Turkey: Foreign Investor's Introductory Guide To Foreign Investment And Company Establishment In Turkey


1.1 Business Friendly Environment

Turkey's regulatory and legal environment for foreign investment is very business-friendly. Foreign investors can – as a rule – establish a company in Turkey irrespective of nationality or place of residence, being subject to same rules as the domestic investors. Unless otherwise stated in the international agreements or specific laws, same local rules apply to foreign investors.

Limited liability corporations (as defined in detail below) can be formed with one or more foreign real persons or legal entities without the need for a local shareholder. A company in Turkey can be formed with 100% foreign capital. Equity participation by Turkish nationals is not required. As a rule, there are no restrictions for transferring foreign cash to a bank account opened in Turkey in the name of the company to be formed.

Foreign investors can freely transfer abroad, net profits, dividends, proceeds from the sale or liquidation of all or any part of an investment, compensation payments, amounts arising from license, management and similar agreements and reimbursements and interest payments arising from foreign loans through banks or special financial institutions.

1.2 No Consent Required

Except for certain types of companies (e.g. publicly-held companies, holding, banks, insurance companies, etc.), establishing a limited liability corporation is not subject to any prior regulatory approval.

However, there is a notification requirement, which must be submitted to the General Directorate of Incentives Implementation and Foreign Direct Investment within 1 month after the completion of any M&A transaction in Turkey, such as forming a company by a foreign investor.


Two most commonly preferred types of company in Turkey are:

  • "Joint Stock Companies" ("anonim şirket" in Turkish, abbreviated as "A.S.") and
  • "Limited Liability Companies" ("limited şirket" in Turkish, abbreviated as "Ltd. Sti.")

Both companies are limited liability corporations. These types of companies provide limited liability for their shareholders; thus a shareholder's personal liability for debts of either an A.S. or a Ltd. Sti. is limited to his/her capital contribution, except for obligations vis-à-vis the government.

Prior to the enactment of the New Turkish Commercial Code (the "TCC") in 2012, the differences between an A.S. and Ltd. Sti. were so prominent as investors who were looking for a smaller, closed and controlled environment with a lot less procedural requirement usually preferred Ltd. Sti., whereas investors looking for more professional and established corporate structure preferred A.S. However, with the TCC, those differences are greatly diminished and both company types have become very similar to each other. The major difference that still attracts most of the foreign investors is the crucial tax advantages A.S. offers when it comes to selling shares with profit.


It is possible to establish a company in a single day by applying to the relevant trade registry (where the headquarters of the company will be located) with the below-mentioned required documents. However, depending on whether all the documents are duly prepared and the workload of the registry, the registration process may take up to a week.

The company - as a rule - becomes a "legal entity" vis-à-vis third parties following its registration with the trade registry. However, the company is deemed to be actually formed when the articles of association is signed by all the shareholders – i.e. some liabilities assumed by the founding shareholders prior to registration of the company (such as entering into a lease agreement, etc.) may later be shifted to the company.


I-  Preliminary Preparation: In this stage, investors must decide on the following issues:

  • Company type - A.S. or Ltd. Sti.
  • Trade Name -  In Turkey, trade names must briefly specify the main area of business the company will operate in together with the name of the company type (e.g. X Nakliyat, Ticaret ve Sanayi Anonim Şirketi (in English, X Transportation, Commerce and Industry Joint Stock Company)
  • Official address - where the headquarters of the company will be located.
  • Capital amount – The minimum capital required to establish an A.S. is TRY 50,000 (app. USD 14,000 - EUR 13,000); whereas the minimum capital requirement for Ltd. Sti. is TRY 10,000 (app. USD 2,800 - EUR 2,500). %25 of the capital must be paid prior to the registration of the company, and the remaining must be paid within 24 months following the registration.
  • Names of shareholder(s) – Companies, as a general rule, can be established with 1 foreign real or legal entity shareholder. 
  • Purpose and subject of the company – Mainly which commercial activities will be carried out by the company.
  • Names of Manager(s)/Board of Directors member(s) - An A.S. is represented and managed by its "Board of Directors" appointed by the General Assembly (assembly of all shareholders). The Board of directors can be composed of 1 real person or legal entity member. Board of Directors members are not required to be shareholders of the company and they are no longer required to be Turkish citizens or residents of Turkey, but the presence of local members is certainly an advantage for the purposes of day-to-day representation and administration of the company. The maximum term of office of the Board of Directors members is 3 years. However, members can be re-elected.

