Company registration in Turkey

Residents can avoid double taxation by conducting business in the country, as Turkey has signed relevant agreements with 87 countries worldwide. These agreements allow residents to make tax deductions only in the country where they receive income. Additionally, Turkey and the EU have approved a Customs Union, which allows the import of certain goods into the European Union duty-free.

The entire process of registering a business in Turkey, from preparing constituent documents to receiving a certificate of business establishment, usually takes at least a week. The government of the Republic of Turkey allows foreigners to carry out commercial activities on the same terms as Turkish citizens. Read on for more information on how to open a company in the Republic, what the registration costs and requirements are.

Doing business in Turkey: regulations for foreigners

A Turkish company with foreign capital has the right to operate and enjoy the same benefits as local firms. The government of the Republic of Turkey has lifted all restrictions on business founders and investors from other countries. Enterprises have the opportunity to reduce their tax burden by participating in available development programs.

Foreigners can register a Turkish company in any form permitted by the country’s Commercial Code. Most residents open a limited liability or a joint-stock company. Foreign founders can rent or purchase Turkish real estate for commercial purposes. An exception is land and premises located in areas that are strategically important to the state; to purchase these, permission from the Turkish General Staff is required. Foreigners wishing to do business in Turkey must obtain an entrepreneur visa. Upon its expiration, they must apply for a residence permit at their place of residence.

Buying a ready-made business or starting a new company

Foreigners who wish to own a company in Turkey are not required to start their own business. Investors can purchase an existing business or shares of an organization and immediately generate profits without waiting for the business to develop. Leaders in direct foreign investment in the country’s economy include Germany, France, the Netherlands, Great Britain, Italy, and other EU countries.

Foreign investors are attracted to the rapidly growing economy, convenient geographical location for international trade, and the opportunity to own a Turkish enterprise and receive dividends while living abroad. One downside to acquiring a company in Turkey is the high cost, especially for businesses that generate significant income.

Registering a business independently in Turkey is cheaper for the founder, who can also establish internal corporate processes at their discretion. However, establishing a company in another country requires careful preparation and carries risks that cannot be foreseen in advance, such as unforeseen circumstances, competition, and ignorance of local laws and customs. The owner can freely dispose of shares acquired or created by him or her. Selling a business in Turkey is faster and easier than liquidating a company and allows you to make a significant profit to invest in another activity.

How to open a company in Turkey: a step-by-step guide

1. Choose the business structure. A foreigner planning to start a company in Turkey should research the types of companies that are well-suited to their field of activity. The appropriate legal form for the future company is chosen based on the number of founders, the specifics of doing business, and the tax system.
2. Obtain a taxpayer identification number (TIN). On the electronic services portal of the Turkish Tax Service (İnteraktif Vergi Dairesi), a foreigner enters their personal data into the designated field, attaches a copy of their foreign passport, and submits a request for a TIN. The tax authority’s system automatically processes the application and issues a Turkish taxpayer code in PDF format. You can verify your data by personal number through the same service, the İnteraktif Vergi Dairesi portal.
3. Prepare the constituent documents. Foreigners who wish to start a company in Turkey begin the process by submitting a registration request through the electronic interface of the country’s Central Trade Register — MERSIS. In this system, a company agreement is prepared in Turkish. To create it, you need passport details and a taxpayer identification number. The document is signed by the founders and then checked by the relevant authority to ensure the information and signatures are authentic. Depending on the organization’s type (JSC or LLC), the agreement can be electronically sent to a notary for approval. MERSIS then assigns a tax identification number (TIN) to the enterprise.
4. Open a bank account. Using the company’s TIN and business documents, the owner can open an account at a Turkish bank. Transactions can be made in any of the following currencies: TRY, USD, or EUR. Part of the company’s authorized capital is deposited into the account, and an additional 0.04% of the total amount is paid to the Turkish Antimonopoly Committee (Rekabet Kurulu).
5. Company registration. A new organization can be established in one of the 238 MERSIS branches of the Central Trade Registry throughout the country within 15-30 days of submitting the request. Applicants who do not submit the documents within the specified period pay a fine of approximately EUR 47. A company can be registered in person or through an authorized representative. Foreigners do not have to pay a state fee to register an enterprise in Turkey.
6. Complete the company formation procedure. After the foreigner submits the application and documents, the Trade Registry Office employee notifies the Turkish Tax and Social Service about the registration of the new organization. Within ten days of the application, the department publishes a corresponding announcement in the Registry Bulletin. The tax officer must visit the new company in person, draw up a final report, and obtain the authorized signature of the owner, partner, or director of the enterprise. The founder will then receive a company registration certificate from the local tax office.

