How to establish a foreign startup in Turkey is a topic that has gained significant attention in recent years as the country emerges as a regional hub for technology, innovation, and entrepreneurship. With its strategic location, young and skilled workforce, and government incentives for startups, Turkey presents numerous opportunities for foreign entrepreneurs. This article provides a comprehensive legal framework and practical guide for foreigners planning to open or expand their startup operations in Turkey.
1. Legal Framework for Foreign Startups
Foreign investments and company formations in Turkey are regulated by:
- Turkish Commercial Code (TCC) – Governs company structures, shareholder rights, and corporate governance.
- Foreign Direct Investment Law No. 4875 – Guarantees equal treatment for foreign and local investors.
- Tax Procedure Law – Regulates tax registration and obligations.
- Social Security and Labor Laws – Define employer obligations regarding employees.
Foreigners are allowed to establish startups in any sector, except for certain restricted industries (e.g., defense, broadcasting, and strategic energy projects), which may require special permissions.
2. Choosing the Right Legal Structure
The first step is to select an appropriate legal entity for your startup:
- Limited Liability Company (LLC) – Most popular option for startups. Requires at least 1 shareholder, minimum capital of 10,000 TRY, and is relatively simple to manage.
- Joint Stock Company (JSC) – Preferred for larger ventures and companies seeking investment through shares. Requires at least 1 shareholder and 50,000 TRY minimum capital.
- Branch Office – Suitable if you want to expand an existing foreign company without creating a separate legal entity.
- Liaison Office – Non-commercial presence for market research or representation; cannot engage in direct sales.
3. Step-by-Step Process for Establishing a Foreign Startup in Turkey
Step 1 – Prepare Founding Documents
You will need:
- Articles of Association (AoA)
- Shareholder details (passport copies)
- Proof of registered office address in Turkey
- Bank deposit slip for initial capital
Step 2 – Capital Deposit
For an LLC or JSC, at least 25% of the share capital must be deposited into a temporary bank account before registration. The remainder can be paid within 24 months.
Step 3 – Trade Registry Application
Apply to the Trade Registry Office in the city where your startup will operate. Submission includes AoA, shareholder documents, proof of capital deposit, and other required forms.
Step 4 – Tax and Social Security Registration
After incorporation, the startup must obtain a tax number and register with the Social Security Institution (SGK) if employing staff.
Step 5 – Obtain Necessary Licenses and Permits
Certain sectors (e.g., fintech, energy, food production) require additional licenses from relevant authorities.
Step 6 – Open a Corporate Bank Account
A Turkish bank account is essential for transactions, capital injection, and payroll.
4. Compliance Requirements for Foreign Startups
Foreign-owned startups must comply with ongoing obligations:
- Annual General Meetings (AGM) – Mandatory for JSCs, optional for LLCs unless specified in the AoA.
- Financial Reporting – Submit annual financial statements in accordance with Turkish accounting standards.
- Tax Compliance – Corporate tax (20% in 2025), VAT, withholding taxes, and employee-related taxes must be paid regularly.
- Employment Law Compliance – Employment contracts must comply with the Turkish Labor Law, including minimum wage, working hours, and termination rights.
5. Incentives and Support for Startups
The Turkish government and private sector offer various incentives to attract foreign startups:
- Technopark Incentives – Tax exemptions for R&D activities within technology development zones.
- Investment Incentive Certificates – Customs duty exemptions, VAT reductions, and social security support for certain sectors.
- Startup Visa Programs – While Turkey does not have a formal startup visa, residence permits can be obtained through company formation and investment.
- TÜBİTAK Grants – R&D funding for innovative projects.
6. Practical Tips for Foreign Entrepreneurs
- Local Partnerships – Collaborating with a local partner or advisor can help navigate bureaucratic procedures.
- Professional Legal Assistance – Engage a Turkish law firm experienced in foreign company formation.
- Market Research – Analyze your target sector, competition, and consumer behavior before incorporation.
- Intellectual Property Protection – Register your trademarks and patents with the Turkish Patent and Trademark Office.
Conclusion
Understanding how to establish a foreign startup in Turkey requires careful planning, legal compliance, and strategic decision-making. The process involves selecting the right legal entity, completing trade registry procedures, securing licenses, and maintaining tax and labor law compliance.
Turkey offers a dynamic business environment with government incentives and a strategic location connecting Europe, Asia, and the Middle East. For foreign entrepreneurs, the key to success lies in thorough preparation, legal due diligence, and leveraging local expertise to ensure a smooth and compliant business launch.
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