A Practical Legal Guide for Foreign Companies Entering the Turkish Market
Foreign companies planning to enter the Turkish market do not necessarily have to incorporate a new Turkish subsidiary. One of the most practical alternatives is to establish a branch office in Türkiye.
Under Turkish law, a company incorporated abroad may establish and register a branch in Türkiye and conduct commercial activities through that branch. Unlike a liaison office, a branch may generally carry out revenue-generating business activities, execute contracts, issue invoices, hire employees and participate directly in commercial transactions, provided that its activities remain within the business purposes of its foreign parent company.
The legal framework is principally based on the Turkish Commercial Code No. 6102, the Trade Registry Regulation, the Foreign Direct Investment Law No. 4875, Turkish tax legislation and, depending on the business sector, sector-specific regulatory rules.
The Foreign Direct Investment Law expressly recognizes the opening of a branch as a form of foreign direct investment. As a general principle, foreign investors are free to make direct investments in Türkiye and are entitled to equal treatment with domestic investors unless otherwise provided by international treaties or specific legislation.
1. Is a Foreign Company Legally Allowed to Open a Branch in Türkiye?
Yes.
A company established under the laws of another country may open a branch office in Türkiye without establishing a separate Turkish company.
Article 40/4 of the Turkish Commercial Code provides that branches in Türkiye belonging to commercial enterprises whose headquarters are located abroad shall be registered in the same manner as domestic commercial enterprises, subject to the rules of their home jurisdiction concerning their trade name.
The same provision requires the appointment of a fully authorized commercial representative whose place of residence is in Türkiye.
Therefore, there is no general requirement that the shareholders of the foreign parent company incorporate a Turkish limited liability company or joint stock company before commencing operations in Türkiye.
The branch itself may constitute the foreign company’s operating presence in Türkiye.
This approach is consistent with the Foreign Direct Investment Law No. 4875, which replaced the former authorization-oriented foreign investment regime with a substantially liberalized system based on investment freedom and national treatment.
2. Is a Turkish Branch a Separate Legal Entity?
This is one of the most important issues for foreign investors.
A Turkish branch of a foreign company does not have a legal personality separate from its parent company.
The branch is therefore legally part of the foreign company rather than a subsidiary owned by that company. Türkiye’s official investment guidance similarly describes a branch as an entity without shareholders and without an independent legal personality, whose duration is linked to the duration of the parent company.
This has significant legal consequences.
If, for example, a German company opens an Istanbul branch and the Istanbul branch signs a commercial agreement with a Turkish customer, the contractual obligations are ultimately obligations of the German parent company.
Likewise, liabilities arising from the branch’s commercial operations may generally reach the foreign parent company because there is no corporate veil separating the branch from its head office.
This is one of the principal differences between a branch and a Turkish subsidiary.
A subsidiary established as a Turkish joint stock company or limited liability company has its own legal personality. A branch does not.
For businesses operating in sectors involving substantial contractual, employment, product liability or regulatory risks, this distinction should be considered carefully before deciding whether a branch or subsidiary is the more appropriate market-entry structure.
3. Can the Branch Conduct Commercial Activities in Türkiye?
Yes.
A registered branch may conduct commercial activities in Türkiye within the scope of the activities of its parent company.
Türkiye’s official investment guidance specifically states that a branch may only be incorporated for purposes corresponding to those of the parent company.
In practice, depending on the parent’s corporate purpose and applicable regulatory requirements, a Turkish branch may enter into agreements with customers and suppliers, provide services, sell products, employ personnel, lease premises, maintain bank accounts, participate in commercial transactions and generate income in Türkiye.
However, establishing a branch does not override sector-specific licensing requirements.
Businesses operating in regulated industries — such as banking, insurance, payment services, capital markets, energy, aviation, telecommunications, healthcare or other licensed activities — may need authorization from the relevant regulatory authority before commencing operations.
The Trade Registry Regulation expressly requires the relevant permission or favorable opinion where the opening of the branch is subject to authorization by a ministry or another public authority.
4. What Is the Difference Between a Branch and a Liaison Office?
The distinction is particularly important.
