Company Formation in Turkey for Foreign Investors

yazarı lawyerfbc

açık Aralık 4, 2025

1. Introduction

Turkey has become one of the most attractive destinations for foreign entrepreneurs seeking to establish a legal and operational base between Europe, Asia and the Middle East. The country’s growing economy, customs union with the European Union for industrial goods, wide logistics network, and investor-friendly legal reforms have turned it into a regional business hub.

Foreign investors in 2025 can set up a company in Turkey almost as easily as local entrepreneurs. Turkish law grants equal treatment to domestic and foreign capital under the principle of freedom of investment. There are no general restrictions on foreign ownership, and incorporation procedures are transparent, fast, and mostly digitalized.

This guide explains, step-by-step, how foreign individuals and corporations can create a business entity in Turkey—covering legal structures, taxation, capital requirements, practical procedures, and post-incorporation obligations.

2. Legal Environment for Foreign Investment

2.1 Equal Treatment Principle

The cornerstone of Turkey’s investment policy is national treatment. A foreign investor enjoys the same rights and bears the same obligations as a Turkish national. There is no requirement to have a local partner except in limited sectors such as media, aviation or defense.

2.2 Regulatory Framework

Company formation is primarily governed by the Turkish Commercial Code (TCC), which sets out all rules on establishment, capital, management, mergers, and liquidation. The Foreign Direct Investment Law supports this structure by removing most approval requirements and guaranteeing free transfer of dividends, capital and profits abroad.

In addition, tax, labor, and social security laws complement the corporate framework. Investors are expected to comply with general obligations such as bookkeeping, annual reporting, and employee insurance if staff are hired.

3. Available Business Structures

Foreign investors can choose among several legal forms depending on their goals, sector and scale of operation. The most common ones are:

Limited Liability Company (Limited Şirket – LLC)
Joint Stock Company (Anonim Şirket – JSC)
Branch Office of a Foreign Company
Liaison or Representative Office

3.1 Limited Liability Company (LLC)

The limited company is the simplest and most frequently used legal form. It can be founded by one or more shareholders, whether individuals or legal entities. Shareholders’ liability is limited to their capital contribution.

Main features:

Minimum share capital: 50,000 TRY (effective 2024–2025)
Can have a single shareholder
Managed by one or more “managers” appointed through the Articles of Association
Share transfers require notarization and registration in the Trade Registry
Ideal for small and medium-sized enterprises and service providers

3.2 Joint Stock Company (JSC)

The joint stock company is designed for larger or institutional investments. It allows for easier share transfers and capital raising, and it is the only company type eligible for public offering.

Main features:

Minimum share capital: 250,000 TRY (or 500,000 TRY if opting for the registered capital system)
Shareholders can be natural or legal persons
Managed by a Board of Directors and a General Assembly
Shares can be freely transferred unless restricted in the Articles of Association
Suitable for large-scale, regulated or capital-intensive projects

3.3 Branch Office

A foreign company can operate through a branch registered with the Turkish Trade Registry. It has no separate legal personality; its liabilities are directly borne by the parent company. Branches are taxed as Turkish entities on income generated in Turkey.

3.4 Liaison Office

A liaison office cannot perform commercial transactions or issue invoices. It may conduct market research, representation and coordination activities for the foreign parent. Its setup requires permission from the Ministry of Industry and Technology, usually granted for up to three years and renewable.

4. Deciding Between LLC and JSC

Foreign investors often compare these two forms before incorporation.

Criteria	LLC	JSC
Minimum Capital	50,000 TRY	250,000 TRY
Governance	Manager(s)	Board of Directors
Public Listing	Not possible	Possible
Share Transfer	Notarized, registry-based	Freely transferable
Ideal Use	SMEs, consultancy, trading	Large ventures, manufacturing, finance

For most new investors, the LLC offers simplicity and lower costs. However, if your plan includes joint ventures, large-scale financing or listing, the JSC provides more flexibility and prestige.

