Advantages of Company Formation in Turkey
Turkey offers numerous advantages for entrepreneurs and investors wishing to Company Formation in Turkey. Strategically located at the crossroads of Europe and Asia, this dynamic market offers both economic and operational advantages, making it an attractive location for business ventures.
Company Formation in Turkey: A Strategic Business Opportunity
Step-by-Step Guide to Company Formation in Turkey
Establishing a company in Turkey involves several detailed steps. Here is a comprehensive guide to help you navigate the process efficiently:
Selecting a Business Name
Choosing a unique and appropriate business name is the first step in company establishment in Turkey. The name must comply with Turkish naming conventions and be approved by the Trade Registry Office.
Drafting the Articles of Association (AoA)
The Articles of Association is a crucial document for company establishment in Turkey. It outlines the company’s structure, scope of activities, share capital, and the rights and obligations of shareholders.
Gathering Required Documents
Collecting the necessary documentation is essential for the smooth establishment of a company in Turkey. This includes identity documents of shareholders and directors, proof of address, notarized Articles of Association, tax ID numbers, and bank receipts of paid-in capital if applicable.
Notarization
Notarizing all collected documents ensures their authenticity and compliance with legal standards, a key step in company establishment in Turkey.
Submitting Documents to the Trade Registry Office
Submitting the notarized documents to the local Trade Registry Office is essential. This submission includes the Articles of Association, identity documents, and proof of address.
Obtaining a Tax Identification Number (TIN)
Applying for a Tax Identification Number (TIN) at the local tax office is crucial for tax-related activities in company establishment in Turkey.
Opening a Bank Account
Opening a corporate bank account in the company’s name is necessary. The company’s initial capital must be deposited into this account to proceed with the establishment of the company in Turkey.
Registering with the Chamber of Commerce
Registering the company with the local Chamber of Commerce provides it with a registration number and official membership, facilitating business operations in Turkey.
Obtaining Necessary Licenses and Permits
Depending on the business nature, obtaining additional licenses and permits from relevant authorities may be required, further ensuring compliance in company establishment in Turkey.-
Registering for Social Security and Tax Authorities
Registering with social security and tax authorities, including the Social Security Institution and obtaining VAT and corporate tax registrations, is essential for company establishment in Turkey.
Finalizing the Company Setup
Once all the above steps are completed, you can officially begin your business operations. Ensure all ongoing compliance requirements, such as annual reporting and tax filings, are met.
Strategic Location
Turkey’s unique geographical position serves as a bridge between Europe and Asia, providing access to a vast market. This strategic location facilitates trade and logistics, making it an ideal hub for businesses targeting both Eastern and Western markets. The country’s proximity to key markets in Europe, the Middle East, and North Africa allows companies to easily reach a diverse and expansive customer base.
Growing Economy
Turkey boasts one of the world’s fastest-growing economies. With a young and dynamic population, the country has seen consistent economic growth over the past decade. The robust economic framework and diversified industrial base create a favorable environment for new businesses to thrive. Sectors such as manufacturing, automotive, textiles, and technology are particularly strong, offering numerous opportunities for investment and growth.
Government Incentives
The Turkish government actively supports foreign investment through various incentives and support programs. These include tax exemptions, reduced utility costs, and financial grants for specific industries and regions. The Free Zones in Turkey offer additional benefits, such as exemption from corporate taxes, VAT, and customs duties, making them highly attractive for businesses looking to maximize their profitability.
Skilled Workforce
Turkey has a well-educated and skilled workforce, with a significant portion of the population under the age of 30. The country’s education system produces a steady stream of graduates in engineering, business, and technology, ensuring that businesses have access to a pool of qualified professionals. Additionally, labor costs in Turkey are relatively competitive compared to Western European countries, providing businesses with cost-effective human resources.
Modern Infrastructure
Turkey’s infrastructure is highly developed, with state-of-the-art transportation networks, including highways, railways, and ports. The country also has a well-established telecommunications network and advanced logistics capabilities. These infrastructure advantages facilitate efficient business operations and enhance connectivity with international markets.
Business-Friendly
Environment
The Turkish government has implemented numerous reforms to create a business-friendly environment. These include simplifying the company registration process, improving transparency, and enhancing legal protections for investors. The World Bank’s Ease of Doing Business Report consistently ranks Turkey favorably, highlighting the country’s commitment to facilitating business activities.
