Foreign companies considering entering the Turkish market do not always need to establish a subsidiary or branch immediately. Where the purpose is primarily to research the market, represent the foreign company, coordinate business contacts, supervise suppliers or establish a regional management function, a liaison office may provide a significantly lighter market-entry structure.

However, the defining feature of a liaison office in Türkiye is also its most important legal limitation:

A liaison office cannot engage in commercial activities in Türkiye.

Under Turkish foreign investment legislation, a company incorporated under the laws of a foreign country may establish a liaison office in Türkiye after obtaining permission from the Ministry of Industry and Technology, General Directorate of Incentive Implementation and Foreign Investment, provided that the office does not conduct commercial activities in Türkiye.

This makes the liaison office particularly attractive for international companies that want to establish a presence in Türkiye before committing to a fully operational subsidiary or branch.

1. What Is a Liaison Office in Türkiye?

A liaison office, known in Turkish as an “irtibat bürosu,” is essentially a representative presence of a foreign company in Türkiye.

Unlike a Turkish subsidiary, it is not established as an independent Turkish commercial company. Unlike a branch, it is not intended to conduct the parent company’s commercial business in Türkiye.

Its purpose is generally limited to activities such as:

• representing the foreign company;
• conducting market research;
• monitoring developments in the Turkish market;
• identifying potential suppliers;
• checking supplier quality standards;
• coordinating meetings and business relationships;
• providing certain forms of technical support;
• gathering and transmitting market information;
• coordinating regional operations.

The central legal condition is that these activities must remain non-commercial.

Accordingly, a liaison office should not be used as a structure through which the foreign company directly sells products or services to Turkish customers, invoices customers, receives commercial revenue or otherwise carries on ordinary trading activities in Türkiye.

If revenue-generating activities are planned, a Turkish subsidiary or branch will generally be more appropriate.

2. Main Legal Basis for Liaison Offices in Türkiye

The principal legislation governing liaison offices is:

Law No. 4875 on Foreign Direct Investments, particularly Article 3 concerning liaison offices; and

The Regulation for Implementation of the Foreign Direct Investment Law, particularly Articles 6, 7 and 8.

Article 3 of Law No. 4875 authorizes the competent authority to permit companies incorporated under foreign laws to establish liaison offices in Türkiye on the condition that they do not engage in commercial activities.

Articles 6–8 of the Regulation regulate matters such as:

• establishment permission;
• application documentation;
• permitted activities;
• duration of the license;
• extensions;
• annual reporting;
• notification obligations;
• inspections; and
• cancellation of the liaison-office permit.

3. Who Can Establish a Liaison Office?

A liaison office may be established by a company incorporated under the laws of a foreign country.

The Ministry may examine, among other things:

• the activities of the foreign parent company;
• its financial position;
• its capital;
• the number of employees;
• the proposed activities in Türkiye; and
• the commercial justification for establishing the office.

An important point for newly incorporated foreign companies is that the Ministry is authorized to require the parent company to have been operating for at least one year before granting a liaison-office permit, depending on factors such as the company’s activities, capital and employment structure.

Therefore, a company incorporated only shortly before filing the Turkish liaison-office application may face greater scrutiny.

4. What Activities Can a Liaison Office Perform?

The permitted activity should be determined carefully at the application stage.

Turkish regulations recognize several types of liaison-office activity.

Representation and Hosting

The office may represent the foreign parent company before sectoral organizations and relevant institutions and coordinate the business contacts of foreign company executives visiting Türkiye.

Supplier Control and Inspection

A liaison office may identify Turkish suppliers for the parent company and inspect manufacturers producing for the foreign company to ensure compliance with the foreign company’s quality standards.

This model is particularly relevant to multinational companies sourcing textiles, automotive components, industrial products, machinery or consumer goods from Türkiye.

Technical Support

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

The distinction between support and commercial service provision must nevertheless be maintained.

Communication and Information Transfer

The office may collect information concerning matters such as:

• market developments;
• consumer trends;
• competitors;
• distributors;
• distributor performance; and
• other business intelligence,

and transfer such information to the foreign parent company.

Regional Management Center

Türkiye may also be used as a regional coordination center for a multinational group.

