A Complete Legal and Practical Overview for Foreign Investors
Introduction
Turkey is an attractive market for foreign investors thanks to its geographical position, growing economy, and investment incentives.
Under the Law No. 4875 on Direct Foreign Investments, foreign investors are granted the same rights and protections as domestic investors.
This article explains the key concepts, procedures, advantages, and legal considerations that foreigners should know before establishing a company in Turkey.
(Note: Procedures may slightly vary depending on local Trade Registry Offices, municipalities, or sectoral regulatory institutions.)
Turkey has become one of the most appealing destinations for foreign investors due to its strategic location between Europe and Asia, young population, expanding market, and government investment incentives.
According to the Foreign Direct Investment Law No. 4875, foreign investors enjoy the same rights as Turkish citizens.
Foreigners can freely establish companies, acquire shares, or engage in commercial activities in almost every sector (except for a few restricted areas).
The right of foreigners to establish companies in Turkey is guaranteed under the Constitution, the Turkish Commercial Code (TCC), and the Foreign Direct Investment Law (Law No. 4875).
Equality Principle (Non-Discrimination Principle)
Under the law, foreign investors are entitled to the same rights as Turkish citizens to:
Restricted Sectors:
Certain industries such as defense, media, civil aviation, and energy may have foreign ownership limitations or require special permissions.
Foreigners can establish any company type available to Turkish citizens.
The most common forms are:
|
Company Type |
Features |
Advantages |
Best For |
|
Limited Liability Company (Ltd. Şti.) |
Minimum one shareholder; capital of at least TRY 10,000 |
Simple structure and easy management |
Small and medium-sized businesses |
|
Joint-Stock Company (A.Ş.) |
Minimum one shareholder; capital of TRY 250,000 (registered capital system) |
Share transfer is easy; suitable for large investments |
Investors, funds, international projects |
|
Branch |
Extension of a foreign company in Turkey |
No need for a separate legal entity |
Companies wishing to conduct limited operations |
|
Liaison Office |
Cannot engage in commercial activity |
Tax-exempt structure |
Market research, representation, coordination |
Foreign individuals or entities must obtain a Turkish tax identification number from the local tax office.
This number is required for opening a bank account and completing official procedures.
The company’s trade name, business scope (NACE code), share capital, ownership structure, and management details must be determined.
The articles must be drafted in Turkish and notarized.
All incorporation documents are submitted to the Trade Registry Office.
If documents are complete, the registration is finalized within 5–7 business days.
For Limited Companies, it is sufficient to declare the capital commitment.
For Joint-Stock Companies, at least 25% of the capital must be deposited in a bank before registration.
Once registered, the establishment is published in the Turkish Trade Registry Gazette.
The company must be registered with the Tax Office and, if employees are hired, also with the Social Security Institution (SGK).
Foreign investors must submit the following documents during incorporation:
All documents must be apostilled or approved by the Turkish consulate.
Foreign companies may establish a branch or a liaison (representative) office in Turkey.
The key differences are:
|
Criteria |
Branch |
Liaison Office |
|
Legal personality |
None |
None |
|
Commercial activity |
Permitted |
Not permitted |
|
Tax liability |
Yes |
No |
|
Establishment approval |
Ministry of Trade |
Ministry of Industry and Technology |
|
Suitable for |
Sales, services, production |
Market research, representation, promotion |
Foreign partners are not required to hold a work permit simply to establish a company.
However, if they intend to actively manage or work within the company in Turkey, they must obtain a work permit under the International Labor Law (Law No. 6735) through the Ministry of Labor and Social Security.
Foreign-owned companies are taxed under the same regulations as domestic companies.
The main taxes include:
|
Tax Type |
Rate / Description |
|
Corporate Income Tax |
25% (as of 2025) |
|
Value Added Tax (VAT) |
1%, 10%, or 20% depending on goods/services |
|
Withholding Tax |
Applied on rent, salaries, and dividends |
|
Stamp Duty |
0.189% on certain contracts and documents |
Turkey has signed Double Taxation Avoidance Agreements (DTA) with over 80 countries, preventing double taxation on the same income.
Foreign investors may benefit from Turkey’s comprehensive investment incentive system, which includes:
Turkey’s Free Trade Zones provide significant tax advantages, especially for export-oriented companies.
The process of company formation in Turkey for foreigners requires attention to detail, documentation accuracy, and compliance with local tax and labor regulations.
Errors in documentation or registration may cause delays or rejection of your application.
Therefore, working with a lawyer specialized in Foreigners’ Law and Corporate Law ensures that your company is established smoothly and in compliance with Turkish legislation.
Foreign investors often have questions regarding the procedures, required documents, capital structure, taxation, and incentives.
Below are the most frequently asked questions and their concise answers.
