Turkey has drawn international investment for many years due to its unique trading location between Asia, Europe, and the Middle East. Turkey is often regarded as a prominent country, with numerous public and multinational corporations establishing offices in and around Turkey's major cities.

Why should you start a business in Turkey?

Recent laws to encourage foreign investment have made it easier than ever to establish a firm in Turkey.

There are government incentives for investors and new firms include:

• The ability for foreign companies to get "Turkish Company" status, which grants new business owners the same rights and duties as existing Turkish companies;

• Existing investment rights are guaranteed;

• adherence to international norms;

• Changing the definition of a foreign investor to include corporations registered outside of Turkey, non-Turkish nationals, and Turkish nationals residing abroad;

• Certain imports of machinery and equipment are now exempt from customs duties, levies, and VAT; certain exemptions from income tax and social insurance contributions; energy subsidies; incentives provided in Turkey's free trade zones, including exemptions from a variety of taxes and customs charges;

• Better safeguards for foreign investors.

  
  

So, how do you go about starting a business in Turkey?

There are several choices available if you want to start a business in Turkey. First, you should get strong legal counsel and do research with the appropriate authorities. Foreigners might explore collective companies, joint stock companies, commandite companies (businesses set up to operate under a trade name), liaison offices, and establishing a branch of an existing foreign firm. However, in this essay, we will concentrate on the comparatively simple and manageable - and hence most common - formation of a private limited company.

Can foreigners establish a limited liability corporation in Turkey?

Yes. The most common type of business for foreigners is a private limited company, which may be formed by two or more non-Turkish nationals. This sort of corporation must have at least one shareholder and a minimum share capital of 10,000TL.

Should I use a business formation agent?

Similarly to the United Kingdom, an increasing number of company formation brokers advertise their services in local newspapers and can be found in most towns and cities. Many expats choose this option since it may save time and effort if you locate a reputable agency. If you are thinking of hiring one, do your homework beforehand and find out what other expat businesses they have helped set up. As with everything, some of these businesses are significantly superior to others.

What types of businesses may a foreigner establish in Turkey?

Most expats start enterprises that are related to tourism or cater to the requirements of other foreigners. Bars, restaurants, hotels, vacation rental firms, estate agents, stores, and maintenance organizations appear to be the standard and are typically simple to organise and manage for foreigners. Foreigners are not permitted to operate some enterprises in Turkey without prior authorisation from the Ministry of Commerce and Industry. Banks, factoring, private financial institutions, foreign currency exchange offices, firms subject to Capital Markets Law, public warehousing, and free-trade zone operators are among them. If you are unsure, consult your lawyer and local authorities.

What is the cost of forming a Turkish limited liability company?

The legalities and expenses of establishing a business in Turkey differ from those in the United Kingdom and most other nations. A private limited company costs a total of 10,000TL, which must be deposited during the establishment process. The shareholders' liability is restricted to the amount of share capital invested in the firm.

What is the procedure for getting started?

The business creation procedure in Turkey is pretty simple, and the investor will be able to begin trading within a week if everything is in order.

The first step is to prepare the articles of incorporation, which must be signed by the company's directors. Articles of association must be written out lawfully and in accordance with Turkish Commercial Code article 279. The term "limited" in the company's trading name must be included in the paperwork. Founders must provide information such as their country, complete names, surnames, residences, and trade address. The document is then brought to be notarised and, if necessary, translated.

The required minimum share capital must be placed in a bank account in the name of the firm. Following that, investors can begin the registration procedure by paying a fee to the Turkish Commercial Registry Office and submitting the required paperwork. The Registry Office will issue a registration certificate, and the establishment of the business will be published in the Turkish Gazette. The business must then register for VAT with the appropriate tax body.

Trading name legislation in Turkey

Your trading name must be unique and unregistered with anybody else. It must not mislead third parties, and the phrases "Turkiye; Turk; Cumhuriyet; Milli" must not be used without the express permission of the Turkish Council of Ministers. Foreign terms and titles may be used in the trading name only provided they do not violate any government or cultural laws or policies.