Access to a Large Domestic Market
With a population of over 80 million people, Turkey provides a substantial domestic market for goods and services. The growing middle class and increasing consumer spending power create a strong demand for diverse products, offering businesses significant market opportunities. Additionally, Turkey’s strategic location allows companies to tap into neighboring markets with ease.
Cultural and Economic Ties
Turkey’s cultural and historical ties with various regions, including Europe, the Middle East, and Central Asia, enable businesses to establish strong relationships and partnerships. These ties often facilitate smoother market entry and expansion, providing businesses with a competitive edge.
Innovation and Technology
Turkey is investing heavily in innovation and technology, with numerous tech parks and innovation centers across the country. The government’s focus on Research and Development (R&D) and support for startups fosters a vibrant entrepreneurial ecosystem. This environment encourages innovation and provides businesses with the resources needed to stay competitive in the global market.
Beginning the Journey: Introduction
Turkey stands as a thriving center for investment, commerce, and entrepreneurship, drawing interest from global innovators. Embarking on the journey to establish a company in Turkey involves a series of strategic steps. This guide navigates you through the entire process, from selecting the optimal business framework to securing essential licenses and permissions. Let’s delve into the intricacies of establishing your business presence in Turkey.
Turkey’s allure as a prime destination for business ventures and investments continues to captivate entrepreneurs worldwide. For those aspiring to establish a company in this dynamic market, a structured approach is essential. This comprehensive guide outlines the key steps involved in setting up your business in Turkey, from selecting the appropriate business model to navigating the regulatory landscape and obtaining essential permits. Let’s explore the roadmap to realizing your entrepreneurial ambitions in Turkey.
Grasping the Legal Structure
The initial stage in setting up a company in Turkey involves comprehending the legal structure. Turkey operates under a robust legal framework, primarily governed by the Turkish Commercial Code (referred to as “TCC”), the Turkish Code of Obligations (referred to as “CoO”), and the Turkish Labor Law (referred to as “TLL”). These legislations oversee diverse facets of business operations, encompassing company establishment, contractual agreements, liability matters, and labor regulations.
Selecting the Optimal Legal Framework for Your Enterprise
Before starting company registration in Turkey, it is very important to choose the appropriate legal framework. Common business structures in Turkey include:
- Sole Proprietorship
- Limited Liability Company (LLC)
- Joint Stock Company (JSC)
- Branches and Representative Offices of Foreign Companies
Each structure offers different advantages and disadvantages. Your decision should be in line with the scale, nature and objectives of your business. Expert advice is essential to ensure informed decision-making. Let’s explore these options in more depth.
Sole Proprietorship:
In Turkey, a sole proprietorship represents the simplest legal form for a business. It is solely owned and managed by an individual who bears full responsibility for all business debts and liabilities. While ideal for small and uncomplicated enterprises, this structure exposes the owner to unlimited personal liability.
Limited Liability Company (LLC):
Among the favored options for businesses in Turkey, the Limited Liability Company (LLC) stands out, providing owners with the advantage of limited liability while permitting multiple stakeholders. In an LLC, shareholders enjoy limited liability, meaning their personal assets are protected from the company’s debts and liabilities (excluding public debts), and their liability is confined to the capital invested in the company. An LLC must have a minimum of one (1) shareholder and can accommodate a maximum of fifty (50) shareholders.
Joint-Stock Company (JSC):
A Joint-Stock Company (JSC) represents a more sophisticated legal framework for businesses in Turkey, ideal for larger corporate entities. In a JSC, ownership is distributed through shares, and shareholders’ liability (excluding public debts) is restricted to the capital they have contributed to the company. A JSC is required to have a minimum of one shareholder.
Branch & Representation Office of Foreign Companies:
Foreign investors are encouraged to establish branches or liaison offices in Turkey, benefiting from equal treatment under the Foreign Direct Investments Law No. 4875 (FDIL), except where specified by international conventions or special laws. The FDIL permits foreign investors to set up liaison offices in Turkey for research purposes within their industry, without engaging in commercial activities.
Opting to open a Turkish branch rather than establishing a new company is often more straightforward and cost-effective for foreign companies. Unlike Joint-Stock and Limited Liability Companies, branches are not subject to minimum capital requirements. Establishing a branch allows investors to commence business operations in Turkey promptly.
