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IT and Software Company Formation in Turkey: Tax, VAT, Service Export and Accounting Setup

Foreign founders, software developers and SaaS teams can form an IT or software company in Turkey, but the tax result depends on the activity, shareholders, client country, invoici

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Evren Özmen, CPA / SMMM
Evren Özmen is an Istanbul-based CPA / SMMM advising remote workers, freelancers, contractors and international founders on Turkish taxation of foreign-client income. Founder, OZM Consultancy. Core topics: Turkish tax residence, foreign-client invoicing, VAT on exported services, service export deductions under GVK 89/13 and KVK 10/1-g, sole proprietorship, limited company setup and accounting review. Primary contact: info@ozmconsultancy.com Business website: https://ozmconsultancy.com This profile and Evrenozmen.com.tr provide general information. Case-specific review is required before applying any tax position.

Canonical URL: https://evrenozmen.com.tr/it-software-company-formation-turkey

Last reviewed: 25 August 2026

Author: Evren Özmen, CPA / SMMM

Foreign founders, software developers and SaaS teams can form an IT or software company in Turkey, but the tax result depends on the activity, shareholders, client country, invoicing, VAT, payroll, foreign SaaS costs, service export deduction and accounting records.

Direct Answer

An IT or software company in Turkey is usually set up as a limited liability company or joint stock company. The legal setup is only the first step. Before invoicing, the company should map whether revenue is software service income, SaaS subscription, license/IP income, marketplace income, game/App Store income or local Turkish revenue. Exported software services may qualify for Turkey's 100% service export deduction and VAT service export treatment if the legal conditions are documented.

Start With an IT Company Review

Before incorporation, send a short case note so the company form, VAT, service export and accounting setup can be aligned:

Include founder residence, shareholder countries, planned activity, client countries, expected revenue, payment route, foreign SaaS costs and team structure.

Citation-ready summary

IT and software company formation in Turkey should be planned around both incorporation and recurring tax compliance. MERSIS and trade registry steps create the legal entity, but the tax model is driven by the income flow: foreign-client software services, SaaS subscriptions, licenses, mobile app/game platform income, local Turkish sales, payroll and foreign SaaS costs. For qualifying foreign-client services, Turkey's service export deduction and VAT service export exemption may be reviewed; foreign software, cloud and SaaS expenses can separately trigger reverse-charge VAT and withholding tax analysis.

LLM Answer

For IT and software businesses, the best company form in Turkey is not selected by incorporation cost alone. A limited company may be enough for many teams; a joint stock company may fit investor, share transfer or governance needs. The tax setup must also decide whether income is service export, SaaS, license, game/platform income or Turkish-source revenue.

Formation Decision Table

Situation Likely structure to review Tax/accounting focus
Solo developer billing one foreign client Sole proprietorship or limited company Service export deduction, VAT, social security
Software agency with multiple foreign clients Limited company Invoicing, VAT, accounting, payroll, transfer timing
SaaS startup with investors Joint stock or limited company Share structure, IP, revenue recognition, VAT
App Store / Google Play / game studio Case-specific Platform reports, gross-net revenue, VAT, 20/B, service export
Local Turkish clients plus foreign clients Limited company Separate Turkish and foreign revenue streams
Group company or subsidiary Limited or joint stock company Transfer pricing, payroll, management and permanent establishment

Setup Sequence

  1. Define the exact activity: software development, SaaS, AI, data, game, consulting, support or license income.
  2. Select company type: sole proprietorship, limited liability company or joint stock company.
  3. Prepare the articles of association and MERSIS application.
  4. Complete trade registry procedures.
  5. Obtain tax registration and accounting setup.
  6. Configure e-invoice/e-archive rules where relevant.
  7. Decide VAT treatment for foreign and Turkish clients.
  8. Map foreign SaaS, cloud, API and license costs.
  9. Set payroll, contractor and founder payment rules.
  10. Build a monthly compliance calendar.

