Introduction

Foreign companies considering the Turkish market do not always need to establish a subsidiary or commercial branch immediately. For international businesses that want to research the Turkish market, coordinate relationships with distributors, monitor suppliers, provide limited technical support or establish a regional management presence without directly generating commercial revenue in Turkey, a liaison office, also commonly referred to as a representative office, can be an attractive legal structure.

Under Turkish law, foreign companies may establish liaison offices in Turkey after obtaining permission from the Ministry of Industry and Technology, provided that the liaison office does not conduct commercial activities in Turkey.

This prohibition is the defining feature of the liaison office regime.

Turkey’s official investment guidance confirms that a company incorporated under the laws of a foreign country may establish a liaison office upon obtaining a licence from the Ministry of Industry and Technology, provided that the office does not engage in commercial activities in Turkey.

A liaison office should therefore not be treated as a cheaper substitute for a branch or Turkish company where the actual intention is to sell products, invoice customers or earn revenue in Turkey.

Instead, a liaison office is primarily appropriate for activities such as:

• market research;
• representation and hosting;
• promotion of the foreign company’s products or services;
• communication and transfer of information;
• technical support;
• supervision of Turkish suppliers;
• supplier identification;
• quality and standards control; and
• regional management and coordination.

The initial operating licence may generally be issued for a maximum of three years. Extension possibilities depend on the nature of the activities. In particular, liaison offices authorised solely for market research or promotion cannot have their operating period extended under the current rules. Other qualifying activities may receive extensions of five years, while regional management centres may receive extensions of up to ten years.

The structure can therefore be highly useful for multinational groups that want a physical presence in Istanbul, Ankara, İzmir or another Turkish city without immediately creating a revenue-generating Turkish business.

However, foreign companies should carefully understand the legal limitations.

If a liaison office begins performing activities that amount to actual commercial business, the Ministry may cancel its operating permit and notify the relevant authorities.

This can lead to potentially serious:

• tax consequences;
• permanent establishment questions;
• corporate tax exposure;
• payroll issues;
• regulatory consequences; and
• penalties.

This article provides a detailed explanation of how a foreign company can establish a liaison office in Turkey in 2026, which activities are permitted, what documents are required, how long the permit lasts, how employees are treated, what tax advantages may exist and when a branch or Turkish subsidiary should be preferred instead.

1. What Is a Liaison Office in Turkey?

A liaison office is a non-commercial representation structure established in Turkey by a company incorporated abroad.

It allows the foreign parent company to maintain a local physical and organisational presence without establishing a Turkish company and without carrying out direct commercial activities.

The legal framework is principally based on:

• Foreign Direct Investment Law No. 4875; and
• the Regulation for Implementation of the Foreign Direct Investment Law.

The Ministry of Industry and Technology is authorised to permit foreign companies to establish liaison offices and to extend their permits, provided that the offices do not conduct commercial activity in Turkey.

The office exists for and on behalf of the foreign parent company.

It does not have its own shareholders and should not be understood as an independent Turkish company.

2. Does a Liaison Office Have Separate Legal Personality?

No.

A liaison office is essentially the representative presence of the foreign parent company.

Unlike a Turkish limited liability company or joint stock company, it does not:

• have shareholders;
• issue shares;
• have independent share capital;
• operate as a separate profit-making corporation; or
• independently carry out commercial transactions for its own account.

This distinction is important when determining which market-entry vehicle is appropriate.

A foreign company expecting substantial commercial operations should generally compare three structures:

Liaison Office

Branch

Turkish Subsidiary

Each has a different legal function.

3. What Is the Main Advantage of a Liaison Office?

The principal advantage is that a foreign company can create a Turkish presence before beginning full commercial operations.

A liaison office may allow the foreign company to:

• understand the Turkish market;
• establish business relationships;
• identify distributors;
• research customer behaviour;
• monitor competitors;
• supervise suppliers;
• coordinate regional operations;
• provide permitted technical support;
• employ personnel; and
• maintain an office in Turkey.

This may be especially useful for international companies that want to test the Turkish market for several years before deciding whether to establish a commercial subsidiary.

For example, a German manufacturer considering Turkish market entry may first establish an Istanbul liaison office to:

• research potential distributors;
• monitor Turkish suppliers;
• coordinate meetings;
• understand customer demand; and
• report information to headquarters.

If the company later decides to sell directly in Turkey, it may establish a commercial branch or subsidiary.

4. Can a Liaison Office Conduct Commercial Activities?

No.

This is the most important restriction.

A liaison office may only operate on the condition that it does not conduct commercial activity in Turkey.

The official Invest in Türkiye guidance expressly states this requirement.