However, it’s crucial to note that liaison offices are restricted from engaging in commercial activities in Turkey. They are prohibited from entering into commercial agreements or issuing invoices. Any violation of this prohibition will result in the revocation of the liaison office’s operating permit. Instead, commercial activities should be conducted directly by the parent company. Nevertheless, liaison offices are permitted to lease office space and open bank accounts in Turkey to cover operational expenses, which are funded by the parent company.
Company Capital Funds
The primary aspect of the company’s capital is to comply with Turkish legislation. The minimum capital required to establish a company in Turkey is ₺50,000 for a Limited Liability Company (LLC) and ₺250,000 for a Joint Stock Company (JSC).
Since Turkish legislation deals with companies based on their capital value, this amount of funds will not provide you with any independence. Consequently, if your company’s capital is set at least ₺100,000, you will be able to:
Easily obtain a work permit in Turkey (or a residence visa), Have the opportunity to join organizations such as TURSAB, MUSIAD, and others, Conduct business or import and export goods more conveniently.
The investment does not have to be put in the bank during the company establishment procedure; instead, it must be deposited before filing for a work permit or within 24 months of the foundation date.
Establishing company in Turkey involves the following key steps:
- Obtain necessary licenses and permits, including a Commercial Registration Certificate, Tax Identification Number, VAT Number, and other relevant permits.
- Open a business bank account for managing finances, payments, and receipts.
- Register with social security and tax authorities, including registering employees with the Social Security Authority and obtaining social security numbers, as well as registering for income tax, VAT, and corporate tax.
Professional guidance is recommended for navigating the legal requirements involved in these steps.
Hiring Employees and Labor Laws in Turkey
Once your company is established, the next step is hiring employees. This includes advertising job openings, conducting interviews, and completing the required paperwork and procedures to employ workers in Turkey.
Turkey has strict labor laws that must be adhered to when hiring employees. This includes providing employment contracts, offering benefits, and ensuring all workers are adequately trained and equipped to perform their job duties.
Shareholders of a Company in Turkey
In Turkey, shareholders own part of a company and have rights and obligations within it. They can be individuals or legal entities, and there is no minimum number of shareholders. Shareholders contribute to the company’s capital and have rights based on their investment. Minority shareholders (with 10% or 5% of share capital) have specific rights under Turkish Law, which can be further enhanced by the company’s Articles of Association. For detailed guidance on company formation in Turkey and shareholder rights, contact Celikel CPA.
Appointment of Directors in Turkey
Under the Turkish Commercial Code (TCC), it is required that at least one member of the Board of Directors (for Joint Stock Companies) or one manager (for Limited Liability Companies) must have the full capacity to exercise the legal rights of the related company. With the exception of special laws and regulations, there are no restrictions on the nationality or residency of directors or managers, and no requirement to obtain a work or residence permit to become a director or manager. Legal entities can also be appointed as directors or managers of a company. In such cases, an individual representative of the legal entity must also be appointed to act on behalf of the legal entity. For foreign individuals serving as directors or managers, or acting on behalf of a legal entity manager or director, it is necessary to obtain a Turkish Tax Number and be registered with the relevant Trade Registry Office. The process of obtaining a tax number is straightforward and involves either a personal application to a tax office or an application through a representative with a duly issued Power of Attorney (PoA).
Legal Requirements for a Company's Board of Directors:
Structure: The board of directors governs JSCs and has a unitary structure. At least one shareholder of an LLC must be a company manager, and other managers can be appointed in addition to the shareholder manager. Both individuals and legal entities can be directors or managers, but if a legal entity is appointed, an individual must represent the legal entity.
Number of Directors or Managers: JSCs and LLCs can have a single-member Board of Directors or Managers, but it may be beneficial to appoint an odd number of directors or managers to facilitate decision-making. There is no maximum limit on the number. Employees’ Representation: Employees have no legal right to representation on the Board of Directors or Managers.
Frequently Asked Questions (FAQs)
What is The Price of Establishing a Company in Turkey?
The cost of establishing a company in Turkey is relatively low. It includes company registration fees, notary fees, and the commission of the Turkish law firm managing the process (if one is appointed).
How Long Does it Take to Establish a Company in Turkey?
The process typically takes between 5 to 15 days, although it can be longer for branches or liaison offices of foreign companies. Seek advice from our team of attorneys in Turkey for more information.
Can a Foreign National Establish a Business in Turkey?
Yes, foreign nationals can establish businesses in Turkey. They must comply with local laws and regulations and obtain the necessary licenses and permits.
