Starting a Business in Türkiye – A Practical Guide for International Investors

Market Entry Türkiye: Why Investing Makes Strategic Sense

Türkiye has emerged in recent years as a highly attractive destination for international investment. Thanks to its strategic location at the crossroads of Europe, Asia and the Middle East, the country offers a young population, a growing industrial base, and cost-efficient production conditions.

For a legally compliant and efficient market entry, early-stage legal consultation is essential – not only with regard to choosing the appropriate corporate form, but also in terms of tax structuring, labour law compliance, and practical implementation requirements. A reliable local partner is particularly indispensable when incorporation is to take place on site in Türkiye.

Vural & Demir Law and Consulting specialises in advising international clients throughout every stage of corporate establishment and business entry into the Turkish market – with legal precision, intercultural understanding, and a strong operational presence both in Türkiye and across Europe.

                               I.          The Turkish Joint Stock Company (Anonim Şirket – A.Ş.)

Structure, Requirements and Use Cases

The Anonim Şirket (A.Ş.), or joint stock company, is a legal form under Turkish law particularly suited for business ventures involving significant capital investment, complex shareholder structures, or regulated business activities. It is often the preferred choice of internationally oriented companies in sectors such as finance, energy, transportation, and industry.

A key reason for choosing the A.Ş. is its structural openness: it can be incorporated by a single natural or legal person, with no statutory limit on the number of shareholders. This facilitates the involvement of institutional investors and allows for flexible expansion of ownership.

Unlike the limited liability company (Ltd. Şti.), the A.Ş. is subject to capital-related thresholds, which vary depending on its organisational form.

·       Under the non-registered capital system, a minimum capital of TRY 250,000 is required.

·       Under the registered capital system, which allows the board of directors to increase capital more flexibly, the threshold is TRY 500,000.

·       In both cases, at least 25% of the subscribed capital must be paid in prior to registration, with the remainder payable within two years.

The internal structure of the A.Ş. is highly formalised by law. Its core governing body is the board of directors (Yönetim Kurulu), responsible for representing and strategically managing the company. The board may consist of one or more individuals; shareholding is not a prerequisite. Legal entities may also serve as board members, provided they designate a natural person as their representative for registration purposes.

Additional executives – such as directors or general managers – may be appointed to handle day-to-day business operations. These individuals do not incur personal liability towards third parties, but are accountable only to the company internally.

The issue of liability is particularly noteworthy: shareholders are not personally liable for the company’s public debts – unlike the rules applicable to the Ltd. Şti. Instead, liability rests with the board of directors, especially in cases of non-compliance with tax or statutory obligations.

The articles of association of an A.Ş. must stipulate the company’s registered address, capital structure, purpose, board composition, and profit distribution rules. If applicable, it must also provide for the appointment of an auditor.

Auditing is not mandatory for small-scale A.Ş. companies, but becomes obligatory upon exceeding certain financial or personnel thresholds, such as total assets, turnover or number of employees. The auditor must be independent and free of any legal or economic ties to the company.

With regard to capital mobility, the A.Ş. offers greater flexibility than the Ltd. Şti.: shares may be transferred without notarisation or commercial registry entry. A simple entry in the internal share ledger suffices – facilitating share transactions even across borders.

Certain special-purpose structures, notably holding companies, require prior approval by the Turkish Ministry of Trade. In such cases, contributions in kind – such as shareholdings in other companies – may be permitted as capital contributions.

Dissolution of the company may occur by shareholder resolution, court order, or insolvency. Unlike a Ltd. Şti., the A.Ş. is not subject to any legal time limit on its existence. Minority shareholders benefit from enhanced protection rights, including access to corporate records and, in severe cases, the right to seek judicial dissolution of the company.

                                                     II.          The Turkish Limited Liability Company

– Key Features of the Limited Şirket (Ltd. Şti.) 

For many foreign investors, the Limited Şirketi (Ltd. Şti.) is the preferred legal form for establishing a limited-liability business presence in Türkiye. It offers a flexible and straightforward framework suitable for both individual founders and small to medium-sized business groups with clearly defined ownership structures.

