International investors and entrepreneurs willing to set up a business in Turkey are treated equally with and not discriminated against Turkish investors, hence, most commonly international investors can establish any form of company, determined according to their needs in Turkey. However, some types of businesses in regulated sectors, such as banking or insurance, may be subjected to compulsory company structures.
The country has recently introduced various reforms with an intention to reduce the number of paperwork, procedures and days required to establish a business in Turkey. A business can now be established at Trade Registry Offices located in Chambers of Commerce within one business day.
Companies may be established under corporate and non-corporate forms depending on their business objectives and organisational structure in Turkey. Though businesses can be formed under the five structures below, most commonly foreign investors in Turkey tend to incorporate JSC and LLC or simply establish branches or liaison (representative) offices in Turkey.
Limited Liability Company (LLC) is the most common company structure used to conduct business activities in Turkey. LLC can be established by one director and one shareholder; however the number of shareholders cannot exceed 50. Establishing Limited Liability Company in Turkey is relatively straightforward and it does not require the investor to travel to Turkey to complete incorporation. The minimum required capital for establishing a LLC is TL 10,000.
Joint Stock Companies (JSC), (Anonim Şirket, A.Ş) may be formed by at least one shareholder who can be legal entity or real persons. Liabilities of the shareholders will be limited with the capital they have provided to establish the business in Turkey. There is no limit to the maximum number of shareholders when incorporating JSC though more than 500 shareholders are subjected to Capital Market Board regulations. The minimum required capital for establishing a JSC is TL 50,000.
Branch offices can be established by international companies to conduct business activities in Turkey. They are not independent legal entities and they have no shareholders. Although there is no certain capital requirement to establish a branch in Turkey; it is recommended that investors allocate a budget according to their business plan. The profit generated by the branch office can be transferred to the headquarters after the payment of 15 percent dividend withholding tax.
Foreign investors can alternatively set up a liaison (or representative) office in order to explore and understand the business environment in Turkey. However, the company should not trade as a commercial entity since the sole purpose of liaison office is to assess market opportunities in the country.
It is crucial to decide which form of structure suits your business model best. This decision can have an immense impact on success or failure of your establishment in Turkey. Therefore, it is important to carry out thorough research, comparisons and due diligence before making any decision on company structure.
TY Research and Consultancy helps international entrepreneurs and investors set up their business in Turkey. In addition to company registration, we assist our clients with business development, recruitment, corporate banking and marketing in the country.