Commercial activity may include conduct such as:

• selling goods in Turkey;
• issuing commercial invoices to customers;
• charging Turkish customers service fees;
• collecting sales revenue;
• concluding revenue-generating contracts as a Turkish commercial operation;
• directly operating an e-commerce business;
• receiving commissions from Turkish transactions; or
• providing paid services to Turkish customers.

The exact analysis depends on the facts.

Foreign companies should be particularly careful where local employees become heavily involved in negotiations with customers.

There is a difference between:

supporting the parent company’s international business

and

operating a Turkish revenue-generating business.

The office should remain clearly on the first side of that boundary.

5. What Happens if a Liaison Office Conducts Commercial Activity?

The consequences can be serious.

The Regulation authorises the Ministry to inspect whether liaison offices operate within their permitted activity scope.

Where the office carries out activities outside its authorised scope, the Ministry may initially give the office 30 days to make an appropriate application concerning its actual activities. This period may be extended by a further 30 days where justified.

However, where the Ministry determines that the liaison office is conducting commercial activity, the operating permit may be cancelled and the matter may be reported to the relevant authorities.

The tax authorities may then separately assess whether the foreign company has created:

• a Turkish permanent establishment;
• taxable business income;
• VAT obligations;
• withholding obligations; or
• other historical tax liabilities.

Therefore, the prohibition should be taken seriously.

6. What Activities Can a Liaison Office Perform?

The Foreign Direct Investment Regulation recognises several principal liaison-office activity categories.

These include:

Market Research

The office may analyse:

• customer demand;
• industry developments;
• competitors;
• market pricing;
• regulatory conditions; and
• investment opportunities.

This is one of the most common reasons international companies initially establish liaison offices.

Promotion of the Foreign Company’s Products and Services

A liaison office may conduct promotional activities regarding the parent company’s products and services.

However, promotion must not turn into direct commercial sales.

Representation and Hosting

The liaison office may represent the foreign company before relevant sector organisations and coordinate the Turkish business contacts of foreign company officials.

The Regulation also recognises organisational and office-support activities for visiting foreign company representatives.

Supplier Quality and Standards Control

A foreign company having products manufactured or sourced in Turkey may use a liaison office to supervise Turkish suppliers.

Activities may include:

• supplier identification;
• factory visits;
• quality control;
• production monitoring;
• standards compliance; and
• sourcing assistance.

The Regulation permits this category and allows a five-year extension period where the relevant requirements are satisfied.

Technical Support

The liaison office may provide technical assistance or training to distributors and may support suppliers in improving quality standards.

However, this must remain within the authorised technical-support scope and should not turn into an independently charged Turkish service business.

Communication and Information Transfer

The office may collect information concerning:

• market developments;
• customer tendencies;
• competitor activities;
• distributor performance;
• sales information; and
• commercial developments

and communicate that information to the foreign parent company.

Regional Management Centre

A liaison office can also function as a regional management centre.

This is particularly important for multinational groups using Turkey as a regional operational base.

Permitted regional coordination activities may include:

• investment strategy;
• management strategy;
• planning;
• promotion;
• brand management;
• financial management;
• technical support;
• research and development coordination;
• procurement;
• product testing;
• research;
• analysis; and
• employee training

for the foreign company’s units in other countries.

7. Can a Liaison Office Sign Contracts?

This requires careful distinction.

A liaison office may need to sign ordinary administrative contracts required for its own existence, such as:

• office lease agreements;
• employment contracts;
• service arrangements for utilities;
• accounting or payroll arrangements;
• office supply agreements; and
• similar operational documents.

What it must not do is operate as a commercial Turkish sales entity generating income through customer transactions.

Therefore, the fact that an office signs a lease does not constitute prohibited commercial activity.

The risk arises where it begins signing revenue-generating customer agreements or operating as a local sales company.

8. Who Gives Permission to Establish a Liaison Office?

The competent authority is the:

Republic of Türkiye Ministry of Industry and Technology – General Directorate of Incentive Implementation and Foreign Investment.

Foreign companies cannot simply open an office and later notify the Ministry.

The necessary operating permit should be obtained.

Turkey’s Investment Office confirms this Ministry authorisation requirement.

9. Does a Newly Established Foreign Company Automatically Qualify?

Not necessarily.

The Ministry may examine newly established foreign companies more carefully.

The current Regulation provides that, when evaluating applications by newly established companies, the Ministry may consider matters such as:

• the company’s field of activity;
• capital;
• number of employees; and
• commercial substance.

The Ministry may require that at least one year has passed since the foreign company’s establishment before granting a liaison office permit.

Therefore, forming a shell company abroad immediately before applying for a Turkish liaison office may create difficulties.

A commercially established parent company with genuine operations and financial history will generally present a stronger application.

