Establishing a Tech Startup in Türkiye: Legal Roadmap and Incentives for Foreign Founders

1. Introduction: Why Türkiye for Tech Startups?

Türkiye has rapidly emerged as one of the region’s most dynamic tech and innovation hubs. With its strategic location connecting Europe, Asia, and the Middle East, a young population, advanced digital infrastructure, and government-backed incentives, Türkiye offers a fertile environment for tech entrepreneurship.
Foreign founders are increasingly choosing Türkiye for its cost-effective operations, access to a large market, and opportunities for regional expansion.

2. Choosing the Right Legal Entity

a) Limited Liability Company (Ltd. Şti.)

• The most popular option for tech startups.
• Minimum capital: 10,000 TRY (as of 2025).
• Allows 100% foreign ownership.
• Simple governance, limited liability for founders.

b) Joint Stock Company (A.Ş.)

• Required for companies planning to raise large amounts of capital, attract VC investment, or go public.
• Minimum capital: 250,000 TRY.
• Can issue shares and go through IPO.
• Often used by scale-ups or SaaS platforms with global ambitions.

c) Branch or Liaison Office

• Ideal for foreign companies wishing to establish a presence without forming a full subsidiary.
• Liaison offices cannot generate revenue but can perform market research or R&D.

3. Company Formation Process for Foreigners

1. Name Reservation and Preparation of Articles of Association.
2. Appointment of Company Directors and Shareholders.
   • No requirement for Turkish nationals as directors/shareholders.
3. Obtaining a Turkish Tax Number for founders and company.
4. Opening a Bank Account and depositing minimum capital.
5. Registering with the Trade Registry (MERSIS).
6. Notarization and Apostille of Foreign Documents (if applicable).
7. Obtaining Work and Residence Permits for foreign directors/employees.
8. Registration with Social Security and Tax Offices.

With a professional advisor, company formation can be completed in as little as 2–3 weeks.

4. Special Tech Incentives and Support Programs

a) Technology Development Zones (Teknoparks)

• More than 80 technoparks across Türkiye (İstanbul, Ankara, İzmir, and others).
• Benefits:
  • Corporate tax exemption for R&D income until 2028 (subject to extension).
  • Income tax exemption for R&D employees.
  • VAT exemption on software development.
  • Simplified import/export of equipment.
• Eligibility:
  • Must engage in eligible tech/R&D activities and locate an office within the zone.

b) TÜBİTAK and KOSGEB Grants

• National grants and funding for R&D, commercialization, and internationalization.
• Available to both local and foreign-founded companies.

c) Startup Visa Pilot and Investment-Based Residence

• Fast-track residence permits for foreign founders with a business plan and initial investment.
• Family members included.

d) Angel Investor Accreditation and VC Ecosystem

• Accredited angel investors benefit from tax deductions and state co-investment.
• Growing network of Turkish and international VC funds, especially in SaaS, fintech, healthtech, and AI.

5. Intellectual Property (IP) Protection

• Patents, trademarks, software copyrights are protected under Turkish law and international treaties.
• Registration with the Turkish Patent and Trademark Office is strongly recommended.
• IP transfer and licensing agreements can be structured under Turkish or foreign law.

6. Taxation and Employment Law Considerations

• Corporate Tax: Standard rate 25% (2025), with exemptions in technoparks.
• Withholding Tax: On dividends, royalties—subject to double tax treaties.
• Employment Contracts: Must comply with Turkish Labor Law; flexible arrangements possible for startups.
• Stock Option Plans: Legally feasible but require careful structuring.

7. Common Mistakes and Practical Tips

• Don’t underestimate bureaucracy: Professional support saves time and prevents errors.
• Choose the right entity for scaling and VC: Investors prefer A.Ş. over Ltd. Şti. for larger rounds.
• Apply early for technopark admission: Spaces are competitive.
• Stay updated on legal changes: Tech law and incentives evolve quickly in Türkiye.

8. Why Legal Guidance Makes the Difference

From entity selection and document preparation to incentive applications and IP strategy, local legal expertise maximizes your success and minimizes risk.
A professional advisor can:

• Cut through red tape,
• Match you with the right technopark or grant,
• Structure your investment and founder agreements,
• Secure your IP,
• Facilitate all visa and permit applications.

Stj.Öğr.Esmanur AKTAŞ