The management of a Ltd. Sti. is carried out by 1 or more real person or legal entity managers, who can be shareholders or third parties. However, at least one shareholder in the company is required to act as a manager to be vested with the authority to represent and bind the company. Managers can be both of foreign or Turkish nationality.

  • Authorized Signatory(ies) – Investors must decide who will be the authorized signatories of the company and who will be entitled to represent and bind the company vis-à-vis third parties.

In both A.S. and Ltd. Sti., authorized signatories can be appointed among Board of Directors members/managers or third parties. However, at least one Board of Directors member in an A.S. must be vested with the authority to represent and bind the company, whereas - as mentioned above - one shareholder in Ltd. Sti. must be an authorized signatory. Authorized signatories are not required to be Turkish citizens or residents of Turkey, but again the presence of local members is an advantage as the signatures of such signatories will be required frequently on a daily basis in order to conduct the activities of the company.

If investors decide to incorporate representation mechanisms with different signatory groups each vested with different powers that are subject to certain limits and thresholds, a specific provision must be added in the articles of association and certain corporate documents such as internal directive must be prepared. We strongly advise investors to work with local lawyers in order to structure the representation mechanism of the company properly, otherwise daily operations may be hindered.

II- Preparation of the Articles of Association:  The articles of association is a mandatory public contract setting out terms and conditions regarding the management and governance of the company as well as the relationship between the shareholders. – Due to the recent procedures adopted in Turkey, articles of association must be prepared online on MERSIS and then notarized by a public notary in Turkey. We again strongly advise foreign investors to work with local lawyers during the company establishment process and especially for the proper preparation of the articles of association.

III- Preparation of Other Required Documents: Below are the other documents that may be required for establishing a company in Turkey. The trade registry may always require additional information and documents.

  • Petition
  • Notarized articles of association 
  • Company formation declaration form
  • Declaration of founding shareholders
  • Notarized signature declarations of manager(s)/director(s) (and apostilled if signed outside of Turkey)
  • Chamber registration form
  • Notarized birth certificate copies of Turkish shareholder(s) and manager(s)/director(s), if any.
  • Notarized passport (and apostilled if signed outside of Turkey) copies of foreign real person shareholder(s) and manager(s)/director(s),
  • Notarized and apostilled Excerpts of Incorporation (or Activity Report) of foreign legal entity shareholder(s) (also indicating the signatory powers of the real persons who will sign and act on behalf of such foreign shareholder(s) in Turkey),
  • Resolution adopted by the foreign legal entity shareholder(s) regarding that the said shareholder(s) will participate in and contribute to the company as a shareholder,
  • Temporary tax numbers obtained in Turkey for foreign real person and legal entity shareholder(s) and manager(s)/director(s),
  • A document evidencing that ¼ of the capital of the company is paid into an account opened in a bank in Turkey in the name of the company,
  • Title deed or a lease agreement regarding the place where the company will be located,
  • Work and/or residence permits for foreign employee(s) of the company (not necessary if there won't be any foreign employee during the incorporation),
  • In case of capital in-rem contribution, valuation report prepared by an expert appointed by the relevant court,
  • A letter obtained from the relevant land registry regarding whether there are any encumbrances on the real estate which will contributed to the company as a capital in-rem

In countries where apostillation is not available, the relevant required documents may be certified by the Turkish embassy located in such country.

