How Can Foreigners Establish a Company in Turkey? A Practical Legal Guide for Foreign Investors

Introduction

Turkey has become an important jurisdiction for foreign entrepreneurs, international companies, technology businesses, exporters, investors, and individuals seeking access to both European and Middle Eastern markets. Its strategic location, developed banking and logistics infrastructure, large domestic market, manufacturing capacity, and extensive international trade relationships make establishing a company in Turkey an attractive option for many foreign investors.

One of the most common questions asked by foreign investors is whether a foreign individual or foreign company can establish a business in Turkey without having a Turkish partner.

The general answer is yes.

Under Turkey’s foreign direct investment regime, foreign investors are generally treated on an equal basis with domestic investors. A foreign individual or foreign legal entity may therefore establish a Turkish company and may, in principle, own 100% of its shares. A Turkish citizen shareholder is generally not required merely because the company is foreign-owned.

However, establishing the company is only one part of the process. Foreign investors must also consider the company’s legal structure, share capital, management, registered office, tax obligations, accounting requirements, banking arrangements, work permits, sector-specific licences, shareholder agreements and potential regulatory restrictions.

This article provides a practical overview of company formation in Turkey for foreigners and explains the main legal issues that should be examined before making an investment.

1. Can a Foreigner Establish a Company in Turkey?

Yes.

Foreign individuals and foreign companies may establish companies in Turkey under the Turkish Commercial Code and the Foreign Direct Investment Law.

The foreign investor may generally:

• own 100% of the company;
• establish the company alone;
• establish the company together with Turkish or foreign partners;
• acquire shares in an existing Turkish company;
• become a director or manager of a Turkish company;
• establish a subsidiary of a foreign company;
• establish a branch in Turkey; or
• enter into a joint venture with another investor.

Foreign investors are, as a general principle, subject to the same company formation rules applicable to Turkish investors.

There are nevertheless certain regulated sectors in which additional licences, regulatory approvals or foreign ownership restrictions may apply. Broadcasting, maritime activities and civil aviation are examples of sectors in which nationality-related restrictions may arise.

For this reason, investors should determine whether their proposed business activity requires special regulatory authorisation before incorporating the company.

2. Does a Foreign Investor Need a Turkish Partner?

For most ordinary commercial activities, no Turkish partner is required.

A foreign investor may establish a company whose entire share capital is foreign-owned.

For example, an investor from the United Kingdom, Germany, Sweden, the United States, the United Arab Emirates or another country may generally establish a Turkish limited liability company and hold 100% of its shares.

Likewise, a foreign parent company may establish a wholly owned subsidiary in Turkey.

This allows international investors to preserve complete economic ownership and corporate control over their Turkish operations.

However, the articles of association, management structure and signature authorities should still be carefully drafted. Ownership of all shares does not eliminate governance risks, particularly where several directors, local representatives or authorised signatories will be involved.

3. What Are the Main Types of Companies in Turkey?

The Turkish Commercial Code recognises several company structures. In practice, foreign investors most commonly use two:

Limited Liability Company – Limited Şirket

The Turkish limited liability company, commonly abbreviated as Ltd. Şti., is frequently preferred by small and medium-sized businesses, consulting companies, e-commerce businesses, technology companies, service providers and family-owned businesses.

It can generally be established with one shareholder and may have up to fifty shareholders.

The shareholders may be individuals or legal entities.

The current statutory minimum share capital for a limited liability company is TRY 50,000.

The subscribed capital of a limited liability company does not generally have to be deposited before registration. It may be paid within twenty-four months following registration, subject to the company’s articles and applicable corporate rules.

Joint Stock Company – Anonim Şirket

A joint stock company, or A.Ş., is generally more suitable for larger investments, businesses planning multiple investment rounds, institutional investors, sophisticated shareholder structures and companies that may eventually raise capital from third parties.

A joint stock company may also be established by a single shareholder.

The current statutory minimum share capital for a joint stock company is TRY 250,000.

For non-public joint stock companies adopting the registered capital system, the minimum initial capital is TRY 500,000.

For cash capital commitments in an ordinary joint stock company, at least one-quarter of the subscribed capital must generally be paid before registration, while the remaining amount may be paid within twenty-four months following registration.

4. Should a Foreign Investor Choose a Limited Company or Joint Stock Company?

There is no universal answer. The appropriate structure depends on the nature and scale of the investment.

A limited liability company may be sufficient where:

• there are only a few shareholders;
• the business is closely held;
• outside investors are not expected;
• the ownership structure is relatively simple;
• the investment is small or medium-sized; or
• the company will primarily conduct operational business.

