Turkey has become an increasingly attractive destination for entrepreneurs and investors, thanks to its strategic location, young workforce, and a business-friendly environment.
Setting up a company in Turkey opens the door to diverse opportunities in local and international markets. However, the process requires careful planning, familiarity with Turkish regulations, and an understanding of the necessary documentation and compliance requirements. This guide will walk you through the essential steps to establish a company in Turkey, offering a roadmap from choosing a business structure to registration and beyond.
Step 1: Decide on the Type of Company
The first step in creating a company in Turkey is choosing the type of legal entity you want to establish. Turkish company law offers various types of business structures, each catering to different operational needs and goals. Here are the most common types:
Limited Liability Company (LLC or Ltd. Şti.)
This is the most common business structure in Turkey. It requires a minimum capital of 10,000 TRY and can be set up by one or more individuals or entities. In an LLC, shareholders’ liability is limited to their capital contribution.
Joint Stock Company (JSC or A.Ş.)
This structure is ideal for larger businesses and companies that may eventually want to go public. A JSC requires a minimum capital of 50,000 TRY, with liability limited to the capital contributed by shareholders. It must have at least one shareholder and can offer shares to the public.
Branch Office
Foreign companies can establish branch offices in Turkey, which operate under the authority of the parent company. Branch offices are subject to local tax obligations but are easier to set up compared to independent entities.
Liaison Office
Also known as a representative office, this structure is ideal for market research or administrative activities. A liaison office cannot conduct commercial transactions or generate revenue in Turkey.
Each structure has unique requirements, so selecting the one that aligns with your business model and goals is essential.
Step 2: Register Your Company Name
Once you have selected a business structure, the next step is to choose a unique name for your company. The name must comply with Turkish commercial code regulations and should not infringe on any existing trademarks. Here’s how you can register your business name:
Check Availability: Conduct a preliminary search on the Central Registry System (MERSIS) to ensure your chosen name is available and not already registered by another entity.
Reserve the Name: Upon confirmation of availability, reserve the name with the Trade Registry Office. This step helps prevent others from registering the same or a similar name while you complete the remaining steps of company formation.
Name Approval: The Turkish Trade Registry Office will approve your business name after a formal application, ensuring it meets naming conventions and legal requirements.
Step 3: Draft the Articles of Association
The Articles of Association (AoA) outline the purpose, structure, and regulations of your company. In Turkey, drafting the AoA is a legally required step for registering a company. The document must be prepared in Turkish, and it includes information such as:
- The company’s name, registered address, and business purpose.
- Shareholders’ details, including capital contributions and shares.
- Board of Directors’ responsibilities and powers.
- Rules for annual meetings, profit distribution, and amendments to the AoA.
To ensure compliance with Turkish commercial laws, it is recommended to consult with a local lawyer when drafting the Articles of Association. Once completed, the document needs to be notarized before it can be submitted to the Trade Registry.
Step 4: Deposit the Minimum Capital
In Turkey, different business structures have specific minimum capital requirements. After preparing the Articles of Association, the next step is depositing the minimum share capital in a Turkish bank account. Here’s what you need to know:
- LLCs: A minimum capital of 10,000 TRY is required, and it must be deposited before the company registration process is completed.
- JSCs: A minimum capital of 50,000 TRY is required for a standard JSC, and 25% of this capital must be deposited before registration.
Upon depositing the capital, the bank will issue a receipt, which you will need to present to the Trade Registry Office as proof of capital contribution.
Step 5: Register the Company with the Trade Registry Office
With the Articles of Association notarized and the capital deposited, you are now ready to register your company with the Turkish Trade Registry Office. The registration process involves the following steps:
Prepare the necessary documents, including the Articles of Association, proof of capital deposit, and identification for shareholders and directors. Submit these documents to the Trade Registry Office.
Fill out the company registration form in the MERSIS system. This online platform allows you to input essential details about your company, shareholders, and directors.