A regional management center may coordinate the foreign company’s units in other countries in areas including:

• investment and management strategies;
• planning;
• promotion;
• sales coordination;
• after-sales coordination;
• brand management;
• financial management;
• technical support;
• R&D;
• procurement;
• product testing;
• laboratory activities;
• research and analysis; and
• employee training.

Regional management centers are particularly important because they may benefit from a considerably longer extension period than ordinary liaison offices.

5. What Can a Liaison Office Not Do?

The most important compliance issue is determining where representation ends and commercial activity begins.

A liaison office should generally not:

• issue invoices to customers;
• sell goods in Türkiye;
• charge customers for services;
• collect sales revenue;
• operate an ordinary retail or commercial business;
• use the Turkish office as the actual sales department of the parent company;
• conduct activities outside the scope specified in its Ministry authorization.

Companies should also exercise particular caution where personnel working in Türkiye have authority to negotiate or conclude customer contracts on behalf of the foreign parent.

This is important not only for liaison-office regulations but also for Turkish corporate tax and permanent establishment rules.

Under Turkish corporate tax principles, a foreign company’s Turkish-source commercial profits may become taxable where commercial income is generated through a Turkish workplace or permanent representative. Turkish legislation also recognizes a “permanent representative” concept in determining the taxation of foreign enterprises.

Therefore, simply calling an operation a “liaison office” does not by itself eliminate tax exposure if its actual activities amount to commercial operations.

6. Which Authority Grants the Liaison Office License?

Applications are submitted to the:

Republic of Türkiye Ministry of Industry and Technology
General Directorate of Incentive Implementation and Foreign Investment
(Teşvik Uygulama ve Yabancı Sermaye Genel Müdürlüğü)

The Ministry currently maintains the relevant application forms, undertakings and activity-report documents for liaison offices.

Unlike the incorporation of a Turkish limited or joint stock company, the core establishment process is therefore based on administrative authorization from the Ministry, rather than ordinary company incorporation before the Trade Registry.

7. Documents Required to Establish a Liaison Office

Under Article 7 of the Regulation, the application generally requires the following documents.

1. Liaison Office Application Form

The official application form must contain information concerning the foreign company, its proposed activities in Türkiye and the proposed representative.

2. Declaration and Undertaking

A declaration describing the scope of activities to be performed by the Turkish liaison office must be submitted.

The foreign company must expressly undertake that the liaison office will not engage in commercial activities in Türkiye.

Evidence showing that the person signing the declaration is authorized to represent the parent company must also be provided.

3. Certificate of Activity of the Foreign Company

A certificate demonstrating that the parent company is duly existing and active in its jurisdiction must be submitted.

The certificate must generally be authenticated either:

• through the relevant Turkish Consulate; or
• by apostille under the Hague Apostille Convention, where applicable.

4. Activity Report or Financial Statements

An activity report concerning the foreign parent company or its balance sheet and income statement must be submitted.

This enables the Ministry to assess whether the parent company possesses an actual economic and operational structure.

5. Authorization of the Liaison Office Representative

Documentation must be submitted appointing and authorizing the individual or individuals who will conduct the liaison office’s activities in Türkiye.

6. Power of Attorney

Where lawyers or another representative will handle the application process, an appropriate power of attorney must be submitted.

Foreign-issued corporate documents should also be reviewed carefully to determine whether apostille, consular legalization, sworn translation and Turkish notarization are required.

8. How Long Does the Application Process Take?

Under the current Regulation, applications for establishment and extension should be concluded within 15 working days, provided that all requested documents and information have been submitted completely and correctly.

In practice, additional document requests, translations, apostilles, questions concerning the proposed activity or regulated-sector approvals may extend the overall preparation process.

For this reason, the legal description of the proposed Turkish activity should be prepared carefully before the application is filed.

9. How Long Is a Liaison Office License Valid?

The initial operating license may be issued for a maximum period of three years.

An extension is not automatic.

The Ministry examines factors including:

• previous activities of the office;
• the foreign company’s future business plan for Türkiye;
• the amount of existing expenditure;
• projected expenditure;
• number of personnel; and
• the nature of the office’s activities.

The applicable maximum extension period depends on the permitted activity.

