Company Formation in Turkey
Service Name
Start
Pro
Elite
Company Name Check and Reservation
Company Formation including Government Fees
Company Secretarial Services for the First Year
Incorporation Documents Package
Registered Office Address for 1 Year
Corporate Bank Account Opening
–
Assistance with VAT Number Registration
–
–
Total Cost
€3250
€4750
€5250
Company Formation in Turkey: A Strategic Guide for Business in a Growing Market
Turkey, with its large and dynamic domestic market, strategic location bridging Europe and Asia, and a young, skilled workforce, has become a compelling destination for company formation. As a G20 economy with a developing infrastructure and business-friendly policies, Turkey offers a unique opportunity for international entrepreneurs and corporations seeking to expand their global reach. This comprehensive guide will walk you through the entire process, from understanding the core benefits to navigating post-incorporation compliance. Mastering the Turkish company registration process is a crucial step towards building a successful and tax-efficient business in this vibrant market.
Why Choose Turkey for Company Formation?
The most common and popular business structure in Turkey is the Limited Liability Company (Limited Şirket, Ltd. Şti.), which is the equivalent of a UK LTD. It offers a range of significant advantages that attract a wide variety of businesses.
Favorable Tax Regime: Turkey offers a competitive corporate income tax rate of 20%. Additionally, it has an extensive network of double tax treaties with over 90 countries, which helps to prevent double taxation on international income. Turkey’s free trade agreements and customs union with the EU also provide significant benefits for businesses engaged in trade.
Strategic Location: Located at the crossroads of major international trade routes, Turkey provides easy access to both European and Middle Eastern markets. This geographical advantage makes it an ideal hub for logistics, manufacturing, and trade.
Large Domestic Market and Workforce: With a population of over 85 million, Turkey boasts one of the largest domestic markets in the region. The workforce is young, dynamic, and highly educated, particularly in engineering, technology, and manufacturing sectors.
Straightforward and Modern Process: The company formation process is highly streamlined and managed by the Turkish Trade Registry. The procedures are modern, and a significant portion of the process can be completed digitally, making it accessible for foreign investors.
Limited Liability Protection: The Ltd. Şti. structure provides shareholders with limited liability, protecting their personal assets from the company’s debts and liabilities.
Pre-Incorporation Checklist: What You Need to Know
Before you initiate the company registration process, several key decisions and preparations are essential.
Choosing a Company Name: The company name must be unique and approved by the Turkish Trade Registry Office. The name must also indicate the legal form, such as “Limited Şirket.” A preliminary search can be performed online.
Appointing Directors and Shareholders: A Turkish Ltd. Şti. requires at least one shareholder and one director. There are no residency requirements for shareholders. However, at least one director must have a Turkish tax number to sign documents.
Defining the Registered Office Address: Your company must have a registered office address in Turkey. This is the official location for receiving legal documents and correspondence. Many companies, especially non-residents, use the services of a professional company formation agent to provide this address.
Determining the Share Capital: The minimum share capital for a Limited Şirket is TRY 10,000 (Turkish Lira). There is no requirement to fully pay up the capital at the time of registration; at least one-quarter of the capital must be paid up within two years.
Preparing Legal Documents: The primary legal document is the Articles of Association. This document must be prepared and signed by the founders.
The Company Formation Process: A Step-by-Step Guide
The Turkish company incorporation process is managed by the Trade Registry Office. The most efficient method is to work with a professional legal firm or corporate service provider.
Preparation of Articles of Association: The founders must draft the company’s Articles of Association and have it notarized.
Obtain Tax ID Numbers: All shareholders and directors must obtain a Turkish Tax Identification Number (TIN) from the tax office.
Deposit Share Capital: The minimum share capital must be deposited into a temporary bank account opened in the company’s name.
Submit the Application: The application, along with all notarized documents and proof of share capital payment, is submitted to the Trade Registry Office.
Awaiting Approval: The Trade Registry reviews the application. The processing time can vary but is generally efficient.
Receive the Certificate of Incorporation: Upon approval, the Trade Registry issues a Certificate of Incorporation, which is the official legal document that proves your company’s existence.
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Post-Incorporation Compliance and Obligations
The responsibilities of a Turkish Ltd. Şti. continue after formation. Failure to meet these obligations can result in fines and legal action.
Tax Registration and Filings: The company must register for Corporate Income Tax and obtain a VAT number. It must also submit monthly or quarterly VAT returns and an annual corporate income tax return to the Turkish Tax Office.
Social Security Registration: If the company has employees, it must register with the Social Security Institution and pay social security contributions.
Annual General Meeting: An annual general meeting of shareholders must be held to approve the company’s financial statements and reports.
Maintenance of Statutory Registers: You must maintain a set of internal registers, including a register of directors, shareholders, and beneficial owners.
Practical Considerations for International Founders
For those based outside Turkey, setting up a company is straightforward but requires careful planning.
Company Tax Residency: While a company incorporated in Turkey is usually a Turkish tax resident, its tax residency can be challenged. The deciding factor is often the “central management and control” test. If all key business decisions and management are conducted by directors residing in another country, the company may be deemed a tax resident of that country as well. This can lead to complex international tax issues, making professional advice essential.
Banking and Fintech Solutions: Opening a business bank account for a newly formed Turkish company can be challenging, particularly if the beneficial owners and directors are non-residents. Banks have strict KYC (Know Your Customer) and due diligence procedures. However, the rise of Fintech and digital banking solutions has created new opportunities. Many of these platforms offer remote onboarding, streamlined processes, and can provide business accounts with a EUR IBAN, making them a viable and often more efficient alternative to traditional Turkish banks.
The Importance of a Professional: While the process is streamlined, engaging a reputable corporate service provider or law firm is crucial to ensure a smooth formation process and ongoing compliance, especially for foreign founders who may not be familiar with the local legal framework.
Conclusion
Company formation in Turkey offers a highly strategic and cost-effective pathway for international entrepreneurs and businesses. The combination of a favorable tax regime, a large domestic market, and a highly skilled workforce provides an exceptional platform for global operations. By understanding the straightforward incorporation process and committing to ongoing compliance, you can successfully leverage the power and credibility of a Turkish Ltd. Şti. to achieve your business goals.
FAQ
The most common structure is the Limited Liability Company (Ltd. Şti.). It's widely used due to its flexibility, limited liability, and alignment with international business standards.
No, there are no residency requirements for shareholders or directors. However, to handle legal and tax matters, at least one director must have a Turkish tax number.
The minimum share capital for a Limited Şirket is TRY 10,000 (Turkish Lira). You don't need to pay the full amount upfront; at least one-quarter of the capital must be paid within two years of formation.
The process, managed by the Trade Registry Office, is generally efficient. With all documents prepared, it can often be completed in as little as 3-5 business days.
The standard corporate income tax rate is 20%. Turkey also has an extensive network of double tax treaties to prevent double taxation on international income.
Yes, Turkey's Customs Union with the EU provides significant benefits. It allows for the free movement of goods without customs duties or quotas on most industrial products, which simplifies trade.
Yes, a local bank account is mandatory. You must open a temporary bank account to deposit the minimum share capital during the registration process.
You must file monthly or quarterly VAT returns and an annual corporate income tax return with the Turkish Tax Office. You are also required to hold an annual general meeting of shareholders to approve financial statements.
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