Company Registration in Turkey: Easy Steps for Business Setup
Registering a company in Turkey is an attractive option for foreign investors and entrepreneurs looking to expand their business into new markets. With its strategic location between Europe and Asia, Turkey offers access to a vast consumer base and a dynamic economy. This article will provide a comprehensive guide on how to register a company in Turkey, covering the types of business entities, the registration process, and the benefits of doing business in the country.
Table of Contents
Company Registration in Turkey: Easy Steps for Business Setup
Benefits of Business Incorporation in Turkey
Options for Commercial Areas to Setup a Company in Turkey
1- Mainland Company
2- Free Zone Company
3- Technopark Comoany
Types of Legal Entities in Turkey
1. Joint Stock Company (JSC)
2. Limited Liability Company (LLC)
3. Sole Proprietorship Company
4. Branch Office
5. Liaison Office
Required Documents for Company Establishment in Turkey
For Individual Shareholders:
For Corporate Shareholders:
Comparison of Legal Entities in Turkey
Steps to Start a Business in Turkey
Cost of Company Formation in Turkey
Duration of Business Registration in Turkey
Tax Registration for Companies in Turkey
1. Obtain a Tax Identification Number (TIN)
2. Value Added Tax (VAT) Registration
3. Withholding Tax Registration
4. Corporate Income Tax Registration
Social Security Registration for Companies in Turkey
Applying for Business Licenses in Turkey
1. Identify Industry-Specific Requirements
2. Prepare Required Documentation
3. Submit the Application
4. Compliance and Inspections
5. Obtain the License
6. Ongoing Compliance
Management of the Companies in Turkey
Duties and Responsibilities of Managers
Business Bank Account in Turkey
FAQs About Company Registrationin Turkey
Setup Your JSC in Turkey with A&M Consulting Co.
Benefits of Business Incorporation in Turkey
Turkey has become a significant destination for business expansion due to its strategic geographical location, growing economy, and investor-friendly policies. Here are some key reasons to consider business incorporation in Turkey:
Strategic Location: Turkey’s unique position as a bridge between Europe and Asia provides easy access to multiple markets, including Europe, the Middle East, and Central Asia.
Growing Economy: With one of the fastest-growing economies globally, Turkey offers numerous opportunities for businesses in various sectors.
Investment Incentives: The Turkish government offers various incentives, including tax breaks, subsidies, and grants, particularly in sectors like technology, manufacturing, and renewable energy.
Skilled Workforce: Turkey boasts a young and educated workforce, making it an ideal location for companies needing skilled labor.
Ease of Doing Business: Turkey has simplified its company registration process, making it easier for foreign investors to start and operate a business.
Options for Commercial Areas to Setup a Company in Turkey
When establishing a company in Turkey, whether to choose the mainland or free zones or Technoparks depends on the company’s field of activity, goals and expectations. Three options have their own advantages and disadvantages.
The sector your company will operate in, the market you are targeting and your long-term strategy are the most important factors in determining whether you will choose the mainland or the free zone.
If you plan to focus on the local market and reach a wide range of customers, the mainland may be more suitable. However, if you are planning to establish an export-oriented company and want to benefit from tax advantages, the free zones may be a more attractive option for you.
Here are some factors to consider when evaluating the options:
1- Mainland Company
Advantages:
Wide Market Access: Easier access to all of Turkey and international markets.
Operating in Different Sectors: Flexibility to operate in various sectors.
Investment Incentives: There may be the opportunity to benefit from various investment incentives offered by the state.
Credit Opportunities: Mainland companies have a wider range of options when it comes to obtaining loans and financing from banks.
Disadvantages:
Tax Liabilities: There may be higher tax rates compared to free zones.
2- Free Zone Company
Advantages:
Tax Advantages: Companies operating in free zones can generally be exempt from corporate taxes, income taxes, and customs duties. This can significantly reduce costs.
Ideal for Export-Oriented Companies: Free zones are ideal for companies that plan to export. Companies that want to do most of their production and trade abroad may prefer these zones.
Fast Import and Export Processes: Bureaucratic procedures in free zones can be faster and simpler, which speeds up business processes.
Disadvantages:
Restricted Access to Local Market: Companies operating in free zones may be subject to certain restrictions when selling directly to the Turkish domestic market.
Focus on Specific Areas of Activity Only: Free zones are generally suitable for certain sectors or activities (e.g. manufacturing, technology, logistics). It may be more difficult to operate in other areas.
Limited Settlement: The settlement areas in free zones are limited and it can be difficult to find a place when demand is high.
More Complex Bureaucracy: The process of establishing a business in freezone companies can be more complicated and time-consuming.
3- Technopark Comoany
Advantages:
Tax Incentives:Companies operating in technoparks are generally exempt from corporate and income taxes. These tax incentives can help companies reduce their costs and increase their profitability.
R&D and Innovation Support: Technoparks focus on R&D and innovation-focused projects. Companies can easily access the infrastructure and support needed to develop innovative projects in these environments.
Qualified Workforce: Since technoparks work in collaboration with universities and research institutions, they provide access to a qualified and talented workforce. This is a great advantage, especially for companies operating in the fields of technology and engineering.
