Can a Foreign Company Open a Branch in Turkey? Legal Guide

Options for Foreign Companies Operating in Turkey

Turkey's strategic location, growing economy and youthful population make it a highly attractive market for international businesses. When foreign companies wish to conduct commercial activities in Turkey, Turkish law provides several structural options. This guide examines the three primary options — branch office, liaison office and subsidiary company — in detail, comparing the advantages and disadvantages of each.

Choosing the right structure depends on the company's operational objectives, capital budget and long-term strategy. Emir Law & Consulting provides comprehensive legal guidance to help clients determine the most suitable structure for their needs.

1. Branch Office

What Is a Branch Office?

A branch office allows a foreign company to conduct commercial activities in Turkey under its own name and on its own account. Under Article 40 of the Turkish Commercial Code and the Foreign Direct Investment Law (Law No. 4875), foreign companies may establish branches in Turkey to engage directly in commercial activities.

A branch does not possess an independent legal personality; it operates as an extension of the parent company. However, it is subject to Turkish law with respect to its activities in Turkey and holds tax liability status.

Documents Required to Open a Branch

• Board resolution: A resolution by the parent company's authorized body to establish a branch in Turkey
• Articles of association: Notarized and apostilled translation of the parent company's current articles of association
• Certificate of registration: Trade registry certificate from the parent company's country of incorporation
• Power of attorney: Notarized power of attorney granted to the branch manager or authorized representative in Turkey
• Signature circular: Notarized signature declaration of the branch representative
• Certificate of good standing: Document confirming the parent company is actively operating
• Capital allocation statement: Document specifying the capital allocated to the branch

Trade Registry Registration Process

Branch registration requires an application to the relevant provincial trade registry office. The process proceeds as follows:

1. Online application through MERSİS (Central Registry System)
2. Physical submission of required documents to the trade registry office
3. Document review and registration by the trade registry office
4. Publication in the Turkish Trade Registry Gazette
5. Tax office registration for tax liability
6. Social Security Institution (SGK) workplace registration

Tax Obligations of Branch Offices

Branch offices of foreign companies operating in Turkey are subject to corporate tax on income derived from their Turkish operations. As of 2026, the corporate tax rate is 25%. Branches are also subject to VAT liability, withholding tax obligations and annual tax return filing requirements.

An important consideration is the 10% profit remittance withholding tax applied when a branch transfers profits to its parent company. However, this rate may be reduced under double taxation avoidance agreements that Turkey has signed with the relevant country.

Operational Restrictions for Branch Offices

Branches may generally operate within the scope of the parent company's business activities. However, certain sectors impose specific restrictions on foreign company branches. Banking, insurance and certain regulated industries require additional licences and permits.

2. Liaison Office

What Is a Liaison Office?

A liaison office is a structure established for a foreign company to conduct market research, promotion and communication activities in Turkey without engaging in commercial operations. It is established with the approval of the Ministry of Industry and Technology under the Foreign Direct Investment Law (Law No. 4875).

Liaison Office Establishment Process

• Ministry application: Application to the General Directorate of Incentive Implementation and Foreign Capital at the Ministry of Industry and Technology
• Activity permit: Initial permits are granted for a maximum of 3 years, with extensions available
• Parent company documents: Certificate of incorporation, activity report, authorization document
• Lease agreement: A lease contract for the office address in Turkey

Limitations of Liaison Offices

A liaison office cannot engage in commercial activities and cannot generate revenue. All expenses must be funded entirely by the parent company abroad through foreign currency transfers. Liaison offices are not corporate taxpayers; however, social security contributions and income tax withholding for their employees remain mandatory.

Activities permitted for a liaison office are limited to:

• Market research and feasibility studies
• Promotion of the parent company's products and services
• Communication with business partners and clients in Turkey
• Quality control and technical support activities
• Supplier research and supply chain coordination

3. Subsidiary Company

What Is a Subsidiary?

A subsidiary is an independent Turkish company established by a foreign company. The parent company maintains control by holding all or a majority of the share capital. A subsidiary possesses its own legal personality and is subject to the provisions of the Turkish Commercial Code.

Foreign investors typically choose to establish subsidiaries as either a limited liability company (Ltd. Şti.) or a joint-stock company (A.Ş.). For detailed information about the advantages and disadvantages of each company type, please consult our corporate law services.

Advantages of Establishing a Subsidiary

• Limited liability: The parent company's liability is limited to its capital contribution
• Independent legal personality: Operates as a fully authorized company under Turkish law
• Commercial freedom: May conduct all types of commercial activities
• Public tender participation: Can participate in government tenders as a Turkish company
• Investment incentives: Eligible for government incentives and subsidies
• Tax planning: Effective utilization of double taxation treaties

Capital Requirements

As of 2026, minimum capital requirements are as follows:

• Limited liability company: Minimum TRY 10,000 (at least 25% payable upon incorporation)
• Joint-stock company: Minimum TRY 50,000 (TRY 100,000 for non-public A.Ş. adopting the registered capital system)

Comparison: Branch vs Liaison Office vs Subsidiary

The following comparison highlights the key features of each structure:

• Legal personality: Branch - No | Liaison Office - No | Subsidiary - Yes
• Commercial activity: Branch - Yes | Liaison Office - No | Subsidiary - Yes
• Revenue generation: Branch - Yes | Liaison Office - No | Subsidiary - Yes
• Tax liability: Branch - Yes | Liaison Office - Limited | Subsidiary - Yes
• Corporate tax: Branch - 25% | Liaison Office - Exempt | Subsidiary - 25%
• Limited liability: Branch - No | Liaison Office - N/A | Subsidiary - Yes
• Setup time: Branch - 2-4 weeks | Liaison Office - 3-6 weeks | Subsidiary - 1-2 weeks
• Minimum capital: Branch - Not specified | Liaison Office - None | Subsidiary - TRY 10,000-50,000

Which Structure Should You Choose?

When a Branch Office Is Appropriate

A branch office is suitable when the parent company wants to extend its operations directly to Turkey, serve clients under the parent company's brand and operate in specific sectors such as construction and engineering projects.

When a Liaison Office Is Appropriate

A liaison office is an ideal starting point for companies seeking to explore the Turkish market, conduct market research and establish contacts with potential business partners without yet committing to commercial operations.

When a Subsidiary Is Appropriate

A subsidiary is the most suitable option for investors planning long-term investment in Turkey, seeking to conduct full commercial operations, aiming to participate in public tenders and wishing to benefit from government incentives.

Conclusion and Professional Assistance

The appropriate structure for a foreign company's presence in Turkey depends on numerous factors. Selecting the wrong structure can lead to unnecessary tax burdens, operational restrictions and legal risks.

Emir Law & Consulting provides comprehensive legal support in determining market entry strategies for foreign companies, company formation, branch registration and managing all legal processes. Contact us to determine the most suitable structure for your company with the guidance of our expert legal team.