A joint stock company may be preferable where:

• institutional investment is expected;
• venture capital or private equity investors may enter the company;
• future investment rounds are planned;
• numerous shareholders may participate;
• a more sophisticated corporate governance structure is required;
• share transfers are expected to occur frequently;
• securities may eventually be issued; or
• the investor is considering a future public offering.

The choice should not be made purely on the basis of initial formation costs.

A structure that appears cheaper during incorporation may become inefficient when new investors enter, shares are transferred, founders disagree, or the business is sold.

5. Can a Foreign Company Establish a Subsidiary in Turkey?

Yes.

A foreign legal entity may become the shareholder of a Turkish company.

For example, a company incorporated in Germany may establish a wholly owned Turkish limited liability company or joint stock company.

In such cases, the foreign parent company will normally need to provide corporate documents proving its existence, current status and authority to make the investment.

Depending on the country of origin, these documents may include:

• certificate of incorporation;
• certificate of activity or good standing;
• articles of association;
• commercial registry records;
• board or shareholder resolution approving the Turkish investment;
• documents identifying authorised signatories; and
• a power of attorney if Turkish lawyers or representatives will complete the establishment process.

Documents issued outside Turkey generally need to be properly legalised. Depending on the country involved, this may require an apostille under the Hague Apostille Convention or certification through the relevant Turkish consular authorities.

The documents must generally then be officially translated into Turkish and notarised in Turkey.

Correct preparation of foreign corporate documentation is particularly important because inconsistencies in company names, registration numbers, signatory authority or resolutions can delay registration.

6. What Documents Does a Foreign Individual Need?

The precise requirements may differ depending on the investor’s status and the relevant trade registry, but a foreign individual commonly needs documents such as:

• passport;
• notarised Turkish translation of the passport;
• Turkish potential tax identification number;
• address information;
• residence permit documentation, where applicable;
• photographs or additional identification information where requested;
• signature declarations; and
• power of attorney if the incorporation procedure will be handled by a lawyer or representative.

Foreign shareholders who do not reside in Turkey can generally still establish a company.

Physical presence in Turkey may not be necessary for every stage if properly drafted powers of attorney and legalised documents are used.

This can be particularly useful for foreign investors wishing to complete the company formation process remotely.

7. What Is MERSIS?

Company formation procedures in Turkey are largely conducted through MERSIS, the Central Registry Record System.

The articles of association are prepared and submitted electronically through MERSIS before the registration process is completed before the competent Trade Registry Directorate.

The articles of association are one of the most important legal documents of the company.

They typically determine matters such as:

• company name;
• registered address;
• business activities;
• share capital;
• shareholders;
• shareholding percentages;
• management structure;
• representation authority; and
• certain corporate governance provisions.

Foreign investors should avoid treating the articles of association as a purely administrative form.

The articles can significantly affect control of the company, voting rights, management authority and future disputes between shareholders.

8. What Are the Main Steps for Establishing a Company in Turkey?

Although the details vary depending on the shareholders and company structure, the process generally involves several stages.

Step 1: Determine the Corporate Structure

The investor should determine:

• whether an Ltd. Şti. or A.Ş. is more suitable;
• the shareholders and their percentages;
• share capital;
• directors or managers;
• company activities;
• registered address; and
• signature and representation authorities.

Step 2: Obtain Tax Identification Numbers

Potential Turkish tax identification numbers are generally obtained for foreign shareholders and foreign board members where required.

These numbers may also be needed for banking and registration procedures.

Step 3: Prepare Foreign Documents

Passports and foreign corporate documents must be prepared, legalised, translated and notarised as necessary.

Foreign corporate shareholders require additional documentation establishing their legal existence and authority to participate in the Turkish company.

Step 4: Prepare the Articles of Association Through MERSIS

The articles are entered into MERSIS and prepared according to the selected company structure.

Step 5: Complete Trade Registry Formalities

The necessary incorporation documents are submitted to the relevant Trade Registry Directorate.

The Investment Office describes Trade Registry Directorates as a one-stop system for company establishment and notes that, once documentation is complete, registration procedures may be completed within the same day.

For foreign investors, however, the overall process may take longer because preparation, apostille, translation, banking and compliance procedures occur before and after the actual registry appointment.

Step 6: Pay Required Capital and Statutory Contributions

For joint stock companies, at least 25% of the subscribed cash capital is generally deposited before registration.

This pre-registration capital payment obligation does not generally apply to limited liability companies.

An amount equal to 0.04% of the company capital is also paid to the Competition Authority through the relevant registration mechanism.