Financing and Grant Opportunities: Companies located in technoparks can benefit from R&D incentives, grants and other financing opportunities provided by the state. Such supports facilitate the implementation of projects.
Networking and Collaboration Opportunities: Technoparks create an ecosystem where companies and academic institutions in the same sector come together. This allows companies to establish new collaborations, increase knowledge sharing and develop joint projects.
Export Potential: Technoparks provide a suitable environment for technology-focused companies to export. Access to foreign markets is facilitated and an international competitive advantage is provided.
Disadvantages:
High Entry Threshold: Certain criteria must be met in order to take place in technoparks. Criteria such as R&D projects, innovation potential and company profile can be decisive in the acceptance of applications.
High Competition: There are many innovative and technology-focused companies in technoparks. This can create a high competitive environment among companies. Intensified competition among companies operating in the same sector can make it difficult to enter the market and grow.
Location and Area Limitations: There are a limited number of office and laboratory spaces in technoparks. Especially for large and expanding companies, it may be difficult to find a place.
High Rents and Costs: Office rents and other operational costs in technoparks can be higher compared to other regions. This can create a financial burden for small-scale enterprises.
Restricted Sector Focus: Technoparks usually focus on specific sectors. For example, they may be focused on technology, biotechnology or software. This can be a disadvantage for companies that want to operate in different sectors.
Bureaucracy: Operating in technoparks may require certain legal and bureaucratic processes. These processes can be time-consuming and complex, especially for small businesses.
Types of Legal Entities in Turkey
1. Joint Stock Company (JSC)
Structure: Suitable for larger and more corporate businesses, a JSC is divided into shares. Shareholders’ liability (excluding public debts) is limited to their capital investment.
Capital Requirement: Minimum capital is 250,000 TL, with 1/4 paid in cash to the company’s bank account before establishment. The remaining amount must be paid within 24 months.
Benefits: No upper limit on the number of shareholders, preferred by banks and insurance companies, easier share transfers, and shares may be listed on the stock exchange.
Click the link for more info about JSC in Turkey
2. Limited Liability Company (LLC)
Structure: Can have 1 to 50 shareholders.
Capital Requirement: Minimum capital is 50,000 TL, payable within 24 months.
Benefits: 100% ownership available for foreigners, immediate establishment with zero capital (to be deposited later), common type of equity company in Turkey.
Responsibilities: One shareholder must be a manager; other directors can be from shareholders or non-shareholders.
Click the link for more info about LLC in Turkey
3. Sole Proprietorship Company
Structure: Owned and operated by a single individual responsible for all debts and liabilities.
Benefits: No cash capital required, quick registration and liquidation, low operating costs.
Drawbacks: Owner is personally responsible for all actions and debts, subject to progressive tax regime.
4. Branch Office
Structure: Allows foreign companies to engage in commercial activities in Turkey without establishing a new entity.
Benefits: No minimum capital requirement, can commence business immediately, can issue invoices and transfer profits outside of Turkey.
Drawbacks: Limited to the parent company’s scope of activities.
Click the link for more info about Branch Office in Turkey
5. Liaison Office
Structure: Set up by foreign investors for research activities without commercial engagement.
Benefits: Exempt from corporate income tax and VAT, relatively easy registration and liquidation.
Drawbacks: Prohibited from commercial activities, cannot issue invoices or transfer profits, time-restricted operations (initially three years, extendable).
Click the link for more info about Liaison Office in Turkey
Required Documents for Company Establishment in Turkey
For Individual Shareholders:
Tax number
Turkish translation of passport
Residence address
Contact information
Biometric data
For Corporate Shareholders:
Notarized and apostilled board decision
Representative’s contact information, address, Turkish ID number, and passport copy
Residence permit and Turkish ID number (if based in Turkey)
Comparison of Legal Entities in Turkey
Steps to Start a Business in Turkey
First Step: Determine the Trade Area: Choose between mainland or free zones.
Second Step: Choose the Company Type: Decide between LLC or JSC.
Third Step: Decide on Managers and Share Capital Amounts:
For JSC: Minimum 250,000 TL, with 1/4 paid before establishment.
For LLC: Minimum 50,000 TL.
Fourth Step: Prepare the Articles of Incorporation:
Reserve company title.
Sign a lease contract for the legal address.
Obtain tax ID numbers for founders.
Translate and notarize founders’ passports.
Fifth Step: Submit Documents:
Submit all required documents and pay registration fees.
Register with the tax office.
Obtain a notarized signature circular for managers.
Cost of Company Formation in Turkey
Forming a company in Turkey typically costs around 4,000 EUR. This includes:
Virtual office fee: 10 EUR/month
Company formation services: Approximately 3,000 EUR
Accounting and tax consultancy: Around 500 EUR/month
Bank account opening services: 500 EUR/bank
Duration of Business Registration in Turkey
For Shareholders in Turkey: 1-3 days for company formation, bank account opening, and online banking setup.
For Shareholders Abroad: Longer setup process and higher costs for remote establishment.
