is necessary for company formation to avoid misuse of brand names. When registering the company trade name, it is required that the trade name must be unique and also include the company type, either LLC or joint stock.
There is a department called the MERSIS system that validates trade names for newly registered companies, both locally and for foreigners.
In simple words, Articles of Association mean the company constitution. These are like a country’s constitution that explains the company, such as how it works, its structure, and other details.
The Articles of Association define what the purpose of the company is, how much capital it has to run the business, and how the company is managed. It may have a single owner, an attorney, or different shareholders.
Once the Articles of Association are ready and now it’s time to submit, but stop, you must check if they comply with the Turkish Commercial Code and how they shall be signed.
The Trade Registry is the official birth of a company. At this point, your company is registered, and Turkish authorities add your new company to the Trade Registry Gazette.
But before reaching the Trade Registry stage, there are other requirements that must be fulfilled before submission, such as an address, tax numbers, bank details and more. These are all now being discussed below.
One benefit of post-registration is that it enables taxation, banking, and hiring.
When we are talking about financial compliance, it means it is an umbrella term, and there are multiple things that must be complied with under finance. Capital activities, banking, and records must comply with local laws:
Remember that capital shows financial credibility and can make the process faster. According to Turkish Trade Law most of the capital can be paid within 24 months after registration. But you need to plan the financing of your company carefully.
If the company does not have enough income right from the beginning to cover the costs, the capital should ensure that financing and the shareholder ratio is according to local laws. Shareholders’ capital contributions show the ratio of ownership. There are no specific requirements for capital format; it could be cash or in kind, and not all capital is required upfront for LLCs or joint-stock companies (A.Ş.).
There is a need for a bank account for company formation in Turkey. One reason is that you need to deposit capital with legal authorities using that bank account. This helps keep records clean.
Personal accounts for legal operations are not compliant. Another reason for the bank account requirement is that local Turkish banks need to apply KYC and AML checks.
To pay taxes with bank transfers you need to open bank accounts at least at one of the Turkish state banks.
Are accounting books a legal requirement in Turkey?
Yes, you need to have fully compliant account books for your business finances. The main reason for this requirement is that businesses keep all records, and when required by legal authorities, they can provide them, making monitoring easier. Some rules:
Books must be notarized / e-approved.
Records must support tax audits.
Records must be kept for the statutory period.
Tax declarations shall be signed by registered tax consultants. Therefore companies usually appoint certified accountants to have the declarations signed and to avoid legal penalties or fines.
Post-incorporation compliance is considered the activation phase for a new company. In this phase, you get the tax number for financial identity and register your company in other business-related departments:
You need to submit your company for tax registration and recording purposes. You’ll get a unique tax number that is used for paying taxes, such as VAT or other taxes. Keep in mind that no tax registration means no invoicing or financial activities, and the tax office, during registration, may verify your provided address in Turkey or help you prepare it first.
This is a legal community of business owners, both locals and foreigners, and membership is mandatory in this department. The responsibility of the Chamber of Commerce is to confirm the commercial legitimacy of a business. Note that annual chamber fees apply once you are registered there.
This registration is mandatory only for businesses that want to hire employees in Turkey. Without registering, hiring can cause serious problems, including fines, penalties, or issues with future registration.
Employee registration is essential before the employee’s start date, and that is possible after registration with a social security institution. Monthly payrolls and SGK filings are mandatory.
If you don’t want to register the company, the best option for hiring is using an Employee of Record (EOR) service. EOR service providers, like FMC Group, hire employees for you and manage employee payrolls and other legal compliances.
We can divide the operational setup into three things: documents, address, and systems. Notarization is the official verification, and let’s understand legal documentation, what it is, what’s included, and what is required by the government:
All documents concerning the shareholders and directors of the company, like passport copies, trade registry copies, power of attorneys, signature samples and similar documents must be verified by the official government authorities of Turkey. The articles of association are to be signed at Trade Registry by the shareholders or by persons with a related power of attorney. After company registration, a notary approved signature circulation has to be prepared. This document is a proof to all third parties about the company authorizations. Please note that Turkish banks rely on notarized signatures.
There is not much to say about the legal address, but understanding this address in Turkey is required, and it could be virtual or physical. A virtual address is acceptable for all company types but not for liaison offices. Yes, liaison offices need a physical address, even if you only want to do market research and some small business activities. The tax office may also inspect that address. You also have the option to use a lease, and the lease proves the right to use the address.
An e-signature is a legally binding digital signature. You use this signature for tax and government portals.
You also receive e-notifications from the government. These are digital mailboxes for legal updates, and missing any important deadlines poses a legal risk. These notices are legally valid once delivered.
Regulatory compliance means complying with rules and permissions, and foreign investors face additional requirements. Below are the three main legal requirements that must also be fulfilled:
Turkish Commercial Code compliance is ongoing, not a one-time requirement. As long as your company is operating in Turkey, you need to continuously follow the rules that’s obvious. It covers governance, meetings, and capital rules. For example, in a joint-stock company or LLC, yearly shareholder meetings are mandatory.
Some sectors are regulated with additional, stricter permissions. These sectors could be medical, pharmaceutical, chemical, banking, media, or other industries related to humans or other living beings that could be seriously affected.
So, who issues these special licenses, Trade Registry?
No. Each special sector has its own regulatory board or ministry that issues these licenses. However, in these sectors, foreigners can fully and freely own the company.
You now have an idea that Turkey is strict in applying the rules, especially for businesses, and not complying with them can result in fines, penalties, and future restrictions.
The best option is to consult with an expert like FMC Group, get a detailed guide, and if you feel confident, you can proceed on your own. If you want everything faster and fully compliant, hire a local partner and start your business immediately.
The good news is that we are offering a free consultation call for anyone who wants to start a business or hire employees in Turkey without registering a company. Grab this opportunity now.
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