How to Register a Turkish Business with the Trade Registry Office

The Turkish Chamber of Commerce maintains offices in all major cities and municipalities around Turkey. After you've completed your Articles of Association and had them notarized, contact them within 15 days to arrange for the official trade register. You will need your completed company registration application form, your written request for application, appropriate identification proving you are the founding members, a letter of commitment in accordance with Article 29 of the Trade Registry Regulations, and a receipt for payment of the deposit required to the Customers Fund Account (normally 1/1000 of the company's capital) at registry. This may sound more frightening than it is, but in order to prevent lengthy waits and unneeded misunderstanding, ensure you have proper legal knowledge or support, as well as the ability to speak, read, and write Turkish. In most circumstances, it is preferable to travel with a native speaker. Your company can begin trading after it has been registered.

Current Trading and Taxes

A private limited business established and based in Turkey must pay full tax on income earned and declared. In addition, you will need to hire an accountant, and bear in mind that accountants in Turkey function differently than in the UK, charging a monthly fee that, in certain situations, might appear expensive while accomplishing quite little some of the time. Because laws and taxes change on a regular basis, you should consult with a qualified accountant before forming your firm.

Overall Suggestions and Advice

Do your research. Make sure you have done your homework before considering establishing a firm in Turkey. Speak with other business expats, your lawyer, and an accountant to determine whether it is a realistic alternative or whether you would be better suited investing elsewhere. Many horror stories are told by foreigners who have created stores, restaurants, and businesses that have failed and left them with a corporation that is difficult to dissolve. Make certain that your concept is a winner! Create a business strategy. Before you start your business, be sure your goals and expectations are clear.

Investigate the startup and continuing costs of running the firm (accountant fees, marketing, taxes etc.) In Turkey, you are unlikely to be requested to provide a business plan, but it will force you to properly analyze and consider your enterprise.

Language stumbling blocks: The procedure and documentation required to establish a business in Turkey will be in Turkish, so be sure you understand the language well enough or have the services of a trustworthy Turkish speaker on hand to assist you every step of the way.

For company owners, citizenship via investment

Since 2018, there has been an additional incentive for anyone intending to establish a business in Turkey. The Turkish government is now providing citizenship to anyone who invests $250,000 in Turkish real estate. This will eliminate a lot of red tape for business owners. More information: Turkish citizenship by investing.

In addition to purchasing property, business people can obtain citizenship through the following methods:

1. Create jobs for at least 50 individuals in Turkey.

2. Make a fixed capital investment of at least $500,000; 

3. Deposit at least $500,000 in a Turkish account; and 

4. Establish a venture capital investment fund worth $500,000.

Please keep in mind that, while we have done our best to provide you with reliable advice, this material should not be construed as legal advice and is only designed to provide general counsel.

Documents needed to start a business in Turkey

One of the most important steps in starting a company in Turkey is preparing the papers necessary to register the firm with the Trade Registrar. The Articles of Association are the fundamental documents that must be written and notarized, and they must include all of the shareholders' information, including their names, addresses, contributions to the company's share capital, and the number of shares they own in the company. The Articles of Association must also include information about the company's management, such as their names, how they are appointed and resigned, and their tasks and responsibilities.

The Turkish company's trade name, address in this country, and a description of the operation's aim must all be included in the same document. Other portions of the Articles of Association may be linked to amendments that may be presented to the business and dispute resolution methods if disagreements emerge among the shareholders. The Articles of Association must be drafted in accordance with the Commercial Code. If you are a foreign entrepreneur wishing to create a company in Turkey, our Turkish law office can assist you with the preparation of these documents.

A crucial factor is that a basic application form must be lodged with the Trade Register when establishing a single proprietorship. The partnership deed is the cornerstone of the establishment of partnerships, which are known as commandite enterprises in Turkey.

Step by step start a New Business in Turkey

Foreign entrepreneurs who want to start businesses in Turkey must go through a few steps before they can begin operations. The following are the stages:

• Choosing on the type of business to start and having the necessary papers prepared and notarized in accordance with the Companies Act;

• Open a corporate bank account and deposit the required share capital.

• In line with the legislation, nominate the company's directors or management;

• Submit the incorporation documentation to the Trade Register, together with the names and addresses of the shareholders and management;

• Obtain tax and VAT identification numbers, and register with the tax office for social security reasons.

