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Establish a Subsidiary in Turkey

Updated on Monday 29th August 2016

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Foreign investors interested in expanding their business in Turkey can choose to open a subsidiary of the parent company abroad. The subsidiary is separated from the parent company and can be established as a new company incorporated in Turkey. The subsidiary must observe all of the taxation laws in Turkey.

 
Investors from countries which have signed double tax avoidance treaties with Turkey can benefit from a single taxation of the profits produced in Turkey. Foreign investors can also benefit from minimized withholding taxes on dividends or even an exemption from paying this tax.
 

Open a Turkish subsidiary

 
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The limited liability company is the most common type of company preferred by entrepreneurs who choose to open a subsidiary in Turkey.
 
The limited liability company can be public or private depending on the minimum capital and the number of founders. A minimum share capital of 50,000 TRY is needed to form a public limited liability company (also referred to as the joint-stock company) and at least one founder/shareholder. The liability of the founders is limited to their contributions, which protects them in case of bankruptcy. The management for this type of company is ensured by a board of directors and a general meeting of shareholders.
 
The private limited liability company is formed with a minimum share capital of 10,000 TRY by at least one founder. The liability of the shareholders is also limited to the amount of their contribution to the company's capital, the same as for the public limited liability company.
 
In order to open a subsidiary in Turkey, the investor will need to submit a number of documents, among which:
- articles of association
- passport of the manager/s (copy)
- signature declaration from the manager/s
- commercial books
 
The documents need to be notarized before they are submitted to the Turkish Trade Register. The investor will also need to open a bank account which will be used in the country by the new subsidiary. The founders of the subsidiary must deposit at least 0.04% of the capital at the Turkish Competition Authority.
 
Our company registration agents in Turkey can tell you more about the incorporation procedure and the additional documents that may be needed to open a subsidiary in Turkey.  
 

The advantages of the subsidiary

 
The subsidiary is a separate legal entity from its parent company abroad. This is an advantage compared to the branch that is totally depended on the foreign company. 
 
A large percentage of the capital of the subsidiary is owned by the foreign company, meaning that it also controls the management of its Turkish counterpart and the latter must make business decisions with the consent of the foreign company.
 
Turkey welcomes foreign investments and there are no restrictions on foreign company establishment: a legal entity can have 100% foreign capital.
 
Because a subsidiary is treated as any other local company, it must also observe the provisions for annual accounting and reporting. Our experts can provide you with professional accounting services in Turkey.
 
If you are interested in opening a company in Turkey and in other European countries, such as: Spain, Sweden or Ukraine, you may contact our local representatives.
 
 

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