Why Foreign Investors Are Choosing Turkey
Turkey is rapidly becoming one of the top destinations for global investors looking to expand into new markets. Its strategic location between Europe, Asia, and the Middle East, coupled with a dynamic economy, young population, and favorable business laws, makes Turkey attractive for entrepreneurs worldwide. Foreign investors from countries such as the UAE, Saudi Arabia, China, the United States, Canada, and Europe are increasingly setting up companies in Turkey to access local and regional markets.
Types of Companies in Turkey
Before establishing a business in Turkey, it’s important to understand the legal forms of business entities available:
- Limited Liability Company (LLC - "Limited Şirket"): The most common structure for SMEs. Requires at least 1 shareholder and minimum capital of TRY 10,000.
- Joint Stock Company (JSC - "Anonim Şirket"): Suitable for larger ventures, can offer shares publicly. Requires a minimum capital of TRY 50,000.
- Branch Office: Allows foreign companies to operate under their parent company’s name. No separate legal entity.
- Liaison Office: Non-commercial presence for market research or representation. Cannot engage in sales or generate revenue.
Step-by-Step Company Formation Process
- Choose Company Type: Decide between LLC, JSC, branch, or liaison office based on your goals.
- Determine Company Name: Reserve a unique trade name via MERSIS (Central Registration System).
- Prepare Articles of Association: Drafted in accordance with the Turkish Commercial Code.
- Notarize Documents: Signatures, IDs, and other official documents must be notarized.
- Open a Bank Account: Deposit initial capital (not always mandatory upfront for LLCs).
- Register with Trade Registry Office: Submit incorporation file and obtain registration certificate.
- Tax Registration: Register with the local tax office and obtain a tax ID.
- Social Security Registration: Mandatory if hiring employees.
Legal Requirements for Foreign Shareholders
- Foreigners can own 100% of the company shares in Turkey.
- No local partner requirement for most sectors.
- Minimum one shareholder is enough for an LLC.
- Each company must have a legal address in Turkey.
- A director (manager) can be a foreign national.
- All documents must be officially translated and notarized in Turkey.
Timeline & Authorities Involved
With proper guidance, the company setup process can be completed within 5–10 working days. The institutions involved include:
- Trade Registry Office
- Tax Office
- Social Security Institution (if employing staff)
- Municipality (for business licenses in certain sectors)
Overview of Taxes & Business Environment
- Corporate Income Tax: 20% standard rate (subject to updates).
- VAT: 18% standard, lower rates for essential goods and services.
- Withholding Tax: Applies on payments like rent, dividends, and interest.
- Turkey has tax treaties with over 80 countries to avoid double taxation.
- Transparent accounting rules and IFRS compliance for many entities.
How Legal Assistance Simplifies the Process
While Turkey allows foreigners to register a company without needing a local partner, the process can involve complex paperwork, document certification, and interactions with multiple government bodies. Hiring a qualified law firm ensures:
- Preparation of compliant Articles of Association
- Fast-track registration through legal representation
- Document translation, notarization, and filing support
- Assistance with licenses, tax obligations, and bank account setup
ER&GUN&ER Law Firm in Istanbul provides end-to-end support for foreign clients looking to establish a company in Turkey. From document preparation to post-registration compliance, our team ensures that you meet all legal requirements efficiently.
Conclusion
Setting up a company in Turkey as a foreigner is a strategic move for global investors. With low entry barriers, a supportive legal framework, and access to a growing market, Turkey offers enormous potential for business success. Whether you're entering the Turkish market for the first time or expanding an existing venture, having expert legal counsel is key to navigating the setup process smoothly.