Step 7: Register the Company

Once registration is completed, the company acquires legal personality.

Relevant registration information is also transmitted to the tax authorities and Social Security Institution through the registration system.

9. Does the Company Need an Address in Turkey?

Yes.

A Turkish company must have a registered office address in Turkey.

This may generally be:

• a leased commercial office;
• an owned office;
• an appropriate serviced office;
• or another legally acceptable registered address.

The choice of address should not be treated casually.

Tax authorities may conduct an address verification procedure after incorporation. A company should therefore use a genuine and legally appropriate address where official correspondence can be received.

The lease structure may also have tax and accounting consequences.

Businesses operating in regulated sectors may additionally need premises satisfying sector-specific physical requirements.

10. Can a Foreign Investor Open a Corporate Bank Account in Turkey?

A Turkish company may apply to open a corporate bank account after or, for certain incorporation purposes, during the formation process.

However, company registration and bank account opening are separate procedures.

A bank is not automatically required to open an account merely because the company has been incorporated.

Banks conduct their own compliance procedures under anti-money laundering, sanctions, beneficial ownership and know-your-customer rules.

Foreign-owned companies may therefore be asked to provide documents concerning:

• ultimate beneficial owners;
• source of funds;
• expected transaction volumes;
• nature of the business;
• shareholder structure;
• foreign parent companies;
• tax residence;
• business contracts;
• addresses;
• expected international transfers; and
• economic purpose of the Turkish company.

Investors from certain jurisdictions or investors operating in industries viewed as higher risk may be subject to enhanced due diligence.

Accordingly, a company formation strategy should consider banking feasibility from the beginning rather than waiting until registration has already been completed.

11. Does Establishing a Company Automatically Give a Foreigner a Residence Permit?

Not necessarily.

Company ownership, residence rights and work authorisation are separate legal matters.

Simply becoming a shareholder of a Turkish company does not mean that the foreign investor may automatically reside or work in Turkey indefinitely.

Foreign nationals must examine the applicable residence or work permit category based on their individual circumstances.

Turkey has several residence permit categories under Law No. 6458, while work permits are primarily governed by the international labour legislation.

12. Does a Foreign Company Owner Need a Work Permit?

If the foreign shareholder will personally work in Turkey, a work permit may be required.

A foreign investor should therefore distinguish between passive ownership of shares and actively working in the company.

The Ministry of Labour and Social Security applies specific evaluation criteria to work permit applications.

Under the current criteria applicable to foreign company partners, where the relevant financial criteria apply, the workplace must generally have paid-in capital of at least TRY 500,000, the foreign partner’s capital contribution must generally be at least TRY 500,000 and the foreign partner must generally hold at least 20% of the company. The employment criteria may also require at least five Turkish citizens to be employed, with the applicable timetable determined under the current work-permit rules.

Foreign partners whose capital share is at least USD 100,000 are currently exempt from certain financial and employment criteria applicable to foreign company partners.

The work permit rules have been revised several times in recent years. Therefore, investors intending to personally manage or work in their Turkish company should review the criteria applicable on the date of application rather than relying on the capital requirements that applied when the company was originally incorporated.

13. Can the Entire Management of the Company Be Foreign?

As a general rule, foreign nationals can participate in the management of Turkish companies.

There is generally no requirement that every company have a Turkish shareholder simply because its managers or owners are foreign.

Nevertheless, corporate law and immigration law should be analysed separately.

A person may legally be appointed as a manager or board member under company law while still being required to obtain a work permit before carrying out activities constituting employment in Turkey.

The articles of association and corporate resolutions should also clearly define who may legally bind the company.

14. How Should Signature Authority Be Structured?

This is one of the most important practical issues in a foreign-owned company.

A company may be represented by one or more managers, directors or authorised signatories depending on its structure.

Authority may be designed so that:

• one person signs individually;
• two persons sign jointly;
• certain transactions require joint signatures;
• specific managers have limited authority; or
• internal approval thresholds apply.

Foreign investors frequently focus on ownership percentages but overlook signing authority.

A shareholder may theoretically own 100% of the shares while granting extensive day-to-day authority to another person.

For this reason, bank authority, contract authority and corporate representation should be deliberately structured.

15. Should Foreign Investors Sign a Shareholders’ Agreement?

Where there is more than one shareholder, a properly drafted shareholders’ agreement can be extremely important.

Turkish company law governs the company’s formal corporate structure, but a shareholders’ agreement can regulate the commercial relationship between investors in greater detail.

