Introduction: Can a Foreign Entrepreneur Establish a Technology Company in Turkey?

Turkey has become an increasingly relevant jurisdiction for international entrepreneurs seeking to establish software, SaaS, artificial intelligence, mobile application, fintech, healthtech, e-commerce and other technology-driven businesses.

From a corporate law perspective, Turkey is relatively open to foreign investment. The Turkish foreign direct investment framework follows the principle of equal treatment, meaning that international investors may generally establish the company forms available to Turkish investors and are subject to substantially the same incorporation rules. There is no general rule requiring an ordinary technology startup to have a Turkish shareholder merely because its founders are foreign.

Accordingly, a foreign entrepreneur may generally establish a Turkish company that is:

• 100% foreign-owned;
• owned by several foreign founders;
• jointly owned by Turkish and foreign founders;
• owned by a foreign holding company; or
• owned by founders together with foreign angel investors or venture capital funds.

However, establishing a technology company in Turkey involves much more than registering a company at the Trade Registry.

A technology business may need to address intellectual property ownership, founder equity, venture capital financing, employee incentives, foreign founder work permits, personal data protection, overseas cloud infrastructure, artificial intelligence APIs, cybersecurity, software licensing, consumer law, international taxation and technology incentives.

The legal structure chosen at the beginning can significantly affect how easily the business can raise capital, admit new shareholders and ultimately be sold.

For this reason, foreign entrepreneurs should approach Turkish technology company formation as a combination of:

corporate structuring + intellectual property protection + regulatory compliance + tax planning + investment readiness.

This guide explains the principal legal issues foreign entrepreneurs should consider when establishing a technology company in Turkey in 2026.

1. Can a Technology Company in Turkey Be 100% Foreign-Owned?

Yes, generally.

Turkey’s foreign investment rules permit international investors to establish companies under the Turkish Commercial Code on substantially the same basis as domestic investors. The official Invest in Türkiye guidance specifically states that international investors have the same rights and liabilities as local investors and may establish the company forms regulated by the Turkish Commercial Code.

Therefore, there is generally no need to give:

• 1%;
• 10%; or
• 51%

of the company to a Turkish national simply to establish an ordinary technology business.

For example, the following structures may generally be possible:

Single foreign founder → 100% Turkish A.Ş.

or

UK Holding Company → 100% Turkish Technology A.Ş.

or

Foreign Founder A 60% + Foreign Founder B 40% → Turkish Software Company

The analysis may change in regulated sectors.

A fintech, payment services platform, crypto asset business, regulated healthcare platform, insurance technology company or telecommunications-related enterprise may be subject to separate licensing, ownership or regulatory requirements.

Therefore, the question should not only be:

“Can foreigners own the company?”

It should also be:

“Does this particular technology business operate in a regulated sector?”

2. Which Company Type Should a Foreign Technology Entrepreneur Choose?

For most technology businesses, the practical choice is between:

Limited Liability Company – Limited Şirket (Ltd. Şti.)

and

Joint Stock Company – Anonim Şirket (A.Ş.).

As of 2026, the statutory minimum capital is:

A limited company can have between one and fifty shareholders. An ordinary joint stock company can be established by one or more shareholders.

A limited company may initially look attractive because of its lower capital requirement.

However, technology founders should not make the decision solely on incorporation cost.

The appropriate question is:

Will this remain a small owner-operated technology business, or is it intended to become an investment-backed startup?

3. Why Is an A.Ş. Often Better for Venture-Backed Technology Companies?

For a bootstrapped software consultancy or small SaaS business owned by one founder, an Ltd. Şti. may be sufficient.

But where the founders expect:

• angel investment;
• venture capital;
• multiple investment rounds;
• strategic investors;
• employee equity;
• different shareholder groups;
• board representation;
• or a future company sale,

an A.Ş. will often provide a more flexible structure.

The Ministry of Trade confirms that an A.Ş. has capital divided into shares, may be established with one or more shareholders and operates through a general assembly and board of directors. The official foreign investment guidance also notes that joint stock companies are commonly preferred for sophisticated joint investment structures because they can accommodate groups of shares and provide stronger shareholder separation.

For a technology startup, this can matter considerably.

A company might begin with:

Founder A – 70%
Founder B – 30%

but later become:

Founder A – 42%
Founder B – 18%
Angel Investor – 10%
Seed Fund – 15%
Series A Investor – 10%
Employee Pool – 5%

The legal vehicle should be capable of supporting that evolution.

4. How Is a Technology Company Established in Turkey?

Turkish company registration procedures are generally conducted through MERSIS – the Central Registry Record System and the competent Trade Registry Directorate.

Official investment guidance explains that company establishment records are prepared electronically through MERSIS and completed through the Trade Registry.

