in Legal Success
| Reading Time: 13 Minutes
The Complete Guide to Establishing a Company in Turkey
Would you like to listen to our content? – Establishing a Company in Turkey
Starting a business in Turkey can be an attractive option for entrepreneurs and investors looking to tap into Turkey’s strong economy and strategic location at the crossroads of Europe and Asia. However, registering a company in Turkey can be complex and time-consuming, involving a range of legal and administrative requirements.
This guide will provide a step-by-step overview of opening a company in Turkey, including the different types of legal structures, the documents required, and the procedures involved. Our guide was prepared for our readers by Nilay Goker DURAN, one of our Corporate Partner Attorneys, and Gozde GOKYILDIRIM, one of our Senior Attorneys.
Here Are The Key Takeaways: Company establishment in Turkey
- Legal and Administrative Process: Setting up a new business in Turkey involves several legal and administrative steps, including obtaining necessary permits and licenses, registering the company with relevant government agencies, and obtaining tax identification numbers.
- Business Entity Types: Turkey’s most common business entities include limited liability companies (LLCs), joint stock companies (JSCs), and sole proprietorships.
- Compliance with Labor Laws: It is important to comply with Turkish labor laws, which include rules on employment contracts, working hours, and employee benefits.
- Tax, Accounting, and Financial Reporting Regulations: Companies must also comply with tax, accounting, and financial reporting regulations.
- Seeking Professional Assistance: Establishing a company in Turkey can be complex and time-consuming, and seeking legal or professional services is recommended.
- Preparedness and Planning: Establishing a company in Turkey can be challenging, but it is possible to successfully launch and operate a business in the country with the right support and preparation.
First: Who Are We?
MGC Legal was founded in 2013 by Mr. Mustafa GUNES, a highly respected attorney in Turkey whose foundation dates back exactly 30 years. Our law firm in Istanbul, Turkey, provides multi-disciplinary legal consultancy services to clients globally with experienced and professional attorneys who specialize in legal practice and are highly competent in dealing with complex legal issues. Check out our promotional video below to get to know us better.
We have established hundreds of companies in Turkey from our clients referred to us by our partner Andersen Global and our other international clients from around the globe. Contact us now for a quote and detailed information about establishing a company in Turkey.
Let’s Get Started: Introduction
Turkey is a hub for investment, business, and trade, attracting entrepreneurs worldwide. If you’re looking to establish a company in Turkey, there are several steps you need to follow to make your dream a reality. This article will offer you the whole process of starting a business in Turkey, covering everything from choosing the right business structure to obtaining the necessary licenses and permits. So, how can you establish a company in Turkey?
Understanding The Legal Framework
The first step in establishing a company in Turkey is understanding the legal framework. Turkey has a comprehensive legal framework, which is based on the Turkish Commercial Code (hereinafter referred to as “TCC“), the Turkish Code of Obligations (hereinafter referred to as “CoO“), and the Turkish Labor Law (hereinafter referred to as “TLL“). These laws regulate various aspects of business, such as company formation, contracts, liability, and labor issues.
Choosing The Right Legal Structure For Your Business
Before registering a company in Turkey, choosing the right legal structure is important. Turkey’s most common business structures are:
- Sole Proprietorship,
- Limited Liability Company (LLC),
- Joint-Stock Company (JSC),
- Branch & Representation Office of Foreign Companies.
Each business structure has its advantages and disadvantages. The structure you choose will depend on the size and nature of your business, as well as your personal goals and objectives. Getting professional advice is crucial to help you make the right choice. Let’s get to know them a little bit better.
A sole proprietorship is a business’s most straightforward legal structure in Turkey. It is owned and operated by a single individual responsible for all debts and liabilities incurred by the business. This type of structure is suitable for small and straightforward businesses. However, it can expose the owner to unlimited personal liability.
Limited Liability Company (LLC)
An LLC is one of the popular choices for businesses in Turkey, as it offers the benefits of limited liability for the owners while allowing multiple owners. In an LLC, the owners are known as shareholders, and their liability (excluding public debts) is limited to the amount of capital they have invested in the company. An LLC must have at least one (1) shareholder and can have a maximum of fifty (50).
Joint-Stock Company (JSC)
A JSC is a more corporate legal structure for a business in Turkey. It is suitable for larger and more corporate businesses. In a JSC, ownership is divided into shares, and the liability of the shareholders (excluding public debts) is limited to the amount of capital they have invested in the company. A JSC must have at least one shareholder.