10. What Documents Are Required to Establish a Liaison Office?

The application generally includes several corporate and authority documents.

The official Invest in Türkiye guidance lists:

• application form;
• statement describing the activities to be conducted by the liaison office;
• undertaking that the office will not conduct commercial activities;
• proof that the person signing the statement is authorised by the foreign company;
• foreign company’s certificate of activity;
• activity report or balance sheet and income statement;
• authorisation certificate issued to the person or persons appointed to conduct liaison-office activities; and
• power of attorney where the establishment procedures are conducted through a representative.

The Regulation contains the same core documentary framework.

A well-prepared application should clearly explain why the foreign company requires a Turkish liaison office and what activities it intends to conduct.

11. Does the Foreign Company’s Certificate of Activity Need an Apostille?

Generally, yes, where the Apostille Convention applies.

The foreign company’s certificate of activity must be appropriately authenticated either:

• through the relevant Turkish Consulate; or
• pursuant to the Hague Apostille Convention.

The official Investment Office confirms this requirement.

The precise legalisation procedure depends on the issuing country.

Foreign companies should plan document preparation early because authentication and translation can become one of the most time-consuming parts of the application.

12. Must Documents Be Translated Into Turkish?

Foreign-language corporate documents to be used before Turkish authorities generally need appropriate Turkish translation and certification.

The authority must be able to determine:

• whether the foreign company legally exists;
• who represents it;
• whether the signatory is authorised;
• what the company’s business is; and
• who has been appointed to manage the liaison office.

Any inconsistency in:

• company name;
• registration number;
• director names;
• authority;
• or corporate status

may delay the application.

13. How Long Does It Take to Obtain a Liaison Office Permit?

Provided that the requested information and documents are complete and accurate, establishment and extension applications are currently expected to be concluded within 15 working days.

This should be distinguished from the total preparation period.

The entire process can take longer where the foreign company must first obtain:

• apostilled documents;
• corporate resolutions;
• translations;
• powers of attorney; or
• additional regulatory approvals.

Therefore, the 15-working-day period should be understood as the Ministry’s processing period for a complete application.

14. How Long Is the First Liaison Office Permit Valid?

The initial permit may be granted for a maximum of:

three years.

The licence applies to the activity category declared in the application.

The office should therefore ensure that its actual operations correspond to the permitted category.

If the company’s strategy changes materially, legal advice should be obtained before the office begins new activities.

15. Can the Three-Year Permit Be Extended?

Depending on the permitted activity, yes.

The Ministry evaluates extension requests by considering matters such as:

• the office’s activities during previous years;
• the foreign company’s future business plans in Turkey;
• existing and anticipated expenditure;
• number of employees;
• business objectives; and
• the actual nature of the liaison-office activities.

However, extensions are not available equally to every office.

16. Which Liaison Offices Cannot Obtain Extensions?

A particularly important rule applies to liaison offices authorised solely for:

• market research; or
• promotion of the foreign company’s products or services.

Their operating periods cannot be extended under the current Regulation.

Therefore, a foreign company establishing a liaison office solely to “research the market” should understand from the beginning that the three-year period is not intended to become a permanent structure.

The foreign company may eventually need to:

• close the office;
• convert its Turkish strategy into a commercial branch;
• establish a Turkish subsidiary; or
• restructure its regional presence.

17. How Long Can Other Liaison Offices Be Extended?

Current rules provide activity-based extension periods.

The following categories may receive extensions of up to five years:

• representation and hosting;
• supplier quality and standards control;
• supplier identification;
• technical support; and
• communication and transfer of information.

A regional management centre may receive an extension of up to ten years.

These are maximum possible extension periods rather than automatic entitlements.

The Ministry evaluates the actual substance of the office before deciding an extension application.

18. When Should an Extension Application Be Made?

The extension application should be submitted before the existing operating period expires.

Foreign companies should avoid waiting until the final days.

An extension file should ideally contain convincing evidence showing:

• what the office has actually done;
• how much money the foreign company has spent in Turkey;
• how many employees have been engaged;
• why continued Turkish presence is required; and
• what activities are planned for the next period.

The office’s annual reports become important evidence during this process.

19. Does the Liaison Office Need a Turkish Address?

Yes.

After receiving the operating permit, the liaison office will generally need a Turkish office address.

The office should enter into an appropriate lease arrangement.

The suitability of the premises should be considered according to:

• employee numbers;
• intended activities;
• local requirements; and
• administrative needs.

The office is not merely a theoretical registration.

A genuine operational structure should correspond with the activities described to the Ministry.

20. What Must Be Done After the Ministry Issues the Permit?

Once the liaison office has obtained the operating permit, several post-establishment obligations arise.

