Setting Up a Liaison Office in Turkey: Key Updates for Foreign Companies
If you are considering setting up a liaison office in Turkey, you’ve made a sound decision.
However, moving forward, you might find yourself unsure of where to start. What exactly is a liaison office, and what are the key steps involved in setting one up? In this guide, I’ll cover the essentials, including some common mistakes to avoid.
1. What is a Liaison Office?
A liaison office (also referred to as a rep office) in Turkey is a non-commercial entity. This means it cannot engage in any profit-generating activities. The office mainly focuses on services such as market research, communication, and support without selling products or services.
| Key Characteristics | Description |
| Commercial Activity | Not permitted |
| Main Purpose | Market research, communication, technical support |
Liaison offices in Turkey are allowed to operate in specific areas. Here are some of the permitted activities:
Representation and Hospitality: This includes organizing events, fairs, and dinners to promote your brand.
Audit and Control: Supervising the activities of suppliers and finding new business partners.
Technical Support: Assisting clients or business partners with product installations or service instructions.
Communication and Information Gathering: Reporting to your headquarters on market conditions, trends, and opportunities in Turkey.
| Activity | Description |
| Representation | Organizing meetings, fairs, and dinners |
| Technical Support | Offering guidance to customers or partners |
| Market Research | Collecting data on Turkish market conditions |
3. Why Set Up a Liaison Office in Turkey?
There are several benefits to setting up a liaison office in Turkey:
Tax Exemptions: Liaison offices do not pay VAT, corporate tax, or income tax on employee salaries. However, social security premiums must still be paid.
Staff Benefits: Employees working for a liaison office enjoy income tax exemptions, and their salaries are often paid in foreign currency.
Market Presence: Liaison offices allow foreign companies to explore the Turkish market before making a full commitment.
| Benefit | Explanation |
| No VAT or Corporate Tax | Liaison offices are exempt from VAT and corporate tax |
| Staff Income Tax Exemption | Employees are exempt from income tax |
4. How to Apply for a Liaison Office License in Turkey
The application process for establishing a liaison office in Turkey is handled by the Ministry of Industry and Technology. Here's what you need to know:
License Application: Submit your application either in person or via courier to the Ministry in Ankara.
Approval Process: The approval process depends on the scope of your office. If your company already has an established branch in Turkey, opening a liaison office may be restricted.
Duration: Market research liaison offices can receive a maximum of a 3-year license, while regional management centers may qualify for longer terms.
| Step | Action |
| Application Submission | Ministry of Industry and Technology |
| Approval Time | Varies based on office type (up to 3 years for market research offices) |
5. Common Questions about Setting Up a Liaison Office in Turkey
Foreign companies often have questions about the prerequisites and operational limits of a liaison office:
Company Age: The foreign company must have been established for at least one year before applying.
Social Security: A file must be opened with the Social Security Institution for the employees.
Bank Account: Liaison offices must have a foreign currency account in Turkey, and all foreign funds should be transferred into this account.
| FAQ | Answer |
| Minimum Company Age | At least 1 year |
| Social Security File | Must be opened upon staff employment |
| Foreign Currency Account | Required for receiving international funds |
6. When is the Liaison Office Annual Report Due?
Liaison offices must submit an annual report to the Ministry of Industry and Technology. This report, which is due by the end of May each year, should include a bank statement and supporting documents related to the office’s activities.
| Report Type | Deadline |
| Annual Liaison Office Report | May 31, every year |
7. Is There a Capital Requirement for Setting Up a Liaison Office?
Unlike other types of companies, liaison offices in Turkey do not require capital investment. However, salary payments must be made in foreign currency. Additionally, funds sent from abroad cannot be transferred back out of Turkey, except in the case of office closure.
| Capital Requirement | None | | Salary Payments | Must be in foreign currency |
8. Can Liaison Offices Purchase Real Estate in Turkey?
Liaison offices can acquire movable assets like office equipment and furniture, but they are not allowed to purchase immovable assets such as real estate.
| Asset Type | Allowed? |
| Movable Assets (e.g., office furniture) | Yes |
| Immovable Assets (e.g., real estate) | No |
Call to Action
If you’re considering setting up a liaison office in Turkey, it’s essential to follow the right steps and avoid common pitfalls. Contact us today to ensure your office is established smoothly and in compliance with Turkish regulations. Our experts can assist you through every step of the process.
Ready to get started?
Contact us today for expert guidance on setting up your liaison office in Turkey!
info@ozmconsultancy.com