Company Formation in Turkey for Foreigners – Frequently Asked Questions (FAQ)
1. Can a foreigner establish a company in Turkey?
Yes. Under Law No. 4875, foreign individuals and entities enjoy the same rights as Turkish citizens.
They may establish a limited, joint-stock, branch, or liaison company in Turkey.
2. Is a Turkish partner required to establish a company in Turkey?
No. Foreign investors may own 100% foreign-capital companies.
However, certain sectors (e.g., media, aviation, security) may require local shareholding.
3. Is a residence permit required to establish a company in Turkey?
No. A residence permit is not mandatory for company formation.
However, if the foreigner will act as a manager or director, a work permit is required.
4. Does establishing a company grant Turkish citizenship?
No, ordinary company formation does not automatically lead to citizenship.
However, under the Citizenship by Investment program, a minimum USD 500,000 capital investment or significant job creation through a company may qualify for citizenship.
5. What types of companies can foreigners establish in Turkey?
Foreigners can form the same company types as Turkish citizens:
6. How long does it take to establish a company?
If all documents are prepared, incorporation usually takes 5–7 business days.
Delays may occur due to document verification or notarization procedures.
7. What documents are required?
Key documents include:
8. What is the minimum capital for a Limited Company?
The minimum capital is TRY 10,000, although in practice many banks and investors prefer at least TRY 50,000 for credibility.
9. What is the minimum capital for a Joint-Stock Company?
For a Joint-Stock Company, the minimum capital is TRY 250,000 (under the registered capital system).
At least 25% of the capital must be paid before registration.
10. Can a foreign shareholder obtain residence through their company?
Yes. A foreign investor can apply for a residence permit based on their work permit obtained through their own company.
11. Must the foreign investor come to Turkey in person?
No. Incorporation can be completed remotely through a notarized or consular power of attorney.
A lawyer or accountant can represent the investor during registration.
12. Can a virtual office be used as a registered address?
Yes. Virtual offices are accepted for registration.
However, if the company conducts physical operations, the tax office may require proof of actual premises during inspection.
13. What registrations are required after incorporation?
After establishment, the company must:
14. What is the difference between establishing a company and a branch?
|
Feature |
Company |
Branch |
|
Legal personality |
New entity |
Dependent on parent company |
|
Taxation |
Independent |
Consolidated with parent company |
|
Activity scope |
Free |
Limited to parent’s business |
|
Capital |
New capital required |
Funded by parent company |
15. Can foreign companies open liaison offices in Turkey?
Yes. Foreign companies can open liaison offices with the approval of the Ministry of Industry and Technology.
These offices cannot engage in commercial activities; they are limited to research, representation, and coordination.
16. Is it mandatory to open a corporate bank account?
Yes. A Turkish bank account is required to deposit capital, make payments, and handle tax transactions.
Banks may request additional documents (such as address proof or residence).
17. Can a company director or board member be a foreigner?
Yes. Foreigners may serve as directors or board members in both Limited and Joint-Stock Companies.
Non-residents must appoint a tax representative in Turkey.
18. What are the tax obligations for foreign-owned companies?
They are subject to the same taxes as domestic firms:
19. Does Turkey have Double Taxation Avoidance Agreements?
Yes. Turkey has treaties with more than 80 countries to avoid double taxation on the same income.
20. Are foreign-owned companies subject to MASAK (AML) inspections?
Yes. Under Law No. 5549 (MASAK), financial transactions and capital transfers must be transparent and traceable.
Banks may require documentation of fund origins.
21. Is hiring a lawyer mandatory for company formation?
Not legally required, but strongly recommended.
A lawyer ensures the articles, notarial acts, and registration filings comply with Turkish law and prevents procedural errors.
22. How is the business scope determined?
Each company must define its activities under NACE codes, clearly stated in the articles of association.
Incorrect classification can cause tax or licensing issues.
23. How can a company be liquidated or closed?
Steps include:
24. Which Turkish cities are best for company formation?
25. Are there special incentives for foreign investors?
Yes. Foreign investors can benefit from:
26. What is the minimum number of shareholders?
Both Limited and Joint-Stock Companies can be formed by a single shareholder.
The maximum number is 50 for Limited and 500 for Joint-Stock Companies.
27. Are lawyers, notaries, or accountants mandatory during incorporation?
Hiring a certified accountant (CPA) is mandatory.
Notarial certification is required for signatures and powers of attorney.
Lawyers are not mandatory but highly advised to minimize risks.
28. Can a foreign shareholder work in Turkey?
Yes, but only with a work permit.
Establishing a company alone does not authorize the foreigner to work; a separate permit must be obtained.
29. What are the annual obligations of a company?
Every year, companies must:
30. What are the main benefits of forming a company in Turkey?