The Regulation requires the office to submit copies of:

• its tax-office registration document; and
• office lease agreement

to the General Directorate within one month.

Turkey’s official Investment Office confirms the same requirement.

This one-month deadline should be included in the establishment checklist.

21. Does a Liaison Office Have a Tax Number?

Yes, liaison offices undergo tax-office registration even though their tax position is different from that of a commercial subsidiary or branch.

The requirement to submit the tax registration documentation to the Ministry within one month is expressly recognised in the current rules.

Obtaining a tax registration should not be confused with concluding that the liaison office automatically owes corporate income tax.

Its tax status depends heavily on the office respecting its prohibition on income-generating commercial activity.

22. Does a Genuine Liaison Office Pay Corporate Income Tax?

Where a liaison office is genuinely operated within the permitted non-commercial framework and does not generate Turkish commercial income, it should generally not create ordinary Turkish corporate income tax liability based solely on its permitted liaison activities.

The legal logic is straightforward:

the office is prohibited from conducting commercial activity and therefore should not be generating ordinary Turkish business profits.

However, this favourable treatment depends on substance.

If the foreign company’s Turkish office begins carrying out revenue-generating activity, the tax authorities may reach a different conclusion regarding the existence of taxable business activity or a permanent establishment.

Therefore:

No commercial activity → generally no commercial profit to tax.

But:

Actual sales/service activity → potentially substantial Turkish tax exposure.

Foreign companies should focus on actual conduct, not merely the title “liaison office.”

23. Are Employee Salaries Exempt From Turkish Income Tax?

They may be, subject to strict statutory conditions.

The Turkish Revenue Administration explains that salaries paid by an employer whose legal and business headquarters are outside Turkey may qualify for an income-tax exemption where all of the statutory conditions are satisfied.

The conditions include that:

• the employer is a limited taxpayer and does not conduct income-generating activity in Turkey;
• the person is an employee;
• the salary is funded from the employer’s foreign-source earnings;
• payment is made in foreign currency; and
• the payment is not recorded as an expense in accounts relating to taxable Turkish income.

The Revenue Administration specifically gives an example involving an employee working at a foreign company’s liaison office in İzmir and confirms the exemption where the relevant conditions are satisfied.

This can be an important practical advantage of a genuine liaison-office structure.

However, it is not enough simply to label a payment “foreign salary.”

All statutory conditions must be satisfied.

24. Does Income Tax Exemption Mean There Are No Payroll Obligations?

No.

Income-tax treatment and social security treatment are different matters.

A liaison office employing personnel in Turkey must separately consider:

• Turkish Labour Law;
• Social Security Institution registration;
• social security premiums;
• occupational health and safety;
• employment contracts;
• severance and notice rights;
• annual leave; and
• workplace obligations.

Therefore, even where employee salaries qualify for an income-tax exemption, Turkish employment and social security obligations may remain.

25. Can a Liaison Office Employ Turkish Citizens?

Yes.

A liaison office may employ Turkish personnel within the scope of its permitted activities.

Common positions may include:

• liaison office manager;
• market analyst;
• administrative assistant;
• supplier quality specialist;
• technical-support employee;
• research employee;
• regional coordinator; and
• support personnel.

The employees should not be instructed to perform activities that would effectively transform the liaison office into a commercial sales operation.

For example, hiring a team called “Turkey Sales Department” that directly sells and invoices Turkish customers would create obvious compliance concerns.

26. Can a Liaison Office Employ Foreign Personnel?

Potentially, yes, but foreign personnel must satisfy Turkish work-permit requirements.

The Ministry of Labour and Social Security’s current 2026 guidance confirms that, for liaison offices, a work permit may be granted to a maximum of one foreign national holding an authorisation certificate, subject to the applicable liaison-office conditions and the existence of the Ministry of Industry and Technology operating permit.

A separate regulation governing foreign personnel in direct foreign investments also provides a special framework for a maximum of one authorised foreign person employed in a liaison office and contains a funding condition linked to foreign currency brought from abroad for the office’s activities.

Work-permit planning should therefore begin before appointing a foreign manager to work physically in Turkey.

27. What Is the USD 200,000 Rule for a Foreign Liaison Office Employee?

Under the Regulation on Employment of Foreign Nationals in Foreign Direct Investments, a special work-permit route exists for one authorised foreign employee of the liaison office.

The regulation states that the Ministry may issue a work permit for a maximum of one person holding an authorisation certificate where at least:

USD 200,000 or equivalent foreign currency

has been brought from abroad for the liaison office’s activities during the previous year.

This condition relates to the special foreign-personnel work permit framework.

It should not be confused with the conditions for merely obtaining the liaison-office establishment permit.

