Quick answer
When a foreign company may create a taxable presence in Turkey through a fixed place, branch, personnel, agent or project, and how treaty analysis works.
A foreign company can create a taxable presence in Turkey without incorporating a Turkish subsidiary. A fixed place, branch, office, dependent agent, long-running project or personnel activity may trigger Turkish tax registration and profit attribution, subject to domestic law and any applicable double tax treaty.
The Analysis Has Two Layers
First, review Turkish domestic rules on legal and business presence. Then review the permanent-establishment article of the relevant double tax treaty. A treaty may restrict Turkey’s taxing right, but it does not remove the need to document the facts. Treaty wording and project thresholds differ, so a generic “six-month rule” is unsafe.
Türkiye’s official investment guidance confirms that Turkish and foreign companies are taxed on earnings generated through operations in Türkiye and distinguishes subsidiaries, branches, permanent establishments and non-commercial liaison offices. See the official Turkish tax system guide.
Common Permanent Establishment Risk Areas
| Activity | Question to test |
|---|---|
| Office or fixed place | Is a location in Turkey available to the foreign enterprise on a continuing basis? |
| Employees | Do personnel habitually conduct the core business in Turkey? |
| Agent | Does a person routinely conclude or play the principal role in contracts? |
| Construction or installation | Does the relevant treaty’s project-duration threshold apply? |
| Remote work | Is a Turkish home office effectively at the enterprise’s disposal? |
| Liaison office | Have activities remained preparatory, auxiliary and non-commercial? |
A payroll, VAT or withholding obligation may arise even when the final corporate-tax PE conclusion is uncertain. Each tax and employment obligation should therefore be tested separately.
Subsidiary, Branch and PE Are Not Interchangeable
A subsidiary is a separate Turkish legal entity. A registered branch belongs to the foreign parent. A permanent establishment is primarily a tax concept and may arise from facts even when no branch was intentionally registered. Review foreign company registration options and the branch guide before deploying personnel or signing local contracts.
Evidence to Collect
Map locations, employee days, authority matrices, contract negotiation, signature process, customer delivery, inventory, project duration and intercompany charges. Then document treaty residence and the applicable treaty article. If a PE exists, determine registration, bookkeeping, payroll, VAT and attributable-profit requirements.
For treaty relief and tax compliance, see tax services in Turkey and the double taxation agreements guide.
Review Before the First Contract
Celikel CPA can map PE, payroll, VAT and registration exposure before operations begin. Request an international tax review or explore tax services in Turkey.
Official Sources
Need practical support in Turkey?
Discuss the accounting, tax, payroll, or company setup implications of your situation with a licensed local professional.
Frequently Asked Questions
Does having a Turkish customer create a permanent establishment?
Not by itself. The analysis considers the place of business, personnel, agents, contract authority, project duration and the relevant treaty wording.
Can a home office create PE risk?
Potentially. The key facts include permanence, whether the location is effectively at the enterprise’s disposal and whether core business is conducted there.
Is a liaison office always tax-exempt?
Only while it remains within its permitted non-commercial scope. Commercial transactions or activities beyond a preparatory or auxiliary function can create tax and regulatory risk.
Is a registered branch the same as a permanent establishment?
No. A branch is a registered legal form, while PE is a tax concept. A branch will normally have a Turkish tax presence, but PE can also arise without deliberate branch registration.
Which country’s treaty should be reviewed?
Review the treaty between Turkey and the foreign enterprise’s country of tax residence, supported by a valid residence certificate and the actual facts.