A typical incorporation process involves:

1. determining the company type;
2. choosing the trade name;
3. determining the registered office;
4. drafting the articles of association;
5. identifying shareholders;
6. determining capital;
7. appointing directors or managers;
8. establishing representation and signature authority;
9. obtaining necessary foreign shareholder tax numbers;
10. completing MERSIS procedures;
11. signing incorporation documents;
12. depositing applicable capital and Competition Authority amounts;
13. completing Trade Registry registration;
14. arranging tax registration and corporate compliance.

The process itself may be relatively straightforward.

The difficult part is designing the corporate structure correctly.

5. What Documents Does a Foreign Individual Founder Need?

Where the shareholder is a foreign natural person, official investment guidance identifies documents including a translated and notarised passport and a Turkish potential tax identification number. Residence documentation may also be relevant where the founder resides in Turkey.

Foreign founders should ensure that their name is recorded consistently.

Problems can arise where different documents contain different:

• spellings;
• surname orders;
• middle names;
• transliterations;
• dates of birth; or
• passport details.

This may later create difficulties in:

• banking;
• Trade Registry procedures;
• tax registration;
• work permit applications;
• and investment documentation.

6. What if the Shareholder Is a Foreign Company?

International startup groups frequently use a foreign holding-company structure.

For example:

US Parent Company
↓
Turkish Technology A.Ş.

or

UK Holding Company
↓
Turkish SaaS Subsidiary

Official Invest in Türkiye guidance states that where the shareholder is a foreign legal entity, documentation may include the foreign company’s certificate of activity, authorised corporate resolution approving establishment of the Turkish company and documents showing authorised signatories. Where the process is conducted by a representative, an appropriate power of attorney may also be required.

Documents issued abroad generally need to be properly:

• notarised;
• apostilled or legalised;
• officially translated into Turkish;
• and notarised for Turkish use,

subject to the applicable international authentication regime.

Foreign entrepreneurs should therefore finalise the holding structure before incorporation rather than changing the shareholder chain unnecessarily shortly afterwards.

7. Should the Startup Use a Foreign Holding Company?

There is no universal answer.

A foreign holding structure may be useful where the business expects:

• international VC investment;
• a future group structure;
• international intellectual property ownership;
• acquisition of subsidiaries in several jurisdictions;
• or an eventual international exit.

However, establishing:

Delaware → UK → Turkey

or

Netherlands → Turkey

merely because the founders saw that structure in another startup can create unnecessary:

• legal costs;
• accounting;
• tax reporting;
• transfer pricing;
• substance;
• banking;
• beneficial ownership;
• and corporate administration.

The holding structure should serve a genuine commercial purpose.

Founders should therefore decide:

Where will investors invest?

Where will the core IP sit?

Where are employees located?

Where will revenue be generated?

Which company will sign customer contracts?

Where is the likely exit expected to occur?

before creating multiple entities.

8. Founder Agreements Are Essential

One of the most common startup mistakes is focusing on the company but ignoring the relationship between the founders.

A Founders’ Agreement should ideally regulate matters such as:

• founder ownership percentages;
• responsibilities;
• full-time commitment;
• management;
• voting;
• intellectual property;
• confidentiality;
• founder departure;
• share transfers;
• future financing;
• dilution;
• deadlock;
• and dispute resolution.

This is particularly important where one founder contributes technology while another contributes capital or commercial relationships.

A simple 50/50 ownership model may appear fair at incorporation but later cause paralysis if the founders disagree.

9. Should Technology Startup Founders Use Vesting?

Founder vesting can be extremely important.

Suppose two founders each receive 50%.

After six months, one founder leaves permanently.

The remaining founder then builds the company for another four years.

Without appropriate contractual protection, the departed founder may still own 50% of the startup.

This can make future investment extremely difficult.

A vesting structure can tie founder economics to continued involvement.

However, Turkish founders should not blindly copy US-style “four-year vesting with a one-year cliff” documentation.

Turkish corporate law has its own rules concerning share transfers, capital and shareholder rights.

The commercial vesting objective therefore needs to be implemented through a legally workable Turkish mechanism.

10. Intellectual Property Ownership May Be the Most Important Legal Issue

For many technology companies, the business is worth very little without its intellectual property.

Important technology assets may include:

• source code;
• algorithms;
• AI models;
• training pipelines;
• software architecture;
• APIs;
• trademarks;
• databases;
• domain names;
• designs;
• patents;
• documentation;
• and trade secrets.

The company should clearly own or have adequate rights to use these assets.

Example

A foreign founder developed a SaaS product personally two years before establishing the Turkish company.

After incorporation, the company sells subscriptions using that software.

The founder never formally transfers the relevant IP.

A VC investor later conducts due diligence.

The investor discovers that the company raising the investment may not legally own its principal technology.

That issue can delay or terminate the financing round.

Pre-incorporation intellectual property should therefore be reviewed and transferred or appropriately licensed to the business where necessary.

11. Freelancers and Software Developers Should Sign Proper Agreements

Many technology businesses use independent developers during the early stages.

