Company Formations

If you would like to establish your presence in our markets, we can help you by forming your local company.

Service

Company Formations

  • Limited Companies
  • Branch Offices
  • Liaison Offices
  • Stock Companies

Tools

  • Providing sample documents
  • Complete handling of all formalities
  • General commercial consulting for company formation

Advantages

  • Guaranteed professional handling of company formations
  • Assurance of legal and financial compliance
  • Experience of nearly 100 company formations

We support our clients on setting up your presence in Turkey through forming the below possible options depending on your strategic decisions:

  • Limited Liability Company (LTD)
  • Joint-Stock Company (AS)
  • Branch Office
  • Liaison Office

In addition to these, if you are looking for a virtual office, we can provide an office address and manage the incoming and outgoing mail of your company.

Limited Liable and Joint Stock Companies

In Turkey, all international investors have the same rights and liabilities as the local investors according to the Turkish Direct Foreign Investment regulation’s equal treatment principle. Hence, foreign investors can incorporate or participate in all types of companies in Turkey which are available for Turkish investors.

The most common legal entity types are Limited liable (LTD) and joint stock companies (AS). For both entities, shareholders’ liabilities are limited to their capital subscribed. However, LTD companies’ shareholders are also personally liable without limitation for the company’s tax payment obligations. However, they are not liable for the capital contributions of the other shareholders that have not yet been paid up.

Requirements for LLC

  • Minimum Shareholder: 1
  • Board of Directors: One of the shareholders will be appointed as managing director
  • Minimum capital requirement: TRY 10,000
  • Time to incorporate: 4 and 8 weeks (after receiving all the required documents from abroad)

Requirements for A.S.

  • Minimum Shareholder: 1
  • Board of Directors: 1
  • Minimum capital requirement: TRY 50,000
  • Registered capital for non-public AS: TRY 100,000
  • Time to incorporate: 4 and 8 weeks (after receiving all the required documents from abroad)

For both legal entities,

  • Shareholders can be companies or individuals, and no nationality is required.
  • At least ¼ of the capital must be paid up to a bank account upon formation. The remaining ¾ must be transferred within two years after registration.

In general, you do not need to travel to Turkey, as you can handle the process with the power of attorneys. However, in principal the offices have the right to ask for the attendance of the managing directors. Besides, being in Turkey for notary processes can speed up the time to incorporate.

Branch and Liaison Office

The other two options for local presence in Turkey can be branch and liaison offices. However, those are not considered as a legal entity.

A branch office is allowed to be involved in all trading activities, but is totally bound to its main company. Consolidation of accounting is a must and the headquarters is fully responsible for all activities of the branch office in Turkey. There is no shareholder and no capital requirement (but a budget should be allocated for the branch operations).

 A liaison office represents a suitable means of starting to operate in Turkey with your own staff, provided that the business transactions can be settled directly between the Turkish customers and the parent company abroad.

The liaison office itself is not permitted to issue invoices or to generate any revenue. It is an office that strictly generates only expenses (costs such as salaries and travel expenses of the employees, rent, etc.), that is, a contact office that provides marketing or purchasing support. All costs are borne by the parent company abroad.

Therefore, the liaison office is only required to do simple accounting, has only a limited obligation to file tax returns, and does not have to pay corporate income tax in Turkey. The costs are charged to the parent company abroad. In addition, as an incentive granted by the Turkish government, the employees are exempt from income tax as long as proof is furnished that they are being paid with foreign exchange transfers from abroad.

The main drawback of a liaison office is that the VAT of the costs incurred in Turkey cannot be deducted, whether in Turkey or abroad. However, the advantages presented by simple expense accounting and the tax savings generally outweigh the disadvantages by far.

A company car or the required office equipment can be purchased and registered in the name of the liaison office. This means that these items are not owned by the Turkish staff (of the liaison office), but rather by the liaison office itself, which is more advisable in the light of potential disputes.

Also, a liaison office allows the employees to be properly enrolled in the social security system. Without a liaison office or a proper company in Turkey, this can only be achieved through these alternative options:

(1) The employee officially goes freelance, paying the social security dues and income tax himself (which, speaking from experience, usually does not happen after all), or

(2) The employee is put on the payroll for instance of FMConsulting or another Turkish company. In this scenario, in addition to the income tax which will then be incurred, 18% VAT will be payable on total costs. So this is only a feasible option only in the short term, prior to the formation of a liaison office.