In order to open a business in Turkey, a foreigner must select a corporate tax system, obtain approval for the enterprise’s name, and consider the deadlines for submitting documents and the latest legislative changes. Typically, founders entrust the preparation of documents and company registration to specialists with experience interacting with the Turkish Trade Registry and other departments. Legal support helps owners open a company in the Republic risk-free.

Different aspects of Turkish company registration

Opening a business in Turkey requires compliance with the country’s basic legislative rules. To choose a suitable company name, the founder should consult a qualified lawyer since a president’s approval is required for certain names (e.g., “türk” — “Turkish,” “milli” — “national,” and “Türkiye” — “Turkey”). Entrepreneurship in insurance, finance, stock exchange, and auditing requires the Ministry of Trade’s approval. When choosing the business structure for the enterprise, the owner should know that the Commercial Code allows changing the company type after registration.

Legal forms of business activities

Согласно Торговому кодексу Турции, в республике можно зарегистрировать следующие типы предприятий:

• Joint-stock company (Anonim şirket). To establish this type of business, the owner must invest at least EUR 2,350 as authorized capital. For a non-public company, the minimum amount is 4,700 EUR. A quarter of the amount must be paid before registration and the rest within 24 months. The board of directors of an Anonim şirket may have one member. Shareholders are not liable for the company’s debts to the company or the state. Companies of this type that engage in activities requiring a license or that exceed the criteria for annual net income or number of employees must undergo an independent audit. JSC shares are freely traded on the stock exchange and can be transferred to other individuals.
• Limited liability company, LLC (Limited şirket). This type of company is the most popular among firms in Turkey. Limited companies account for about 82% of the total number of enterprises registered in the country. To establish an LLC, one must have authorized capital of EUR 470. Founders can transfer assets to the company’s balance sheet in the form of real estate, intellectual property, or vehicles, for example. Founders have the right to deposit funds into a bank account within two years of registration without making an advance payment. An LLC is only liable for debts with its assets. Partners of an LLC can be legal entities and individuals. Shares of the company are not listed on the stock exchange and can only be transferred after approval at a general meeting of the Board of Directors.
• Collective company (Kollektif şirket). This type of organization is a joint-stock company formed by two or more partners under one trademark. A Kollektif Şirket has no requirements for authorized capital size. Management of a collective company can be carried out by all partners or by one of them by majority decision. Shareholders have unlimited liability to the organization’s creditors (including personal funds).
• Limited liability partnership (Komandit şirket). This type of company can be registered by two or more people. One or more partners must be individuals with full liability for the enterprise’s debts. Only a partner who is liable to clients with all of his or her property can be an authorized representative of the partnership. All other partners have limited liability and are responsible for paying off the Komandit Şirket’s debts with the funds invested in the authorized capital. These partners can be individuals or legal entities, usually LLCs. Turkish legislation does not stipulate a minimum investment for forming a partnership.
• Cooperative (Kooperatif). This organization is an association of legal entities and individuals that aims to protect economic interests and facilitate business processes in a specific field (construction, trade, or tourism). To create a cooperative, at least seven partners are required, three of whom must be Turkish citizens. The partners create a charter whose provisions determine each participant’s degree of responsibility. The size of the share capital of the cooperative is not established, but the value of one share should be about EUR 5. Since partners have the right to own between one and 5,000 shares of the organization, the authorized capital of the cooperative can be EUR 35 at the initial stage.
• Joint venture (Adi Ortaklık). This type of company is considered an ordinary partnership and is not a legal entity under Turkish law. An Adi Ortaklık is not registered with the Trade Registry Office but may consist of two or more legal entities that are. This type of organization is created when its participants wish to achieve a common goal while making a profit. The Adi Ortaklık partners enter into an agreement on collective liability before third parties, and the document also stipulates their basic rights and obligations.
• Branch (Şube). In Turkey, this type of company is not a legal entity and is not registered with the Trade Registry since it is completely dependent on the foreign company. Authorized representatives are appointed to manage the branches. If a foreign organization establishes several branches in Turkey, those established after the first one are registered as branches of a domestic company. The activities of the parent company and the branch must coincide. Repatriation of income from the Turkish branch is also permitted. Profits transferred from branches to the head office in another country are subject to a 15% income tax. This tax can be reduced based on an agreement between countries regarding the avoidance of double taxation. A company’s branch in Turkey does not have its own assets.