28. Does the Liaison Office Need to Be Financed From Abroad?

Because a liaison office cannot conduct commercial activity and generate ordinary operating revenue in Turkey, its expenses are ordinarily financed by the foreign parent company.

This funding structure is also relevant to the income-tax treatment of employees.

The Turkish Revenue Administration specifically requires, for the salary exemption, that qualifying salaries be paid from the foreign employer’s earnings generated outside Turkey.

The office should therefore preserve clear evidence of:

• transfers from headquarters;
• bank statements;
• foreign currency transfers;
• payroll funding;
• rent payments;
• office expenses; and
• other operational costs.

These records may be relevant during annual reporting, permit extensions and tax review.

29. Can the Liaison Office Open a Bank Account?

Yes.

A liaison office may require Turkish banking arrangements in order to:

• receive operating funds from the parent company;
• pay rent;
• pay salaries;
• pay social security premiums;
• pay utility bills; and
• finance other permitted expenses.

Banks will generally perform their own:

• KYC checks;
• beneficial ownership checks;
• sanctions screening;
• parent-company verification; and
• representative-authority review.

The liaison-office permit does not automatically require a bank to open an account without compliance review.

30. Does the Liaison Office Have Annual Reporting Obligations?

Yes.

Every liaison office must provide information concerning its activities during the previous year.

The Regulation requires liaison offices to submit the Liaison Offices Activities Data Form (Annex 4) and supporting documentation no later than the end of May each year.

This is one of the most important recurring compliance deadlines.

The office should maintain records throughout the year rather than attempting to reconstruct activities at the end of May.

31. What Happens if the Annual Activity Report Is Not Filed?

The consequences are potentially serious.

The Regulation expressly provides that where the liaison office fails to submit the annual activity information form and attachments:

• its permit-extension request will not be evaluated; and
• its operating permit may be cancelled ex officio.

Annual reporting should therefore be treated as a core legal obligation rather than an optional statistical filing.

32. Is E-TUYS Used for Liaison Office Reporting?

Foreign investors should distinguish between the reporting system applicable to companies and branches and the specific reporting regime applicable to liaison offices.

Turkey’s E-TUYS platform is used extensively for foreign-investment reporting by Turkish foreign-invested companies and branches.

The current Foreign Direct Investment Regulation, however, separately requires liaison offices to submit their own Annex 4 Liaison Offices Activities Data Form each year by the end of May.

Accordingly, a foreign company should not assume that the E-TUYS filings used for subsidiaries and branches automatically satisfy the liaison-office reporting obligation.

The reporting route in force for the specific office should be confirmed with the General Directorate.

33. What Changes Must Be Reported to the Ministry?

Several changes must be notified promptly.

The liaison office must notify the General Directorate within one month where there is a change concerning:

• liaison-office address;
• liaison-office representative or representatives; or
• name/title of the foreign parent company.

Supporting documentation should accompany the notification, such as:

• new lease agreement;
• new representative’s authorisation certificate; or
• documentation relating to the parent company’s name change.

Failure to maintain accurate records may create problems during later permit extensions.

34. Can the Ministry Inspect a Liaison Office?

Yes.

The Ministry may examine whether the liaison office is operating:

• within the law;
• within its licence; and
• within the activities declared in its permit application.

Inspections may occur on the Ministry’s own initiative or following written information from another public authority.

This is important because the legal classification depends on the actual activity, not simply on what appears in the permit.

A foreign company cannot safely conduct Turkish sales operations merely because its office paperwork says “market research.”

35. What Activities Commonly Create Compliance Risk?

Several operational practices may indicate that a liaison office is crossing into commercial activity.

Examples include:

• issuing invoices;
• collecting customer payments;
• operating a Turkish sales platform;
• accepting customer purchase orders;
• earning commissions;
• providing paid consulting services;
• selling technical support packages;
• signing sales contracts in its own Turkish operation;
• keeping Turkish sales revenue; or
• creating a local business model whose economic purpose is direct profit generation.

Other activities may require more detailed analysis.

For example, a liaison-office employee participating in negotiations may not automatically violate the rules, but extensive authority to negotiate and conclude contracts for the foreign parent may create both liaison-office and international tax permanent-establishment concerns.

36. Can a Liaison Office Create a Permanent Establishment for Tax Purposes?

This is a major international tax issue.

A genuine liaison office conducting only auxiliary, preparatory and permitted non-commercial activities may often be structured so that the foreign company does not have ordinary taxable commercial profits in Turkey.

However, the title of the Turkish office is not decisive for double taxation treaty purposes.

Tax authorities may examine what the office actually does.

For example, risks increase if Turkish personnel:

• routinely negotiate essential contract terms;
• conclude contracts;
• generate Turkish revenue;
• make sales decisions;
• carry inventory for customer sales; or
• perform the foreign company’s core commercial business.