Tax Registration for Companies in Turkey
Tax registration is last one of the company registration steps in Turkey. This is an essential step to ensure compliance with the Turkey’s legal and regulatory framework. Here’s the process and key considerations:
1. Obtain a Tax Identification Number (TIN)
Step 1: Company Registration
Before tax registration, your company must be officially registered with the Trade Registry Office.
Step 2: Application for TIN
Apply for a Tax Identification Number at the local tax office where your company is registered.
Required Documents:
Trade Registry Gazette indicating the company’s registration.
Articles of Association of Company
Copies of the identification documents (passports) of the company directors.
Proof of address for the company’s headquarters.(Rent Agreement)
2. Value Added Tax (VAT) Registration
Step 1: Determine VAT Obligations
All companies in Turkey are required to register for VAT. The standard VAT rate is 20%, with reduced rates of 1%, 8% and 10% applicable to certain goods and services.
Step 2: Submit VAT Registration Form
Complete and submit the VAT registration form at the local tax office.
Step 3: VAT Number Issuance
Upon approval, the tax office will issue a VAT number for your company.
3. Withholding Tax Registration
Register for withholding tax if your company makes payments subject to withholding such as salaries, rent and certain types of professional services such as Accounting, Translate, Law
4. Corporate Income Tax Registration
Companies operating in Turkey are required to pay a 25% tax on their profits. However, certain sectors benefit from reduced corporate income tax rates.
For further information, check out our article on Tax Registration in Turkey
Social Security Registration for Companies in Turkey
Register with the Social Security Institution (SGK) for social security contributions. This is mandatory for companies employing staff in Turkey.
Required Documents:
Company registration documents.
Identification documents of the directors.
Employment contracts of the employees.
For further information, check out our article on Turkish Social Security System
Applying for Business Licenses in Turkey
If your company in Turkey will engage in certain regulated activities, it is mandatory to complete the business licensing phase. This involves obtaining specific business licenses and permits from the relevant authorities overseeing the industry in which your company will operate. Here is an overview of the process and requirements for obtaining business licenses in Turkey:
1. Identify Industry-Specific Requirements
Step 1: Determine the Industry
Identify the industry in which your company will operate. Common industries requiring special licenses and permits include:
Health
Education
Insurance
Financial services
Manufacturing
Step 2: Research Regulatory Bodies
Research the regulatory bodies and authorities responsible for issuing licenses in your specific industry. Each industry has its own set of regulations and requirements.
2. Prepare Required Documentation
Step 1: Gather Necessary Documents
Compile the necessary documents for your license application. These may vary by industry but generally include:
Company registration documents.
Articles of Association.
Identification documents of company directors.
Proof of company address.
Relevant qualifications or certifications of key personnel.
Step 2: Additional Industry-Specific Documents
Depending on the industry, additional documents may be required, such as:
Health industry: Medical licenses, facility inspections, compliance with health regulations.
Education: Accreditation certificates, curriculum approvals, staff qualifications.
Insurance: Financial statements, solvency requirements, regulatory compliance.
Financial services: Capital adequacy, regulatory filings, operational guidelines.
Manufacturing: Environmental impact assessments, safety protocols, production permits.
3. Submit the Application
Step 1: Complete Application Forms
Fill out the appropriate application forms provided by the regulatory authority.
Step 2: Submit Application
Submit your application along with all required documents to the relevant authority. This can often be done online or in person.
Step 3: Pay Application Fees
Pay any applicable application fees. Fee amounts vary by industry and type of license.
4. Compliance and Inspections
Step 1: Compliance Checks
Ensure your business complies with all regulatory requirements and standards set by the relevant authority.
Step 2: Site Inspections
Be prepared for site inspections or audits by the regulatory body to verify compliance with industry-specific regulations.
5. Obtain the License
Step 1: Approval Process
The regulatory authority will review your application and conduct any necessary inspections. If your application meets all requirements, it will be approved.
Step 2: License Issuance
Once approved, you will receive your business license, allowing you to legally operate in your industry.
6. Ongoing Compliance
Step 1: Maintain Compliance
Continuously comply with industry regulations and standards to avoid penalties or revocation of your license.
Step 2: Renewal of License
Be aware of the expiration date of your license and ensure timely renewal by submitting the necessary documentation and fees.
Management of the Companies in Turkey
You can manage the company yourself or appoint a director. According to the Turkish Commercial Code, at least one manager is required, who can be a shareholder or an external appointee. If the manager is a legal entity, a natural person must be appointed to represent it. Foreign managers require a work permit.
Duties and Responsibilities of Managers
Managers are responsible for:
Preparing financial statements and annual reports.
Executing general assembly meeting decisions.
Establishing the accounting system and conducting audits.
Notifying the commercial court if the company is in debt.
Business Bank Account in Turkey
A bank account is essential for financial transactions, including share capital deposits, tax payments, and efficient financial management. Required documents include:
Articles of Association
Company registration certificate
Tax registration certificate
Company seal
Wet signatures of representatives
Residence permit (if representatives are based in Turkey)
For further information, check out our article on Corporate Bank Accounts in Turkey
Simplify your company registration in Turkey. Explore the process, legal steps, and benefits of starting a business in Turkey today!