IV- Finalization of All Required Documents and Application to the Trade Registry:  Once all the documents are duly signed, notarized and apostilled (if required), an application must be made to the relevant trade registry.

V- Further Actions:

i) Corporate books:  Subsequent to the registration of the company with the relevant trade registry, certain mandatory corporate books such as share ledger, book of inventory must be prepared and notarized by a public notary (this stage can be completed within a single day). We always advise foreign investors to work with a local accountant/accounting firm at this stage.

ii) Tax number:  Also, a tax number must be obtained for the company (this stage - as a rule - can be completed within a maximum of 1 week depending on the workload of the tax office).

iii) Signature circular: Last step is to prepare a signature circular (which will govern and indicate how and by whom the company will be represented vis-à-vis the third parties - details of which explained above) and having it notarized. 


Employment of foreigners in Turkey is subject to certain requirements under International Workforce Law No. 6735. ("Law No. 6735") In principle, all foreigners who will be employed in Turkey must obtain a work permit issued by the Ministry of Labor and Social Security unless an exemption is granted to foreign nationals under the Law No. 6735 or bilateral/multilateral agreements or international conventions of which Turkey is a signatory.

Duration of the work permit granted to the foreigners is limited to a maximum of 1 year provided that this period does not exceed the duration of the employment contract. The work permit may be extended up to maximum of 2 years upon first request for extension. In the subsequent applications, the extension may be granted for a maximum of 3 years in each application.

Foreign Board of Directors members who are shareholders in A.S. and foreign managers who are shareholders in Ltd. Sti. are required to obtain a work permit to work in Turkey.

There are also other rules for employers who wish to employ foreigners, including the requirement to employ at least 5 Turkish employees full-time for each new foreign employee to work at the same workplace. Also, the paid-in capital of the company must be at least TRY 100,000. Therefore, an expert must be consulted before hiring any foreign employee at the newly established company in Turkey.


As a rule, all foreigners can freely purchase real property in Turkey subject to certain limits and requirements.

In particular, companies established in Turkey, in which foreigners hold 50% or more of the shares or have the power to assign or dismiss the majority of the management, may acquire property only in order to conduct the business activities specifically and explicitly indicated in their articles of association. Same rule applies in cases of indirect ownership of shares or appointment rights in other companies.


We advise foreign investors to always consult to and coordinate with a tax expert and/or an accountant while conducting its activities in Turkey. Following is general information on the tax regime in Turkey:

There are three types of taxes in Turkey: i) Income Tax, ii) Taxes on Expenditure (VAT, Special Consumption Tax, Banking and Insurance Transaction Tax and Stamp Tax) and iii) Taxes on Wealth (inheritances, property, etc.)

Non-residents earning income in Turkey through employment, ownership of property, business transactions, or any other activity which generates income are also subject to taxation, but only on the income earned in Turkey.

In Turkey, the basic corporate income tax rate levied on business profits is 20%. Dividends are subject to 15%. The personal income tax rate varies from 15% to 35% depending on the income of the individual.

As for the VAT, the generally applied VAT rate varies between 1%, 8%, and 18%. Commercial, industrial, agricultural, and independent professional goods and services, goods and services imported into the country, and deliveries of goods and services as a result of other activities are all subject to VAT.

Regarding the taxes on wealth, real estate owned in Turkey are subject to tax ranging at a rate of 0.1% and %0.06, while Contribution to the Conservation of Immovable Cultural Property is levied at a rate of %10 percent of this real estate tax. Motor vehicle taxes are collected on the basis of fixed amounts that vary according to the age and engine capacity of the vehicles every year. Inheritance and Gift Taxes are levied at a rate of %1-30.

Turkey has signed Double Taxation Prevention Treaties with 80 countries. This enables tax paid in one of two countries to be offset against tax payable in the other, thus preventing double taxation.

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.

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