Founders sometimes assume:

“We paid for the software, so the company owns everything.”

That assumption can be dangerous.

Developer agreements should address:

• scope of work;
• delivery;
• source code;
• confidentiality;
• copyright and IP transfer;
• third-party software;
• open-source components;
• warranties;
• and post-termination obligations.

The same applies to:

• UI/UX designers;
• branding agencies;
• freelance engineers;
• AI consultants;
• software studios;
• and overseas development teams.

Investors will often review this chain of title during legal due diligence.

12. Open-Source Software Should Not Be Ignored

Modern technology companies frequently use open-source components.

This is normal.

The risk comes from not knowing what licences apply.

Different open-source licences can impose different conditions concerning:

• attribution;
• modification;
• distribution;
• source-code disclosure;
• and derivative works.

A technology business should maintain an inventory of material open-source components and review licence compatibility, particularly where proprietary commercial software incorporates open-source code.

This becomes especially important before:

• major fundraising;
• enterprise customer onboarding;
• or acquisition.

13. Register the Trademark Before the Brand Becomes Valuable

Trade Registry registration and trademark registration are different.

Incorporating:

XYZ Teknoloji A.Ş.

does not necessarily mean the company has exclusive trademark rights over “XYZ” for all relevant technology services.

Founders should consider early trademark clearance and registration.

For internationally scalable startups, the analysis may need to include:

• Turkey;
• EU;
• UK;
• US;
• and other key markets.

A technology company should not spend millions building a brand only to discover that another party has superior trademark rights in the market where expansion is planned.

14. Can a Foreign Founder Work for Their Own Turkish Technology Company?

Company ownership does not automatically create a right to work in Turkey.

This is one of the most important distinctions foreign entrepreneurs should understand.

A foreign person can legally own shares but still require a Turkish work permit to perform active work in Turkey.

The Ministry of Labour’s current criteria provide specific requirements for foreign company shareholders.

For balance-sheet businesses, the ordinary rule generally requires:

• company paid-up capital of at least TRY 500,000;
• the foreign shareholder’s capital amount to be at least TRY 500,000;
• the foreign shareholder to own at least 20%; and
• employment of at least five Turkish citizens beginning from the seventh month of the first work permit period.

However, where the foreign shareholder’s capital participation is at least USD 100,000, those specific shareholder capital/shareholding and five-Turkish-employee criteria do not apply.

This is why the statutory minimum company capital and the commercially appropriate capital for a foreign founder are not necessarily the same.

15. A 2026 Work Permit Development May Help Certain Foreign Entrepreneurs

The Ministry of Labour also introduced a relevant criterion effective from 3 August 2026.

For certain domestic work permit applications involving foreigners who have legally stayed in Turkey for at least one year during the previous three years through qualifying residence, work permit or international protection categories, the employment and financial qualification criteria may not be applied for up to three qualifying foreigners at the same workplace, subject to the detailed conditions.

This may be useful for some foreign founders already living in Turkey.

However, the rule does not create an automatic entitlement to a work permit.

Immigration status, company ownership and employment authority should always be analysed separately.

16. Does Establishing a Technology Company Give the Founder a Residence Permit?

Not automatically.

Company ownership and residence status are distinct legal matters.

A foreign entrepreneur may need to evaluate:

• work permit;
• short-term residence;
• family residence;
• student-related status;
• or another immigration category

depending on personal circumstances.

Where the person obtains a valid work permit, that permit generally also serves as lawful residence during its validity under the applicable immigration framework.

Founders should therefore coordinate company formation and immigration planning rather than treating them as unrelated procedures.

17. Technology Companies With Foreign Investors Must Consider E-TUYS

Companies established in Turkey with foreign investment have additional foreign direct investment reporting obligations.

The official Invest in Türkiye guidance confirms that information relating to:

• FDI activity;
• FDI capital; and
• FDI share transfers

is reported electronically through E-TUYS, the Ministry’s web-based foreign investment information system.

This matters especially for technology startups because their ownership structures can change frequently.

A startup might progress from:

one foreign founder

to

two founders + angel investor

to

founders + VC fund

to

multiple institutional investors.

Foreign-investment reporting should therefore be built into the closing checklist for each financing round or share-transfer transaction.

18. KVKK Compliance Should Be Built Into the Technology Product

Technology companies process significant amounts of personal data.

Depending on the business, this may include:

• customer identity information;
• email addresses;
• telephone numbers;
• IP addresses;
• user behaviour;
• device identifiers;
• payment information;
• employee records;
• location;
• health information;
• biometric data;
• and customer correspondence.

Turkey’s Personal Data Protection Law No. 6698 – KVKK – should therefore be considered at product-design stage.

The company should determine:

• what data is processed;
• why it is processed;
• what legal ground applies;
• how long data is retained;
• who receives the data;
• where the data is stored;
• what vendors process it;
• and how users can exercise their legal rights.

