How to Start a Startup Company in Turkey: A Legal Guide for Foreign Founders

Turkey has become an increasingly attractive jurisdiction for entrepreneurs seeking access to a large domestic market, a young workforce, regional markets, technology talent, and investment opportunities connecting Europe, the Middle East, Central Asia, and North Africa. For foreign entrepreneurs planning to launch a technology company, SaaS platform, e-commerce business, artificial intelligence venture, fintech project, marketplace, mobile application, or another innovative business, understanding the Turkish legal framework before incorporation is essential.

Establishing a startup in Turkey is generally possible for foreign individuals and foreign companies without the need for a Turkish shareholder. Under the Turkish foreign investment regime, foreign investors are generally subject to the same principles applicable to domestic investors. Foreign founders may establish the company forms recognized under the Turkish Commercial Code and, subject to sector-specific restrictions, may own the entire share capital of a Turkish company.

However, incorporation is only the beginning. A startup should be structured from the outset with future investment rounds, founder relationships, intellectual property ownership, employee equity, taxation, data protection, regulatory compliance, and a potential exit in mind.

This guide explains the principal legal issues foreign founders should consider when establishing a startup company in Turkey.

Can a Foreigner Start a Company in Turkey?

Yes. As a general rule, foreign individuals and foreign legal entities may establish companies in Turkey and may become shareholders in existing Turkish companies.

Turkish law does not generally require:

• a Turkish citizen shareholder,
• a Turkish majority shareholder,
• a local nominee shareholder, or
• a minimum percentage of Turkish ownership.

Accordingly, a startup may generally be wholly foreign-owned.

The Foreign Direct Investment Law is based on the principle of equal treatment between domestic and foreign investors. However, certain regulated sectors, including specific activities relating to broadcasting, aviation, maritime transportation, financial services, payment services and other regulated industries, may be subject to additional ownership, licensing or authorization requirements.

Foreign founders should therefore first determine whether the startup’s proposed business activity is subject to a special regulatory regime.

For example, establishing a normal software development company is fundamentally different from establishing a company intending to provide regulated payment services.

Which Company Type Is Best for a Startup in Turkey?

Although Turkish law recognizes several company structures, startups are generally established as either:

• a Joint Stock Company (Anonim Şirket – A.Ş.), or
• a Limited Liability Company (Limited Şirket – Ltd. Şti.).

Both structures provide separate legal personality and limited liability principles. However, they are not identical from an investment and corporate governance perspective.

Limited Liability Company

A limited liability company can be suitable for:

• early-stage businesses,
• closely held companies,
• family businesses,
• consulting businesses,
• small technology businesses, and
• startups that do not expect complex institutional investment structures in the short term.

The minimum capital requirement for a limited liability company is currently TRY 50,000. The minimum capital thresholds were increased with effect from 1 January 2024.

A limited liability company may be incorporated with a single shareholder.

However, founders should not select an Ltd. Şti. merely because it appears administratively simple. Share transfers, governance arrangements, investment rights and exit mechanics may become more complicated as the company grows.

Joint Stock Company

For startups expecting venture capital, angel investment, multiple financing rounds, employee equity structures, strategic investors or a future share sale, a joint stock company is often structurally more suitable.

The minimum capital for a standard joint stock company is currently TRY 250,000. For non-public joint stock companies adopting the registered capital system, the minimum initial capital is TRY 500,000.

An A.Ş. structure may provide greater flexibility concerning:

• different share groups,
• investment rounds,
• governance rights,
• board representation,
• share certificates,
• share transfers,
• exit transactions,
• minority investor protections, and
• institutional investment structures.

For this reason, many startups intending to raise professional investment prefer an A.Ş. structure from the beginning.

LLC or JSC: Which One Should a Foreign Founder Choose?

There is no universally correct answer.

A founder planning to operate a small software consultancy may reasonably choose an Ltd. Şti.

A founder planning to raise seed investment within twelve months, issue equity to employees, bring several investors into the cap table and eventually sell the company may benefit from establishing an A.Ş. from the outset.

Changing the company structure later may be possible, but restructuring after investors, employees, intellectual property and contracts have already accumulated may create unnecessary legal and tax complexity.

Therefore, the choice should be made according to the startup’s expected development rather than merely the lowest incorporation cost.

Can One Foreign Founder Establish the Company Alone?

Yes.

Both a joint stock company and a limited liability company may generally be established with a single shareholder.

The shareholder may be:

• a foreign individual,
• a Turkish individual,
• a foreign company,
• a Turkish company, or
• a combination of domestic and foreign investors.

A startup therefore does not need to find a Turkish partner merely for incorporation purposes.

This is particularly important for international founders establishing a Turkish subsidiary of an existing foreign technology company.

Step 1: Determine the Startup’s Corporate Structure

Before filing incorporation documents, founders should determine several fundamental issues.