Required documents

Foreign entrepreneurs who want to open a company in Turkey must prepare a package of documents according to the business’s structure. Documents issued in the country of permanent residence must be notarized and apostilled to confirm the authenticity of the signature and seal. Citizens of other countries also have the right to contact the Turkish consulate and have their documents ratified there. Then, the originals of the foreign documents are officially translated into Turkish and certified by a notary of the Republic of Turkey. To apply for business registration in Turkey, the following documents are required:

• The company’s memorandum of association (original and 4 copies);
• A document indicating the total amount of the company’s authorized capital, as well as the shares assumed by each partner or shareholder;
• The original and a copy of the passport of the company’s director, certified by a notary;
• Confirmation that at least 25% of the company’s authorized capital has been deposited into a bank account (or proof of equivalent value in assets, such as real estate or intellectual property);
• A receipt for the payment of 0.04% of the total assets to the Antimonopoly Committee;
• 2 notarized signature declarations of persons authorized to manage or represent the company;
• Contracts, permits, or conclusion letters related to the process of establishing the company (if applicable);
• Written statements from the members of the Board of Directors confirming their acceptance of responsibility (if necessary);
• A notarized Turkish residence permit and tax identification number (TIN) for individuals who reside in Turkey;
• A certificate of business activity of a legal entity abroad, if the founder or investor is a foreign company.

Costs and processing times of company registration

Setting up a company in Turkey involves registering a business, preparing a package of documents, obtaining an individual tax number, and registering a legal address. On average, preparing the dossier takes 3-5 days, and the registration process takes about an hour. Preparing documents for joint-stock companies takes 10-20 days, depending on the number of founders and partners. Verification of the data provided upon submission by the Trade Registry and the Tax Service takes 4-10 days.

Companies carrying out activities that require a license must obtain additional permission from the Ministry of Trade. In this case, the waiting period increases by 1-3 days. Once all registration procedures are complete, the Trade Registry Directorate publishes information about the establishment of a new enterprise in the department’s official bulletin. The average time required to establish a Turkish company is 7-33 days.

The cost of registering a business in Turkey includes government fees, notary and translator services, and deductions to the Antimonopoly Committee. The table below shows the main expenses a foreigner should consider when setting up a Turkish company.

Business taxation in Turkey

A Turkish company is automatically registered with the tax office through the trade register by the MERSIS system. During the registration process, the department transfers information about the new enterprise to the tax service without the owner’s participation. The company is assigned a TIN (tax identification number), which is used to pay taxes. Turkish enterprises are required to submit an annual income tax return within the timeframe specified by law. Accounting books and financial statements must be kept in Turkish and in the national currency of the Republic of Turkey. Accounting documentation must be kept for 5 years.

Companies registered in the free economic zones (FEZ) of the Republic of Turkey are exempt from paying income, customs, stamp duty, and VAT taxes on goods purchased in Turkey. Additionally, firms in FEZs receive preferential deductions for the salaries of local employees. However, only large enterprises whose activities require a license are registered in Turkish economic zones. The cost of this permit in the FEZ is approximately EUR 4,500. Usually, a trade and export company needs several licenses. Registering a business in a free zone takes several months.

In Turkey, companies pay a number of taxes, and certain industries receive benefits. For instance, the VAT rate for the agricultural sector is either 1% or 8%, whereas the standard rate is 18%. The amount of deductions in the country is the same for all legal entities. However, residents pay tax on income received worldwide, not just in the Republic. The table below shows the main corporate fees in Turkey.

Tax incentives for Turkish companies

The government of Turkey has signed double taxation treaties with 87 countries. These include countries in the European Union, Great Britain, Australia, the United Arab Emirates (UAE), the Republic of Korea, the United States (USA), and Tajikistan, among others. DTCs provide non-residents with an exemption or reduction in taxes paid in another country. Typically, foreigners doing business in Turkey pay taxes in the Republic of Turkey. However, international agreements do not apply to VAT or excise duties. Additionally, when transferring profits to another country, a Turkish entrepreneur pays a dividend tax.

The Customs Union between Turkey and the EU, established on January 1, 1996, significantly simplifies export and import procedures between signatory parties. Due to the zero or preferential duty rate on a number of goods imported into the European Union, the relocation of businesses (and the number of investors) to Turkey from EU countries has increased in recent years.

What business to open in Turkey: an overview of ideas

The most popular types of businesses in Turkey are those in the tourism, hotel, and restaurant industries, as well as construction and the production and export of goods from the automotive, food, jewelry, and light industries. Each industry has its own distinctive features that must be considered when establishing a company.

Construction

This type of business in Turkey requires a special license from the city or area’s zoning and planning department. Before beginning construction, approval of the architectural plan and other documents must be obtained, and qualified specialists must be selected for each task. Therefore, foreigners most often invest in half-finished projects or projects that require external finishing. Afterwards, they sell or rent them out. LLCs are most often registered for the construction industry.

Automotive industry

Over the past 10 years, the Republic of Turkey has exported the largest number of cars to Europe. In 2022, Germany imported 15% more vehicles than the previous year. In the first quarter of 2023, Turkish auto industry exports amounted to USD 8,618,998. Foreigners who create businesses in Turkey for producing spare parts and components for cars can expect a stable income and growing demand for their products at home and abroad.