The applicable double taxation treaty should therefore be reviewed separately.

A liaison-office permit under Turkish foreign investment law does not automatically guarantee that no permanent establishment exists under an international tax treaty.

37. Can a Liaison Office Advertise the Parent Company’s Products?

Yes, promotion of the parent company’s products or services is a recognised liaison-office activity.

However, promotion should remain promotional.

The office should not convert advertising activity into a direct Turkish sales operation.

A practical boundary may be:

Permitted: presenting products, organising demonstrations, supplying information and communicating potential customer interest to headquarters.

Higher risk: quoting final commercial terms, accepting customer orders, collecting payment and completing the Turkish sale locally.

The internal authority of local employees should therefore be carefully structured.

38. Can a Liaison Office Provide Technical Support?

Yes, technical support is an expressly recognised activity category.

The current Regulation refers to:

• training distributors;
• providing technical assistance; and
• helping supplier manufacturers improve quality standards.

This category may also qualify for a permit extension of up to five years.

However, the technical support should not become a separately billed Turkish service business.

If Turkish customers are paying the liaison office for technical services, the legal model should be reconsidered.

39. Can a Liaison Office Act as a Regional Management Centre?

Yes.

This can be one of the most strategically valuable liaison-office structures for large multinational groups.

A regional management centre may coordinate the foreign company’s operations in multiple countries from Turkey.

Permitted regional management activities can include:

• management strategy;
• investment strategy;
• planning;
• brand management;
• financial management;
• technical support;
• research and development coordination;
• procurement;
• product testing;
• research and analysis;
• and training.

Regional management centres may potentially receive extension periods of up to ten years, making them materially different from ordinary market-research offices.

40. Liaison Office or Branch: Which Is Better?

The answer depends on whether the foreign company intends to generate Turkish revenue.

Liaison Office

A liaison office is suitable where the purpose is:

• research;
• representation;
• promotion;
• coordination;
• supplier supervision;
• technical support;
• communication; or
• regional management.

It cannot engage in commercial activity.

Branch

A branch may conduct genuine commercial activity and generate Turkish revenue.

However, the branch is legally an extension of the foreign parent company and creates Turkish tax obligations relating to Turkish commercial profits.

Therefore:

If you want to research the market → liaison office may be appropriate.

If you want to sell directly → branch or subsidiary will usually be necessary.

41. Liaison Office or Turkish Subsidiary: Which Is Better?

A Turkish subsidiary is usually established as an:

• Ltd. Şti.; or
• A.Ş.

It has separate legal personality and can:

• sell goods;
• invoice customers;
• enter revenue-generating contracts;
• own assets;
• employ personnel;
• receive investments;
• distribute dividends; and
• conduct ordinary Turkish commercial operations.

A subsidiary may therefore be preferable where the foreign company expects Turkey to become a genuine standalone market.

A liaison office can instead be useful as an entry-stage vehicle.

42. Can a Liaison Office Later Become a Commercial Business?

The foreign company can change its Turkish market-entry strategy, but it should not simply begin commercial activity using the liaison office.

If commercial operations are required, the company should consider establishing:

• a Turkish subsidiary; or
• a registered branch.

Contracts, personnel, leases and operations may then need to be transferred or reorganised appropriately.

The transition should be planned before commercial sales begin.

43. How Is a Liaison Office Closed?

Where the foreign company decides to terminate its liaison-office activities, formal closure procedures must be completed.

The Regulation provides that the office should obtain a cessation/inspection document from the relevant tax office and submit it to the General Directorate for closure purposes.

The official Investment Office also confirms this procedure.

The liaison office cannot claim transfers of funds other than amounts remaining after closure and liquidation.

Employment termination, lease termination, bank accounts and social security matters should also be handled as part of the closure project.

44. What Are the Most Common Mistakes Foreign Companies Make?

Mistake 1: Using a Liaison Office to Sell Products

This directly conflicts with the fundamental non-commercial requirement.

Mistake 2: Calling a Sales Team “Market Research”

Authorities may examine actual conduct rather than employee titles.

Mistake 3: Forgetting the Three-Year Permit Limit

A market-research office does not automatically continue indefinitely.

Mistake 4: Assuming Every Permit Can Be Extended

Market-research and product-promotion liaison offices cannot currently obtain extensions under the Regulation.

Mistake 5: Missing the Annual May Filing

Failure to file may prevent permit extension and may result in permit cancellation.

Mistake 6: Failing to Report Address or Representative Changes

These changes generally have a one-month notification deadline.

Mistake 7: Hiring a Foreign Manager Without a Work Permit

Corporate authorisation does not replace work permission.

