Branch, Liaison or Subsidiary in Turkey: Investor's Guide

When a foreign company decides to enter the Turkish market, one of the first legal questions it faces is deceptively simple: what kind of presence do you actually need? Turkey's Direct Foreign Investments Law (Doğrudan Yabancı Yatırımlar Kanunu, Law No. 4875) guarantees equal treatment for foreign and domestic investors and explicitly recognises three main routes — a liaison office, a branch, or a separate Turkish subsidiary. Getting this choice right from the start saves time, avoids unnecessary tax exposure, and keeps your liability where you want it.

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Liaison Office: The Low-Commitment Option

A liaison office (irtibat bürosu) is the lightest form of presence a foreign company can have in Turkey. Under Law No. 4875, the Ministry of Industry and Technology is authorised to grant liaison office permits to foreign companies — but only on the strict condition that the office does not engage in commercial activities in Turkey.

What does that mean in practice? A liaison office can conduct market research, manage communications between Turkey and the parent company, represent the parent at trade fairs and meetings, and coordinate administrative tasks. It cannot sign contracts that generate Turkish-source revenue, issue invoices to Turkish clients, or place orders on behalf of clients. The moment those boundaries are crossed, the office is operating as an unlicensed business.

Permits are time-limited — typically issued for three years and renewable upon application. The office is fully funded by transfers from abroad and pays no Turkish corporate tax because it earns none. Liaison offices must still maintain books and file annual activity reports with the Ministry.

Best for: Companies testing the Turkish market before committing, regional coordination hubs, or representative offices that only need to gather market intelligence and build relationships.

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Branch Office: Commercial Presence Without a New Entity

A branch (şube) is not a separate legal entity — it is a registered extension of the parent company, incorporated in Turkey under the Turkish Commercial Code (Türk Ticaret Kanunu). That legal distinction carries significant practical weight.

Because the branch and the parent are the same legal entity, the parent company bears full, direct liability for every debt and obligation the Turkish branch incurs. There is no corporate veil protecting the parent's assets. In exchange, the branch can conduct any commercial activity — signing contracts, employing staff, issuing invoices — just as a Turkish company can.

Tax-wise, a branch is treated as a non-resident institution (dar mükellef kurum) in Turkey: it is taxed only on the income it earns here, not on the parent's worldwide profits. Profit remittances to the parent may be subject to withholding tax. Setting up a branch requires registering the parent company's constitutional documents at the Turkish Trade Registry — these must be translated into Turkish, notarised, and apostilled. A local authorised representative must also be appointed.

Best for: Companies that want full commercial operations in Turkey without creating a new legal entity, and whose parent is willing to carry direct liability for Turkish activities.

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Turkish Subsidiary: A Separate Local Entity

A Turkish subsidiary is a fully independent legal entity incorporated under Turkish law — usually a limited liability company (limited şirket, Ltd. Şti.) or a joint-stock company (anonim şirket, A.Ş.). The foreign parent holds shares in it, but the subsidiary has its own legal personality: it can own property, enter contracts, and take legal action in its own name.

The key advantage is limited liability. In most circumstances, the parent's financial exposure is capped at the amount it invested as share capital. A limited şirket requires at least one shareholder and a minimum capital of 10,000 TL under the Turkish Commercial Code — it is flexible, fast to establish, and well-suited to small and medium-scale operations. An anonim şirket requires a minimum capital of 50,000 TL and a more formal governance structure; it is the standard vehicle for larger operations, regulated sectors such as banking or insurance, and situations where shares may eventually be offered publicly.

Unlike a branch, a subsidiary is taxed as a resident institution (tam mükellef kurum) on its worldwide income — though bilateral tax treaties between Turkey and many countries provide relief from double taxation.

For more on the specifics of forming a Turkish company as a foreign investor, see our guide to foreign investor company formation in Turkey.

Best for: Most foreign companies planning meaningful Turkish operations — retail, manufacturing, services, real estate holding, or any regulated activity.

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How to Choose: Three Deciding Questions

The right structure depends on three practical questions.

Will you generate revenue in Turkey? If yes, a liaison office is off the table — commercial activity is explicitly prohibited for it. You need either a branch or a subsidiary.

How much parent-level liability can you absorb? A branch exposes the parent directly and completely. A subsidiary limits exposure to the invested capital. For companies where a Turkish operation gone wrong could create group-level risk, a subsidiary is usually the safer choice.

How committed are you to Turkey long-term? A liaison office is quick to open and relatively easy to close. A branch is more involved to wind down but leaner than a full subsidiary. A subsidiary is the full long-term vehicle — more formalities at the start, but more operational flexibility once running.

For guidance on protecting minority shareholder interests once you have a Turkish subsidiary, our article on minority shareholder rights in Turkish LLCs is worth reading alongside this one.

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A New Option in 2026: The Qualified Service Centre

Law No. 4875 was amended in June 2026 to introduce a new entity type: the Nitelikli Hizmet Merkezi (Qualified Service Centre). It is designed for multinational groups that want to centralise service functions — finance, legal coordination, HR, R&D, marketing — for their global operations from a Turkish base. To qualify, the centre must serve affiliated entities in at least three countries and earn at least 80% of its revenue from related non-Turkish companies. Implementation details and any associated tax incentives are being finalised by the Ministry of Industry and Technology. If your group is considering a shared-services model in Turkey, this framework deserves close attention.

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Frequently Asked Questions

Q: Can a liaison office sign a contract with a Turkish client?

No. Law No. 4875 explicitly prohibits commercial activity for liaison offices. Signing any revenue-generating contract with a Turkish party would breach the permit conditions. The office would first need to be converted into a branch or a subsidiary.

Q: If my branch is sued in Turkey, can the judgment reach my parent company's assets?

Yes, in principle. Because a branch and its parent are the same legal entity, a judgment against the Turkish branch can, subject to international enforcement rules, be enforced against the parent's assets globally. This is the most important liability difference between a branch and a subsidiary.

Q: Can a 100% foreign-owned Turkish subsidiary own land?

Yes. A Turkish legal entity — even one wholly owned by foreign nationals — is treated as a Turkish entity for real property purposes. General restrictions on foreign individuals buying property do not apply directly to Turkish companies. Sector-specific restrictions (military zones, agricultural land limits) may still apply, but at the entity level.

Q: How long does it take to open a branch or subsidiary?

A Turkish limited şirket can usually be incorporated in one to two weeks once all documents are in order. Branch registration follows a similar timeline after the apostilled and translated parent-company documents are ready. A liaison office permit from the Ministry may take a few weeks longer.

Q: Can I hire foreign employees in a branch or subsidiary?

Yes. Turkish labour law applies to all employment in Turkey regardless of nationality. Foreign employees need a work permit issued by the Ministry of Labour — this applies equally to staff at branches, subsidiaries, and liaison offices under Law No. 4875.

How Mona Hukuk Can Help

The choice between a liaison office, branch, and subsidiary is rarely just a legal question — it depends on your business model, tax position, long-term plans, and risk tolerance. Our firm advises foreign investors and companies across the full range of market-entry decisions, from structure selection through Trade Registry registration, permit applications, and ongoing compliance in Antalya and across Turkey. If you are considering dispute resolution clauses in your operational contracts, our overview of arbitration in Turkey (ICC vs ISTAC) is a useful starting point.

Contact us at contact@monahukuk.com or call +90 (242) 606 14 32 to schedule a consultation in Antalya.