5. Step-by-Step Incorporation Procedure

The formation process generally takes one to two weeks if documentation is complete. Here is a practical roadmap:

Step 1: Planning and Structure Design

Before any paperwork, investors should clarify:

Type of entity (LLC, JSC, Branch, Liaison)
Business scope (trade, services, manufacturing, technology, etc.)
Capital amount and shareholding ratios
Management structure and signatory powers
Company name and registered office location

Step 2: Obtain Tax Numbers

All foreign shareholders and directors must obtain a Turkish tax identification number. This can be arranged online or through a local attorney with power of attorney.

Step 3: Prepare Founding Documents

Essential documents include:

Articles of Association (AoA): drafted according to TCC requirements
Identification of shareholders and managers/directors
Notarized signatures and specimen declarations
Proof of capital payment (for JSCs, at least 25 % must be paid before registration)
Lease contract for the registered office
Powers of attorney for local representatives

All foreign documents must be notarized, apostilled, and translated into Turkish by a sworn translator.

Step 4: Reserve the Company Name

Through the online MERSİS system, investors reserve the company name and submit draft Articles of Association for pre-approval.

Step 5: Capital Deposit

A temporary bank account is opened in the company’s name, and required capital is deposited. The bank issues a letter confirming payment, which is attached to the registry application.

Step 6: Notarization and Filing

The notarized incorporation documents are filed with the Trade Registry Office along with:

Founders’ declaration
Company address proof
Passport copies of foreign shareholders
Capital deposit receipt

Upon approval, the Trade Registry issues the Registration Certificate, and the company gains legal personality.

Step 7: Post-Registration Formalities

Tax Office registration and potential inspection
Social Security (SGK) registration if staff are hired
Certification of statutory books by a notary
E-signature and e-invoice setup if applicable
Company stamp (still used in many practical transactions)

After these steps, the company can start operations immediately.

6. Taxation Overview

6.1 Corporate Income Tax

Resident companies pay tax on worldwide income at a 25 % corporate tax rate. Non-residents, such as branches, are taxed only on Turkish-source income.

6.2 Dividend Withholding

Dividends distributed to foreign shareholders are subject to a 15 % withholding tax, unless reduced by an applicable double taxation treaty.

6.3 Value Added Tax (VAT)

The standard VAT rate is 20 %, with reduced rates of 10 % and 1 % for certain goods and services. VAT registration is mandatory for most businesses.

6.4 Other Taxes

Stamp Tax: on certain agreements, generally 0.948 % of the document value
Customs Duties: for imported goods
Social Security Premiums: approximately 22.5 % of gross salary shared between employer and employee

6.5 Incentives

Turkey offers several investment incentives, including:

Corporate tax reductions for strategic and regional investments
VAT and customs exemptions on imported machinery
Cash support for R&D and technology zones
Free zone advantages, such as exemption from income tax on export earnings

7. Employment and Work Permits

Foreign directors or employees who will reside and work in Turkey need a work permit and residence permit. The company must be duly registered and in good standing to sponsor such applications.

Key Conditions

Foreign employee ratio: usually one foreign employee for every five Turkish employees, subject to exceptions
Minimum salary thresholds depending on job category
Permits are typically granted for one year and renewable

8. Accounting and Compliance

All companies must maintain statutory books and file periodic returns:

Monthly: VAT, withholding and social security filings
Quarterly: provisional tax returns
Annually: corporate income tax return and financial statements

Financial records must be kept in Turkish Lira and in Turkish language. Companies that meet specific thresholds (based on assets, turnover or employees) must appoint an independent auditor.

Failure to meet these obligations may result in administrative fines and personal liability for managers.

9. Banking and Currency Rules

Opening a corporate bank account requires completion of company registration and presentation of incorporation documents. Banks perform strict Know-Your-Customer (KYC) checks, including verification of shareholders and ultimate beneficial owners.

There are no restrictions on using foreign currency for capital or transactions, but accounting records must ultimately be kept in Turkish Lira. Profits can be freely transferred abroad after taxes are paid.