These include:

• the company type,
• shareholding percentages,
• company capital,
• management structure,
• voting rights,
• registered address,
• business activities,
• company name, and
• representation authority.

These issues should not be treated as administrative formalities.

For example, if two founders incorporate a company with 50% of the shares each without establishing a deadlock mechanism, a disagreement may later prevent important corporate decisions.

Similarly, giving one founder a disproportionately small equity interest without considering future contributions may create serious disputes once the startup begins attracting investment.

The cap table should therefore be designed deliberately.

Step 2: Choose the Company Name and Business Activities

The startup should select a trade name that complies with Turkish Commercial Code requirements and is available for registration.

The articles of association should also describe the company’s principal areas of activity.

For technology startups, activities may include areas such as:

• software development,
• licensing,
• cloud services,
• artificial intelligence,
• digital platforms,
• e-commerce,
• mobile applications,
• technology consulting,
• data analytics,
• cybersecurity,
• digital marketing, or
• research and development.

The activity description should be sufficiently broad to support the company’s foreseeable operations while remaining consistent with regulatory requirements.

If the business enters a regulated sector, additional authorization may be required regardless of what is written in the articles of association.

Step 3: Obtain Turkish Tax Identification Numbers

Foreign founders and certain foreign directors or managers may need Turkish potential tax identification numbers for incorporation and related procedures.

The tax number may also be relevant for:

• banking transactions,
• notarization,
• shareholding registration, and
• various administrative procedures.

Official investment guidance also identifies obtaining a potential tax number for non-Turkish shareholders and relevant foreign board members as part of the establishment process.

Step 4: Prepare Foreign Documents

A foreign individual shareholder will generally need identification documentation, particularly a passport.

Where a foreign company will become the shareholder, additional documents may be required to establish:

• the foreign company’s legal existence,
• its shareholders or representatives where necessary,
• the authority of the individual signing incorporation documents, and
• the corporate decision approving the Turkish investment.

Documents issued abroad may need:

• apostille certification or other legalization depending on the issuing country,
• notarization, and
• sworn translation into Turkish.

A common mistake among foreign founders is travelling to Turkey before checking whether their foreign corporate documents have been properly apostilled or legalized.

Correct document preparation should therefore be completed before the incorporation appointment.

Step 5: Prepare the Articles of Association

The articles of association are one of the most important constitutional documents of the company.

They regulate matters including:

• the company name,
• registered office,
• business purpose,
• share capital,
• shareholders,
• share structure,
• management,
• representation, and
• corporate governance.

Company establishment procedures are processed electronically through MERSIS, Turkey’s Central Registry Record System. Official investment guidance confirms that company establishment and commercial registry procedures are conducted through MERSIS and the relevant Trade Registry Directorate.

Startup founders should avoid using overly basic articles of association when the company is expected to receive investment.

Certain investor rights may later need to be reflected not only in a shareholders’ agreement but also in the company’s articles of association and corporate resolutions.

Step 6: Determine and Pay the Share Capital

The founders must determine the startup’s registered share capital.

The statutory minimum should not automatically be treated as the commercially appropriate amount.

A startup will need working capital to pay expenses such as:

• salaries,
• office costs,
• software infrastructure,
• marketing,
• accounting,
• legal services,
• licenses,
• taxes, and
• product development.

For joint stock companies, Turkish company law contains rules concerning payment of subscribed cash capital. Official guidance states that at least 25% of subscribed cash capital is generally paid before registration, with the remaining amount payable within twenty-four months.

For limited liability companies, the requirement to pay 25% before incorporation does not apply, and the subscribed capital may generally be paid within twenty-four months following establishment.

Founders should nevertheless coordinate the timing and method of capital payments with their legal and financial advisers.

Step 7: Register the Company with the Trade Registry

Once the incorporation documentation has been prepared, registration is completed through the relevant Trade Registry Directorate.

The incorporation file will generally include documents relating to:

• the founders,
• articles of association,
• management,
• representation,
• share capital,
• registered office,
• signatures, and
• statutory payments.

A statutory payment corresponding to 0.04% of the company’s capital is also made to the Competition Authority account as part of the establishment process.

After registration, the company obtains legal personality.

Official guidance describes Trade Registry Directorates operating within Chambers of Commerce as a one-stop mechanism for company establishment in Turkey.

Step 8: Complete Tax Registration

Company incorporation and tax compliance should be treated as connected but distinct matters.

Following establishment, the startup should ensure completion of the relevant tax procedures and obtain the necessary tax documentation.

Depending on the company’s activities and financial circumstances, taxation may include matters relating to:

• corporate income tax,
• value-added tax,
• withholding tax,
• payroll taxation,
• stamp tax, and
• other activity-specific tax obligations.

Startups receiving payments from abroad or providing cross-border digital services should also evaluate international taxation issues.

