Turkey has become an important destination for international entrepreneurs and companies seeking access to regional markets, a large domestic economy and a strategic location between Europe, Asia and the Middle East.
Foreign investors can establish and own companies in Turkey, subject to the applicable legal and administrative requirements. However, setting up a company involves more than registering an entity with the Trade Registry. Investors should also consider taxation, banking, accounting, employment, social security and ongoing compliance before starting operations.
This guide explains the main stages of company registration in Turkey and highlights important considerations for foreign investors planning to establish a business in the country.
Why Do Foreign Investors Establish Companies in Turkey?
Turkey offers foreign investors access to a large consumer market as well as connections to international markets.
Foreign-owned businesses operate in a wide range of industries, including:
- Technology and software
- E-commerce
- Manufacturing
- International trade
- Tourism
- Financial and business services
- Logistics
- Medical and healthcare services
- Professional services
The appropriate company structure depends on the nature of the proposed business, the number of shareholders, investment plans and long-term objectives.
Before beginning the registration process, foreign investors should therefore determine the activities the Turkish company will perform and how the business will be structured.
Choosing the Right Company Structure in Turkey
The most common company structures available to investors include the Limited Liability Company (Ltd. Şti.) and the Joint Stock Company (A.Ş.).
Limited Liability Company
A Limited Liability Company is commonly used by foreign entrepreneurs and international businesses entering the Turkish market.
It can be established with one or more shareholders, and the shareholders’ liability is generally limited to their capital contribution.
An LLC can be suitable for many small and medium-sized businesses, service companies, trading businesses and foreign-owned subsidiaries.
Joint Stock Company
A Joint Stock Company can be appropriate for larger investments, businesses planning to raise capital or companies that require a corporate structure designed for more complex ownership arrangements.
The shares of a Joint Stock Company are represented by share certificates, and the company structure can provide greater flexibility for certain investment and financing arrangements.
Other Structures
Depending on the circumstances, foreign businesses may also consider establishing a branch office or liaison office.
A liaison office, for example, is generally established for representative and market research activities and is not intended to conduct ordinary commercial operations.
The appropriate structure should therefore be selected according to the company’s actual business activities and objectives.
Company Registration in Turkey
The registration process generally involves several stages, including preparing corporate documents, obtaining required signatures and notarizations, registering the company with the relevant Trade Registry and completing tax-related procedures.
Foreign investors planning to establish a Turkish company can review this detailed Company Registration in Turkey guide for further information about the registration process, requirements and practical considerations.
Preparing the Company Documents
The first stage is generally the preparation of the company’s Articles of Association and other required corporate documents.
Foreign shareholders and directors may need to provide identification documents and other supporting documentation.
Documents issued outside Turkey may require notarization, apostille procedures and certified Turkish translations depending on their origin and intended use.
Determining the Company Address
A Turkish company must have a registered address.
Depending on the business model, this may be a physical commercial office or an appropriate registered/virtual office arrangement where permitted.
The address is important because it is used for official correspondence, tax registration and other administrative procedures.
Trade Registry Registration
The company is registered with the relevant Trade Registry through the applicable registration system.
Following registration, the company’s corporate information is recorded in the Trade Registry and published in the Turkish Trade Registry Gazette where required.
The company can then proceed with the remaining tax, accounting and operational requirements.
Capital Requirements for Foreign-Owned Companies
Foreign investors should also consider the applicable minimum capital requirements.
The capital requirement depends on the company type and the applicable legislation.
However, the minimum statutory capital should not necessarily be treated as the appropriate investment amount for every business.
A foreign investor should consider the company’s expected operating expenses, staffing requirements, office costs, equipment, working capital and banking requirements when determining the appropriate capital structure.
For investors who also plan to obtain a work permit based on their company, additional capital and employment-related requirements may need to be considered.
Tax Registration After Company Formation
Company registration is only the beginning of the compliance process.
After incorporation, the company generally needs to complete its tax registration and establish the accounting and reporting systems required for its activities.
Depending on the business, the company may need to deal with:
- Corporate income tax
- Value Added Tax (VAT)
- Withholding tax
- Payroll taxes
- Social security contributions
- E-invoicing requirements
- E-ledger requirements
- Other statutory declarations and reporting obligations
Companies should establish these processes before commencing significant commercial activity.
VAT Registration and E-Invoicing
VAT can be an important consideration for companies conducting business in Turkey.
The applicable VAT treatment depends on the nature of the company’s products or services and the transactions it performs.
Businesses may also be required to use electronic invoicing and electronic ledger systems depending on their activities and statutory obligations.
Foreign companies should therefore evaluate their invoicing and accounting infrastructure during the company formation stage rather than waiting until after operations begin.
Opening a Corporate Bank Account
Opening a corporate bank account is another important step for a newly established company.
Banks may request corporate documents, identification documents, information concerning the shareholders and directors, details about the company’s business activities and information concerning the expected source and use of funds.
For foreign-owned companies, the practical requirements can vary depending on the shareholder and management structure.
Investors should therefore prepare the company’s corporate and personal documentation carefully before approaching a Turkish bank.
Accounting and Bookkeeping Requirements
A Turkish company is required to maintain accounting records and comply with applicable financial reporting and tax obligations.
The accounting system should be established according to the company’s business model and transaction volume.
For example, a company involved in international trade may have different accounting requirements from a technology company providing software services to overseas customers.
Foreign investors should therefore consider professional Accounting and Bookkeeping Services in Turkey when establishing their Turkish operations.
Proper bookkeeping is also important when a company wants to benefit from tax incentives or other statutory advantages because supporting accounting records may be required.
