Business Formation in Turkey

Business formation is the process of establishing a new business entity and legally registering it to operate according to the laws and regulations of Turkey. The key steps involved in company formation include determining the type of company, selecting a unique name, determining a registered office address, preparing and filing articles of incorporation/formation, identifying shareholders/members, registering with government authorities, obtaining necessary permits and licenses, registering for taxes, opening a business bank account, and ensuring ongoing compliance with legal and regulatory obligations.
Choosing the appropriate business formation from the start is an important strategy for determining your responsibilities, liabilities, privileges, and restrictions. Seeking guidance from our legal professionals is advisable for personalized assistance and compliance assurance.

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Business Formation in Turkey

Business formation refers to the process of creating and establishing a new company or business entity. It involves legally registering a company and setting it up to operate in accordance with the laws and regulations of Turkey in which it will operate. The specific steps and requirements for company formation can vary depending on the location and type of company you wish to establish.

Determine the Type of Company

  • Sole Proprietorship: This is the simplest form of business structure, where an individual owns and operates the business. The owner has unlimited liability and is personally responsible for all debts and obligations.
  • Partnership: A partnership is a business structure where two or more individuals share ownership and responsibilities. There are several different types of partnerships, including general partnerships, limited partnerships, and limited liability partnerships.

According to Foreign Direct Investment Law No. 4875 and in line with the Turkish Commercial Code No. 6102, foreign investors are entitled to establish joint stock companies, limited liability companies as well as branches and liaison offices in Turkey.

Joint stock companies & limited liability companies

In Turkey, the most common legal structures for company formation are limited liability company (LLC) and joint-stock company (JSC). The LLC is suitable for small to medium-sized businesses, while JSC is more suitable for larger businesses with publicly traded shares.

A minimum of one (1) shareholder and Turkish lira (TL) 50,000 of capital is required to establish a joint stock company. Limited liability companies shall also have minimum one (1) shareholder but shall be established with a minimum capital of TL 10,000. At least 25% of the capital must be paid during incorporation. Both entities are corporate taxpayers in Turkey.

Due to the favorable position concerning the liabilities borne by shareholders, joint stock companies and limited liability companies are the business vehicles in Turkey most commonly chosen by foreign investors, along with the other business setup forms of branch offices and liaison offices.  These two types of companies, joint stock companies and limited liability companies are the ones, for which the shareholders are not held liable for the debts of the company in terms of their personal assets.

For limited liability companies, if the tax receivables cannot be wholly or partially collected from the company itself, or it is apparent that the public receivables will not be collected from company, the liability of the shareholders and/or legal representative arises.


Foreign investors are also entitled to establish a branch in Turkey in order to engage in activities within Turkey, as per the Turkish Commercial Code and the Trade Registry Regulation.  Unlike joint stock companies and limited liability companies, branches may be incorporated only for the same purposes as the parent company; therefore, branches does not need to have a separate Articles of Association. There is no minimum capital requirement for branches but branches may have a separate capital, which may be allocated by the parent company. Turkish citizens and foreigners can be appointed as branch managers; however, it is required that they reside in Turkey.

Branches are liable for all taxes such as corporate income tax, value added tax, withholding tax and stamp duty once they are registered for tax purposes in Turkey. Branches are treated as non-resident limited liability companies for tax purposes and only profits generated in Turkey are subject to corporate tax at the rate of 23% for 2022 and, unless this legislation will be amended, the rate will be 20% for 2023 and following years. The branch profits transferred to headquarters are subject to dividend withholding tax at a rate of 10%, which might be reduced if there is an available DTT between Turkey and the country of which the principal is a resident for income tax purposes.

Liaison office

A foreign entity may prefer to establish a liaison office in Turkey to represent its parent company’s business activities and to gather necessary information on the related sector and the country on behalf of the parent company. This is a practical way to enter the Turkish market.

The Ministry of Trade is authorized to permit foreign companies established under the laws of foreign countries to establish liaison offices to carry out the activities indicated under the Regulation of the Implementation of Foreign Direct Investment Law, provided that they do not engage in commercial activities in Turkey. The Ministry must be convinced with supporting documents that the operations of the prospective liaison office fall under the accepted categories.  These activities are as follows: market research, promotion of the goods and services of the parent company, representation and hosting, control of the suppliers in Turkey, technical support, communication and information transfer and regional management center etc.  In addition, there is no foreign capital requirement in establishing a liaison office.

Even if the Law and Communiqué prohibit liaison offices from engaging in any profit or expense-generating activities, tax liability of the liaison office will arise in the event that the liaison office performs commercial activities contrary to the permission.  In case of engaging in commercial activities, the liaison office will be taxed in accordance with legislation on the limited liability taxpayer.