Once the application is complete, you’ll be required to pay a registration fee. This can vary based on the company structure and region.
After successful registration, the Trade Registry Office will issue a certificate of registration, confirming that your company is officially recognized in Turkey.
Step 6: Obtain a Tax Identification Number
Every company operating in Turkey must have a Tax Identification Number (TIN). After registering with the Trade Registry, the company is automatically registered with the Turkish tax authorities. Here’s how to proceed:
Visit the Tax Office:
Go to the local tax office and present the company’s registration documents, including the Trade Registry Certificate.
Receive the TIN:
The tax office will issue a Tax Identification Number, which will be used for all tax-related activities, such as filing taxes, invoicing, and financial reporting.
Arrange for Taxation Compliance: Ensure that you understand Turkey’s tax obligations, which include VAT, corporate income tax, and potential payroll taxes if you plan to hire employees.
Step 7: Register for Social Security
If your company intends to hire employees, you must also register with Turkey’s Social Security Institution (SGK). The registration process is as follows:
Obtain an Employer Registration Number: Submit the necessary documents, including the Trade Registry Certificate and Tax Identification Number, to the SGK.
Comply with Employment Laws: Familiarize yourself with Turkish labor laws, including minimum wage requirements, employee benefits, and social security contributions.
Start Monthly Contributions: Companies are required to make monthly contributions to social security on behalf of their employees, covering benefits such as retirement, health insurance, and unemployment.
Step 8: Open a Corporate Bank Account
Opening a corporate bank account is essential for conducting business transactions in Turkey. This account will be used for various financial operations, including paying suppliers, collecting payments, and managing payroll. To open a corporate bank account:
Choose a Bank: Select a bank that suits your business needs. Many Turkish banks offer specialized accounts for international investors and companies.
Provide Required Documents: Most banks require your Trade Registry Certificate, Tax Identification Number, Articles of Association, and identification of authorized signatories.
Complete the Process: After submitting the necessary documents, the bank will open the account, allowing you to start managing your finances.
Step 9: Register for Municipal Licenses and Permits
Depending on your business activity, you may need to apply for additional licenses and permits from local municipal authorities. Common licenses include:
Occupational Licenses: Required for specific professions and regulated businesses.
Environmental Permits: Necessary for companies involved in manufacturing, waste disposal, or other activities that impact the environment.
Signboard License: Required if you plan to display a business sign outside your office or storefront.
Each municipality may have unique requirements, so it is advisable to check with your local authority to determine which permits are applicable to your business.
Step 10: Maintain Compliance and Keep Records
After setting up your company, ongoing compliance with Turkish regulations is essential for smooth operations. Key compliance requirements include:
Bookkeeping and Accounting: Maintain accurate financial records and submit them periodically. Hiring a certified accountant familiar with Turkish tax laws is often beneficial.
Annual Reporting: Submit annual reports to the relevant authorities, detailing financial performance, changes in company structure, and other relevant information.
Tax Filings: Corporate income tax returns must be filed annually, while VAT returns are usually submitted monthly or quarterly. Ensure timely tax filings to avoid penalties.
General Assembly Meetings: For JSCs, holding an annual general assembly meeting is mandatory, where shareholders review the company’s performance and make key decisions.
Establishing a company in Turkey offers numerous opportunities for growth and expansion, whether you’re a local entrepreneur or an international investor. By following the steps outlined in this guide, you can navigate the company formation process smoothly and legally. From selecting the right business structure to registering with the Turkish Trade Registry, each step is crucial to setting up a successful business venture in Turkey.
Understanding the nuances of Turkish laws and regulations is essential for long-term success, so it is recommended to seek assistance from local legal and financial professionals who can provide guidance tailored to your business needs. With the right approach, Turkey’s dynamic market and strategic location can serve as the foundation for a thriving business, unlocking new possibilities in the region and beyond.