Should You Use a Company Formation Agent?
Many entrepreneurs choose to use company formation agents as they can save time and effort. Research and find a reputable agent with experience in helping expatriate businesses. MGC Legal offers professional company formation services in Turkey.
Where Can You Seek Information on Establishing a Company in Turkey?
Consult your attorney or consultant for guidance, ensuring they are knowledgeable about Turkish Company Regulations. You can also find information on Turkish Embassies and government websites.
What Are The Differences Between LLC and JSC in Turkey?
An LLC (Limited Liability Company) and a JSC (Joint Stock Company) have different structures and legal requirements. Refer to the provided .pdf document for detailed information on the differences between the two.
Conclusion
In conclusion, starting a business in Turkey is a multistep process with its own set of rules and regulations. The procedure involves choosing the right business structure, registering with the appropriate authorities, obtaining necessary licenses and permits, and more.
It’s essential to seek professional advice and guidance to navigate through the legalities and requirements smoothly. While the process may seem daunting, with the right support, it can be a rewarding and lucrative venture.
If you’re considering investing in Turkey or starting a business, don’t hesitate to reach out for assistance. We’re here to help you navigate the complexities and ensure a successful venture in Turkey.
Contact us now ! to explore the exciting possibilities and opportunities that Turkey has to offer!
Brief
The article provides a concise summary of the process of establishing a business in Turkey. It highlights the importance of legal and administrative steps, obtaining necessary permits and licenses, and complying with Turkish labor and taxation laws. It also emphasizes the value of seeking professional assistance to navigate the complexities of company establishment in Turkey. Overall, the article underscores the potential challenges and the necessity of thorough preparation for successfully launching and operating a business in Turkey.
| Liaison Office | LLC/JSC | Branch Office | |
|---|---|---|---|
| Engage in Commercial Activities | Not allowed | Allowed | Allowed |
| Scope of Activities | Limited | Unlimited | Limited to the parent office’s scope of activities |
| Invoice Issuance | Cannot issue invoices | Can issue invoices | Can issue invoices |
| Grants Application | Cannot apply for grants | Can apply for grants | Can apply for a transfer of profits from abroad |
| Profits Transfer | Cannot ask for the transfer of profits from abroad | Can ask for a transfer of profits from abroad | Can apply for a transfer of profits from abroad |
| Time Limit | Initial permit for 3 years, extendable to 5 or 10 years | No time limit | No time limit |
| Financing | Must be financed abroad | Can finance activities | Can finance activities |
| Tax Exemptions | Exempt from Corporate Income Tax and Value Added Tax | Not exempt from tax (except for special exemptions) | Not exempt from tax (except for special exemptions) |
| Application Processing Time | 15-20 business days (if documents are complete) | 5-15 business days (if documents are complete) | – |
| Liquidation Process | Brief | Detailed; Law stipulates 6 months | – |
Frequently Asked Questions
What are the steps to establish a company in Turkey?
The steps include selecting a business name, drafting the Articles of Association, gathering required documents, notarizing the documents, submitting them to the Trade Registry Office, obtaining a Tax Identification Number (TIN), opening a bank account, registering with the Chamber of Commerce, obtaining necessary licenses and permits, registering for social security and tax authorities, and finalizing the company setup.
What documents are required for company registration in Turkey?
The required documents typically include identity documents of shareholders and directors, proof of address, notarized Articles of Association, tax ID numbers, and a bank receipt of paid-in capital if applicable.
How long does it take to establish a company in Turkey?
The process usually takes between 1 to 2 weeks, depending on the preparation of documents and the procedures at the relevant authorities.
Are there any government incentives for establishing a company in Turkey?
Yes, the Turkish government provides various incentives for foreign investors, including tax exemptions, reduced utility costs, and financial grants for specific industries and regions. The Free Zones offer additional benefits such as exemption from corporate taxes, VAT, and customs duties.
Can a foreigner start a business in Turkey?
Yes, Turkey has a liberal and open market for foreign investors, allowing them to establish businesses across various sectors. Foreigners can set up different types of companies such as Limited Liability Companies (LLCs), Joint Stock Companies (JSCs), Branch Offices, and Liaison Offices.
What are the benefits of establishing a company in Turkey?
Benefits include a strategic location, a growing economy, government incentives, a skilled workforce, modern infrastructure, a business-friendly environment, access to a large domestic market, cultural and economic ties with various regions, and significant investments in innovation and technology.