Under current Turkish law, a Limited Liability Company may be established by a single shareholder, and the number of shareholders may not exceed 50. Both natural and legal persons, whether resident in Türkiye or abroad, are eligible to become shareholders. 

The minimum share capital is set at TRY 50,000. This amount does not need to be fully paid in at the time of incorporation but may be contributed over a period of up to two years, provided the shareholder has made a binding capital commitment. A capital increase is permissible under certain conditions, but only after the initially subscribed capital has been fully paid in.

The articles of association must define the company’s purpose, registered office, duration, capital structure, governance rules, and representation powers of the managing directors. While many companies use standardised articles, these may be tailored to the specific needs of the founders. Amendments to the articles usually require a qualified majority representing two-thirds of the paid-in capital.

One or more managing directors must be appointed. It is standard practice to grant full executive powers to at least one of the shareholders. Legal entities may also act as directors, but must designate a natural person as their official representative for registration. There are no requirements for Turkish nationality or residency for directors.

Corporate decision-making is subject to formal requirements: shareholder resolutions must be notarised. Often, this can be done by matching the signature against a specimen previously deposited with a notary. The company’s registration is carried out via the MERSİS online system.

The transfer of shares generally requires the approval of the general assembly and must be notarised. Legal effect against third parties arises only once the transfer has been registered with the Trade Registry.

Not all types of regulated business may operate in the Limited Liability Company form. For example, banks, leasing companies, and certain financial service providers are legally required to adopt the joint stock company (A.Ş.) structure. The previous A.Ş. requirement for insurance companies has, however, been repealed.

Companies that exceed specific thresholds regarding turnover, assets, or employees are subject to mandatory external auditing. This requirement does not usually apply to small and medium-sized enterprises.

A Limited Liability Company may be established for a fixed or indefinite term. Dissolution may occur by court decision, voluntary liquidation, or insolvency. In the event of liquidation, the existing directors typically act as liquidators unless otherwise stipulated.

                                           III.          Partnerships under Turkish Commercial Law

Although Turkish law recognises various forms of partnerships, they are of limited practical relevance for most foreign investors. The main obstacle is that all partners must hold a valid Turkish residence permit, which restricts the flexible use of these structures.

The general partnership (Kollektif Şirket) is characterised by the unlimited personal liability of all partners, making it an unattractive option even for many domestic entrepreneurs.

A limited partnership (Komandit Şirket) also exists under Turkish law. However, the personally liable partner must be a natural person; legal entities are excluded from this role. As a result, hybrid structures involving corporate general partners are not permissible.

A rarely used hybrid form is the partnership limited by shares, which combines elements of partnerships and corporations but plays only a minor role in business practice.

                                                  IV.          Liquidation, Insolvency and Termination

1.     Insolvency and Judicial Dissolution

In commercial practice, insolvency is the most common reason for the involuntary termination of a company. Once insolvency proceedings are initiated—either at the request of creditors or by the company itself—a court-supervised winding-up process begins in accordance with statutory rules.

During the proceedings, the existing management may, under certain circumstances, continue in a limited capacity if the court grants temporary protection from enforcement, typically for restructuring purposes. Otherwise, a court-appointed administrator will assume full control of the company’s affairs. 

Outside formal insolvency proceedings, a court may also order the dissolution of a company—for example, at the request of a qualified minority of shareholders or in cases of severe breaches of the articles of association. This route is particularly relevant in situations involving persistent shareholder conflicts or operational paralysis. 

2.     Voluntary Dissolution by Shareholder Resolution

Independent of the company’s financial standing, shareholders may resolve to voluntarily dissolve the entity. Such a resolution typically requires unanimity or a qualified majority, depending on the company’s articles of association.

The voluntary winding-up process includes the appointment of one or more liquidators, whose primary responsibilities include settling contracts, collecting receivables, discharging liabilities, and distributing any remaining assets.

Only once all legal obligations have been fulfilled and potential creditor claims addressed can the company apply for deregistration with the Trade Registry. Turkish law mandates a minimum liquidation period of six months, in part to allow for the proper notification of creditors. 