A privacy policy copied from a US startup is not necessarily sufficient for Turkish KVKK compliance.

19. SaaS Companies Need to Identify Whether They Are a Controller or Processor

This distinction can be particularly important for SaaS businesses.

Suppose a Turkish SaaS company provides CRM software to private hospitals.

The hospital determines:

• which patient data is collected;
• why it is processed;
• and how healthcare operations are conducted.

The SaaS company may process the information on the hospital’s instructions.

In that relationship, the SaaS provider may function primarily as a data processor for certain processing operations.

However, the same SaaS company may independently determine why it processes:

• employee data;
• website visitor data;
• its own marketing data;
• customer contact information.

For those operations, it may be the data controller.

A technology company can therefore have different legal roles for different data processing activities.

20. Using Foreign Cloud Providers Can Constitute an International Data Transfer

One of the most important issues for foreign-backed Turkish technology companies is overseas infrastructure.

A startup may use:

• AWS;
• Microsoft Azure;
• Google Cloud;
• Salesforce;
• HubSpot;
• OpenAI;
• Gemini;
• Claude;
• Stripe-related tools;
• analytics platforms;
• overseas email infrastructure;
• bug monitoring systems;
• or international CRM providers.

The company may believe:

“Our main server is in Turkey, so we do not transfer data abroad.”

That conclusion may be wrong.

If personal data is transmitted to a foreign service provider, foreign subprocessor or overseas API, the transaction can constitute an international transfer even if a separate copy remains in Turkey.

21. Turkey’s International Data Transfer Regime Changed Significantly

KVKK Article 9 was substantially amended in 2024.

Under the new system, international transfer mechanisms include adequacy-based transfers and various appropriate safeguards.

The Personal Data Protection Authority expressly identifies standard contracts and binding corporate rules among the mechanisms available under the revised international transfer framework.

The Board has published four forms of standard contracts addressing different relationships, including transfers:

• controller to controller;
• controller to processor;
• processor to processor;
• processor to controller.

Technology companies should therefore identify the legal role of both the Turkish exporter and foreign data recipient before selecting the appropriate mechanism.

22. The Standard Contract Must Be Notified Within Five Business Days

This is particularly important in 2026.

In its 27 July 2026 public announcement, the Personal Data Protection Authority reiterated that where the Board’s standard contract mechanism is used, the completed standard contract must be notified to the Authority within five business days after the signatures are completed. Notification can be made through the permitted channels, including the Standard Contract Notification Module and KEP.

The Authority also emphasised important formal requirements, including:

• valid signatures;
• proper representation authority;
• Turkish text requirements;
• consistency between party names and supporting documents;
• and restrictions on changing the standard contractual text beyond permitted alternatives.

For a technology company using multiple foreign processors, this can become an important compliance workstream.

23. AI Companies Need Special Data Governance

Artificial intelligence businesses should examine what information is sent to the model provider.

Example

A Turkish healthtech startup allows clinics to respond to patient messages using an AI assistant.

The patient’s messages may contain:

• name;
• telephone number;
• symptoms;
• diagnosis;
• medical history;
• medication;
• photographs;
• and appointment information.

If those messages are sent to an overseas AI service, the company may be transferring both ordinary personal data and special-category health data abroad.

The legal analysis should cover:

• lawful processing;
• data minimisation;
• sensitive data;
• controller/processor roles;
• international transfer;
• security;
• retention;
• subprocessors;
• and contractual restrictions.

Where possible, architecture may also reduce legal risk by:

• minimising data sent to AI;
• pseudonymising data;
• restricting log retention;
• separating identity information from prompts;
• and preventing unnecessary model training on customer information.

24. Confidential Company Information Should Also Be Protected From AI Tools

Not every technology risk is a KVKK issue.

Employees may upload:

• source code;
• investor decks;
• customer contracts;
• pricing models;
• product plans;
• trade secrets;
• or confidential client information

into generative AI services.

Even where no personal data is involved, this may create:

• confidentiality;
• trade secret;
• intellectual property;
• and contractual risks.

Technology companies should therefore establish an internal AI Use Policy.

The policy may define:

• approved AI tools;
• prohibited data;
• rules for source code;
• confidential information;
• customer data;
• verification requirements;
• and employee accountability.

25. Cybersecurity Is Part of Legal Compliance

A technology company processing customer data should not treat cybersecurity as merely an engineering issue.

Appropriate technical and organisational measures may include:

• role-based access;
• multi-factor authentication;
• encryption;
• audit logs;
• backup procedures;
• vulnerability management;
• incident response;
• employee access controls;
• vendor security review;
• and data minimisation.

Enterprise customers and investors increasingly expect evidence of security governance.

A startup attempting to raise institutional investment may be asked to provide:

• penetration testing reports;
• information security policies;
• incident history;
• data flow maps;
• cloud architecture;
• vendor lists;
• and access management documentation.

