Company Formation in Turkey for Foreigners

Turkey’s dynamic economy and strategic location establish it as an attractive hub for international investors. However, a successful entry into this market begins with choosing the right legal structure for your business. This comprehensive guide addresses the entire process of company formation in Turkey for foreigners, meticulously examining the legal framework, advantages, and requirements for each primary option: establishing a fully-fledged company, opening a branch of an existing parent company, or creating a liaison office for market research.

Incorporating a New Company in Turkey (A.Ş. or LTD. ŞTİ.)

This is the most comprehensive way for foreigners to do business in Turkey. By establishing a new legal entity, you create a fully independent Turkish company.

• Legal Status: A newly formed company, typically a Joint-Stock Company (A.Ş.) or a Limited Liability Company (LTD. ŞTİ.), is a separate Turkish legal entity. It can enter into contracts, issue invoices, hire employees, and conduct all commercial activities in its own name.
• Key Principle: Governed by the Foreign Direct Investment (FDI) Law No. 4875, this option provides “national treatment,” meaning foreign investors have the same rights and obligations as local investors. There is no requirement for a Turkish partner.
• Liability: The liability of the shareholders is limited to the capital they have subscribed to the company. The parent company’s assets are protected.
• Best For: Businesses planning full-scale commercial operations, long-term investment, manufacturing, sales, and service delivery in Turkey.

Opening a Branch Office

A branch office is a viable option for foreign companies that wish to conduct commercial activities in Turkey without creating a new legal entity.

• Legal Status: A branch is not a separate legal entity but an extension of the parent company. It operates under the same name and in the same field of activity as its foreign parent.
• Liability: Since the branch is legally a part of the parent company, the foreign parent is fully and directly liable for all debts and obligations of the Turkish branch.
• Process: Opening a branch requires permission from the Turkish Ministry of Trade. The process involves submitting notarized and translated corporate documents of the parent company and appointing a fully authorized representative residing in Turkey.
• Best For: Companies that want to directly conduct business and generate revenue in Turkey but prefer to operate under their existing global corporate identity.

Establishing a Liaison Office (L.O.)

A liaison office (irtibat bürosu) is the most limited form of presence and is strictly non-commercial.

• Legal Status: A liaison office is not a legal entity and is strictly forbidden from engaging in any commercial or income-generating activities. It cannot issue invoices or sign commercial contracts.
• Permitted Activities: Its sole purpose is to conduct market research, represent the parent company, gather information, build a network, and facilitate communication—essentially acting as a “listening post” before a larger investment.
• Process: Establishing a liaison office requires a license from the Ministry of Trade. This license is typically granted for an initial period of up to 3 years and can be extended based on reports of its past activities and future plans.
• Best For: Companies that are exploring the Turkish market, testing the business environment, or managing communications and representation without engaging in direct commercial sales.

Key Differences at a Glance

Conclusion

In conclusion, Turkey offers a robust and legally secure framework for foreign investors, providing diverse and well-regulated entry strategies through branches, fully-fledged companies, or liaison offices. Each of these structures comes with its own unique set of advantages, operational limits, and legal procedures. Therefore, the process of company formation in Turkey for foreigners is not merely a commercial decision but a critical strategic step that requires determining the right legal pathway. To ensure the success and legal security of your investment from the outset, navigating this complex process with professional legal guidance is of paramount importance. To ensure the success and legal security of your investment from the outset, navigating this complex process with the guidance of an expert corporate lawyer in Turkey is indispensable.