3.     Withdrawal of Individual Shareholders

The withdrawal of one or more shareholders does not automatically result in the termination of the company. On the contrary, Turkish law imposes strict requirements for such withdrawals. A unilateral exit is permitted only in exceptional cases, such as a fundamental breakdown in the business relationship or serious violations of shareholder obligations.

In the absence of specific statutory provisions, a court claim is often the only route available to enforce a shareholder’s exit. To avoid protracted legal disputes, it is advisable to include clear exit procedures in the articles of association, covering valuation methods, compensation arrangements, and transitional rules.

     V.          Procedural Steps and Financial Considerations for Company Formation in Türkiye

Establishing a corporation in Türkiye requires not only a careful legal analysis of the appropriate legal form but also a clear understanding of procedural requirements and financial implications. For foreign investors in particular, issues commonly arise regarding legal representation, the recognition of foreign documents, and the expected cost framework.

1.     Legal Framework and Formal Requirements

In Türkiye, companies are registered exclusively through the central electronic registration system (MERSİS), which digitally manages all incorporation procedures. The articles of association and necessary filings are prepared online and submitted to the relevant Trade Registry Office.

Foreign founders may be represented in this process by an authorised third party. In this context, a legally valid signature circular must be issued, either in Türkiye (before the registry officer) or abroad (via a Turkish consulate or local notary). In the latter case, an apostille is mandatory to ensure the document’s recognition under Turkish law.

Provided all documents are complete and compliant, the registration procedure is typically efficient. However, it is essential to have a functional business address in Türkiye available in advance, as this is verified by the tax authorities during initial registration.

2.     Practical Timelines

In practice, the incorporation process rarely exceeds two to three weeks if all preparations have been completed in advance. Common causes of delay include:

·       Incomplete or improperly translated powers of attorney,

·       Missing or invalid apostilles on foreign documents,

·       Absence of Turkish tax identification numbers for shareholders or directors,

·       Operational challenges related to bank account setup or verifying the company’s physical address.

Such issues can usually be mitigated through early legal planning and coordination.

3.     Typical Costs and Fees

The cost of establishing a company depends on various components, which may vary depending on the complexity of the business structure. Key cost drivers include:

·       Fees for trade registry registration and mandatory public announcements,

·       Costs for translation and legalisation of foreign documents,

·       Professional fees for legal and administrative support (often linked to the company’s share capital or scope of services),

·       Optional expenditures for providing a local director, representative, or business address in Türkiye.

Overall, founders should expect a moderate to high four-digit Euro amount, depending on the specific requirements and legal customisation (e.g. bespoke articles of association, holding structures, or non-cash contributions).

Importantly, incorporation-related expenses can generally be reimbursed by the company post-registration, provided they are properly documented and incurred in the interest of the company.

4.     Conclusion: Strategic Planning Is Key

Although Türkiye’s corporate formation process is relatively straightforward by international standards, involving foreign stakeholders necessitates careful preparation. Language barriers, notarisation formalities, and tax administration requirements can pose challenges that are best addressed through structured legal guidance—minimising the risk of delays, unnecessary costs, or formal errors.

                              VI.          Tax Registration and Ongoing Compliance Obligations

Regardless of the chosen legal form, all companies established in Türkiye must register with the relevant tax authorities following incorporation. This process is carried out through the locally competent tax office and includes the issuance of a tax identification number, the creation of a corporate tax account, and registration for VAT (KDV) if the company generates taxable turnover in Türkiye.

Once tax registration has been completed, the company – whether an independent subsidiary or branch – is subject to ongoing compliance obligations: These include the regular filing of VAT, corporate income tax, and withholding tax returns; the maintenance of mandatory commercial books; the issuance of electronic invoices (e-fatura); and compliance with statutory reporting deadlines. Failure to fulfil these obligations may lead to financial penalties and, in severe cases, tax-related criminal sanctions. It is therefore strongly recommended to engage a locally certified tax advisor (mali müşavir) at an early stage to ensure full compliance and avoid legal and procedural risks.