26. Customer Contracts Are Critical for SaaS and Technology Businesses

A technology company should use contracts appropriate to its business model.

A B2B SaaS agreement may regulate:

• subscription fees;
• licence rights;
• user limits;
• service availability;
• support;
• data protection;
• confidentiality;
• intellectual property;
• termination;
• liability;
• indemnities;
• governing law;
• dispute resolution.

Where customer personal data is processed, a Data Processing Agreement may also be necessary.

For enterprise SaaS companies, customer contracts can materially affect valuation.

A potential investor will want to know:

• whether revenue is recurring;
• whether customers can terminate at will;
• whether contracts contain unlimited liability;
• whether IP is licensed appropriately;
• and whether customer data obligations are manageable.

27. B2C Technology Companies Must Consider Consumer Law

If a technology company sells directly to individuals, Turkish consumer law may apply.

This is particularly relevant to:

• mobile applications;
• digital subscriptions;
• online courses;
• marketplaces;
• consumer SaaS;
• gaming;
• streaming;
• and e-commerce platforms.

Potential issues include:

• pre-contractual disclosure;
• distance contracts;
• withdrawal rights;
• recurring subscriptions;
• automatic renewals;
• refunds;
• unfair contractual terms;
• electronic communications;
• and marketplace obligations.

A B2C Terms of Service agreement should therefore not simply be copied from an international website without Turkish-law review.

28. Employment Agreements Should Protect Technology IP

Once the company hires software developers and engineers, employment contracts should address:

• role and responsibilities;
• remuneration;
• confidentiality;
• intellectual property;
• trade secrets;
• information security;
• company equipment;
• remote work;
• customer confidentiality;
• and post-employment restrictions where legally appropriate.

Technology investors often examine employee documentation during due diligence because the company’s most valuable code may have been created by employees.

The company needs a clean chain of rights.

29. Remote Work and Overseas Developers Need Careful Structuring

A Turkish technology company may use a distributed team.

For example:

• Turkish developers in Istanbul;
• a UI designer in Poland;
• AI engineers in India;
• a sales representative in Germany.

This creates cross-border questions involving:

• employment classification;
• tax residence;
• permanent establishment;
• payroll;
• contractor status;
• IP transfer;
• and data protection.

A company should avoid assuming that calling every overseas worker a “freelancer” removes all tax and employment consequences.

The true legal relationship matters.

30. What Is the Corporate Income Tax Rate for a Technology Company in Turkey?

The ordinary corporate income tax rate for most Turkish corporate taxpayers in the 2026 fiscal period is 25%.

Foreign ownership does not by itself increase this rate.

The Revenue Administration’s 2026 guidance also provides reduced rates for qualifying categories, including a 20% effective corporate rate on qualifying export income and 24% on qualifying manufacturing income, subject to the applicable statutory requirements.

Technology companies should additionally examine the specialised Technology Development Zone regime.

31. Technology Development Zones Can Provide Major Tax Benefits

Turkey has Technology Development Zones, often referred to as:

technoparks,
teknokents, or
Technology Development Zones.

For qualifying companies, these zones can provide significant tax advantages.

Current legislation provides that income earned by taxpayers operating in Technology Development Zones exclusively from qualifying software, design and R&D activities is exempt from income and corporate income tax until 31 December 2028, subject to the statutory requirements.

This can be especially valuable for:

• software startups;
• AI companies;
• SaaS businesses;
• cybersecurity companies;
• R&D businesses;
• game developers;
• data companies;
• and engineering technology ventures.

However, being a technology company does not automatically qualify the company.

32. Not All Revenue of a Technopark Company Is Automatically Tax-Exempt

This distinction is important.

The exemption is connected to qualifying income from activities conducted within the statutory framework.

Suppose a technopark company earns income from:

• development of proprietary software;
• general consulting;
• hardware sales;
• digital advertising;
• and financial interest.

The fact that the company is located in a Technology Development Zone does not automatically exempt every income item.

Revenue and expenses should therefore be correctly separated.

Revenue Administration guidance specifically emphasises that the exemption applies to profits derived from qualifying software, design and R&D activities, and that different components may need to be separated where commercialisation includes non-qualifying elements.

33. SaaS Income May Potentially Benefit Where the Legal Requirements Are Met

An important question for software founders is whether software provided by licence, subscription or rental model can fall within the Technology Development Zone income exemption.

Revenue Administration guidance has recognised that income from qualifying software developed exclusively in the zone and supplied through licensing or rental structures can fall within the exemption, subject to the statutory conditions.

This can be highly relevant to SaaS businesses.

However, the company must still determine:

• what part of the revenue relates to qualifying software;
• whether non-software services are bundled;
• whether implementation or consultancy is separately charged;
• and whether the activity meets Technology Development Zone requirements.

34. A Technology Startup Should Consider Tax Incentives Before Choosing Its Office

Founders commonly choose an office first and investigate incentives later.