The most profitable way to establish a large company that produces related products for the automotive industry in Turkey is to register in one of the Free Economic Zones (FEZs). Registering a business in a free zone exempts you from paying income, customs, and VAT taxes on goods purchased in the republic. Small businesses register with the trade registry and usually sell their products on the domestic market. A company that produces spare parts and components for cars does not require skilled workers if it manufactures small parts. However, assembling multi-component systems requires specialists with the appropriate skills.

Light industry

Turkey is a leader in producing clothing, bath products, and bedding for European countries. In 2022, Italy became the leader in textile and light industry exports from the Republic. Large and small sewing enterprises in Turkey have work scheduled for months in advance. This type of business is not the most expensive; the owner purchases or rents premises and equipment and buys raw materials. Wages in the sewing industry are low, especially in small towns and villages, where workers are paid as little as EUR 7 per day and are not required to confirm their qualifications.

The business owner pays standard taxes (VAT, income tax, and stamp duty), as well as logistics costs for raw materials and finished goods. Turkey has large sewing factories that manufacture products under their own brand, as well as medium and small enterprises. Foreigners can invest in shares of large companies or purchase one or more sewing workshops. The main requirement for the success of this type of business is an ample supply of orders. Products can be manufactured in any region of Turkey. It is not difficult to find workers, and logistics in the country are very well developed.

Hotel business

The hotel industry is well-developed in Turkey. Tourists can stay in boutique hotels, boarding houses, and large recreation complexes, or even on yachts. Foreigners who want to engage in this type of activity must purchase commercial real estate or residential apartments and obtain permission to operate a hotel. Additionally, the owner of a hotel complex must obtain a license from the Ministry of Tourism and Culture of the Republic of Turkey. When purchasing premises, VAT of 18% must be paid, as well as 4% for the transfer of ownership to the new owner.

The cost to purchase an operating hotel in Turkey (Antalya region) with 20 or more rooms starts at EUR 1,250,000. The payback period for this type of business is about 5 years. Foreigners who have purchased a hotel or boarding house in the Republic of Turkey have the right to obtain a residence permit and live at the resort all year round. When establishing a hotel business, owners can hire staff from other countries.

Citrus fruits growing

According to official statistics, Turkey shipped 603,488 tons of citrus fruits, primarily tangerines and lemons, to other countries in the first quarter of 2023. While this type of business is highly profitable in Turkey, the initial investment required to purchase a profitable fruit-bearing garden is at least EUR 6,000,000. Citrus producers in Turkey often form cooperatives, which makes it easier for them to export goods together and influence public policy in this area. The Union of Mediterranean Exporters also operates in Turkey.

Both permanent and seasonal workers are recruited. The type of company established depends on the volume of production. Producers are subject to standard taxation, but the VAT rate in this area is reduced, ranging from 1% to 8%. Citrus orchard owners in Turkey must provide proper product storage, as well as local and international logistics, since lemons, tangerines, grapefruits, and other fruits are mainly exported to Europe, Asia, and other continents.

Business immigration: obtaining a residence permit through company registration

A foreigner who has registered or acquired a business in Turkey may apply for a residence permit based on the business. First, the founder must obtain an entrepreneur visa from the consulate of the Republic in their place of residence and then move to Turkey with this permit. The application for a residence permit is submitted online through the state electronic registration system, e-ikamet. This service provides foreigners with information about the date of their visit to the Turkish migration service in their place of residence. During the visit, the business owner submits a package of documents and pays a EUR 70 state fee.

After visiting the Migration Service, a foreigner may leave the country for up to 15 days. Consideration of a residence permit application takes between 30 and 90 days. The status of an application can be tracked on the e-ikamet website using the case number assigned upon submission. After receiving notification that the residence permit has been issued, the foreigner can obtain an ID card for temporary residence in Turkey. The cost of producing this ID card is approximately EUR 17. The initial residence permit for entrepreneurs is usually valid for one year.

Assistance with obtaining legal residency in Turkey

Immigrating to Turkey for the purpose of opening and running a business is a complicated process for citizens of other countries. It is necessary to prepare documents for legalization, register a company, select housing and office premises, and use the services of an accredited translator all at once. Foreign entrepreneurs should contact specialized lawyers in advance, entrusting them with preparing documents and providing expert support during visits to Turkish institutions.

P4 provides business registration services and assistance with other types of legal issues, helping clients correctly prepare documents and obtain temporary and permanent residence permits or second citizenship. The company’s lawyers track reasons for government refusals and select the most fitting immigration methods for clients. With qualified legal support, immigrating to any country is much faster and easier.