Choose a Name

Select a unique and distinguishable name for your company. Check the availability of the chosen name with the appropriate government authorities, such as the business registrar or corporate filing office. Make sure the name complies with naming guidelines, which may include restrictions on the use of certain words or the requirement to include specific terms (e.g., “Ltd.” or “A.Ş.”) based on the company type.

Before starting the company formation process, it is essential to reserve a unique company name. The name reservation can be done online through the Central Registration System (MERSIS) or in person at the Trade Registry Office.

Registered Office and Address

Determine the registered office address for your company. This is the official address where legal notices and correspondence will be sent. In Turkey, you are required to have a physical address within the jurisdiction. You should also appoint a registered director or agent who will receive official communications on behalf of the company.

Articles of Incorporation or Formation

Prepare and file the necessary legal documents, such as articles of incorporation. These documents outline the basic structure and characteristics of the company. Include information such as the company name, registered office address, purpose of the company, details of shareholders/members, share/membership structure, and any other required information. The AoA must be notarized and filed with the Trade Registry Office.

Shareholders or Members

Identify and document the shareholders of your company. Specify the ownership percentages or units held by each shareholder/member and outline the rights and responsibilities associated with their ownership.

Register with Government Authorities

Register your company with the appropriate government authorities or regulatory bodies. This typically involves submitting the necessary incorporation documents, along with the required fees, to the relevant business registrar or corporate filing office.

The company formation process involves registering the company with the local Trade Registry Office, which is under the Ministry of Commerce. The required documents for registration include the AoA, company founders’ identification documents, and proof of share capital payment.

Obtain Business Permits and Licenses

Research and obtain the necessary permits, licenses, or certifications required to operate your business legally. The specific requirements vary depending on factors such as the nature of your business, industry, location, and applicable regulations.

If your business involves importing or exporting goods, you will need to comply with customs regulations and procedures. This includes obtaining necessary import/export licenses, understanding customs duties and tariffs, and complying with product standards and certifications.

Certain sectors, such as defense, energy, and finance, may have additional regulations and restrictions on foreign ownership. It is essential to research and understand the specific regulations that apply to your industry or sector.

Intellectual Property Protection

Protecting intellectual property (IP) rights is important for businesses in Turkey. Trademarks, patents, copyrights, and industrial designs can be registered with the Turkish Patent and Trademark Office to safeguard your company’s unique assets and innovations.

Tax Registration

Register your company for taxation purposes with the appropriate tax authorities. Obtain a tax identification number or any other required tax registrations based on the tax laws of your jurisdiction.

Companies in Turkey are subject to various taxes, including corporate income tax, value-added tax (VAT), and payroll taxes. It is crucial to understand the tax obligations, maintain proper accounting records, and file tax returns accurately and on time.

Social Security Registration

Companies must register their employees for social security with the Social Security Institution (SGK) and make regular contributions on their behalf.

Open Bank Accounts

Open a business bank account in the name of your company. This account should be separate from your personal accounts to maintain clear separation between personal and business finances.

Work Permits and Residence

If foreign shareholders or employees will be involved in the company, they may need to obtain work permits or residence permits, depending on their roles and duration of stay in Turkey. The necessary permits can be obtained from the relevant authorities.

Compliance and Ongoing Obligations

Understand and comply with the ongoing legal and regulatory obligations for your company. This may include filing annual reports, maintaining corporate records (e.g., minutes of shareholder/member meetings), fulfilling tax obligations, and adhering to employment laws and regulations, such as proper employee classification, payment of wages, and compliance with workplace health and safety standards.

When hiring employees in Turkey, it is important to comply with labor laws and regulations. This includes adhering to employment contracts, minimum wage requirements, working hours, employee benefits, termination procedures, and occupational health and safety standards.

Complying with any industry-specific regulations or licensing requirements that apply to your business. Depending on the nature of your business activities, you may need to obtain specific licenses or permits from industry-specific regulatory authorities. This can include sectors such as construction, healthcare, tourism, manufacturing, and transportation. Compliance with relevant regulations is crucial to operate legally and avoid fines.

Fulfilling tax obligations, including filing regular tax returns, making tax payments, and maintaining proper accounting records.

Complying with corporate governance requirements, such as holding shareholder or member meetings, maintaining company bylaws or operating agreements, and documenting major decisions or resolutions.

Renewing business permits, licenses, and registrations as required by the relevant authorities.

Staying informed about changes in laws, regulations, or compliance requirements that may affect your business and taking appropriate actions to remain compliant.

Ongoing compliance

After company formation, ongoing compliance requirements include filing annual tax returns, holding general assembly meetings, preparing financial statements, and meeting reporting obligations to the Trade Registry Office.

Due to the complexity of the company formation process in Turkey, it is advisable to seek assistance from legal professionals. Bicak Law provides guidance on the specific requirements, assist with document preparation and submission, and ensure compliance.


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