How to Start a Business in Turkey as a Foreigner

Turkey continues to rank among the most attractive jurisdictions for international business. Its strategic location bridging Europe and Asia, advanced infrastructure, access to over 1.5 billion consumers through free trade agreements, and a favorable legal environment for foreign investors all make the Turkish market particularly appealing.

However, starting and running a business in any foreign jurisdiction involves a range of legal complexities — and failing to understand them can lead to serious mistakes and financial losses.

In this article, prepared by the experts at Tuncay & Barcın Law Office, we take a detailed look at all the key aspects — from choosing the optimal legal structure to the process of setting up a company in Turkey.

Where to Start: Choosing the Right Legal Structure

Selecting the right legal form for your company in Turkey is a fundamental decision that affects taxation, administrative requirements, investment opportunities, and the personal liability of founders.
Turkish legislation grants foreign investors the same rights as local entrepreneurs, as established by Law No. 4875 on Direct Foreign Investments.

Types of Business Entities

Limited Liability Company (Limited Şirket / LTD / LLC)

The most common form among foreign entrepreneurs, small businesses, startups, family enterprises, trade and service companies, IT firms, and agencies. According to the Istanbul Chamber of Commerce, over 70% of new companies are registered in this form.
The minimum share capital for an LLC (Limited Şirket) is 50,000 TRY.

Joint Stock Company (Anonim Şirket / AS / JSC)

Designed for medium and large enterprises, manufacturers, and companies planning to attract significant investment or list on the stock exchange.
The minimum share capital for a JSC is 250,000 TRY.

Branch Office (Şube)

A structural unit of a foreign company conducting commercial activity in Turkey on behalf of the parent organization. Suitable for companies that want to test the Turkish market without establishing a separate legal entity or for temporary project work.

Representative Office (Temsilcilik)

A non-commercial presence that allows marketing, research, and preparatory activities. A good option for studying the market, coordinating distributors, or representing a foreign company’s interests without conducting transactions.

Sole Proprietorship (Gerçek Kişi Ticari İşletmesi)

Under Turkish law, foreign citizens can register as sole proprietors only if they hold a residence permit (ikamet) or Turkish citizenship. This format is suitable for freelancers, consultants, craftsmen, and professionals engaged in small-scale individual activity.

Other possible legal forms include partnerships, limited partnerships, and cooperatives.

Advantages and Disadvantages for Foreigners

Limited Liability Company

Advantages:

• Protection of founders’ personal assets.
• 100% foreign ownership allowed.
• Simple management structure.
• Suitable for most types of business.
• Relatively low administrative costs.

Disadvantages:

• Limited opportunities to attract external investment.
• Shares cannot be publicly traded.
• May be viewed as less prestigious when dealing with large corporations.

Joint Stock Company

Advantages:

• High credibility with banks and large partners.
• Ability to raise capital through share offerings.
• Potential for stock market listing.
• Flexible capital structure.

Disadvantages:

• Complex management (board of directors, general meetings).
• Mandatory external audit for many companies.
• Higher administrative costs.
• Stricter corporate governance requirements.

Branch Office

Advantages:

• No need to create a separate legal entity.
• Reputation benefits from the parent company.
• Centralized management simplifies decision-making.
• No minimum capital requirement.

Disadvantages:

• The parent company bears full liability for branch obligations.
• Financial reports of the parent company must be provided.
• More complex closure process.
• Potential tax risks for the parent company.

Representative Office

Advantages:

• Low initial costs.
• Simple structure.
• Ability to explore the market without commercial risk.

Disadvantages:

• No commercial activity permitted.
• Limited term of operation.
• All expenses borne by the parent company.

Minimum Requirements

Steps to Register a Company in Turkey

The company registration process in Turkey is standardized and largely digitalized thanks to the MERSIS system (Merkezi Sicil Kayıt Sistemi — Central Registration System). With proper preparation, a company can be opened within 7–14 business days.

Step 1: Prepare Founders’ and Directors’ Documents

For individuals (founders and directors):

• Valid passport (at least 6 months).
• Notarized copy of passport with apostille (if notarized outside Turkey).
• Certificate of no criminal record from the country of citizenship and residence (if different), translated into Turkish, notarized, and apostilled
• Proof of address.
• Two biometric photos.

For legal entities (if the founder is a company):

• Company charter.
• Certificate of incorporation.
• Trade registry extract (not older than 3 months).
• Financial statements for the last year (balance sheet and profit/loss).
• Resolution of the board or shareholders to establish a company in Turkey.
• Power of attorney for the authorized representative in Turkey.

Important:All foreign documents must be translated into Turkish by a sworn translator, notarized, and apostilled.

