Introduction Entering the dynamic Turkish market presents exciting opportunities, but requires careful strategic planning. While establishing a full commercial presence through a Limited Liability Company (LLC) or a Branch Office are common routes, there’s another crucial structure designed specifically for preliminary activities: the Liaison Office (İrtibat Bürosu).
Often misunderstood, a Liaison Office serves as a non-commercial outpost for a foreign parent company, allowing it to explore the market, build connections, and gather intelligence without engaging in profit-generating activities.
This guide clarifies the unique role of a Liaison Office in Turkey, outlining its permitted activities, significant advantages (like tax exemption), critical limitations, and when it serves as the ideal strategic stepping stone for foreign investors.
What Exactly is a Liaison Office in Turkey?
Legally, a Liaison Office is not an independent Turkish legal entity. Similar to a Branch Office, it is considered an extension of the foreign parent company. However, unlike a Branch or an LLC/JSC, a Liaison Office is strictly prohibited from engaging in any commercial or income-generating activities within Turkey.
Its sole purpose is to facilitate specific non-commercial functions on behalf of the parent company. Think of it as a representative or research arm, not a sales or operational division.
Permitted Activities: What Can a Liaison Office Do?
The scope of activities for a Liaison Office is clearly defined and limited by Turkish regulations. Permitted functions generally include:
Market Research: Studying the Turkish market potential, competitor analysis, and identifying business opportunities for the parent company.
Representation and Networking: Acting as a point of contact, hosting meetings, and representing the parent company at trade fairs or industry events.
Feasibility Studies: Conducting research to assess the viability of future investments or commercial operations in Turkey.
Quality Control & Inspection: Overseeing the quality of goods or services provided by Turkish suppliers to the parent company abroad (not selling within Turkey).
Data Collection & Communication: Gathering technical information, coordinating communication between the parent company and Turkish contacts.
Promotion: Promoting the parent company’s products or services (without making sales or taking orders).
Strictly Forbidden: What a Liaison Office Cannot Do
Understanding the limitations is crucial to avoid legal issues. A Liaison Office is strictly forbidden from:
Engaging in any commercial activities: This includes sales, marketing resulting in sales, taking orders, issuing invoices, or providing paid services.
Generating revenue: All operational expenses must be funded by the foreign parent company through foreign currency transfers.
Signing commercial contracts: It cannot enter into binding sales or service agreements on behalf of itself or the parent company (except for operational necessities like office rent or utilities).
Acting as a distributor or agent: It cannot facilitate direct commercial transactions.
Violating these restrictions can lead to penalties and the revocation of the operating permit.
Key Advantages of Establishing a Liaison Office
Despite its limitations, the Liaison Office structure offers distinct strategic benefits:
Tax Exemption: Since Liaison Offices cannot generate income, they are exempt from Corporate Income Tax and Value Added Tax (VAT) in Turkey on their operational activities funded from abroad. Staff salaries are also typically exempt from income tax (though social security contributions apply).
Market Intelligence: Provides a low-risk way to gain firsthand understanding of the local market, regulations, and business culture before committing significant capital.
Low Barrier to Entry: Requires no minimum share capital and generally involves a less complex setup process compared to establishing a subsidiary or branch.
Brand Presence: Allows the foreign company to establish a physical presence and build brand awareness in Turkey without immediate commercial pressure.
Networking: Facilitates building relationships with potential partners, suppliers, and customers.
Key Limitations and Considerations
Investors must be aware of the inherent constraints:
Strictly Non-Commercial: The inability to generate revenue is the most significant limitation. It is purely a cost center.
Limited Permit Duration: Initial permits are typically granted for a maximum of 3 years (depending on the activity). Extensions are possible but require demonstrating continued adherence to non-commercial activities and future plans.
Parent Company Liability: As it’s not a separate legal entity, the foreign parent company remains fully liable for the actions and obligations of the Liaison Office in Turkey.
Operational Costs: While tax-exempt, the office still incurs operational costs (rent, salaries, utilities) that must be fully covered by the parent company.
Reporting Requirements: Liaison Offices must submit annual activity reports to the Ministry of Industry and Technology, detailing their non-commercial activities and expenditures.
| Feature | Liaison Office | Branch Office | Subsidiary (LLC / JSC) |
| Legal Status | Extension of Parent (No Entity) | Extension of Parent (No Entity) | Independent Turkish Legal Entity |
| Liability | Parent Co. Unlimited Liability | Parent Co. Unlimited Liability | Limited Liability (Parent Protected) |
| Permitted Acts | Strictly Non-Commercial | Commercial (Limited by Parent Scope) | All Lawful Commercial Activities |
| Taxation | Exempt (Corp. Tax, VAT) | Taxed on Turkish Income | Taxed on Worldwide Income (Resident) |
| Primary Purpose | Market Research, Representation | Commercial Operations, Projects | Long-term Investment, Full Operations |
| Min. Capital | None | None | Yes (TRY 50k for LLC, 250k for JSC in 2025) |
When is a Liaison Office the Right Choice?
A Liaison Office is strategically ideal for foreign companies that are:
In the early stages of exploring the Turkish market.
Need a physical presence for representation or networking without immediate sales goals.
Conducting feasibility studies before a major investment.
Primarily focused on supporting the parent company’s operations (e.g., quality control for imports from Turkey).
Seeking a low-risk, low-commitment initial entry point.
It is generally not suitable for companies intending to start sales, manufacturing, or service delivery in Turkey immediately.
Establishment and Operation Essentials (Brief Overview)
Governing Body: Establishment requires obtaining a permit from the Ministry of Industry and Technology (General Directorate of Incentive Implementation and Foreign Investment).
Application: Involves submitting documents like the parent company’s activity certificate, financial statements, and a detailed explanation of the non-commercial activities planned in Turkey.
Funding: Must be financed entirely through foreign currency transferred from the parent company.
Personnel: Can hire local and foreign staff (subject to work permit regulations for foreigners).
Duration & Extension: Permits are time-limited but can be extended upon application, proving continued non-commercial operations.
Conclusion: A Strategic, Non-Commercial Gateway
The Liaison Office serves a valuable, albeit specific, function in a foreign company’s Turkish market entry strategy. It acts as the eyes and ears on the ground, providing crucial market insights and establishing a presence without the complexities and liabilities of full commercial operations. While its non-commercial nature is a strict limitation, its tax advantages and low setup barrier make it an excellent tool for exploration, research, and representation during the pre-investment phase. Understanding its distinct role compared to branches and subsidiaries is key to leveraging it effectively.