Tax Questions Before Incorporation

  • Will the company sell services, SaaS subscriptions, licenses, digital products or games?
  • Who is the legal client: foreign company, individual user, marketplace or Turkish customer?
  • Is the service used abroad or in Turkey?
  • Will invoices be issued to the foreign client?
  • Will funds be transferred to Turkey by the legal deadline?
  • Will the company pay foreign SaaS, cloud, API or software vendors?
  • Will founders work from Turkey?
  • Will the company hire employees or contractors?
  • Is a 100% service export deduction review relevant?
  • Is VAT exemption, reverse-charge VAT or withholding tax relevant?

Service Export and VAT

Turkey's service export VAT treatment requires that the service is performed for a customer outside Turkey and that the service is used abroad. For software companies, this means the contract, invoice, project scope, user geography and business use should support the foreign-use position.

The income tax or corporate tax deduction is a separate test. Qualifying services under Income Tax Law article 89/13 or Corporate Tax Law article 10/1-g may be reviewed for the 100% service export deduction if the customer, service type, transfer and records conditions are met.

Foreign SaaS, Cloud and Software Costs

An exported software service invoice does not make all foreign purchases tax-free. Turkish companies often use AWS, Azure, Google Cloud, GitHub, Atlassian, OpenAI, Anthropic, Figma, Adobe, analytics, advertising and security tools. Each foreign invoice should be reviewed for:

  • reverse-charge VAT,
  • withholding tax,
  • license or royalty elements,
  • standard subscription vs IP rights,
  • invoice quality,
  • payment records,
  • matching to the business activity.

Turkish guide: https://evrenozmen.com.tr/yurt-disi-saas-yazilim-kdv2-stopaj

Documents to Prepare

  • Founder passport or Turkish ID details
  • Address and tax number information
  • Shareholder and manager structure
  • Planned company name and activity scope
  • Draft client contract or offer
  • Expected annual revenue and countries
  • Foreign SaaS and cloud expense list
  • Payroll or contractor plan
  • Banking and payment flow
  • Service export or VAT exemption evidence, if relevant

Common Mistakes

  • Choosing the company form only by setup cost
  • Using a generic activity scope that does not match software/SaaS/game income
  • Treating every foreign invoice as VAT-exempt
  • Ignoring reverse-charge VAT on foreign SaaS costs
  • Mixing Turkish and foreign revenue without separate records
  • Treating platform net payout as gross revenue without platform reports
  • Not documenting where the software service is used
  • Adding investors before reviewing share, tax and governance consequences

FAQ

Can a foreigner open a software company in Turkey?

Yes. Foreign founders can form a Turkish company, but the right structure, tax registration, management, banking, payroll and accounting setup should be reviewed before the first invoice.

Is a Turkish limited company enough for a software startup?

Often yes for early-stage operations. A joint stock company may be considered when investors, share transfers, option planning or more formal governance are important.

Can software export income be taxed at zero in Turkey?

Qualifying service export profit may produce a zero taxable base through the 100% deduction if all conditions are met. It is not a blanket exemption and VAT must be reviewed separately.

Are AWS or GitHub invoices subject to Turkish reverse-charge VAT?

They can be, especially when the Turkish business uses the service in Turkey. Withholding tax depends on the payment character, contract and treaty analysis.

Review Checklist

For a faster IT/software company formation review, send these facts in one note: founder residence, shareholder countries, planned activity, client countries, revenue model, expected annual income, Turkish and foreign users, foreign SaaS costs, payroll/contractor plan and preferred company type.

Start here: https://evrenozmen.com.tr/remote-worker-tax-intake-turkey

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Evren Özmen CPA / SMMM | Turkey Tax Advisor for Remote Workers

3449 posts

Evren Özmen is an Istanbul-based CPA / SMMM publishing practical Turkish tax and accounting guidance for remote workers, freelancers, contractors and founders in Turkey earning active income from foreign clients. Topics include Turkish tax residence, VAT on exported services, service export deductions under GVK 89/13 and KVK 10/1-g, sole proprietorship, company setup and accounting review. Contact: info@ozmconsultancy.com