For a qualifying technology company, the reverse approach may be more efficient.

Before committing to a long-term office, the company should consider whether its activities could qualify for:

• a technopark;
• R&D incentives;
• investment incentives;
• or another technology support programme.

Relocating later is possible, but incentive eligibility may affect:

• employee cost;
• corporate tax;
• VAT;
• investor projections;
• and product pricing.

For technology companies with substantial engineering payroll, even a relatively small tax difference can materially affect runway.

35. How Should Foreign Investment Be Structured?

A foreign founder may finance the Turkish company using:

equity,
shareholder loans, or
a combination.

Equity strengthens the company’s balance sheet and may be important for:

• work permits;
• banks;
• investors;
• and financial credibility.

Shareholder loans can offer flexibility but may create:

• withholding tax;
• transfer pricing;
• interest deductibility;
• thin capitalisation;
• and foreign exchange issues.

Technology founders should not simply finance the company with minimal equity and unlimited related-party debt without analysing the Turkish tax consequences.

36. Intercompany Agreements Must Follow Transfer Pricing Rules

If a foreign parent and Turkish technology subsidiary operate together, the group may have contracts involving:

• IP licences;
• management services;
• software development;
• cost sharing;
• shareholder loans;
• marketing;
• engineering;
• or customer support.

These transactions should be commercially real and priced at arm’s length.

For example:

A foreign holding company should not charge the Turkish company an arbitrary USD 1 million “management fee” merely to remove taxable profit from Turkey.

Tax authorities may ask:

• What services were provided?
• Who provided them?
• Was the service necessary?
• How was the price calculated?
• What would independent parties pay?

Transfer pricing documentation should therefore be part of international technology group compliance.

37. Technology Startups Should Prepare for Investment Due Diligence From Day One

The easiest fundraising process is one where the startup has maintained clean legal records before the investor arrives.

A future VC may request:

• company incorporation documents;
• cap table;
• share ledger;
• articles of association;
• founder agreements;
• board decisions;
• employment agreements;
• developer contracts;
• IP transfer agreements;
• trademark registrations;
• customer contracts;
• supplier contracts;
• privacy notices;
• KVKK records;
• international data transfer documentation;
• technopark records;
• tax returns;
• litigation information;
• and regulatory licences.

A startup that cannot produce these documents quickly may appear legally immature even if the technology itself is strong.

38. Create a Startup Data Room Early

A well-organised technology company should maintain a legal data room with clearly separated folders for:

Corporate

Founders and Shareholders

Investment Documents

Intellectual Property

Employees and Contractors

Customer Contracts

Vendors

Privacy and KVKK

Licences and Regulation

Tax and Finance

Litigation

Insurance

Technology and Security

This reduces transaction costs during:

• angel rounds;
• seed investments;
• Series A;
• bank financing;
• strategic investment;
• and acquisition.

39. Investment Agreements Should Be Designed for Turkish Corporate Law

Foreign investors frequently send investment documents based on:

• US;
• UK;
• Singapore;
• or European templates.

Commercial concepts such as:

• liquidation preference;
• anti-dilution;
• preferred shares;
• founder vesting;
• board nomination;
• veto rights;
• tag-along;
• drag-along;
• and conversion rights

can be highly relevant.

But the implementation of those rights must be coordinated with Turkish corporate law.

An English-language shareholders’ agreement cannot simply override mandatory Turkish corporate procedures.

Where appropriate, certain rights should also be reflected in:

• the articles of association;
• share classes;
• general assembly decisions;
• and board structures.

40. SAFE and Convertible Investment Instruments Need Local Adaptation

Technology founders are often familiar with SAFE agreements and convertible notes.

These instruments can be commercially useful for early-stage financing.

However, a standard US SAFE should not automatically be assumed to convert into Turkish company shares merely because the contract says so.

A Turkish company still needs to comply with applicable rules concerning:

• capital increases;
• share issuance;
• shareholder resolutions;
• pre-emption rights;
• registration;
• and corporate approvals.

The financing documentation should therefore be designed so that the conversion can actually be implemented under Turkish law.

41. Employee Equity Should Be Planned Before Investors Require It

Technology startups frequently compete for talent using long-term incentives.

Possible approaches may include:

• actual shares;
• share options;
• phantom shares;
• contractual value participation;
• bonus arrangements linked to exit;
• or other incentive models.

The correct mechanism depends on:

• company type;
• tax;
• employment law;
• securities/company law;
• and cap table strategy.

A VC investor may request a 5% or 10% employee pool before its investment.

If founders have not modelled this dilution in advance, the economic effect can be significant.

42. Plan the Exit Before the Company Is Valuable

Technology startups are often established with a future exit in mind.

Possible outcomes include:

• founder buyout;
• strategic acquisition;
• private equity investment;
• secondary share sale;
• merger;
• or public offering.

Early shareholder documentation should therefore address:

Tag-Along Rights

Minority shareholders may participate if controlling shareholders sell.

