Many foreign investors, who are interested in the Turkish market, want to start doing business in this country without the obligation of opening a company from the very beginning. The first step is to become familiar with the economic environment in the country and to see if the market offers good opportunities to develop a larger business.
A liaison office is a good choice for those investors who want to test the market in Turkey and do not want to develop commercial activities right away. Our company registration agents in Turkey can help you open this representative office.
The purpose of the liaison office in Turkey
Cautious entrepreneurs have an adequate solution to test the market – opening a liaison office, in accordance with the Law on Foreign Direct Investments. The Turkish authorities – especially the General Directorate of Foreign Investments - approve the opening of a liaison office, after the foreign investors present the documents required.
The authorization is available only for three years and after that, the entrepreneur must request another approval after he presents a report about its past activity and the future plans for the next three years, which represents the maximum period for which he will receive an extension. Detailed reports must be submitted every year to the entity that approved the registration of the liaison office.
Interdictions for the liaison office
The representative office can’t make profits from commercial activities and it’s not a legal entity. If the businessmen intend to perform commercial activities in Turkey, they can open firstly a liaison office for marketing purposes or information gathering and then set up a company, after they have studied the competitors. They can’t generate any form of income throughout the period of the liaison office. The parent company of the investor will be responsible for all the activities of the representative office in Turkey.
The parent company must provide the funds necessary for the representative office. It is not mandatory to deposit a minimum share capital upon the registration of a liaison office in Turkey. The documents that need to be drawn up and submitted are the certificate of registration for the parent company and a short presentation, the balance sheet for the previous year, the power of attorney for the person who will act as the liaison officer. In addition, a declaration related to future plans for the new office must be presented.
The registration procedure takes no more than five working days and after the procedure is completed, the foreign investor needs the identity number given by the tax department.
You can watch the video below, for more information on how to set up a representative office in Turkey:
Activities performed by a liaison office in Turkey
A representative office can perform only a few categories of activities, according to the Turkish laws:
- market research
- promotion for the goods and services provided by the parent company
- control of the suppliers
- technical support
- communication and information
- regional management center and others.
Those companies that want to have a wider range of business options in Turkey and that want to perform various business activities can open a branch or a subsidiary. Like the liaison office, the branch will depend on the parent company but will be able to enter into commercial relationships, trade and sign contracts in Turkey. Its activities will be limited to those performed by the parent company abroad. Unlike the liaison office, the branch has no limited functioning term.
Liaison offices in Turkey are allowed to employ personnel. In this case, additional permits will be necessary and the establishment will be liable to social security.