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Articles

Establish a Subsidiary in Turkey

Updated on Monday 11th November 2019

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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.

Our Turkish company formation advisors can offer information on the procedure related to opening a subsidiary.

Open a Turkish subsidiary

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 of 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 of both the parent company establishing the subsidiary and of the new entity;
  • - copies after the passports of the manager/s of the Turkish subsidiary;
  • - signature declaration from the manager/s showing they accept the position in the subsidiary;
  • - commercial books of the new company which must be purchased by the subsidiary’s representative.

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.  

Below, is a scheme detailing the main steps of opening a Turkish subsidiary:

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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.

Questions on the opening of a Turkish subsidiary

Below are the answers to some of the most frequently asked questions on how to open a subsidiary in Turkey:

  1. Can a foreign company open the subsidiary remotely?

Yes, the registration process of a subsidiary is the same as for any other type of company and can be partially completed from a distance through power of attorney.

  1. Is it necessary to have a local partner in order to open a subsidiary?

No, there is no need for a local sponsor or partner for setting up a subsidiary in Turkey.

  1. How long does it take to register the subsidiary?

The registration process will take around 10 days, however, if any other licenses or approvals are necessary, investors should expect a longer period of time before actually starting the operations.

  1. Is it necessary for the subsidiary to have a local office?

Yes, as a local company, the subsidiary must have an official address in Turkey. This address will be registered in the official database of the Trade Register.

  1. What should a foreign company choose between the subsidiary and the branch office?

The main difference between the two types of entities lies in the degree of independence the parent company wants to offer: the subsidiary is fully independent, while the branch office must undertake the parent company’s activities. Our local advisors can guide you in choosing the right option from this point of view.

You can also watch the video below on how to open a subsidiary in Turkey:

 

 

If you are interested in opening a company in Turkey and in other European countries, such as: SpainSweden or Ukraine, you may contact our local representatives.

 

 

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Call us now at +90 532 351 66 77  to set up an appointment with Cagatay Altunsoy, one of our specialists in company formation in Istanbul, Turkey. Alternatively you can incorporate your company without traveling to Turkey.

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