Mistake 8: Assuming Salary Tax Exemption Is Automatic

The Revenue Administration imposes specific cumulative conditions.

Mistake 9: Treating the Liaison Office as Automatically Free From Permanent Establishment Risk

International tax treatment depends on actual activities.

Mistake 10: Keeping the Liaison Office After the Business Becomes Commercial

Once the Turkish operation moves into sales and revenue generation, a branch or subsidiary should be considered.

45. Practical Example: US Technology Company Establishing an Istanbul Liaison Office

Assume a US software company is considering entering the Turkish market but does not initially want to establish a sales company.

The company intends to:

• research Turkish enterprise customers;
• analyse competitors;
• coordinate potential distributors;
• represent the company at industry events;
• provide information to headquarters; and
• conduct market analysis.

Stage 1 – Structure Analysis

The company determines that it does not initially need to invoice Turkish customers.

A liaison office is therefore considered instead of an Ltd. Şti. or branch.

Stage 2 – Parent Company Documents

The US company prepares:

• certificate of activity;
• financial statements or activity report;
• corporate authority documents; and
• authorisation for the Turkish liaison-office representative.

Stage 3 – Authentication

Relevant foreign documents are apostilled and translated into Turkish.

Stage 4 – Ministry Application

The application is submitted to the Ministry of Industry and Technology.

The company expressly undertakes not to conduct commercial activity.

Stage 5 – Operating Permit

The Ministry grants an initial permit for the authorised activity within the maximum three-year framework.

Stage 6 – Office and Tax Registration

The company leases an Istanbul office and completes the necessary tax-office registration.

Copies of the tax registration and lease are submitted to the General Directorate within one month.

Stage 7 – Employees

The company hires Turkish personnel for market analysis and coordination.

Employment and SGK obligations are addressed.

Stage 8 – Funding

All operating funds are transferred from the US headquarters.

Stage 9 – Annual Compliance

Each year, the office prepares its activity records and submits the required liaison-office activity information by the end of May.

Stage 10 – Commercial Expansion

Two years later, the company decides to begin directly selling software subscriptions to Turkish customers.

At this point, the company does not simply begin issuing invoices through the liaison office.

Instead, it obtains legal and tax advice and establishes a Turkish commercial subsidiary.

The liaison-office structure is then appropriately reorganised or closed.

This example demonstrates the proper function of a liaison office:

market entry and representation before commercial operation—not a permanent substitute for a commercial company.

Frequently Asked Questions About Liaison Offices in Turkey

Can a foreign company open a liaison office in Turkey?

Yes. A company incorporated under foreign law may obtain a permit from the Ministry of Industry and Technology to open a liaison office, provided that it does not conduct commercial activity in Turkey.

Does a liaison office need Ministry approval?

Yes.

Can a liaison office sell products in Turkey?

No. Commercial activity is prohibited.

Can it issue invoices?

It should not issue invoices for revenue-generating commercial activities because a liaison office is not authorised to conduct commercial business.

Can it conduct market research?

Yes.

Can it promote the foreign company’s products?

Yes, within the permitted promotional scope.

Can it supervise suppliers?

Yes. Supplier identification and quality/standards supervision are expressly recognised activities.

Can it provide technical support?

Yes, within the authorised non-commercial technical-support framework.

Can it serve as a regional management centre?

Yes. Regional management is a recognised liaison-office category and can potentially support an extension of up to ten years.

How long is the first permit?

Up to three years.

Can a market-research liaison office extend its permit?

No. Offices authorised for market research or promotion of the foreign company’s goods and services are not eligible for extension under the current Regulation.

How long can other liaison offices be extended?

Representation, supplier control, technical support and information-transfer activities may potentially receive five-year extensions. Regional management centres may potentially receive ten-year extensions.

How long does the Ministry take to process the application?

A complete and accurate application is generally to be concluded within 15 working days.

Does the foreign parent company need to have existed for one year?

The Ministry may require newly established foreign companies to have been operational for at least one year, depending on factors including activity, capital and employee numbers.

Must foreign documents be apostilled?

The foreign company’s certificate of activity must generally be authenticated through the appropriate Turkish consular or Apostille Convention procedure.

Does the office need a Turkish lease?

Yes, and a copy of the lease must be submitted together with the tax registration document within one month after establishment.

Does the office have annual reporting obligations?

Yes. The Annex 4 Liaison Offices Activities Data Form and supporting documents must be submitted by the end of May each year.

What happens if the annual report is not filed?

A permit-extension request may not be considered, and the office’s operating permit may be cancelled ex officio.

Can the office hire Turkish employees?

Yes, subject to Turkish employment and social security legislation.

Can it hire foreign employees?