Common provisions include:

• voting arrangements;
• reserved matters;
• board appointment rights;
• founder obligations;
• funding obligations;
• share transfer restrictions;
• pre-emption rights;
• right of first refusal;
• tag-along rights;
• drag-along rights;
• anti-dilution mechanisms;
• deadlock procedures;
• confidentiality;
• intellectual property;
• non-compete obligations;
• exit mechanisms; and
• dispute resolution.

The Investment Office also notes that shareholders’ agreements are commonly used in joint venture structures in Turkey.

A foreign investor should ensure that the shareholders’ agreement and articles of association are coordinated wherever Turkish corporate law requires a provision to be reflected at company level.

16. What Taxes Apply to a Company in Turkey?

A Turkish company becomes subject to Turkish tax and accounting obligations.

Depending on the company’s activities, these may include:

• corporate income tax;
• value added tax;
• withholding taxes;
• payroll taxes;
• stamp tax;
• social security contributions; and
• other sector-specific taxes or charges.

The company must also maintain statutory accounting records and make periodic filings.

Foreign-owned companies should additionally consider international tax issues such as:

• double taxation treaties;
• transfer pricing;
• related-party transactions;
• withholding tax on cross-border payments;
• permanent establishment risk;
• dividend distributions;
• management fees;
• royalties;
• financing arrangements; and
• beneficial ownership requirements.

Where the Turkish company will transact with a foreign parent company, subsidiary, founder or affiliated entity, transfer pricing and documentation should be analysed from the beginning.

17. Can Profits Be Transferred Abroad?

Foreign investors are generally permitted to transfer investment-related proceeds abroad subject to applicable banking, tax, anti-money laundering and foreign exchange rules.

In practice, however, the legal basis and tax treatment of the payment must be correctly identified.

For example, transferring money abroad may involve:

• dividend distributions;
• repayment of shareholder loans;
• service payments;
• royalties;
• management fees;
• repayment of capital;
• sale proceeds; or
• another commercial payment.

These categories may have very different corporate and tax consequences.

Foreign investors should therefore avoid making undocumented transfers between the Turkish company and foreign shareholders.

18. Can a Foreign Investor Purchase an Existing Turkish Company Instead?

Yes.

Instead of establishing a new company, a foreign investor may purchase shares in an existing Turkish company.

This can offer significant commercial advantages, particularly if the target already has employees, contracts, licences, customers or operating infrastructure.

However, purchasing an existing company creates a major additional issue: historical liabilities.

The investor should conduct legal, financial and tax due diligence before completing the acquisition.

Due diligence may investigate:

• tax debts;
• Social Security Institution liabilities;
• litigation;
• enforcement proceedings;
• employee claims;
• regulatory penalties;
• commercial contracts;
• guarantees;
• bank loans;
• related-party transactions;
• intellectual property;
• licences;
• real estate;
• data protection compliance; and
• undisclosed liabilities.

A share purchase agreement should then allocate these risks through representations, warranties, indemnities, disclosure procedures and payment mechanisms.

19. What Are the Most Common Mistakes Made by Foreign Investors?

Foreign investors frequently encounter problems because company incorporation appears administratively simple.

The most common mistakes include:

Choosing the Wrong Company Type

An investor intending to raise institutional capital may unnecessarily establish a limited liability company when a joint stock company would better suit the future investment structure.

Using Generic Articles of Association

Standard articles may not adequately regulate voting rights, management authority or shareholder protections.

Giving Excessive Signing Authority

Foreign shareholders may grant broad powers to a local representative without appropriate limits.

Ignoring Work Permit Requirements

Being a shareholder does not automatically authorise a foreigner to work in Turkey.

Failing to Plan Banking Compliance

A registered company may still face delays when opening a bank account.

Ignoring Tax Structuring

Poorly designed payments between the Turkish company and foreign affiliates can create tax risk.

Failing to Protect Intellectual Property

A company name does not automatically provide the same protection as a registered trademark.

Entering a Partnership Without a Shareholders’ Agreement

Disputes about funding, management or exit can become extremely difficult if the parties never documented their relationship.

20. How Long Does It Take to Establish a Company in Turkey?

Once all incorporation documents are correctly prepared, the formal trade registry stage can be completed very quickly. The official Investment Office states that company establishment is handled through Trade Registry Directorates operating as a one-stop process and may be completed within the same day.

Foreign investors should nevertheless distinguish between the registration appointment and the entire company establishment process.

The complete process may take longer where it involves:

• apostilled foreign documents;
• translations;
• tax numbers;
• powers of attorney;
• bank compliance;
• preparation of customised articles;
• regulated business licences; or
• foreign corporate shareholders.

