Looking to set up business in Turkey might seem overwhelming at first, but with research and advice, anyone can do it. At the crossroads of Europe and Asia, Turkey presents a thriving business landscape with its dynamic market opportunities among other foreign countries. With its growing economy and abundant opportunities across various sectors, the appeal of Turkey is undeniable.
Selecting the correct business structure is just one of several essential decisions that require consideration. This guide to doing business in Turkey is in two parts: a brief summary for a quick read, and a more in-depth step-by-step guide from navigating legalities and deciding on a business bank account to understanding tax obligations and incentives.
It's easy to see why Turkey appeals as a destination for new companies: half its 80-million-strong population is under 30, and they're increasingly educated and solvent, with cash to spend. Banking and communications infrastructure have improved vastly, and trade links with Europe and the Middle East are strong.
Government incentives include:
- "Turkish Company" status, giving new firms the same rights and obligations as existing Turkish companies;
- Guarantee of existing investment rights;
- Conformity with international standards;
- Changing the definition of a foreign investor to include companies registered outside the country, non-Turkish nationals and Turkish nationals living outside the country;
- Imports of specific machinery and equipment are now exempt from customs duties, levies and VAT;
- Certain exemptions from income tax and social insurance contributions;
- Energy subsidies;
- Incentives available in free trade zones, including exemptions from several taxes and customs duties;
- Better protections for foreigners.
The company incorporation process is relatively straightforward, and investors can start trading within a week, if everything is in order. After formulating your business plan, the first task is drafting the articles of association, which must be signed by the directors, and conforming to Article 279 of the Turkish Commercial Code. The document must incorporate “limited” in the company's trading name. Founders must state their nationality, full names, surnames, addresses, and trading addresses. The document is then officially notarised and translated.
Deposit the minimum share capital into a bank account in the company's name. After this, begin the registration process, paying a fee to the Turkish Commercial Registry Office, with the required documents. The Registry Office will issue a registration certificate and publish the company's incorporation in the Turkish Gazette. They then register for VAT with the relevant tax authority.
The Turkish Chamber of Commerce has offices throughout Turkey. Contact them within 15 days to organise the official trade registry. You will need your filled in company registration application form, your written request for application, suitable identification of the founding members, a letter of commitment in line with Article 29 of the Trade Registry Regulations, and a receipt of payment of the deposit to the Customers Fund Account (normally 1/1000 of the capital). To avoid lengthy waits and unnecessary confusion, seek advice or the services of someone who speaks Turkish. Once registered, you can start trading.
Turkish law allows entrepreneurs and sole proprietorships to establish legal entities in the country. Limited Liability Companies (LLCS) and Joint Stock Companies (JSCS) are the most popular business structures. Both are governed by the Commercial Code No. 6102 and ensure a favourable business environment. A minimum capital of 50,000 TRY is needed to start an LLC, while a JSC requires 250,000 TRY. Entrepreneurs must also secure a Tax Number to conduct transactions. Picking the proper structure will impact how your company operates and complies.
A Limited Liability Company (LLC) is popular among small and medium firms. Limited companies stand out for their easy governance structure, low operating costs, and lower capital requirements compared to other types. Foreigners often choose LLCS because they allow one legal entity shareholder while offering limited liability protection. This protection means shareholders are only liable up to their capital investment.
Setting up the registration documents for an LLC is efficient and quick, usually completed in under a week. You need one director and one shareholder to form an LLC. An LLC can engage in any commercial or industrial activity and is eligible for investment in Turkish free zones. These zones provide full tax exemptions, making this company incorporation process an attractive choice.
A Joint Stock Company (JSC), or Anonim Şirket, requires a higher initial capital than an LLC, and is ideal for larger firms that want to raise capital on the stock market or operate in more competitive markets. You need at least 250,000 TRY and 25% of the minimum share capital to deposit in a bank. JSCS are suitable for higher scales or to go public. You must hire an official lawyer for consultancy. Establishing a JSC is swift, typically taking one to three working days.