Potentially. A special work-permit framework applies to a maximum of one authorised foreign person under the relevant foreign direct investment rules.

Are employee salaries exempt from Turkish income tax?

They may qualify for exemption where all conditions in the Turkish Income Tax Law are satisfied, including foreign-source funding and the absence of Turkish income-generating activity by the employer.

Can a liaison office earn Turkish revenue?

No. Direct commercial revenue generation is inconsistent with the liaison-office regime.

Can a liaison office later become a branch?

The foreign company may restructure its Turkish presence into a commercial branch or subsidiary, but the transition should be formally planned rather than simply beginning commercial activities within the liaison office.

Conclusion: Is a Liaison Office the Right Way for a Foreign Company to Enter Turkey?

A Turkish liaison office can be a highly effective market-entry structure for a foreign company that wants a physical presence in Turkey without immediately commencing commercial operations.

The structure is particularly suitable for:

• multinational companies exploring the Turkish market;
• manufacturers supervising Turkish suppliers;
• international groups coordinating distributors;
• technology businesses conducting market research;
• companies providing permitted technical support;
• businesses collecting market information; and
• multinational groups establishing regional management functions.

The legal framework provides significant flexibility, but only on one fundamental condition:

The liaison office must not conduct commercial activities in Turkey.

That restriction should guide every operational decision.

A liaison office may:

• research;
• represent;
• communicate;
• supervise;
• coordinate;
• promote;
• monitor; and
• provide permitted support.

It should not:

• sell;
• invoice;
• collect revenue;
• operate a local sales business; or
• provide revenue-generating Turkish commercial services.

The current establishment procedure can broadly be summarised as:

corporate structuring review → preparation of foreign parent company documentation → apostille/consular authentication → Turkish translations → liaison-office application to the Ministry of Industry and Technology → operating permit → Turkish office lease → tax registration → one-month Ministry notification → employee and social security setup → foreign work permit where applicable → foreign-parent funding → annual activity reporting by the end of May → permit-extension or closure planning.

The initial operating licence may be granted for up to three years.

Foreign companies should nevertheless decide from the beginning whether their proposed activity can realistically remain non-commercial for that period.

Where the objective is only market research or product promotion, the current Regulation does not permit extension after the initial period.

Where the office performs qualifying activities such as:

• representation and hosting;
• supplier supervision;
• technical support; or
• information transfer,

an extension of up to five years may potentially be available.

Regional management centres may potentially obtain extensions of up to ten years.

Tax planning is equally important.

A liaison office that genuinely conducts no commercial activity will generally have a fundamentally different corporate-tax profile from a Turkish branch or subsidiary.

Employees may also benefit from the foreign-currency salary income-tax exemption where all statutory requirements are satisfied, including that the foreign employer does not carry out income-generating activities in Turkey and that the salaries are funded from foreign-source earnings.

However, these tax advantages make strict compliance with the non-commercial activity requirement even more important.

If an office formally registered as a liaison office is in reality operating as a Turkish sales organisation, the foreign parent company may face both Ministry enforcement and retrospective tax exposure.

For this reason, international companies should periodically review what their Turkish personnel actually do.

Job descriptions, email authority, customer negotiations, contract-signing authority, banking arrangements and internal sales processes should all be consistent with the authorised liaison-office activities.

The most important strategic question is therefore not:

“Can we open a liaison office in Turkey?”

For most established foreign companies, the answer may be yes.

The more important question is:

“Will the activities we actually intend to perform in Turkey remain within the legal limits of a liaison office?”

If the answer is yes, a liaison office may provide a flexible and relatively efficient entry structure.

If the foreign company intends to:

• invoice customers;
• conclude local sales;
• generate Turkish revenue;
• employ a full commercial team;
• operate a permanent revenue-generating business; or
• create a standalone Turkish business,

then a branch or Turkish subsidiary will generally be a more appropriate structure.

Choosing the correct vehicle at the beginning can prevent significant future problems involving tax assessments, licence cancellation, employment compliance and corporate restructuring.

Foreign companies considering opening a liaison office in Turkey should therefore obtain a Turkish legal and tax review before filing the application, particularly where the dividing line between representation and commercial activity may be difficult to identify.

A properly structured liaison office can provide an international business with an effective platform for understanding the Turkish market and developing long-term opportunities.

A liaison office used as a disguised commercial business, however, can expose the foreign company to exactly the legal and tax risks that the structure was designed to avoid.

This article reflects Turkish legislation, administrative rules and official guidance available as of August 2026. It is prepared for general informational purposes only and does not constitute company-specific legal, tax, employment, immigration or investment advice. The eligibility of a foreign company and the scope of permitted liaison-office activities should be evaluated according to the business model, sector, parent-company structure and administrative practice applicable on the date of application.