Step 2: Obtain a Tax Number (Vergi Numarası)

All individual founders must obtain a Turkish tax number before registration. This can be done at any tax office (Vergi Dairesi) with a passport and completed application form.

Step 3: Prepare the Articles of Association

The Ana Sözleşme defines the company’s Turkish name, legal address, objectives, activities, share capital, ownership structure, management, decision-making procedures, and profit distribution rules. It must be drafted in Turkish.

Step 4: Establish a Legal Address

A company must have a valid registered address in Turkey from the moment of incorporation. Options include:

• Renting an office.
• Using a virtual office (a popular choice for startups).
• Business centers (providing registered address services).
• A home address (if the founder owns the property or has the owner’s consent).

Registration via MERSIS and the Trade Registry

MERSIS is a centralized electronic system introduced in 2012 to streamline company registration.
To register, create an account on https://mersis.ticaret.gov.tr/. Access is available via e-Devlet; if you don’t have it, credentials can be obtained from the local Chamber of Commerce.

1. Check name availability — the system verifies whether the proposed company name is free. Reservation is valid for 15 days.

2. Fill out the online application — enter:

• Founder information (name, tax number, address, ownership share).
• Director details and authorities.
• Company address.
• Business activities (NACE codes).
• Share capital amount.
• Bank details for capital deposit.

After uploading scanned documents, the system assigns a unique MERSIS number (16 digits).

Next, finalize registration at the local Trade Registry Office (Ticaret Sicil Müdürlüğü):

• Schedule an appointment online or by phone.
• The founder (or authorized representative) appears in person with original documents. The Articles and other documents are signed before a notary (often located inside the Chamber).
• Remote registration via power of attorney is also possible.

Registration costs include:

• Chamber registration fee: approx. 150–300 TRY
• Publication in the Trade Gazette: 300–500 TRY
• Stamp duty: about 505 TRY
• Antimonopoly deposit: 0.04% of share capital
• Accounting book certification: approx. 150 TRY

Upon completion, the company receives:

• Certificate of incorporation (Ticaret Sicil Gazetesi).
• Chamber of Commerce membership certificate.
• Certified Articles of Association.
• Trade registry extract.

The Trade Registry then notifies the Tax Office, which sends an inspector to verify the company’s address.
The Social Security Institution is also informed — all companies in Turkey must register with it and obtain an employer insurance number.

Required Insurance for Businesses

• Employee social insurance (SGK) — mandatory for all employers.
• Professional liability insurance — for doctors, architects, lawyers, accountants, and tour operators.
• Work accident insurance — for all employers.
• Motor vehicle liability insurance — for all corporate vehicles.

Opening a Bank Account

Having a bank account is a mandatory requirement for doing business in Turkey. It is needed to deposit share capital, conduct financial transactions, pay salaries, and fulfill tax obligations.

When opening a bank account, the company director or an authorized representative must be present with the following documents:

• Certificate of company registration
• Articles of Association
• Extract from the Trade Registry
• Resolution appointing the director and authorized signatories
• Company tax number
• Lease agreement for the registered address
• Passports of authorized persons (director, accountant)
• Signature circulars (Imza Sirküleri) — a notarized document defining who has signing authority for the account

Foreign companies can open accounts with public banks such as Ziraat Bankası, VakıfBank, Halk Bank, private banks such as Garanti BBVA, İş Bankası, Yapı Kredi, Akbank, and international institutions including HSBC Turkey, ING Bank, QNB Finansbank.

After the account is opened, at least 25% of the share capital must be deposited. The bank issues a confirmation document (Sermaye Yatırım Belgesi), which is submitted to the Chamber of Commerce.

Important: Foreigners may establish a company and obtain a work permit if the share capital is at least 500,000 TRY, and this amount must be fully paid in. Only founders holding at least 20% ownership in the company are eligible to receive a work permit.

Apart from starting a new business, foreigners can also purchase an existing company in Turkey — a popular and profitable option for investors who want to enter the market quickly. The experts at Tuncay & Barcın Law Office can advise on how to acquire an operating business in the Republic of Turkey.

Permits, Licenses, and Regulations

Not all business activities in Turkey can be launched immediately after company registration. Licenses are mandatory in industries related to public health, safety, finance, education, and regulated goods.

Examples of licensed activities include:

• Financial services (banking, insurance, investment) — licenses from the BRSA, Ministry of Finance, or Capital Markets Board
• Education (schools, language centers) — permits from the Ministry of Education
• Healthcare (clinics, pharmacies) — licenses from the Ministry of Health
• Tourism and hospitality — certification by the Ministry of Culture and Tourism, classification from 1 to 5 stars
• Large-scale retail (stores over 2,000 m²) — environmental assessment, construction permit, and approval from the Ministry of Economy

The registered office address must be real and accessible for inspection by tax and other government authorities. A valid lease or ownership document and a company nameplate are required. Address changes must be reported to the Chamber of Commerce and the Tax Office within 15 days.
A virtual office is acceptable (if mail can be received there), as is a home address (with the owner’s consent and if the activity complies with residential use).