Apart from the LLCS and JSC types of companies, Turkey offers alternative corporate structures such as collective companies, commandite companies, parent companies, and liaison offices. While less common, these standard types serve specialised roles. Collective Companies focus on defined partnership activities rather than broad commercial actions. Commandite Companies are for partnerships with shared responsibilities, making them suitable for unique collaborations. On the other hand, Liaison Offices are representative offices. These structures fall under the same legal framework as LLCS and JSCS.
Paying 25% of the minimum capital requirement upfront is a key requirement. The rest of the paid-in capital contribution is due within two years. Knowing the different types of companies is vital. Each type has unique rules and benefits, but regardless, all need a physical or virtual office. Your registration finishes only when it appears in the official Gazette under the commercial register, as authorised by the relevant authorities.
Proper documentation and payment of the registration fee are cornerstones. Key documents like copies of shareholders and a valid tax number are vital. If stakeholders are not in Turkey during the setup, a Power of Attorney (POA) is required, but it is a straightforward process. Ensure you prepare and submit all documents and copies before the date for signature approval. These include passport copies, identification documents, signature declarations, and the 0.04% deposit to the competition authority.
Registration at the Tax Office is critical; otherwise, you can't legally issue invoices or operate in the Turkish market. Once the registry approves all submissions and completes tax procedures, you receive a registration certificate. This confirms the completion with the Chamber of Commerce. Having every document in place streamlines the process and ensures compliance, and Turkish consulates worldwide also notarise documents by international standards.
A corporate account is essential for business transactions, economic growth, and legal purposes. The corporate bank account is also fundamental to managing financial transactions, like tax payments and salaries. For successful registration, a director must complete this process. Understanding the documents and business licenses upfront streamlines the setup. Selecting a bank for your company's account is essential, especially if you want to transfer capital in a foreign currency.
The right bank should meet your needs in services, fees, and facilities, regardless of your business type. Depositing the minimum required capital into the bank account at incorporation is a standard protocol. Directors and company managers must provide personal identification and official documents. Consulting with local advisors or accountants is beneficial for foreign owners unfamiliar with Turkey's banking landscape.
For the formation process, understand the tax obligations and required documents. New companies and anyone operating as a real person must register with the Turkish tax authorities. Corporate income tax is generally 23%. However, some sectors may benefit from reduced corporate tax rates.
This registration also involves filing audited financial statements with the government. New companies must regularly file tax returns and pay taxes, such as withholding tax, when applicable. Turkey offers incentives in free zones like tax exemptions and benefits, which attract foreign investors looking to minimise costs. Thorough knowledge of these obligations helps new companies succeed in Turkey's dynamic market.
A Tax Identification Number (TIN) enables you to operate legally and issue invoices. Foreign nationals working with a Turkish company will need one. To get a TIN, present specific documents. These include a petition and a tenancy contract showing the registered address or virtual office services. If a proxy is used, a notarised power of attorney is necessary. Further advice is available from the relevant tax office, where you will register.
Turkish authorities require businesses to register for Value Added Tax (VAT). The standard VAT rate is 20%, although some goods and services have reduced rates from 1% to 10%. Submit a VAT registration form to their local tax office to begin the process. After approval, a VAT number is issued. Besides VAT, register for social security via the employment registration process required for company incorporation. Firms must provide a legal address, proven through a lease or property ownership document.
Turkey offers a vibrant market for international investors, with governmental incentives designed to help with operational costs. Foreign-owned firms benefit from operating in free zones where they enjoy tax exemptions. Additionally, VAT exemptions are available in select industries, enhancing the profit margins. Turkey offers numerous investment incentives in burgeoning sectors like technology and renewable energy. These include subsidies and grants, which encourage foreign investments. With a strategic location and streamlined registration processes, Turkey provides an attractive environment.