These may include:

• permanent establishment risk,
• transfer pricing,
• withholding taxes,
• double taxation treaties, and
• cross-border invoicing.

Tax structuring is particularly important where the founders operate both a Turkish company and a company incorporated in another jurisdiction.

Step 9: Open the Company’s Bank Account

Once the company has been registered, corporate banking arrangements should be completed.

Banks may request extensive documentation under:

• know-your-customer procedures,
• anti-money laundering requirements,
• beneficial ownership rules, and
• internal compliance policies.

Foreign founders should therefore not assume that incorporation automatically guarantees immediate access to a fully operational bank account.

The bank may request information regarding:

• shareholders,
• ultimate beneficial owners,
• business activities,
• expected transaction volume,
• countries of operation,
• sources of funds, and
• commercial contracts.

Businesses dealing with crypto assets, fintech, high-risk jurisdictions or unusual cross-border transactions may face enhanced compliance review.

Does Establishing a Company Give the Founder a Work Permit?

No.

This distinction is extremely important.

Owning shares in a Turkish company and obtaining the right to work in Turkey are separate legal matters.

A foreign individual may be able to own shares in a Turkish startup without automatically acquiring the right to work in Turkey.

A foreign founder who intends to work in the company may therefore need to obtain an appropriate work permit.

Residence permits and work permits should also not be confused.

Foreign founders should assess their immigration status separately from corporate incorporation.

Founder Agreements Should Be Prepared Before Problems Begin

One of the most common legal mistakes in startups is focusing only on incorporation documents.

Two or three friends establish a company, divide shares and begin developing a product. Everything works well until:

• one founder stops working,
• another founder wants to sell,
• an investor arrives,
• the founders disagree about salaries,
• intellectual property ownership becomes disputed, or
• one founder starts a competing business.

A professionally structured Founders’ Agreement can address these risks.

It may regulate:

• founder responsibilities,
• equity ownership,
• management powers,
• vesting,
• confidentiality,
• intellectual property,
• founder departure,
• good leaver and bad leaver scenarios,
• non-compete obligations,
• share transfers,
• deadlocks, and
• dispute resolution.

The founders should preferably address these issues before the company gains substantial value.

Intellectual Property Must Belong to the Startup

For a technology company, intellectual property may be more valuable than its physical assets.

A startup should clearly establish ownership of:

• source code,
• software,
• algorithms,
• trademarks,
• databases,
• designs,
• domain names,
• mobile applications,
• documentation,
• inventions, and
• other creative works.

A dangerous assumption is that software belongs to the company merely because someone developed it for the startup.

The answer may depend on:

• who developed the software,
• whether that person was an employee,
• whether they were a freelancer,
• the wording of the relevant agreement, and
• the nature of the intellectual property right concerned.

Written IP assignment and licensing provisions should therefore be prepared carefully.

Investors conducting legal due diligence will usually examine whether the startup actually owns the technology it claims to own.

Protect the Startup’s Brand

Founders should consider trademark protection at an early stage.

Registering a company name with the Trade Registry does not necessarily provide the same protection as registering a trademark.

A startup investing heavily in branding should consider trademark applications covering the relevant goods and services.

The founders should also secure control over:

• domain names,
• social media accounts,
• application store accounts,
• cloud infrastructure,
• source code repositories, and
• other digital assets.

These assets should ideally be registered in the company’s name rather than in the personal account of one founder.

Data Protection Compliance

Technology startups frequently process significant amounts of personal data.

A startup operating in Turkey may therefore need to comply with Turkish personal data protection legislation, particularly Law No. 6698 on the Protection of Personal Data.

Depending on the business model, compliance issues may involve:

• privacy notices,
• legal grounds for processing,
• consent where required,
• cookies,
• employee data,
• customer databases,
• data security,
• data processors,
• international data transfers, and
• data breach procedures.

Startups operating internationally may also need to consider the GDPR and the data protection legislation of other jurisdictions.

Privacy compliance should be incorporated into product development rather than postponed until the first investment round.

E-Commerce and Consumer Law

A startup selling goods or services to consumers may also be subject to Turkish consumer and electronic commerce legislation.

Depending on the business model, the company may need to prepare:

• terms and conditions,
• distance sales agreements,
• preliminary information forms,
• cancellation and withdrawal procedures,
• privacy documentation,
• subscription terms, and
• electronic commerce disclosures.

Marketplace businesses may face additional responsibilities.

A B2B SaaS business and a consumer marketplace should therefore not use the same generic legal documentation.

Regulated Startup Sectors

Some startup sectors require significantly greater legal preparation before launch.

Examples include:

• fintech,
• payment services,
• electronic money,
• banking-related technology,
• insurance,
• crypto assets,
• telecommunications,
• healthcare,
• energy,
• transportation, and
• certain financial services.