A branch office can conduct commercial activities.
A liaison office generally cannot.
Foreign companies may establish liaison offices in Türkiye subject to authorization by the Ministry of Industry and Technology, but such offices must not engage in commercial activities in Türkiye.
Liaison offices are therefore generally more appropriate for activities such as market research, coordination, representation, technical support, regional management or similar non-revenue-generating functions.
By contrast, if the foreign company intends to sell goods or services, invoice Turkish customers or otherwise generate commercial revenue directly from Türkiye, a branch or Turkish subsidiary will usually be the more appropriate structure.
5. Is Minimum Capital Required to Establish a Branch?
Unlike Turkish joint stock and limited liability companies, a foreign company branch is not subject to a statutory minimum capital requirement for incorporation.
Nevertheless, an amount may be allocated by the parent company to finance the operations of the Turkish branch.
Türkiye’s official investment guidance expressly states that there is no minimum capital requirement for branches, although allocating a budget for branch operations is considered advisable.
The amount allocated to the branch may also appear in the registration documentation.
This should not be confused with the minimum capital requirements applicable to independently incorporated Turkish companies.
6. Does the Foreign Company Need a Representative in Türkiye?
Yes.
This is a statutory requirement.
Under Article 40/4 of the Turkish Commercial Code, a foreign commercial enterprise establishing a Turkish branch must appoint a fully authorized commercial representative whose place of residence is in Türkiye.
The Trade Registry Regulation further requires information concerning the person or persons authorized to represent the branch before courts, public authorities and private organizations.
The representative’s authority must therefore be sufficiently broad to represent and bind the Turkish branch.
If the relevant authority has not already been granted in the parent company’s branch establishment resolution, a separate power of attorney must generally be submitted during registration.
It is also important to distinguish corporate representation authority from immigration and employment authorization.
If a foreign national will physically work in Türkiye as branch manager or employee, the person’s appointment as representative does not automatically eliminate the need to comply with Turkish work permit legislation. The work authorization requirements must therefore be examined separately.
7. How Is a Foreign Company Branch Registered in Türkiye?
The branch must be registered with the Trade Registry Directorate having jurisdiction over its address.
Trade registry transactions in Türkiye are conducted through the Central Registry Record System (MERSİS). The Ministry of Trade confirms that registration, amendment and deregistration transactions concerning companies and commercial enterprises are processed electronically through MERSİS.
Under Article 122 of the Trade Registry Regulation and current administrative practice, the registration package generally includes:
- The application petition;
- The competent corporate body’s resolution approving the establishment of the Turkish branch;
- The parent company’s current commercial registry certificate or equivalent certificate of activity;
- A certified copy of the parent company’s articles of association or constitutional documents;
- Documentation concerning the requirements of the law of the parent company’s jurisdiction regarding the establishment of foreign branches;
- A declaration containing information concerning the parent company, its capital, business activities, registration details, Turkish branch address, allocated capital and authorized representatives;
- The resolution appointing the fully authorized representative resident in Türkiye, or a separate power of attorney granting the necessary powers;
- Identification documents and signature declarations of the branch representative;
- Where applicable, regulatory permits or approvals required for the relevant sector; and
- Other forms and declarations requested by the competent Trade Registry Directorate.
Article 122 of the Trade Registry Regulation contains the detailed statutory documentary requirements applicable to branches of enterprises headquartered outside Türkiye.
The precise document set may vary depending on the legal form of the foreign company, its country of incorporation and the nature of the intended Turkish activities.
8. Do Foreign Corporate Documents Need an Apostille?
In most cases, yes.
Documents issued abroad generally need to be properly authenticated before they can be used for Turkish trade registry procedures.
Where the issuing country is a party to the Hague Apostille Convention, foreign public documents will generally need to be apostilled.
Where the Apostille Convention is not applicable, legalization through the competent Turkish diplomatic or consular authorities may be required.
Foreign-language documents must also be translated into Turkish through the appropriate official translation and notarization process.
Türkiye’s official investment guidance confirms that documents executed abroad must generally be notarized and apostilled or alternatively authenticated by the competent Turkish consulate, followed by official Turkish translation and notarization.