10. Common Legal Mistakes to Avoid

Using template Articles of Association without adapting to actual needs
Failing to apostille foreign documents before submission
Not opening a local bank account early enough, delaying registration
Ignoring work permit rules for foreign managers
Under-capitalizing the company below realistic business requirements
Neglecting annual compliance such as shareholder meetings and filings

Each of these can cause costly delays or administrative penalties. Professional legal and accounting guidance ensures smooth establishment and operation.

11. Advantages of Incorporating in Turkey

100 % foreign ownership allowed in most sectors
Strategic location with access to EU, MENA and CIS markets
Fast incorporation (often within one week)
No mandatory local partner or director
Access to double taxation treaties and investment incentives
Competitive operational costs and skilled labor force

12. Practical Tips for 2025 Investors

Plan real capital – Authorities increasingly expect genuine capitalization rather than symbolic amounts.
Digital signatures and online filings – Many corporate tasks, including registry updates and tax returns, are now handled electronically.
Keep clean documentation – Consular legalization or apostille is essential for any foreign document.
Monitor regulatory updates – Tax rates and thresholds are periodically revised; always verify the latest numbers.
Use bilingual contracts – For cross-border operations, ensure all key documents are available in both English and Turkish.

13. Case Study Example

A technology startup from Germany wishes to establish a research and development subsidiary in Istanbul. After consulting with a Turkish attorney:

They choose an LLC structure with 100 % foreign ownership.
Set capital at 200,000 TRY, above the minimum threshold.
Appoint one German and one Turkish manager.
Obtain tax numbers and prepare notarized, apostilled corporate documents.
File through MERSİS and receive registration within ten days.
Register with the Technology Development Zone for tax incentives on R&D.

Within one month, the company becomes fully operational, hires engineers, and benefits from corporate tax exemption on qualifying R&D profits. This illustrates how quickly a foreign investor can integrate into the Turkish market with the right legal guidance.

14. Long-Term Compliance and Governance

Every year, companies must hold an annual general meeting to approve financial statements, appoint auditors (if required), and decide on profit distribution.

Boards or managers should also ensure:

Timely submission of tax and audit reports
Updating Trade Registry information when there are changes in capital, address, or management
Keeping shareholder ledgers and minute books properly certified
Observing data protection rules (KVKK) for employee and customer data

Non-compliance can trigger administrative fines or suspension of certain rights such as dividend distributions.

15. Exit and Restructuring Options

When foreign investors wish to restructure or exit the market, several options exist:

Share transfer to another investor (subject to notarization for LLCs)
Merger or demerger within Turkish entities
Liquidation of the company and repatriation of remaining assets after taxes
Conversion from LLC to JSC or vice versa

Turkey’s legal system allows these operations under predictable rules, ensuring investment continuity and legal security.

16. Future Outlook

The Turkish government continues to digitalize corporate and tax processes, attract high-tech investment and align with international compliance standards. Reforms planned for 2025–2026 include:

More comprehensive electronic company registry integration
Simplified capital increase procedures
Enhanced AML and beneficial ownership transparency
Further tax incentives for green and technology investments

For foreign investors, these reforms mean greater clarity, faster operations and improved confidence in Turkey’s business environment.

17. Frequently Asked Questions (FAQs)

Q1: Can a foreigner establish a company in Turkey alone?
Yes. Both LLCs and JSCs can be formed by a single foreign shareholder. No Turkish partner is required.

Q2: How long does it take to complete registration?
Normally between 5 and 10 working days once documents are ready.

Q3: Do I have to live in Turkey?
No, but if you are appointed as a resident manager, you may need a work and residence permit.

Q4: Can profits be transferred abroad freely?
Yes, after paying relevant taxes, dividends can be remitted without restrictions.

Q5: What sectors require special permits?
Banking, insurance, energy, telecoms, aviation, and certain media activities require additional licenses.

18. Conclusion

Setting up a company in Turkey as a foreign investor is straightforward when approached strategically. The combination of liberal investment policy, modern company law and strong infrastructure makes Turkey a regional powerhouse for international business.

By choosing the right company form, ensuring proper documentation, and maintaining ongoing compliance, foreign investors can secure a solid legal foundation and long-term profitability.

Categories:

Genel