Foreign registered companies planning to invest in Turkey should establish liaison offices that are regulated by the Regulation for Implementation of Foreign Direct Investment Code ("the Regulation") before they investment to promote their commercial activities, analyze the market and follow the Turkey's business opportunities.

Liaison offices are different from branch offices. Unlike branch offices, liaison offices do not engage in income-generating commercial activities, according to foreign capital regulations. Additionally, all expenses should be covered by foreign currency. As a result of such conditions, the economic structure of the liaison office is closely monitored. The activities of the liaison office is usually controlled ex officio by the Ministry or upon written notification from relevant institutions and organizations.

A permit for establishing the liaison office should be obtained from the Ministry of Economy. The opening permit applications should be submitted with the documents requested in the Regulation. The complete application package is usually processed within 15 days.

There are certain requirements for foreign companies establishing liaison offices in Turkey:

  1. The company must be established in accordance with the laws and regulations of its country of origin;
  2. The liaison office must not conduct any commercial activities in Turkey; and
  3. The Ministry should provide a waiting period of at least one (1) year to evaluate the area of activity, working capital, and number of personnel employed for the company's liaison office applications.

Upon fulfilling the aforementioned conditions, the application should be submitted to the Ministry of Economy. The required documents are as follows:

  1. Application Form (Annex-6 of the Regulation);
  2. Written statement that includes the liaison office's scope of activity, as well as a document stating that the liaison office will not engage in any commercial activities (Annex-7 of the Regulation) and the authorization document from the foreign company official;
  3. The Certificate of Activity of the foreign company, which should be approved by the relevant Turkish Consulate or in accordance with the provisions of the Convention Abolishing the Requirement of Legalization for Foreign Public Documents, prepared on the basis of the Hague Conference on Private International Law;
  4. Activity report or balance sheet and income statement of the foreign company;
  5. Authorization document of the person who is appointed to conduct the operations of liaison office; and
  6. Power of attorney in the event that another person operates the establishment transactions of the liaison office.

The Ministry permits are valid for three (3) years after the initial application process. For the extension of permits, the offices should apply to the General Directorate of Incentive Practices and Foreign Capital. The permit period of liaison offices that operate in market research or promote the activities of foreign companies is not extended. Additionally, the wages of people working at liaison offices are exempt from income tax, according to the Article 23 paragraph 14 of the Income Tax Code.

A termination notification and examination of business note, which is received from the relevant tax office, should be submitted to the General Directorate in the event of the termination of the liaison office's activities. Liaison offices must not claim any money transfer apart from the balance due to termination and liquidation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.