For this reason, the documentary stage often deserves particular attention before the MERSİS and trade registry application is initiated.
9. Can a Turkish Branch Hire Employees?
Yes.
A registered Turkish branch can employ personnel in Türkiye.
Once operational, the branch must comply with Turkish employment and social security legislation in substantially the same manner as other employers operating in Türkiye.
This may include employment agreements, payroll administration, employee income tax withholding, registration with the Social Security Institution and compliance with Turkish Labour Law.
Where foreign employees are employed, work permit legislation must additionally be considered.
Therefore, a foreign executive’s appointment as branch representative should not automatically be interpreted as authorization to work physically in Türkiye.
10. How Is a Foreign Company’s Turkish Branch Taxed?
A branch constitutes a significant Turkish tax presence.
Because the foreign parent company’s legal and business headquarters remain abroad, the foreign company is generally treated as a limited taxpayer corporation in Türkiye with respect to income attributable to its Turkish permanent establishment or branch.
The Turkish Revenue Administration confirms that corporations whose legal and business headquarters are both outside Türkiye are taxable in Türkiye on Turkish-source income and that commercial income derived through a workplace or permanent representative in Türkiye is taxable under the limited-taxpayer regime.
For the 2026 fiscal period, the standard Turkish corporate income tax rate applicable to ordinary corporate taxpayers is 25%, subject to special rates, exemptions and other statutory rules applicable to particular activities or sectors.
The branch may also become liable for other Turkish taxes and reporting requirements depending on its activities, including VAT, withholding taxes, payroll-related taxes, stamp tax and applicable transaction-specific taxes.
A tax treaty between Türkiye and the parent company’s home jurisdiction should always be reviewed because double taxation treaties may affect the allocation of taxing rights, permanent establishment issues and applicable withholding rates.
11. Can Branch Profits Be Transferred Back to the Foreign Head Office?
Yes.
Turkish foreign investment legislation allows foreign investors to transfer abroad net profits, dividends, sale and liquidation proceeds and certain other amounts arising from their Turkish investments through banks and financial institutions.
However, tax consequences must be taken into account.
Following the taxation of branch profits in Türkiye, amounts transferred by the Turkish branch to the foreign head office may be subject to branch profit remittance withholding tax.
The current statutory withholding rate is 15%, although the applicable rate may be reduced under a relevant double taxation treaty. Türkiye’s official investment guidance also states that branch profits transferred to headquarters are subject to a 15% withholding tax, subject to treaty relief.
Accordingly, the tax treatment of a branch should be compared with the taxation of a Turkish subsidiary before the investor chooses its corporate structure.
12. Is the Parent Company Liable for the Branch’s Debts?
As a general corporate-law consequence of the branch having no independent legal personality, the parent company ultimately stands behind the obligations of the branch.
This may include commercial debts, contractual claims, employee claims, damages and other liabilities arising from Turkish operations.
For example, if a Turkish branch enters into a supply agreement and fails to perform its obligations, the fact that the agreement was executed through the Turkish branch does not create the same liability separation that would normally exist between a shareholder and a separately incorporated Turkish subsidiary.
From a risk-management perspective, this is one of the most important factors when choosing between a branch and a subsidiary.
13. Does the Branch Need to File Foreign Investment Notifications?
Foreign investment reporting requirements should also be considered after registration.
Certain information previously submitted in paper form by companies and branches established in Türkiye by foreign investors is now reported electronically through E-TUYS, the web-based system administered by the General Directorate of Incentive Implementation and Foreign Investment.
The system covers, among other matters, foreign direct investment activity and capital information.
Accordingly, foreign investors should regard trade registry registration as the beginning rather than the end of their Turkish regulatory compliance obligations.
14. Branch or Turkish Limited Company: Which Is Better?
There is no universally correct structure.
A branch can be attractive where the foreign parent wants to enter Türkiye quickly under its existing corporate identity and maintain direct control over Turkish operations.
It also avoids creating shareholders and does not require the statutory minimum share capital applicable to independently incorporated companies.