Branch & Representation Office of Foreign Companies
Establishing a branch or liaison office by foreign investors in Turkey is welcome. Local and foreign investors are equally treated pursuant to the Foreign Direct Investments Law No. 4875 (the “FDIL“) except as otherwise stipulated in international conventions and special laws. FDIL also allows foreign investors to establish a liaison office in Turkey to conduct research activities in their industry without engaging in any commercial activity.
A foreign company can invest in its commercial activities by opening a Turkish branch instead of establishing a new company in Turkey. In fact, it is often easier and cost-free. The minimum capital requirement required for establishing Joint-Stock and Limited Liability Companies is not stipulated for branches. By establishing a branch in Turkey, the investor can start their business activities in Turkey.
In Turkey, liaison offices cannot conduct commercial activities. In other words, the liaison offices of foreign companies are not entitled to sign commercial agreements or issue invoices. This prohibition is the first condition for establishing a liaison office in Turkey. If a liaison office enters commercial transactions, its operation permit will be canceled.
The parent company (i.e., a foreign company) should perform such activities directly when required. However, a liaison office may lease an office and open a bank account in Turkey to pay its operational expenses. The parent company will cover the expenses of the liaison office.
The Company’s Capital Funds
The primary aspect of the firm’s capital is to act according to Turkish Legislation. The minimum capital required to establish a company in Turkey is ₺10.000 for an LLC and ₺50.000 for a JSC.
Because Turkish Legislation deals with companies based on their capital value, this quantity of funds will not provide you with any independence. As a result, if your company’s capital is set at least ₺100.000, you will be able to:
- Obtain a work permit in Turkey (or a residence visa) is easier,
- Have the opportunity to join businesses such as TURSAB, MUSIAD, and others,
- Being able to do business or export and import commodities conveniently.
The investment does not have to be put in the bank during the company establishment procedure; rather, it must be deposited before filing for a work permit or within 24 months of the foundation date.
Required Documents For Registering a Company in Turkey
Once you have chosen the right legal structure for your business, you will need to gather the necessary documents and information to register your company in Turkey. Based on the nature of the shareholder, such as a real person or legal entity, this may include the following:
- A title of company and Articles of Association (AoA),
- Personal information and passport copies of the shareholders and directors,
- Proof of address for the shareholders and directors,
- Proof of the capital amount, its source and existence,
- Tax Identification Numbers (TIN) for the shareholders and directors,
- A Registration and Commercial Activity Certificate.
The Procedures For Starting a Company in Turkey
The process for establishing a company in Turkey can be broken down into several steps, including:
- Reserving the title of the company,
- Preparation of the Articles of Association (AoA),
- Submitting the necessary documents to the Trade Registry Office,
- Obtaining the Tax Identification Number and Commercial Registration Certificate,
- Registering with the Chamber of Commerce,
- Applying for any necessary licenses and permits,
- Opening a bank account.
Obtaining The Necessary Licenses and Permits
Once you have chosen the right business structure for your company, obtaining the necessary licenses and permits is next. This process involves obtaining the following documents:
- Commercial Registration Certificate,
- Tax Identification Number,
- VAT number,
- Other required related institutions.
Opening a Bank Account
After the establishment of your company, it is important to open a business bank account in Turkey. This will allow you to manage your company’s finances, make payments, and receive customer payments. It is important to choose a well-established bank with a good reputation and to ensure that your business information is up-to-date and accurate.
Registering With Social Security and Tax Authorities
The final step in establishing a company in Turkey is registering with the social security and tax authorities. This process involves registering your employees with the Social Security Authority, obtaining a social security number for each employee, and registering for the necessary taxes, such as income tax, value-added tax (VAT), and corporate tax.
Another key point is that hiring employees is next once you set up a company in Turkey. This involves advertising your job openings, interviewing candidates, and completing the necessary paperwork and procedures to hire employees in Turkey.
What Are the Labor Laws in Turkey?
Turkey has strict labor laws that must be followed when hiring employees. This includes providing employee contracts, offering benefits, and ensuring all employees are properly trained and equipped to perform their duties.