Consider local economic conditions, lease contracts, available workforce, and infrastructure. Such factors could influence success in different regions. Exploring these differences and aligning strategies with regional strengths and challenges provides a competitive edge in this dynamic economy.
The online establishment process starts with submitting paperwork and application forms online. Although these online features exist, getting advice from a legal expert is wise. They help to navigate the entire process smoothly. Remember that once you register, you have to keep commercial books.
Online registration, mainly through the MERSIS system, offers many benefits. It simplifies the setup process by enabling the electronic submission of applications and key documents. There are, however, challenges to online registration even with its many advantages. Despite the convenience of initial online submissions, the process still requires physical actions like authentication and bank procedures.
Local experts can help with a smooth registration process, minimising potential setbacks. Legal services from local law firms also guide foreign investors through the procedural steps and ensure legalities are met efficiently. Hiring legal representatives or consultants is advantageous for the whole process, from the online application to special licenses, the authorised capital, commercial partnerships, and more. Although having a local partner or director is not mandatory, these professionals offer administrative support to adhere to Turkish business law. They handle immigration, residence, social security contributions and work permits.
Utilising a financial advisor or company formation agents helps with steps like fulfilling legal documentation. These experts help streamline the company establishment process, ensuring all paperwork is completed accurately and on time. Legislative reforms have made registration fees and applications more straightforward. Yet, knowledgeable local advisors and experienced teams are instrumental in navigating the remaining complexities. With their guidance, foreign entrepreneurs then focus on growing their ventures. Whether you need assistance in immigration matters, a virtual office provider, or to learn about business structures, the help and legal aid are there.
Companies must register with the tax office. This step is vital for handling taxes correctly and gaining access to online transactions. Another requirement is registering with the Social Security Administration. Even if a company has no employees, this registration helps obtain an employer registration number and verify workplace safety standards. Hiring a Certified Public Accountant (CPA) is also necessary. Opening a corporate banking account is recommended to manage financial transactions. Lastly, preparing a signature circular is essential to standardise documents and authorise transactions.
Obtain licenses relevant to your industry. For branch offices, securing industrial sector licensing is mandatory. It’s essential for foreign company branches that want to engage in local transactions and trade. The firm must have at least one manager, who can be the owner, a shareholder, or an external individual. A legal entity manager must appoint a natural person as the representative. Foreign nationals acting as managers need a work permit to carry out their duties legally.
Establishing solid financial operations and maintaining corporate books is crucial when joining the Turkish economy. Employ a Certified Public Accountant to manage tax matters and declarations. The Articles of Association and Establishment Form must be notarised and submitted to the Trade Registry Office. File annual tax returns, prepare audited financial statements, and follow the guidelines of the New Turkish Commercial Code (No. 6102). This code outlines the protocols for legal operation in the world's 17th-largest economy.
Yes, they can. A private limited company is ideal for foreigners and can be set up by two or more non-Turkish nationals. At least one shareholder is required to form this type of company, with a minimum share capital of 10,000 TL.
Company formation agents advertise services in the local press, which are found in most towns and cities. Many investors use them to save time and hassle. If you are considering using one, research them first and find out what other companies they have helped set up. As with everything, some of these companies are far better than others.
As an added incentive, the Turkish government offers citizenship to anyone investing $400,000 in Turkish property. For owners, this will cut out a lot of red tape. The application process takes roughly six months after buying the property and gaining a residence permit. (Find out more here.)
As well as buying property, there are other common types of investment for entrepreneurs to gain citizenship:
- Employ at least 50 people
- Make a fixed capital investment of at least $500,000;
- Deposit a minimum of $500,000 into a Turkish account;
- A venture capital investment fund worth $500,000.
With offices throughout Turkey, we have helped thousands of people from across the world invest in properties or start companies in Turkey. Our team has expert knowledge in vast industries and ensures to deliver the best service and guidance to our clients. If you have any questions or want to learn more, contact Property Turkey today.