In regulated industries, incorporating a company does not necessarily mean the business may immediately begin operations.

Licenses, permits or regulatory approvals may be required.

Foreign founders should investigate licensing requirements before committing substantial investment.

Preparing the Startup for Future Investment

A startup that expects external investment should be structured from day one as if a future investor will conduct legal due diligence.

Investors may examine:

• corporate records,
• cap tables,
• founder agreements,
• intellectual property ownership,
• employee agreements,
• tax liabilities,
• litigation,
• regulatory compliance,
• data protection,
• customer agreements,
• supplier contracts, and
• previous share transfers.

Problems that seem insignificant during incorporation can become major obstacles during an investment round.

For example, an investor may hesitate to invest if:

• the source code belongs to a freelancer,
• one founder owns the trademark personally,
• employee agreements are missing,
• the cap table is unclear,
• corporate resolutions were not properly adopted, or
• important customer contracts contain unlimited liability.

Legal preparation therefore contributes directly to investment readiness.

Common Legal Mistakes Foreign Startup Founders Make in Turkey

Foreign founders frequently make several recurring mistakes.

Choosing the Wrong Company Type

Selecting an Ltd. Şti. solely because it appears cheaper or simpler may not be appropriate if substantial venture capital investment is expected.

Using Generic Articles of Association

Standard incorporation documents may fail to reflect the startup’s intended governance structure.

Ignoring Founder Vesting

If a founder receives 40% of the company and leaves three months later, the remaining founders may face a serious cap table problem.

Failing to Transfer Intellectual Property

Software, trademarks and other intellectual property should be legally controlled by the company.

Mixing Personal and Corporate Assets

Startup revenues, expenses and digital assets should be separated from founders’ personal assets.

Assuming Share Ownership Equals a Work Permit

A foreign shareholder does not automatically obtain the right to work in Turkey merely because they own a Turkish company.

Ignoring Data Protection Rules

Startups often collect user data before establishing a proper compliance framework.

Waiting Until the Investment Round to Organize Legal Documents

Legal due diligence should not be the first time the founders review their corporate records.

How Long Does It Take to Establish a Startup in Turkey?

The formal registration itself may be completed relatively quickly when all documentation is properly prepared. Official Turkish investment guidance indicates that company establishment is handled through Trade Registry Directorates operating as a one-stop mechanism and may, where documents are complete, be completed on the same day.

For foreign founders, however, the overall process may take longer because of:

• apostille procedures,
• translations,
• notarization,
• tax numbers,
• banking compliance,
• foreign corporate documents, and
• regulatory approvals.

Accordingly, founders should distinguish between the technical trade registry registration period and the entire operational setup process.

Can a Foreign Startup Establish a Turkish Subsidiary?

Yes.

A foreign company may establish a Turkish company as its subsidiary.

This structure is frequently used by international startups seeking to:

• hire employees in Turkey,
• sell products or services locally,
• enter contracts with Turkish customers,
• establish regional operations, or
• receive local investment.

Whether a subsidiary, branch or another structure is preferable depends on the business model, tax position, liability concerns and long-term strategy.

A subsidiary is a separate legal entity, whereas a branch does not have independent legal personality separate from its foreign parent.

Should Foreign Founders Use a Lawyer When Establishing a Startup in Turkey?

A company may sometimes be incorporated through relatively standardized procedures, but startup formation should not be regarded merely as an administrative registration exercise.

A lawyer advising a startup should look beyond incorporation.

The legal structure should anticipate:

• investment,
• founder disputes,
• employee equity,
• IP ownership,
• commercial contracts,
• data protection,
• regulatory compliance,
• tax structure, and
• exit scenarios.

Correcting a poor legal structure after the startup has received investment is usually more complicated and expensive than designing the structure correctly at the beginning.

Conclusion

Turkey provides foreign entrepreneurs with a generally accessible legal framework for establishing and operating companies. Foreign founders may generally establish wholly foreign-owned companies, and joint stock companies and limited liability companies are the most commonly used structures.

However, establishing the legal entity is only the first stage of building a legally sustainable startup.

Founders should consider company type, shareholding arrangements, corporate governance, founder vesting, intellectual property ownership, employment issues, data protection, commercial contracts, taxation, work permits, regulatory approvals and future investment requirements from the beginning.

For startups expecting venture capital investment or international expansion, legal structuring should be designed not only for the company’s current operations but also for its next financing round and eventual exit.

A carefully structured startup is easier to manage, easier to finance and significantly better prepared for legal due diligence when investors or strategic buyers eventually enter the process.

Legal Disclaimer: This article provides general information regarding startup company formation in Turkey and does not constitute legal or tax advice. The appropriate corporate structure and regulatory requirements may vary depending on the founders, investment model, business activity and sector. Foreign entrepreneurs should obtain professional advice based on the specific circumstances of their proposed investment.