                  VII.          Non-Commercial Representation: The Turkish Liaison Office

(İrtibat Bürosu)

For foreign companies seeking to explore the Turkish market without engaging in commercial activity, the liaison office (irtibat bürosu) offers a regulated, non-operational form of local presence. Its permitted activities are limited to networking, market research, and local observation—it may not generate revenue, issue offers, or enter into contracts.

Establishing such an office requires prior authorization from the Turkish Ministry of Trade, which is usually granted for a limited period and subject to extension. Any form of profit-making or commercial engagement is strictly prohibited.

Despite its limited mandate, the liaison office is subject to concrete legal obligations. It must comply with Turkish labor law—employees must be properly registered with the social security system—and it is required to submit regular reports to the authorities.

If the liaison office exceeds its permitted scope—such as by conducting sales activities, interacting with customers, or engaging in contract execution—it risks being reclassified retroactively as a permanent establishment for tax purposes. This could trigger significant fiscal liabilities.

From a strategic standpoint, the liaison office may serve as a low-risk entry model, but it should not be relied upon as a permanent operational structure.

                                                        VIII.          Branch Offices (Şube) in Türkiye

1.     When is a Branch Office Appropriate?

Establishing a branch can be appropriate when a foreign parent company seeks to operate in Türkiye temporarily or with limited scope, without building a full-fledged corporate structure. Common scenarios include:

·       Technical assistance for infrastructure or industrial projects,

·       Sales support and warehousing,

·       After-sales service units or warranty-related operations.

In these cases, a branch offers a means of local operational presence without incurring the full establishment and compliance costs associated with a Turkish capital company.

2.     Frequently Overlooked: Direct Legal Attachment to the Parent Company 

A critical feature of branch offices under Turkish law is that they are not separate legal entities. This has several implications:

·       Contracts entered into by the branch directly bind the foreign parent company,

·       All liability—whether contractual, tax-related, or employment-related—falls back to the parent,

·       Litigation involving the branch is treated as litigation against the foreign company itself.

This creates a heightened liability risk, especially if the branch is managed remotely and Turkish regulatory or labor compliance is not fully ensured.

3.     Employment Law Considerations 

Although the branch lacks separate legal personality, it is treated as a domestic employer for the purposes of Turkish labor law. This entails:

·       Full applicability of Turkish labor legislation to all employees—regardless of whether they are locally hired or seconded from abroad,

·       Employment contracts must be in writing and in Turkish; all HR-related measures must comply with local formalities,

·       Employees must be registered with the Turkish social security system, unless they are on formally documented secondments with exemption certificates,

·       For legal thresholds in employment protection or collective labor law, the entire corporate group size may be considered—not just the number of local staff.

As a result, the branch is subject to local payroll, social security obligations, and labor jurisdiction in Türkiye. All resulting responsibilities and liabilities are borne directly by the parent company.

          IX.          What Vural & Demir Law and Consulting Can Do for You: Our Core Advisory Services at a Glance

As an internationally oriented law firm based in Istanbul, Vural & Demir Law and Consulting advises foreign companies, investors, and entrepreneurs on all legal and procedural aspects of establishing and conducting business in Türkiye. Our legal services go far beyond the selection of an appropriate legal structure: we provide end-to-end guidance throughout the incorporation process, including tax, employment, and regulatory compliance.

We ensure that our clients are legally protected and formally compliant—from the initial company registration to ongoing reporting obligations vis-à-vis Turkish authorities and tax offices. Our core areas of expertise include: 

·       Incorporation of capital companies, branch offices, and liaison offices,

·       Drafting and customization of articles of association and shareholder agreements,

·       Tax structuring in cooperation with licensed Turkish accountants (mali müşavir),

·       Legal assistance in bank account opening, capital verification, and notarisation processes,

·       Advisory in Turkish employment law, including onboarding of local and seconded personnel,

·       Strategic legal support for restructuring measures and market adjustments.

With our multilingual capabilities (Turkish, German, and English) and deep intercultural competence, we are well-positioned to handle cross-border legal matters with precision and efficiency—particularly for foreign companies seeking to establish or expand operations in Türkiye.