Foreign Investor Guide to Company Formation in Turkey

Turkey has become an attractive destination for foreign investors thanks to its geo-strategic location, qualified workforce, and growing domestic market. The number of foreign-capital companies in tourism, real estate, technology, and services sectors — particularly in Antalya — continues to rise. While the company formation process for foreigners in Turkey runs relatively quickly and predictably, choosing the right corporate structure and meeting all compliance obligations from the outset prevents tax, legal, and operational problems down the line. This guide explains the basic steps and key considerations.

General Framework of Foreign Investment

Turkey actively encourages foreign investment. Under the Direct Foreign Investment Law (Law No. 4875), foreign-capital companies receive equal treatment with Turkish companies. Within this framework, foreign investors may:

• Establish 100% foreign-capital companies,
• Become partners in existing Turkish companies,
• Open branches, liaison offices, or representative offices,
• Freely buy and sell company shares.

Additional permissions or restrictions may apply in certain strategic sectors (defence, telecommunications, energy, media).

Company Types

The two company types most preferred by foreign investors in Turkish law are:

Limited Liability Company (LLC)

• Flexible structure — well suited for small and medium-sized enterprises,
• Limited number of partners (between 1 and 50),
• Simpler and lower-cost formation process,
• Relatively low minimum capital requirement,
• Simple management structure.

Joint Stock Company (JSC)

• Scalable structure — suited for large investments and IPO plans,
• Easy share transfer mechanism,
• Board of Directors governance structure,
• Higher minimum capital requirement,
• Registered capital system available.

Branch

A branch is an extension of a foreign company in Turkey. It has no separate legal personality; it is legally one with the parent company. This has significant consequences for tax liability and corporate liability.

Liaison Office

A liaison office cannot conduct commercial activity in Turkey and is limited to support activities such as market research, coordination, and promotion. It is tax-advantageous since it generates no income in Turkey; however, the inability to make commercial sales is its key limitation.

Typical Company Formation Process

Step 1: Determining Company Type and Structure

Based on the investor's objectives, the following are determined at the outset:

• Activity area and business lines,
• Partner structure (foreign/local, natural/legal person),
• Capital amount,
• Management model.

At this stage, obtaining legal and tax advisory together is important for making the right structural decision.

Step 2: Tax Number for Foreign Partners

Foreign natural or legal persons forming or partnering in a Turkish company must obtain a Turkish tax number. The process is fast and can be completed within a day using a passport or foreign company documents.

Step 3: Articles of Association

The company's articles of association are drafted. This document must specify:

• Company name, address, and activity area,
• Capital amount and share distribution,
• Management structure and authorised representatives,
• Profit distribution and other internal arrangements.

Notary certification or consular authentication is required for foreign partners' signatures. For foreign legal-person partners, an apostille and a sworn translation of corporate documents are required.

Step 4: Registration

The articles of association are registered at the Trade Registry Directorate. The registration certificate:

• Establishes the company's legal personality,
• Forms the basis for tax office registration,
• Is required for opening a bank account,
• Is published in the Turkish Trade Registry Gazette.

In Antalya, Trade Registry Directorate processing typically completes within a few days. Electronic application via the e-Registration system is also available.

Step 5: Tax Registration

Upon application to the tax office, the following are established:

• Corporate tax number,
• VAT obligation,
• Withholding tax obligation.

A tax inspector visits the registered address to verify the company's actual place of business.

Step 6: SGK and Employee Records

If the company will employ workers, an SGK employer registration must be opened and employee declarations submitted before work begins.

Step 7: Bank Account and Capital Investment

A bank account is opened in the company's name and the committed capital is deposited into this account. For foreign investment inflows, a Currency Purchase Document (DAB) must be recorded — this is important for future profit transfers abroad and for citizenship applications based on investment.

Tax Obligations

A newly formed company is subject to the following main tax obligations:

Corporate Tax

Paid on company earnings; the rate is determined by prevailing legislation. Reduced rates apply in certain sectors and for qualifying investment types.

VAT (Value Added Tax)

Tax calculated, collected, and offset on goods and services transactions. Monthly VAT declarations are mandatory.

Withholding Tax

Tax deducted from employee salaries, rent payments, freelance fees, and similar items.

Stamp Duty, Income Tax, and Others

Apply to contracts, payroll, and invoices as relevant.

Working with a licensed accountant is mandatory for tax compliance and bookkeeping.

Employee Hiring: Foreign Personnel

A foreign-capital company may hire both Turkish and foreign workers. For foreign employees:

• A work permit application must be filed with the relevant authority,
• Domestic-to-foreign employee ratios prescribed by law must be observed,
• The foreign worker's wages must comply with applicable regulations.

Work permit compliance is a separate regulatory area that requires careful advance planning.

Investment Incentives

In Turkey, an incentive certificate can be obtained for investments in certain sectors, regions, and above certain investment thresholds. Available incentives include:

• Tax reduction,
• Employer-side social security premium support,
• Investment site allocation,
• Interest support,
• Customs duty exemption.

In provinces with strong tourism and agricultural sectors such as Antalya, incentive packages are often configured differently from other regions.

Common Mistakes for Foreign Investors

1. Wrong company type selection — converting to a different structure later is possible but costly,
2. Poorly drafted articles of association — vague partnership terms create disputes,
3. Capital entry without a DAB document — causes problems for profit transfers and citizenship applications,
4. Narrow activity area definition — re-registration is required when new business lines are added,
5. Formation without tax planning — leads to unnecessarily high tax costs.

Post-Formation Compliance

After company formation, the following must be managed on a regular basis:

• Monthly and annual tax returns,
• SGK and employee declarations,
• Annual general meetings (for joint stock companies),
• Trade registry updates,
• KVKK data protection compliance,
• Incentive certificate follow-up where applicable.

Legal Support

MONA HUKUK, based in Antalya, provides integrated advisory services to foreign investors establishing companies in Turkey — from choosing the right structure and completing the trade registry process to tax planning and employment law compliance. Through our network of partner accountants, we coordinate both the legal and financial aspects of your Turkish market entry so that the process is fast, fully compliant, and cost-efficient.

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