Establishing Company in Turkey
Establishing Company in Turkey
Establishing company in Turkey presents a compelling opportunity for entrepreneurs and investors seeking to leverage Turkey’s robust economy and strategic positioning at the nexus of Europe and Asia. However, navigating the process of registering a company in Turkey can be intricate and time-intensive, encompassing various legal and administrative prerequisites.
Establishing Company in Turkey: A Strategic Move for Entrepreneurs
At our Financial Consulting Firm, we excel in simplifying the process of establishing a company in Turkey. We specialize in acquiring tax identification numbers for your partners efficiently. Through close collaboration with relevant authorities and experts,We ensure the seamless issuance of essential tax identification numbers. This streamlined approach not only facilitates your partners in meeting their tax obligations but also ensures they fulfill all legal requirements seamlessly.
Establishing Company in Turkey: Key Takeaways
- Establishing a new business in Turkey entails a series of legal and administrative procedures, such as securing requisite permits and licenses, completing company registration with pertinent governmental bodies, and acquiring essential tax identification numbers.
- Common business entity types in Turkey encompass limited liability companies (LLCs), joint stock companies (JSCs), and sole proprietorships, offering entrepreneurs various options to structure their businesses according to their specific needs and objectives.
- Ensuring adherence to Turkish labor regulations is imperative, encompassing compliance with statutes concerning employment agreements, work schedules, and employee entitlements.
- Fulfilling tax, accounting, and financial reporting obligations is essential for companies, necessitating adherence to regulatory frameworks governing fiscal matters, financial record-keeping, and reporting requirements.
- Obtaining professional guidance is advisable when establishing a company in Turkey, given the complexity and time-intensive nature of the process, ensuring smoother navigation of legal and administrative intricacies.
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.
Starting a Company in Turkey: Step-by-Step Guide
Selecting a Business Name: Choose a unique name and reserve it at the Trade Registry Office. Drafting the Articles of Association (AoA): Prepare this document, which includes details about the company’s scope of activities, share capital, and the rights and obligations of shareholders. Gathering Required Documents: Collect the necessary documents, including the AoA, personal identification, and address proofs of shareholders and directors. Submitting Documents to the Trade Registry Office: Submit the required paperwork along with the AoA to the local Trade Registry Office for review and approval. Obtaining Tax Identification Number (TIN) and Commercial Registration Certificate: After the approval of your company’s registration, apply for a TIN and Commercial Registration Certificate from the tax office.
Registering with the Chamber of Commerce: Register your company with the local Chamber of Commerce to obtain a registration number and become an official member. Applying for Licenses and Permits: Depending on the nature of your business, you may need to apply for additional licenses and permits from relevant authorities. Opening a Bank Account: Finally, open a bank account for your company, and deposit the required minimum share capital. These steps are general guidelines, and the specific requirements may vary depending on the type of company and local regulations. It’s advisable to seek legal and professional advice to ensure compliance with all relevant laws and regulations.
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.
Documents Needed for Registering a Company in Turkey
Once you’ve decided on the right legal structure for your business, you’ll need to gather the required documents and information to register your company in Turkey. Depending on the status of the shareholder, whether they’re a natural person or a legal entity, these documents may include: Articles of Association (AoA) and a company title
Personal details and passport copies of shareholders and directors
Proof of address for shareholders and directors Evidence of the capital amount, its origin, and its existence Tax Identification Numbers (TIN) for shareholders and directors A Registration and Commercial Activity Certificate.
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 | – |