Shareholders in a Company in Turkey
The individuals or legal entities that own/hold a portion of a company in Turkey are referred to as shareholders. These individuals or companies hold rights and obligations within the company. Additionally, no minimum number of shareholders is required, and Turkish citizens and foreign nationals are eligible to be shareholders.
One of the primary duties of shareholders is to contribute to the company’s capital. The extent of their rights within the company will depend on the size of their contribution. In LLCs, the shareholders’ responsibility for the company’s debts and other obligations (excluding public debts) is limited to the amount they invested. In partnerships, the responsibilities of shareholders are taken on by the partners.
Who is The Shareholder of a Company in Turkey
A shareholder or a group of shareholders with at least 10% of the share capital of a privately held Joint-Stock Company (JSC)(5% for publicly held companies) enjoys minority shareholders’ rights under the Commercial Code. You can decrease the threshold for minority shareholding through the Articles of Association.
Turkish Law has no provisions requiring the inclusion of these rights in by-laws or shareholders’ agreements. Failure to do so does not hinder the applicability or enforceability of these rights. The minority shareholders’ rights under the Commercial Code (which are also applicable to publicly-held companies) include rights:
- To postpone financial statement discussions,
- To appoint an independent auditor,
- To request the replacement of the auditor,
- To request a general assembly meeting and the addition of an item to the meeting agenda,
- To request the dissolution of the JSC,
- To request the issuance of share certificates,
- To be represented by the Board of Directors (provided that there is a specific provision in the Articles of Association of the company).
In addition to the minority rights granted by the Commercial Code, the Articles of Association can contain provisions strengthening the rights and interests of minority shareholders by increasing the meeting and/or decision quorums specified in the Commercial Code. For example, a provision can require major decisions to be adopted only by the affirmative vote of the minority shareholders, such as:
- Capital increases and decreases of the company,
- Dissolution or liquidation of the company.
Are There Any General Restrictions or Requirements on The Appointment of Directors?
Under the TCC, at least one member of the Board of Directors (for JSCs) or one manager (for LLCs) must have full capacity to exercise the legal rights of the related company. Unless otherwise required by special laws and regulations, there are no restrictions regarding the nationality or residency of directors or managers or a requirement to obtain a work or residence permit to become a director or manager.
Legal entities can also be appointed as directors or managers of a company. In this case, an individual representative of the legal entity must also be appointed to act on behalf of the legal entity. Foreign individuals who serve as directors or managers, or act on behalf of a legal entity manager or director, must obtain a Turkish Tax Number to be registered with the relevant Trade Registry Office. Furthermore, obtaining a tax number is a simple process involving either a personal application to a tax office or an application through a representative with a duly issued Power of Attorney (PoA).
What Are The Legal Requirements For The Composition of a Company’s Board of Directors?
Three things to consider are structure, number of directors or members, and employee representation.
As shareholders, you can elect and dismiss the directors (of JSCs) or managers (of LLCs). Under the Commercial Code, the board of directors governs the JSC and has a unitary structure. As a result, at least one shareholder of an LLC must be a company manager. Other managers can be appointed in addition to the shareholder manager. Both individuals and legal entities can be directors or managers. If you appoint a legal entity as a director or manager of a JSC or an LLC, appoint an individual to represent the legal entity.
Number of Directors or Members
Even though the Boards of Directors (BoD) of JSCs and the Boards of Managers (BoM) of LLCs can be composed of a single member, you, as a company, may prefer to appoint an odd number of directors or managers for adopting resolutions. There is no maximum limit on the number.
Employees have no legal right to employee representation on the Board of Directors or Managers.
What Are MGC Legal’s Company Establishment Services in Turkey?
MGC Legal is a very high-quality and well-known law firm in Turkey that has served in Turkey for many years. MGC legal especially focuses on the legal problems experienced by foreigners in Turkey, including establishing a company. Our staff of English-speaking attorneys is ready to assist you throughout this process. Now, let’s answer some of your questions about establishing a company in Turkey.
Frequently Asked Questions (FAQs) About Establishing a Company in Turkey
Starting a business in Turkey can be complex, and entrepreneurs often have many questions about the process. Below are answers to some of the most frequently asked questions about establishing a company in Turkey.
What is The Price of Establishing a Company in Turkey?
The cost of establishing a company in Turkey is low. As the company owner, you must include the costs of company registration, notary fees, and the commission of the Turkish law firm managing the process (if you appoint one) in your budget.