Taxation in Turkey

Turkey’s tax system ranks among the world’s top 10 most investor-friendly. Foreign investors are subject to the same rules as local companies, reflecting the principle of equality established by law.

Main types of business taxes:

1. Corporate Tax (Kurumlar Vergisi) — paid by all legal entities: LLCs, JSCs, and branches of foreign companies.

• Standard rate: 25% of taxable profit.
• Higher rate: 30% for banks, insurance companies, leasing firms, investment funds, and other financial institutions.

2. Value Added Tax (VAT / KDV) — applies to most goods and services in Turkey.

• Standard rate: 20% (as of 2024).
• Reduced or exempt rates may apply to specific sectors.

3. Payroll Tax and Social Contributions —

• Income Tax (Gelir Vergisi) on employee wages: progressive from 15% to 40%, depending on salary level.
• A tax-free minimum applies and is reviewed annually.
• Social Security Contributions (SGK) — employer’s total contribution is around 22.5% of gross salary.

Residency, Work, and Visa Matters

Understanding the visa regime and work permit requirements is crucial for foreign entrepreneurs and employees.

Residence Permit via Business

Foreign founders and directors of Turkish companies are eligible for a short-term residence permit valid for one year, with the option to renew. After eight years of continuous residence, holders may apply for permanent residence (ikamet).
However, residence obtained through business ownership does not automatically grant the right to work for another employer. A separate work permit is required for employment.

Employment Rules for Foreigners

Foreign nationals may work in Turkey only with a work permit (Çalışma İzni), which functions similarly to a residence permit.
Foreign employees may not exceed 10% of a company’s workforce, except for specific exempt categories.
Both the employer and the foreign employee are involved in the application process.

The “5 Turkish employees rule,” which once required hiring five Turkish nationals per foreign worker, was relaxed in 2024 — exemptions now apply to highly qualified specialists, spouses of Turkish citizens, and certain other categories.

Types of Work Permits

• Fixed-term Work Permit (Süreli Çalışma İzni) — issued for up to one year, tied to a specific employer and position; must be renewed if the job changes.
• Permanent Work Permit (Süresiz Çalışma İzni) — available after eight years of legal employment in Turkey; not linked to any specific employer.
• Independent Work Permit (Bağımsız Çalışma İzni) — for freelancers and self-employed professionals; requires residence permit and proof of financial independence.
• Work Permit for Refugees and Individuals under International Protection.

Incentives and Benefits for Foreign Entrepreneurs

Turkey applies a differentiated investment support system based on three criteria: project location, industry, and investment size.
The country is divided into six regions by socioeconomic development — from the most developed (Istanbul, Ankara, Izmir) to less developed eastern provinces. The lower the development level of a region, the greater the incentives offered.

The general incentive system is available to all investors, regardless of nationality, and includes:

1. Tax incentives: reduced corporate tax rates or exemptions for a defined period, depending on the region and industry.

2. Customs and tax privileges: full exemption from customs duties on imported equipment for investment projects.

3. Social contribution support: the state covers 30–80% of employer social security payments for new hires, for 2 to 10 years.

4. Financial support: subsidized interest rates on loans (up to 5%), and preferential allocation of land plots in industrial zones.

5. Free Economic Zones (FEZ): Turkey’s 19 FEZs offer maximum advantages for export-oriented businesses:

• 100% exemption from corporate tax on export income.
• Full exemption from VAT and customs duties on imports.
• Simplified currency regulation and accelerated registration.

Note: Sales of goods from FEZs to Turkey’s domestic market are taxed under standard rules.

6. Support for small businesses: grants for startups, equipment subsidies, employee training, and export incentives.

7. Citizenship by Investment: Turkey offers citizenship to those who meet one of the following conditions:

• Purchase of real estate worth USD 400,000 or more
• Bank deposit of USD 500,000 or more
• Capital investment of USD 500,000 or more
• Creation of 50 or more jobs

Starting and running a business in Turkey gives foreign entrepreneurs real access to a fast-growing market with a favorable investment climate.

Tuncay & Barcın Law Office specializes in providing comprehensive legal support for foreign investors in Turkey. We offer:

• Consultation on choosing the optimal business structure
• Full assistance with company registration
• Help obtaining licenses and permits
• Tax planning and optimization
• Support with residence and work permits
• Ongoing legal services for your business

Contact us for professional advice and a tailored strategy for your business in Turkey!