Drag-Along Rights

A qualifying majority can potentially require minority shareholders to participate in a whole-company sale under agreed conditions.

Pre-Emption Rights

Existing shareholders receive protection when new shares are issued or transferred under the agreed structure.

Lock-Up

Founders may be restricted from selling during a specified period.

Good Leaver / Bad Leaver

Different economic consequences may apply depending on why a founder or key employee leaves.

Exit provisions should be negotiated before an offer to buy the company arrives.

43. Practical Example: Foreign Entrepreneur Establishing an AI SaaS Company in Turkey

Assume a Canadian entrepreneur wants to establish an AI SaaS platform in Turkey.

The company will:

• employ 20 software developers in Istanbul;
• sell subscriptions to European companies;
• use Google Cloud;
• use a foreign generative AI API;
• process customer employee information;
• and raise venture capital within two years.

A sensible legal roadmap could include:

Step 1 – Company Type

Consider an A.Ş. because institutional financing and repeated share issuances are expected.

Step 2 – Capital

Set capital after considering both corporate requirements and the foreign founder’s potential work permit strategy.

Step 3 – Founder Documentation

Prepare founder arrangements covering equity, vesting, confidentiality and departure.

Step 4 – IP

Transfer pre-existing software and source code to the Turkish company or document the group licence structure.

Step 5 – Employment

Use proper developer employment agreements containing IP and confidentiality protections.

Step 6 – Cloud Architecture

Map where customer personal data is stored and transmitted.

Step 7 – AI Provider

Identify what information is sent to the AI API and whether international personal data transfers occur.

Step 8 – KVKK

Establish lawful processing grounds, privacy notices, processor agreements and an appropriate international transfer mechanism.

Step 9 – Standard Contracts

Where Board-issued standard contracts are used for international transfers, complete and notify them to the Authority within five business days.

Step 10 – Technopark

Assess whether the software and R&D activity qualifies for a Technology Development Zone.

Step 11 – Tax

Model ordinary 25% corporate income tax against available technology or export incentives.

Step 12 – E-TUYS

Maintain foreign investment reporting as the shareholding structure changes.

Step 13 – Investment Preparation

Build the cap table, legal data room and investment documentation before approaching VC funds.

This is a far more robust approach than simply registering a company and dealing with legal problems one by one later.

Frequently Asked Questions About Establishing a Technology Company in Turkey

Can a foreigner establish a software company in Turkey?

Yes. Foreign investors may generally establish companies under the same corporate law framework applicable to domestic investors.

Can a Turkish technology company be 100% foreign-owned?

Generally yes, subject to special restrictions applicable to regulated sectors.

Do I need a Turkish business partner?

Not generally for an ordinary software, SaaS or technology company.

What is the minimum capital for a limited company?

TRY 50,000.

What is the minimum capital for a joint stock company?

TRY 250,000 for an ordinary A.Ş.

Which company type is usually better for a VC-backed startup?

An A.Ş. is often preferable because its share and governance structure is generally more suitable for institutional investment, repeated funding rounds and future transfers.

Can a foreign holding company own the Turkish technology company?

Generally yes. Appropriate foreign corporate documents, authorisations, apostille/legalisation and Turkish translations may be required.

Can a foreign founder work in their own company?

Ownership alone does not automatically grant permission to work. A work permit may be required.

What are the 2026 work permit criteria for foreign company partners?

The ordinary current criteria generally require TRY 500,000 paid-up company capital, at least TRY 500,000 capital participation by the foreign shareholder and at least 20% ownership, plus five Turkish employees beginning from the seventh month. These specific criteria do not apply where the foreign shareholder’s capital participation is at least USD 100,000.

Can a Turkish startup use AWS or Google Cloud?

Yes in principle, but KVKK and international data transfer rules must be analysed where personal data is transferred abroad.

Can a Turkish AI startup use OpenAI, Gemini or another overseas AI provider?

Potentially yes. The company must assess the data being transferred, the parties’ controller/processor roles, security requirements and the lawful international transfer mechanism.

What are KVKK standard contracts?

They are Board-issued agreements that can provide an appropriate safeguard for qualifying international personal data transfers under the revised KVKK Article 9 regime.

How quickly must a standard contract be notified?

Within five business days after signatures are completed.

Does a foreign-invested technology company have E-TUYS obligations?

Yes. Foreign-invested companies should review the electronic reporting requirements for FDI activity, capital and share-transfer information.

What is Turkey’s corporate tax rate in 2026?

The ordinary corporate income tax rate is 25%.

Are technology companies tax-exempt?

Not automatically.

What is the technopark corporate tax advantage?

Income earned exclusively from qualifying software, design and R&D activities within Technology Development Zones is currently exempt from income and corporate tax until 31 December 2028, subject to statutory conditions.

Does every SaaS company qualify for technopark exemption?