  
  

Three significant special investment zones are of particular interest to foreign investors:

the free zones (20 zones specifically designed to increase the number of export investments, with 100 percent duty exemption, corporate income tax for manufacturing enterprises, VAT, income tax on personnel salaries for companies that export at least 85 percent of goods produced here, unlimited free deposit of goods, and the ability to transfer profits abroad and to Turkey);

organized industrial zones (276 zones with low natural gas, water, and telecommunications rates, no municipality tax on building or solid waste - the latter if the zone does not use municipal services, no VAT on land acquisition, and a five-year exemption from real estate duty);

Technology development zones (50 zones with considerable exemptions from company and income taxes on software development revenue, VAT on software application sales, R&D salaries - but no more than 10% of total personnel - till 2024);

Only 34 technical development zones are now functioning, with the others under construction. You should also know that hair transplantation is a thriving industry in Turkey.

Foreign investors can also benefit from double tax treaties (which allow them to avoid paying the same taxes in their home country and in Turkey) and free trade agreements (signed with Albania, Bosnia and Herzegovina, Chile, Croatia, Egypt, Georgia, Iceland, Israel, Jordan, Lebanon, Liechtenstein, Mauritius, Macedonia, Montenegro, Morocco, Norway, Palestine, Serbia, South Korea, Switzerland, Syria, and Tunisia).

Shareholders of a Turkish company

The shareholders are the corporation's founders, or better phrased, the company's proprietors. These might be real people or companies with various rights and duties inside the company. In both private and public corporations, a Turkish firm can only have one investor. These can be Turkish citizens or residents, although foreigners can also be sole shareholders in a Turkish company.

Shareholders have a main duty to contribute to the company's share capital. Based on their efforts, they will be given more or fewer rights in the company. In the case of limited liability companies, the shareholders' liability for the business's debts and other obligations is limited to the amount of money invested in the company. In the case of partnerships, the partners or members serve as shareholders.

Company management in Turkey

The firm's management is one of the most important positions in a Turkish organization. The shareholders of a private corporation must appoint at least one company director. A board of directors must oversee the operation of a public firm in Turkey. In the same sort of organization, at least one auditor must be selected. In the case of private firms, the auditor will be objective and will be called only when the financial documents of the business need to be audited. It should be noted that regardless of the kind of corporation, at least one shareholder must act as a corporate director. Another corporation can also assume the managerial role as long as a natural person is chosen as a corporate representative.

The trade name and legal address are essential when forming a corporation in Turkey.

The first step in forming a company in Turkey is to select a suitable trade name. The name should be unique and not insulting. To guarantee that the company name is different, the applicant can submit three potential names for validation, from which he or she will choose the best one based on the demands of the firm. We would like to remind investors that branch offices must be named after the parent company. A local address is also required for a corporation to be recognised as a Turkish resident firm. The registration address must be in the city where the business will be established. For this reason, we may provide virtual office services.

How easy is it to locate workers in Turkey?

If a newly founded Turkish corporation seeks to engage overseas personnel, the procedure may only be carried out if the foreign employees obtain a Turkish work permit. Work permits for foreign employees are available through two channels: the Ministry of Labor and Turkish embassies or consulates in the country of the foreign worker's residency. The Turkish Consulate or Embassy requires the following documents:

• The applicant's passport (valid for at least six months);

• An application for a work visa, which will be handed to the applicant on the spot;

• One recent passport-size photograph; and one copy of the work contract — the copy must be provided by the potential employer

• A letter of assignment confirms the appointment of the future employee.

  
  

When a company hires a foreign worker, the Turkish employer must submit the following documents to the Ministry of Labor and Social Security:

• letter of application for a work permit;

• Foreign personnel application form

• a financial report;

• the most recent income statement

  
  

The online application must be submitted to the Turkish Consulate within ten working days of the foreign employee applying for the job. Foreign employees are permitted to work in Turkey under the Employment of Foreign Nationals in the Framework of Foreign Direct Investments legislation. International direct investment refers to enterprises created in Turkey or branches of international corporations; under legislation no.4875, a Turkish company may employ foreigners as long as foreign shareholders own at least TRY 1,062,691 of the company's capital. Our Turkish legal office can provide you with further information regarding the requirements outlined in this statute. The Ministry requires residents to fill out an online application. Within one month, the decision to grant the work visa is made.

How much does it cost to start a business in Turkey?

Opening a company in Turkey is not expensive, but the business owner must consider the price of company registration, notary fees, and the honorarium of the Turkish law firm handling the process (if one is appointed).

How long does it take to set up a business in Turkey?

Forming a corporation in Turkey takes around three weeks. The procedure takes longer in the case of a branch office. Please contact our Turkish legal team for further information on the processes followed by Turkish authorities when founding a corporation. We can provide customized company registration services in Turkey.