Tax Incentives for Foreign Companies
Foreign ownership does not automatically provide a tax exemption. However, qualifying investments and activities may benefit from various Turkish investment incentive regimes.
Depending on the nature and location of the investment, companies may potentially benefit from:
- Corporate tax reductions
- VAT exemptions
- Customs duty exemptions
- R&D incentives
- Technopark incentives
- Free Zone benefits
- Incentives for certain exported services
The applicable incentive depends on the company’s activities, investment characteristics and compliance with the relevant conditions.
Foreign investors considering a significant investment should therefore examine Tax Incentives in Turkey before making major investment decisions.
Employment and Payroll Requirements
Companies employing staff in Turkey must comply with employment, payroll and social security regulations.
This can include:
- Employment contracts
- Payroll calculations
- Income tax withholding
- Social security contributions
- Employee declarations
- Annual leave and employment records
- Other labor law obligations
Foreign companies should establish payroll procedures from the beginning of their operations to avoid compliance problems.
The requirements can become more complex when a company employs both Turkish and foreign nationals.
Tax Compliance for Foreign Companies
Once a company is incorporated, ongoing tax compliance becomes an important part of its operations.
Companies may need to submit periodic tax declarations, maintain accounting records, issue invoices correctly and comply with electronic reporting requirements.
Foreign companies should also consider how their Turkish operations interact with their international activities, including cross-border transactions and payments.
A useful starting point is the Tax Compliance in Turkey for Foreign Companies guide, which provides an overview of the ongoing tax and reporting obligations that can apply to international businesses.
Can Foreigners Own 100% of a Turkish Company?
Foreign investors can generally establish companies with foreign ownership, including wholly foreign-owned companies, subject to the rules applicable to the specific sector.
This means an international investor does not necessarily need a Turkish shareholder simply because the company is being incorporated in Turkey.
However, certain regulated sectors may have additional requirements or restrictions. Investors operating in regulated industries should therefore verify the rules applicable to their particular activity before incorporation.
Common Mistakes Foreign Investors Should Avoid
Foreign entrepreneurs sometimes focus exclusively on company registration and overlook the operational requirements that follow incorporation.
Several issues deserve attention from the beginning.
Choosing the Wrong Company Structure
The cheapest or simplest structure is not necessarily appropriate for every business.
The expected investment, shareholders, activities and future expansion plans should all be considered.
Ignoring Tax and Accounting Requirements
Company registration does not complete the company’s compliance obligations.
Tax registration, bookkeeping, invoicing and statutory declarations must be properly organized after incorporation.
Delaying Banking Arrangements
A company may be legally established but still face practical difficulties if its banking requirements have not been addressed.
Investors should prepare corporate and shareholder documentation in advance.
Failing to Plan for Employment Compliance
Businesses planning to employ staff should establish payroll and social security procedures before employees begin working.
Considering Incentives Too Late
Some investment incentives depend on specific conditions and procedures that should be considered before an investment is made.
For this reason, tax incentive planning should form part of the initial investment analysis.
A Practical Company Formation Process for Foreign Investors
Although the exact procedure depends on the circumstances, foreign investors can generally approach the process in the following sequence:
1. Define the business activity
Determine what products or services the Turkish company will provide.
2. Select the legal structure
Choose between an LLC, Joint Stock Company, branch or another appropriate structure.
3. Prepare shareholder and corporate documents
Arrange identification documents, powers of attorney, Articles of Association and required translations or notarizations.
4. Determine the registered address
Establish an appropriate registered business address.
5. Complete Trade Registry registration
Submit the required documents and complete the incorporation procedure.
6. Complete tax procedures
Establish the company’s tax registration and accounting infrastructure.
7. Set up e-invoicing and electronic accounting systems
Determine which electronic systems apply to the company.
8. Open the corporate bank account
Complete the bank’s corporate onboarding and compliance procedures.
9. Establish payroll and employment procedures
Register employees and implement payroll and social security processes where applicable.
10. Maintain ongoing compliance
Continue with accounting, tax, payroll and statutory reporting requirements after incorporation.
Professional Support for Foreign Investors
Establishing a company in Turkey involves several interconnected processes. Company registration, taxation, banking, accounting, payroll and regulatory compliance should ideally be considered together.
For international investors unfamiliar with the Turkish administrative environment, professional assistance can simplify the process and help coordinate the different stages.
A&M Consulting Co. supports foreign entrepreneurs and international companies with company formation, tax registration, accounting, payroll, tax compliance and other business-related services in Turkey.
Professional support can be particularly useful when the investor is establishing a wholly foreign-owned company, planning to hire employees, applying for an Investment Incentive Certificate or operating across multiple jurisdictions.
Conclusion
Turkey offers foreign investors a range of opportunities to establish and operate businesses across different sectors. However, successful market entry requires more than registering a legal entity.
Investors should consider the company structure, capital requirements, registered address, tax registration, VAT, accounting, banking, employment, payroll and ongoing compliance requirements as part of an integrated setup process.
For businesses planning to enter the Turkish market, understanding the company registration in Turkey process at the beginning can help establish a stronger foundation for subsequent tax and operational planning.
Foreign investors should also review applicable tax incentives and compliance requirements before making significant investments or beginning commercial operations.
Professional Advice for Foreign Investors
If you are planning to establish a company in Turkey, professional guidance can help you understand the incorporation process and the tax, accounting and regulatory obligations that follow.
Contact A&M Consulting Co. for assistance with company registration, tax, accounting and business setup requirements in Turkey.