No. Eligibility depends on the actual software/R&D activities, zone admission and the nature of the income.

Can subscription software revenue qualify?

Revenue Administration guidance indicates that qualifying software developed within the zone and provided through licensing or rental arrangements may fall within the exemption, subject to the applicable conditions and allocation rules.

Conclusion: Is Turkey a Good Jurisdiction for Foreign Technology Entrepreneurs?

Turkey can provide a strong legal platform for foreign entrepreneurs seeking to establish a software, SaaS, AI or other technology company.

Foreign entrepreneurs may generally own 100% of a Turkish company and are subject to the same general establishment framework as domestic investors.

The critical question, however, is not simply whether a company can be established.

It is whether the company is structured to support:

technology + employees + foreign founders + data + investment + growth + exit.

For a small software consultancy or bootstrapped technology company, an Ltd. Şti. may be adequate.

Its current statutory minimum capital is TRY 50,000.

For a technology startup expecting venture capital, several investment rounds, employee equity and a future acquisition, an A.Ş.—with its current TRY 250,000 ordinary minimum capital—will often deserve serious consideration from the beginning.

The founders should then secure the company’s fundamental assets.

Pre-incorporation software should be transferred or properly licensed.

Employee and freelancer agreements should contain appropriate intellectual property and confidentiality provisions.

Trademarks should be protected.

Open-source software should be reviewed.

Founder vesting and departure arrangements should be determined before disagreements occur.

Foreign founders must also distinguish company ownership from the legal right to work.

Turkey’s 2026 work permit criteria for foreign company partners can require substantially higher economic participation than the minimum capital necessary merely to establish a company. Under the ordinary criteria, paid-up capital and the foreign partner’s own capital participation may each need to reach TRY 500,000, together with at least 20% ownership and a Turkish employment requirement from the seventh month. The USD 100,000 capital-participation exception can materially change that analysis.

For software and AI businesses, data protection should form part of the product architecture.

A Turkish technology company may create international data transfers simply by using overseas cloud, CRM, analytics or AI infrastructure.

Turkey’s revised KVKK Article 9 framework provides several mechanisms for international transfers, including Board-issued standard contracts and binding corporate rules.

Where standard contracts are used, the five-business-day notification requirement is particularly important. The Personal Data Protection Authority’s July 27, 2026 guidance also demonstrates that formal errors involving signatures, authority documents or changes to the published wording can create compliance problems.

Technology founders should therefore build a data-flow map identifying:

customer → Turkish startup → cloud provider → AI provider → subprocessor → storage location.

That map is often more useful than simply asking:

“Where is our server?”

Tax planning can also materially affect the viability of the business.

The ordinary Turkish corporate income tax rate is currently 25% for most companies.

However, qualifying technology companies operating in Technology Development Zones may enjoy one of Turkey’s most important technology incentives: profits derived exclusively from qualifying software, design and R&D activities in the zone remain exempt from income or corporate income tax until 31 December 2028, subject to the applicable legal requirements.

For SaaS companies, Revenue Administration guidance also demonstrates that qualifying software licensing or rental income can potentially fall within the exemption, although companies must distinguish exempt software-related profit from non-qualifying commercial elements.

Foreign entrepreneurs should therefore investigate technopark eligibility before designing their long-term office, staffing and tax structure.

Foreign-invested technology companies should additionally establish responsibility for E-TUYS reporting because foreign capital and share-transfer information is collected electronically through the system.

This becomes particularly important during investment rounds.

A technology startup may change ownership several times before profitability:

founder → angel → seed fund → VC → strategic investor.

Every funding round should therefore include a legal closing checklist covering:

• corporate approvals;
• updated cap table;
• shareholder documentation;
• E-TUYS;
• tax;
• beneficial ownership;
• investment agreements;
• and intellectual property.

The most effective legal roadmap for a foreign technology entrepreneur in Turkey is consequently:

business model analysis → regulatory classification → company type → founder structure → capital and work permit planning → incorporation → intellectual property → employment and contractor agreements → KVKK and cybersecurity → cloud and AI transfer compliance → customer contracts → technopark and tax incentives → investment documentation → cap table management → exit planning.

A technology company that follows this approach will be substantially easier to finance and sell than a company that attempts to correct its legal structure immediately before due diligence.

The goal should therefore not merely be:

“How can a foreigner establish a technology company in Turkey?”

The more valuable question is:

“How can a foreign entrepreneur establish a Turkish technology company that is legally scalable, investment-ready, data-compliant and capable of attracting international capital?”

For a serious technology founder, that distinction can determine whether the company remains a small operating business or develops into an investable international startup.

This article reflects Turkish legislation and official administrative guidance available as of August 2026. It is intended for general informational purposes and does not constitute company-specific legal, tax, immigration, intellectual property, investment or data protection advice. Technology company structures should be reviewed individually according to the founders, business model, regulated activities, data flows, IP structure, financing plan and intended markets.