ESTABLISH A BUSINESS IN TURKEY
If you wish to set up a business in Turkey, it is possible to establish a new company or establish a branch of the company that is already been establishes in a foreign company. Below is a short information on these two alternatives.
1. Branch: A company established in a foreign country can establish a branch in Turkey. The profits of the branch must be transferred to the shareholder company (the company that is established outside of Turkey). Further, the branch must have a representative resident in Turkey. Therefore if you would prefer to incorporate a branch first you need to determine a representative in Turkey and then proceed with the application. The shareholder company must reserve share capital for the branch, meaning that there is no minimum share capital requirement for a branch. The shareholder company would be liable for the activities of the branch. With regards to the taxation, any income profit generated by the branch will be subject to taxation in Turkey.
2. Company: Basically, joint stock companies (the “JSC”) and limited liability companies (the “LLC”) are the most commonly used company forms in Turkey. The sole liability of the shareholders is to put in the minimum share capital of the company. The most important difference between these two companies is the tax advantage in a possible share transfer. Accordingly, if the shares of a joint stock company were owned by the transferor for the previous two years before the share transfer VAT will not be applied to such share transfer. If not, VAT at the rate 18% will be applicable. Another distinction is that the shareholders of an LLC are also liable for public claims (i.e. social security premiums and tax claims) whereas the shareholders of an JSC are not personally liable for such claims.
3. Costs for incorporation:
- Approximate costs for incorporating a LLC: TL3,000 (approximately USD1,600) (general incorporation costs) + TL2,500 (approximately USD1,350) (minimum paid in share capital amount) + notarisation of the translation costs (We cannot precisely determine the translation and notarisation costs of the constitutional documents as the length of the shareholder company's constitutional documents are not certain at the time being, for translation we can either translate the documents for USD75 per page (excluding VAT) or get it translated by a translation company (approximately USD100 per page excluding VAT; the notarisation of such translated documents would depend on the length of the documentation but should not exceed USD750)
- Approximate costs for incorporating a JSC: TL3,000 (approximately USD1,600) (general incorporation costs) + TL 12,500 (approximately USD6,650) (minimum paid in share capital amount) + notarisation of the translation costs (We cannot precisely determine the translation and notarisation costs of the constitutional documents as the length of the shareholder company's constitutional documents are not certain at the time being, for translation we can either translate the documents for USD75 per page (excluding VAT) or get it translated by a translation company (approximately USD100 per page excluding VAT; the notarisation of such translated documents would depend on the length of the documentation but should not exceed USD750)
The total cost for LLC incorporation is approximately USD 3,750 (including the payment of the minimum paid in share capital,)
The total cost for JSC incorporation is approximately USD 9,000 (including the payment of the minimum paid in share capital)
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.