Preparation is therefore often more important than the registry procedure itself.

21. Can a Company Be Established Remotely?

In many cases, substantial parts of the process can be handled through authorised lawyers or representatives.

A foreign investor may issue a properly drafted power of attorney authorising a Turkish lawyer or other authorised representative to perform relevant incorporation procedures.

If the power of attorney is issued outside Turkey, apostille or Turkish consular legalisation and Turkish translation may be required depending on the country and document.

Remote establishment is particularly attractive to investors who do not wish to travel to Turkey solely for company registration.

However, banks and certain regulatory authorities may separately require identification or additional compliance procedures.

22. Is Establishing a Company the Same as Obtaining Turkish Citizenship by Investment?

No.

Company formation and citizenship by investment are separate legal procedures.

Merely establishing a Turkish company does not automatically entitle a foreign investor to Turkish citizenship.

Turkey’s citizenship-by-investment framework contains specific investment categories and monetary thresholds. Where an investor intends to combine business establishment with immigration or citizenship planning, the structure should be analysed before funds are transferred.

This is particularly important because not every investment into a Turkish business will qualify for citizenship purposes.

23. Why Is Legal Due Diligence Important Before Company Formation?

Many legal problems can be avoided before the company is registered.

Before incorporating, foreign investors should answer questions such as:

• Who will own the shares?
• Who will control the company?
• Who will have bank signing authority?
• Will the investor personally work in Turkey?
• Will foreign employees be hired?
• Will the company receive investment?
• Will shares later be transferred?
• Will intellectual property be owned in Turkey or abroad?
• Will the company borrow from shareholders?
• Will profits be distributed abroad?
• Will the company transact with related foreign entities?
• Does the business require licences?
• Is foreign ownership restricted in the sector?

A corporate structure designed around these questions can significantly reduce future disputes and restructuring costs.

24. Frequently Asked Questions About Company Formation in Turkey for Foreigners

Can a foreigner own 100% of a Turkish company?

Yes. Foreign investors may generally own 100% of a Turkish company, subject to restrictions that may apply in specific regulated sectors.

Is a Turkish citizen shareholder mandatory?

Generally, no.

Can one foreign person establish a company alone?

Yes. Both a limited liability company and a joint stock company may generally be established with a single shareholder.

What is the minimum capital for a limited company in Turkey?

The statutory minimum share capital is currently TRY 50,000.

What is the minimum capital for a joint stock company?

The general minimum is currently TRY 250,000. The minimum initial capital is TRY 500,000 for a non-public joint stock company adopting the registered capital system.

Does company ownership automatically give a work permit?

No. Work permit requirements must be separately examined.

Can a foreign company establish a Turkish subsidiary?

Yes.

Can foreigners buy an existing Turkish company?

Yes, although legal and financial due diligence is strongly recommended before completing the transaction.

Can the incorporation process be handled through a lawyer?

Many parts of the procedure can generally be performed through an appropriately authorised representative, subject to the requirements applicable to the relevant documents and procedures.

Is a bank account automatically opened after incorporation?

No. Banks apply separate KYC, beneficial ownership and compliance procedures.

Conclusion: Establishing a Company in Turkey as a Foreign Investor

Turkey offers a comparatively accessible corporate framework for foreign investors.

Foreign individuals and foreign legal entities may generally establish wholly foreign-owned Turkish companies without the need for a Turkish partner. The two most common structures are the limited liability company and joint stock company, each offering different advantages depending on the investment model.

However, successful company formation in Turkey for foreigners requires more than registering a company name.

Investors should carefully plan:

• the company type;
• shareholding structure;
• capital;
• management rights;
• signing authority;
• shareholder agreements;
• banking arrangements;
• tax structure;
• cross-border payments;
• work and residence permits;
• intellectual property;
• sector-specific licences; and
• future investment or exit plans.

A properly structured company can provide a strong platform for doing business in Turkey. By contrast, mistakes made during incorporation may later result in shareholder disputes, tax exposure, banking difficulties, work permit problems or expensive corporate restructuring.

Foreign investors considering starting a business in Turkey, establishing a Turkish subsidiary, acquiring an existing company or entering into a joint venture should therefore structure the investment from both a corporate and regulatory perspective before incorporation.

Legal advice obtained at the beginning of the investment is often considerably more efficient than attempting to correct an unsuitable corporate structure after the business has already begun operating.

This article provides general information on Turkish law and does not constitute legal advice for any specific transaction or investor. Company formation, immigration, tax and regulatory requirements should be reviewed according to the investor’s nationality, proposed business activity, ownership structure and circumstances at the time of the investment.