On the other hand, the lack of separate legal personality means that branch liabilities may directly affect the parent company.
A Turkish subsidiary may therefore be preferable where the investor wants a separate corporate vehicle, clearer segregation of liabilities, local shareholders or investors, future equity financing or a structure designed for a long-term independent Turkish operation.
Tax treaty considerations may also significantly affect the decision.
Consequently, the choice between a branch and a subsidiary should normally be made after reviewing corporate liability, taxation, sectoral licensing, employment structure, projected revenue, repatriation of profits and the investor’s long-term exit strategy.
15. Can a Foreign Company Operate Through More Than One Branch?
Yes.
The Turkish Commercial Code specifically regulates this situation.
Where a foreign commercial enterprise has several branches in Türkiye, branches established after registration of the first branch are registered according to the rules applicable to branches of domestic commercial enterprises.
This allows foreign companies to expand their physical operations into multiple Turkish cities without establishing a separate Turkish company for every location.
16. Are There Restrictions for Certain Industries?
Yes.
The general foreign investment regime is liberal, but national treatment does not mean that every activity is completely unregulated.
Sector-specific laws may impose licensing, shareholding, management, security or authorization requirements.
Official Turkish investment guidance also notes that nationality restrictions or specific regulatory requirements may continue to apply in certain sectors, including areas such as broadcasting, maritime transportation and civil aviation.
Therefore, before registering a branch, the investor should determine whether the contemplated activity requires approval from a sector regulator.
A branch registration alone does not replace a legally required operating licence.
Frequently Asked Questions
Can a UK, US, German, UAE or other foreign company open a branch in Türkiye?
Yes. Turkish law does not generally limit branch establishment to companies incorporated in specific jurisdictions. However, corporate documents must comply with authentication, apostille/legalization and Turkish translation requirements.
Does the foreign company need a Turkish shareholder?
No. A branch has no shareholders because it is part of the foreign parent company.
Is there a minimum capital requirement?
There is no general statutory minimum capital requirement for an ordinary foreign company branch.
Can the branch issue invoices in Türkiye?
A properly registered and tax-registered branch conducting commercial activities may issue invoices in connection with its Turkish business activities, subject to Turkish tax and invoicing legislation.
Can the branch sign contracts?
Yes. Contracts may be executed through duly authorized branch representatives within the scope of their authority.
Can the branch employ Turkish employees?
Yes. Turkish employment and social security legislation will apply.
Does the branch manager have to be a Turkish citizen?
No. Turkish citizenship is not the statutory requirement. The Turkish Commercial Code requires the fully authorized commercial representative to have his or her place of residence in Türkiye.
Does opening a branch automatically give a foreign manager the right to work in Türkiye?
No. Corporate representation authority and immigration/work authorization are separate legal matters.
Can profits be sent to the parent company abroad?
Yes, subject to Turkish taxation and applicable foreign exchange and banking procedures. Branch profit remittances are currently subject to a 15% withholding tax under domestic rules, unless a relevant double taxation treaty provides a reduced rate.
Conclusion
A foreign company can legally establish a branch office in Türkiye and conduct commercial activities without incorporating a separate Turkish subsidiary.
The principal requirements are the adoption of a valid branch establishment decision by the foreign parent company, appointment of a fully authorized representative resident in Türkiye, preparation and authentication of the foreign corporate documents, registration through MERSİS and the competent Trade Registry Directorate, and completion of the necessary tax, employment, foreign investment reporting and sector-specific compliance procedures.
The most important legal characteristic of the branch structure is that the Turkish branch is not legally independent from its foreign parent company.
This can make the branch structure relatively straightforward from a corporate organization perspective, but it also exposes the foreign parent directly to liabilities arising from Turkish operations.
For that reason, foreign companies entering the Turkish market should compare the branch model with establishing a Turkish limited liability company or joint stock company before commencing business.
The appropriate structure depends not merely on establishment costs, but also on taxation, liability exposure, regulatory requirements, anticipated Turkish turnover, staffing arrangements, profit repatriation and the company’s long-term business strategy.
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