Should You Use a Company Formation Agent?
Find company formation agents in most urban centers by reading local newspapers, as an increasing number advertise their services. As a matter of fact, many expatriates choose to go this way since locating a competent agent saves time and effort. If you’re considering hiring one, research beforehand and see what other expatriate businesses they’ve helped start. Some of these businesses are considerably superior to others, as with everything. MGC Legal can provide professional company formation services for you in Turkey. Contact us to get more detailed information.
How Long Does it Take to Establish a Company in Turkey?
Establishing a company takes roughly 5 (five) to 15 (fifteen) days. The process takes longer in the event of a branch or liaison office of the foreign company. Accordingly, contact our team of attorneys in Turkey if you want additional advice on the processes followed by Turkish authorities while establishing a company in Turkey. We can assist you with our customized business registration services.
Where Can You Seek Information on Establishing a Company in Turkey?
Many people’s first point of contact is their attorney or consultant. Ensure you get a reputable legal counsel familiar with Turkish Company Regulations and have successfully assisted foreigners in establishing successful enterprises in Turkey. Furthermore, all Turkish Embassies and government websites have current and accurate information.
Can a Foreign National Establish a Business in Turkey?
Foreign nationals can establish a business in Turkey, but they must follow local laws and regulations and obtain the necessary licenses and permits.
What Are The Differences Between LLC and JSC in Turkey?
We have prepared a special file for you; please check the .pdf document to learn about the differences between an LLC and a JSC in Turkey.
Establishing a company in Turkey is a complex process that requires careful planning and a thorough understanding of the legal and regulatory framework. To ensure the success of your business, you must complete each step correctly, from choosing the right business structure to obtaining the necessary licenses and permits.
With the right guidance and support, however, establishing a company in Turkey can be a rewarding and profitable experience. Whether you’re looking to start a new business or expand your existing business into Turkey, the opportunities are abundant, and the future is bright. By following the steps outlined in this guide, you’ll be well on your way to successfully establishing a company in Turkey.
Would you like to invest in Turkey? Contact us now!
A Brief Summary of The Article: Company Establishment in Turkey
Company establishment in Turkey refers to setting up a new business entity. It involves several legal and administrative steps. Including obtaining necessary permits and licenses, registering the company with relevant government agencies, and obtaining tax identification numbers.
Turkey’s most common business entities include limited liability companies (LLCs), joint stock companies (JSCs), and sole proprietorships. Seek legal or professional services to simplify the complex and time-consuming process of establishing a company in Turkey.
It is important to comply with Turkish labor laws, which include rules on employment contracts, working hours, and employee benefits. Companies must also comply with tax, accounting, and financial reporting regulations.
With the right support and preparation, you can successfully launch and operate a business in Turkey despite the challenges in the company establishment process.
What is The Difference Between an LLC/JSC, Branch, and Liasion Office of Foreign Companies?
|LIAISON OFFICE||LLC/JSC||BRANCH OFFICE|
|Not allowed to engage in commercial activities.||Allowed to engage in commercial activities.||Allowed to engage in commercial activities.|
|Limited scope of activities.||Unlimited scope of activities.||Limited to the parent office’s scope of activities.|
|Cannot issue invoices.||Can issue invoices.||Can issue invoices.|
|Cannot apply for grants.||Can apply for grants.||Can apply for a transfer of profits from abroad.|
|Cannot ask for the transfer of profits from abroad.||Can ask for a transfer of profits from abroad.||Can apply for a transfer of profits from abroad.|
|Time-restricted (the permit is initially issued for three (3) years; after three (3) years, it can be extended up to five (5) years – in some cases, up to ten (10) years).||Does not have a time limit (in terms of permit).||Does not have a time limit (in terms of permit).|
|It cannot finance its activities – it must be financed abroad.||Can finance its activities.||Can finance its activities.|
|Exempt from Corporate Income Tax and Value Added Tax.||Not exempt from tax (except special exemptions given to certain sectors and regions).||Not exempt from tax (except special exemptions given to certain sectors and regions).|
|Duration of application processing: 15-20 business days (provided all documents are complete and in order).||Duration of application processing: 5-15 business days (provided all documents are complete and in order).||–|
|Liaison office closing and liquidation take a brief time.||There is a detailed process to conduct for liquidation. The Law stipulates it as six (6) months.||–|