Opening a Subsidiary in Turkey

Establishing a subsidiary in Turkey can unlock access to a dynamic market of over 85 million consumers, strategic regional positioning, and various investment incentives. This guide to opening a subsidiary in Turkey will walk you through the key steps, legal requirements, timelines, costs, and post‑registration obligations you need to know before you launch your Turkish arm.

Table of Contents

1. Why Choose Turkey for Your Subsidiary?

2. Legal Structures Available

3. Step‑by‑Step Registration Process

4. Key Documentation Requirements

5. Estimated Timelines & Costs

6. Tax Implications & Incentives

7. Post‑Registration Compliance

8. Common Pitfalls to Avoid

9. Conclusion

Why Choose Turkey for Your Subsidiary?

• Strategic Location: Bridging Europe and Asia, Turkey offers access to EU, Middle East, and Central Asian markets.

• Large Domestic Market: A population of over 85 million with increasing purchasing power.

• Investment Incentives: Sector‑specific tax credits, reduced corporate rates in designated zones, and R&D grants.

• Skilled Workforce: Young, educated labour pool with competitive salary expectations.

• Ease of Doing Business: Streamlined electronic registration via the Central Registry System (MERSİS).

These factors make opening a subsidiary in Turkey an attractive proposition for international investors seeking regional expansion.

Legal Structures Available

When opening a subsidiary in Turkey, you must choose an appropriate legal form. The most common options are:

1. Limited Liability Company (LLC / “Limited Şirket”)

   • Capital Requirement: Minimum TRY 10,000

   • Shareholders: 1–50 real or legal persons

   • Liability: Limited to company assets

2. Joint‑Stock Company (JSC / “Anonim Şirket”)

   • Capital Requirement: Minimum TRY 50,000

   • Shareholders: Minimum 1 (no upper limit)

   • Liability: Limited to company assets

   • Suitable for larger operations and stock issuance

3. Branch Office (“Şube”)

   • No separate legal personality: Dependent on parent company

   • Capital: No minimum, but requires official deposit

   • Simpler setup but exposes parent to liabilities

Choosing the right legal structure depends on your planned scale, governance preferences, and liability considerations.

Step‑by‑Step Registration Process

1. Pre‑Registration Checks

   • Verify trade name availability via the Turkish Trade Registry Gazette.

   • Obtain notarized powers of attorney for any foreign directors.

2. Preparation of Articles of Association

   • Draft in Turkish by a licensed attorney.

   • Specify company scope, capital, shareholder details, and management structure.

3. Notarization & Apostille

   • Notarize founding documents.

   • Apostille or consular legalization for foreign‑executed documents.

4. Apply via MERSİS

   • Register online with the Central Registry System (MERSİS).

   • Submit digital copies of all notarized documents.

5. Trade Registry Registration

   • File with local Trade Registry Office.

   • Publication in the Turkish Trade Registry Gazette and local newspaper.

6. Tax Office & Social Security Registration

   • Obtain Tax Identification Number (TIN).

   • Register for Value‑Added Tax (VAT) and corporate tax.

   • Enrol employees in Social Security Institution (SGK).

7. Opening a Bank Account & Capital Deposit

   • Open a Turkish bank account in the company’s name.

   • Deposit the paid‑in capital requirement.

8. Final Certificates

   • Receive Trade Registry Certificate and Chamber of Commerce registration.

   • Apply for any sector‑specific licenses (e.g., tourism, manufacturing).

Key Documentation Requirements

Estimated Timelines & Costs

Note: Costs vary based on professional fees, translation needs, and capital requirements.

Tax Implications & Incentives

• Corporate Income Tax: Standard rate at 25 %, dropping to 20 % for 2024‑2025 profits.

• VAT: Standard rate of 18 %, with reduced rates (1 %, 8 %) for certain goods/services.

• Withholding Taxes: On dividends (15 %), interest, and royalties unless reduced by DTT.

• Incentive Zones:

  • Organized Industrial Zones: Discounts on land and utilities.

  • Technology Development Zones: 0 % corporate tax for qualifying R&D income.

Tip: Leverage Turkey’s double tax treaties to minimize withholding tax on cross‑border payments.

Post‑Registration Compliance

Once your subsidiary is operational, ensure ongoing compliance with:

• Monthly VAT Returns: Filed by the 26th of the following month.

• Quarterly Corporate Tax Prepayments: Due on 14th of April, July, October, and January.

• Annual Statutory Financial Statements: Audited and filed by end of the fiscal year.

• SGK Declarations: Monthly employee premium reporting.

• Board Minutes & Shareholder Resolutions: Maintain accurate minutes for all corporate actions.

Non‑compliance can lead to penalties, interest, or even suspension of activities.

Common Pitfalls to Avoid

• Incomplete Documentation: Missing apostilles or uncertified translations can delay registration.

• Choosing the Wrong Structure: A branch office exposes the parent company to full liability.

• Underestimating Timelines: Allow buffer for translations, publication, and regulatory review.

• Neglecting Local Regulations: Certain sectors (e.g., food, pharmaceuticals) require additional licensing.

• Overlooking Incentives: Failing to apply for regional or sectoral incentives can increase your effective tax rate.

Conclusion

Opening a subsidiary in Turkey offers significant growth potential but requires careful planning, thorough documentation, and ongoing compliance.

By understanding the legal structures, step‑by‑step registration process, key documents, timelines, costs, and tax implications outlined above, you can streamline your Turkish subsidiary formation and position your business for success in this thriving economy.

You can reach us for opening a subsidiary in Turkey

info@ozmconsultancy.com