A particularly important rule is that liaison offices authorized only for market research or promotion of the foreign company’s products or services cannot obtain an extension after their initial term.

Foreign companies planning a long-term presence should therefore carefully determine the appropriate activity category from the beginning.

10. What Must Be Done After the License Is Granted?

Receiving Ministry authorization is not the final step.

The liaison office must complete certain post-establishment procedures.

In particular, a copy of:

• the liaison office’s tax-office registration; and
• its office lease agreement

must be provided to the General Directorate within one month.

Changes relating to matters such as:

• office address;
• liaison office representative;
• representatives; or
• name of the foreign parent company

must also be notified to the General Directorate within one month together with the supporting documents.

11. Does a Liaison Office Pay Corporate Tax in Türkiye?

A properly structured liaison office does not carry on commercial activity and should therefore not generate commercial profits in Türkiye.

Accordingly, it is fundamentally different from a Turkish branch or subsidiary that carries on revenue-generating business.

However, this should not be misunderstood as meaning that a liaison office has no tax obligations whatsoever.

The office still requires tax registration, and issues such as:

• employee taxation;
• withholding obligations;
• rent payments;
• stamp tax;
• social security; and
• taxation resulting from activities exceeding the liaison-office authorization

must be examined separately.

Most importantly, if the actual Turkish operation begins conducting commercial business, there may be a risk that the foreign parent company is considered to derive taxable commercial profits through a Turkish workplace or permanent representative.

The factual operation of the office must therefore match the activities described in its Ministry license.

12. Are Liaison Office Employees Exempt from Income Tax?

Türkiye provides an important income-tax exemption that may apply to personnel working for foreign employers.

Under Article 23/14 of the Turkish Income Tax Law, salaries may be exempt from Turkish income tax where the statutory requirements are satisfied, including principally that:

• the employer’s legal and business headquarters are outside Türkiye;
• the employer does not conduct income-generating business in Türkiye;
• the employee is working as an employee of that foreign employer;
• the salary is funded from the employer’s foreign-source earnings; and
• the payment is made in foreign currency.

The Turkish Revenue Administration expressly recognizes these conditions.

The exemption should nevertheless be analysed on the specific payroll and funding structure of each liaison office.

For example, a company should be able to document clearly that the salary and the office’s expenses are funded from abroad.

13. Can a Liaison Office Employ Turkish Employees?

Yes.

A liaison office may employ personnel necessary to perform its authorized non-commercial activities.

Employment relationships in Türkiye may trigger obligations under Turkish labour and social security legislation even though the office itself does not carry on commercial activities.

Accordingly, issues such as:

• employment agreements;
• Social Security Institution registration;
• payroll;
• working hours;
• annual leave;
• severance rights;
• workplace health and safety; and
• termination procedures

should be handled in accordance with Turkish employment legislation.

14. Can Foreign Nationals Work at a Liaison Office?

Foreign nationals who will work in Türkiye generally require an appropriate work permit unless a statutory exemption applies.

The Ministry of Labour and Social Security currently requires liaison-office work-permit applications to include the liaison office’s operating authorization. Current Ministry documentation also refers to evidence that at least USD 200,000 or equivalent foreign currency was transferred from abroad during the preceding year in connection with certain liaison-office work permit applications.

This USD 200,000 criterion should not be confused with the requirements for establishing the liaison office itself. It arises in the context of foreign-employee work-permit procedures.

Special rules also apply to key personnel in qualified foreign direct investments.

15. Annual Reporting Requirement

A liaison office has continuing compliance obligations after establishment.

Every year, no later than the end of May, the liaison office must submit the official:

“Information Form on the Activities of Liaison Offices” (EK-4)

together with the required supporting documents to the Ministry.

The purpose is to demonstrate what the office actually did during the preceding year.

Failure to submit the annual information form may have serious consequences.

The Regulation provides that:

• an extension request may not be considered; and
• the operating permit may even be cancelled ex officio.

The annual May filing should therefore be treated as an essential compliance deadline.

16. Can the Ministry Inspect a Liaison Office?

Yes.

The Ministry may inspect whether the liaison office is actually operating:

• in accordance with Turkish legislation; and
• within the scope of activities specified in its operating license.

