Opening a branch in Turkey offers many growth opportunities. However, it requires careful planning and adherence to complex legal and regulatory requirements as well. In this article, we will guide you through the entire process of establishing a branch in Turkey. If you are considering expanding your business into the dynamic and vibrant market, here are the steps to opening a branch in Turkey.
Characteristics of Branches in Turkey
Branches in Turkey have distinctive characteristics that set them apart from independent companies or subsidiaries. For instance, a branch cannot carry out tasks other than those of the parent company since it is an extension of it. Also, the business name of the parent company must be used by the Turkish branch. Moreover, the operations of the branch in Turkey must go hand in hand with those of the main company. This also implies that the branch office cannot make decisions regarding the purchase or sale of assets.
Why Turkey? Advantages of Opening a Business Branch in Turkey
The geographic, economic, and cultural diversity of Turkey has drawn interest from investors who are thinking about establishing a branch in recent years. First and foremost, the strategic position of Turkey at the meeting point of Europe and Asia makes it an important center for trade and business operations, serving as a link between markets in these regions and the Middle East. Moreover, the diverse economy of Turkey offers opportunities in various sectors, including manufacturing, technology, finance, agriculture, and tourism. This makes it possible for entrepreneurs who prefer to open a branch in Turkey in various business fields. In addition to its diverse economy, the Turkish government offers several investment benefits and assistance programs to attract domestic and foreign investment. Therefore, opening a branch in Turkey becomes a sensible decision.
Step-by-Step Process for Opening a Branch in Turkey
Establishing a branch in Turkey involves several steps, which may change depending on the specific business type and the legal requirements at the time of the application. The list of these steps is stated below.
- Conducting detailed market research to understand the Turkish market,;
- Collecting the required documentation,
- Applying to the Trade Registry,
- Registering with the Tax Office to get a tax identification number,
- Opening a bank account,
- Based on the business activities, obtain necessary permits and licenses from specific regulatory bodies,
To ensure a smooth process and meet all necessary legal and regulatory requirements for opening a branch in Turkey, it is recommended to consult with Turkish business and commercial lawyers. A lawyer in Turkey or a Turkish law firm with expertise in Turkish business and corporate law can help you with the whole process, from initial registration to ongoing compliance. At the Turkish lawyer firm, Istanbul Lawyer Firm, you can get legal assistance in this field from our experienced and English-speaking lawyers in Turkey.
Market Search and Business Planning
It is essential to conduct an in-depth market study and create a strong business plan before opening a branch in Turkey. Through this process, the local market will be better understood, the viability of doing business in Turkey will be evaluated, and a success plan for the branch will be developed.
Registering the Branch in Turkey
After conducting in-depth market research, appoint a branch representative who will act on behalf of the branch and represent it in dealings with Turkish authorities. Then, obtain a tax number, collect all the required documents, and register with the Trade Registry Office.
Acquiring Necessary Permissions and Documents
To ensure compliance with local laws and regulations, you should consider this step. As stated in Article 122/1-g of 2012/4093, numbered Trade Registry Regulation for registration of branches in Turkey of businesses headquartered outside Turkey, the required documents are noted below.
- A notarized copy of articles of the parent company of the association,
- An agreement to open a branch office in Turkey from the authorized authority of the parent company,
- A power of attorney authorizing the Turkish legal representative,
- A letter from the bank verifying that the branch has enough capital.
Opening a Bank Account
Opening a bank account for a branch is an essential step in branch establishment. People who plan to do so should research and choose a Turkish bank company that best suits their business needs.
Taxation of Branches in Turkey
The tax laws and regulations of Turkey apply to the taxation of branches. Foreign corporations that operate branches in the Turkish market are regarded as permanent establishments, and Turkey taxes their income and financial transactions. Therefore, opening a branch in Turkey will be taxed on the income it develops in the country. Those who establish a branch are subject to Turkish corporate income tax on their worldwide income. The general corporate tax rate is 25%. Besides, they are subject to income tax value-added tax.
Remember that for branches to remain functional, they must stay informed about the most recent tax regulations and guidelines. For this reason, consulting with tax authorities or a tax lawyer in Turkey can help guarantee compliance and efficient tax planning for branches operating in Turkey.
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