If an office is carrying out an activity outside its approved scope, it may be given 30 days to apply for authorization covering the actual activity. Where justified, this period may be extended for another 30 days.

More serious consequences apply if the office is found to be conducting commercial activities.

In such a case, the liaison-office permit may be cancelled and the matter may be notified to the relevant authorities.

17. Liaison Office vs. Branch vs. Subsidiary

Choosing the correct structure at the beginning is extremely important.

A liaison office is generally suitable where the foreign company wants to:

explore the market without selling directly.

A branch may be more appropriate where the foreign company wants to:

conduct commercial transactions directly in Türkiye without establishing a separate subsidiary.

A Turkish subsidiary may be more appropriate where the investor wants to:

establish a full operational business, employ substantial personnel, contract with customers, generate revenue and create a more independent Turkish corporate structure.

The choice should therefore depend on the intended business model rather than merely establishment cost.

A company that intends to sell from the beginning should normally not try to use a liaison office simply because it appears administratively simpler.

18. Practical Example

Assume that a German machinery manufacturer wants to enter the Turkish market.

It wants to:

• research potential customers;
• monitor competitors;
• identify distributors;
• coordinate meetings;
• inspect Turkish component suppliers; and
• report market information to Germany.

It does not initially intend to sell machinery through the Turkish office.

A liaison office may be a suitable structure.

However, if the Turkish office later begins:

• signing machinery sales contracts;
• issuing invoices;
• collecting customer payments; or
• directly providing paid services,

the business model has moved beyond the normal scope of a liaison office.

At that stage, the company should consider establishing a branch or Turkish subsidiary.

19. Main Advantages of a Liaison Office

For foreign companies in the market-entry phase, the liaison-office structure may offer several advantages.

It allows the investor to establish a physical presence in Türkiye without immediately creating a fully operational commercial company.

There is also no statutory paid-in share capital requirement comparable to the minimum capital applicable to Turkish capital companies.

Furthermore, because the office cannot generate revenue, the accounting and tax profile may be simpler than that of an operating company.

It can therefore be particularly useful for:

• multinational groups evaluating the Turkish market;
• foreign manufacturers sourcing goods from Türkiye;
• technology companies conducting market intelligence;
• companies coordinating distributors;
• foreign companies establishing regional headquarters; and
• international groups that need representation without immediate local sales.

20. Main Legal Risks

The greatest legal risk is commercial activity disguised as liaison activity.

Foreign companies sometimes begin with a liaison office but gradually allow Turkish employees to perform functions normally belonging to a sales company.

This may occur where employees:

• negotiate final prices;
• conclude contracts;
• accept purchase orders;
• invoice customers;
• receive payments; or
• effectively operate the Turkish sales function.

Such activity may create several simultaneous problems:

1. cancellation of the liaison-office authorization;
2. potential Turkish corporate tax exposure;
3. permanent establishment risk;
4. retrospective tax assessments;
5. VAT and withholding questions;
6. employment and payroll exposure; and
7. regulatory problems where the relevant sector requires additional licensing.

Accordingly, liaison-office compliance should be evaluated not only when the office is established but throughout its operation.

Conclusion: Is a Liaison Office the Right Structure for a Foreign Company?

A liaison office can be one of the most efficient ways for a foreign company to establish an initial presence in Türkiye without immediately establishing a commercial enterprise.

It is especially suitable for companies whose Turkish activities are limited to:

market intelligence, representation, supplier management, technical coordination, communication or regional management.

However, its principal advantage is inseparable from its principal restriction: the office may not conduct commercial activities in Türkiye.

A foreign company that expects the Turkish operation to sign customer contracts, invoice clients, generate revenue or perform ordinary commercial transactions should generally evaluate a branch or Turkish subsidiary instead.

Before applying, the foreign company should therefore determine precisely:

• what the Turkish personnel will do;
• who will sign contracts;
• where invoices will be issued;
• where customer payments will be received;
• how Turkish expenses and salaries will be funded; and
• whether the contemplated activity falls within one of the liaison-office categories recognized by Turkish legislation.

Proper structuring at the beginning can prevent later problems involving the Ministry of Industry and Technology, Turkish tax authorities, the Social Security Institution and the Ministry of Labour.