Turkey welcomes foreign investments and entrepreneurs can choose from several types of Turkish companies which can serve their business needs. The limited liability company and the joint stock company are the most common types of legal entities. When choosing to open a company in Turkey, the investor must take into consideration the particularities of the company types. While some are more suited for small and medium-sized companies, others will be more appropriate for larger corporations. Our company formation agents in Turkey can give you detailed information about the local regulations for incorporating companies.
- the joint stock company which is best suited for foreign investors seeking to develop large projects;
- the limited liability company is the most popular business form among foreign entrepreneurs in Turkey;
- the commandite company is the equivalent of the general partnership in other European or Western countries;
- the collective company, just like the commandite one, is the equivalent of the limited partnership in other countries;
- the cooperative company is widely spread among investors operating in agriculture in Turkey;
- branches are one of the best options for foreign companies seeking to have a permanent establishment in Turkey.
Our local consultants can offer full information on each type of company in Turkey. The types of companies in Turkey are presented in the infographic below:
Characteristics of Turkish companies
The limited liability company is best suited for small and medium-sized companies. The incorporation procedure is straightforward, and its characteristics make it a favorite among foreign investors. At least one shareholder is required for this business form and a minimum share capital of 5,000 TRY. The company is managed by a board of directors.
Among the advantages of limited liability companies in Turkey is also the fact that they can be used for various activities. Among these, they can be set up as holding companies and thus make a great tax optimization solution. Also, shelf companies which are quite common in Turkey are usually created as limited liability companies and then sold to those seeking to spend the least amount of time possible with the registration of a new company.
The joint stock company is used by those who want to start large businesses. At least one shareholder is needed to incorporate this company type and the requirements for the minimum share capital are larger than for the limited liability company, at 50,000 TRY. The management of the company is also foreseen by a board of directors, together with a supervisory board.
The commandite company does not require a minimum share capital and this company is used to operate a commercial enterprise under a trade name. Shareholders can have either a limited or unlimited liability. The collective company is similar to the commandite, however, the liability of the shareholders is limited in this case to the number of contributions made to the share capital.
Companies in Turkey must draw up the articles of association according to the Turkish Commercial Code. Before beginning the company registration procedure, applicants should check if their desired business name is available. This can be done at the Trade Registry Office.
Business forms for foreign companies in Turkey
As mentioned in the beginning, foreign companies can set up business operations in Turkey through subsidiaries and branch offices. They can also temporarily create liaison offices with the purpose of prospecting the market and promoting the foreign company’s activities. However, most of the times, foreign enterprises decide directly for branches and subsidiaries.
The branch office will act as a dependent business structure which will complete the same activities as the parent company. Most of the times, the branch office is the solution employed by foreign banks and other types of financial institutions operating in Turkey. These are also covered by Turkey’s double tax treaties.
Compared to the branch, the Turkish subsidiary will be registered as an independent company and can be used for completing the activities of the parent company, but other undertakings are also permitted. Subsidiaries usually take the form of limited liability companies and are treated as domestic companies from a taxation point of view.
If you have trouble deciding for the besttype of company, our Turkish company formation specialists can help you choose in accordance with your business needs. The registration of a branch and subsidiary in Turkey is similar from a documentation point of view, however, it is easier and less expensive to set up a branch office.
If you need to open a company in another country, such as Latvia, we can put you in touch with the Latvian lawyers, our local partners.
Registering a company in Turkey
No matter the type of company one wants to open in Turkey, there are several steps which must be completed. These are:
verifying the company name with the Trade Register (the company name must be unique);
having the Articles of Association drafted and notarized by a Turkish public notary;
filing the Articles of Association and other supporting documents with the Companies Registrar;
registering for taxation, VAT and social contributions with the tax authorities;
applying for the business licenses – these permits are issued in accordance with the activities of the company.
The Articles of Association in Turkey
All companies in Turkey must have their Articles of Association drafted. These must contain the following information:
- the company’s name, object of activities, share capital and legal address;
- information about shareholders and their contribution to the company’s capital;
- how the shares are divided among the shareholders and how the share capital can be altered;
- information about the company’s managers and directors, their appointment and dismissal;
- information about the annual general meeting and other specials provisions.
The share capital of companies in Turkey
Each company registered in Turkey needs to have a share capital, according to the Company Law. Even if not all business forms must have a specific minimum amount deposited in a bank account, the founders are required to deposit a minimum sum of money based on the activities the company will carry out.
As we’ve seen above, joint stock and the private limited liability companies are subject to a few requirements when it comes to the share capital, however, no amount of money is forwarded by the law when it comes to commandite companies and sole traders. However, in their case, the law requires for the share capital to be determined by the owner.
Another aspect which needs to be considered by those who register joint stock companies and limited liability companies is to divide the capital into shares. The requirements are different here because, joint stock companies can list their shares on the Stock Market, while private companies are not allowed to do that. The following requirements apply in the case of Turkish joint stock companies:
- at least 0.04% must be deposited with the Competition Authority in Turkey;
- at least 25% of the whole amount must be deposited in the corporate bank account;
- the remaining 75% can be added within a maximum of 2 years after the company was registered.
There is also the possibility of depositing the whole amount prior to company registration. Joint stock companies can list their shares on the Stock Exchange and are also allowed to issue bonds compared to private companies. You can also watch our video on the types of companies in Turkey:
Taxation of companies in Turkey
One of the most important aspects related to choosing a type of Turkish company is related to the taxes it will pay. The taxation system in Turkey is a 3-tiered one under which the following taxes apply:
- the direct taxes which apply to individuals and companies;
- the taxes on expenditure;
- the taxes on wealth.
Out of these, companies will be imposed with the corporate tax which is levied at a rate of 20%. Sole traders and the partners in commandite companies, on the other hand, will be levied the personal income tax which applies progressively and ranges between 15% and 35%.
We mentioned earlier that Turkey has signed various double taxation treaties which are meant to protect foreign investors doing business here from paying the same tax twice: once in Turkey and once in their country of residence. These treaties usually provide for various tax exemptions and reductions and thus contribute to a very advantageous taxation system imposed on foreign entrepreneurs with businesses here.
Our company registration agents in Turkey can help you incorporate a company and register it for VAT purposes. If you would like to buy a shelf company in Turkey, our experts can provide you with special services for this purpose. You can rely on us for more information on the available types of companies in Turkey and assistance in selecting the right business entity based on your needs and requests, as well as for tailored services for registering a company.
Can I purchase a shelf company in Turkey?
Yes, a shelf company is the same as a ready-made company, it can be purchased relatively fast and used right away. The ownership transfer of a shelf company in Turkey takes place in approximately 24 hours if the submitted documents are accepted. A shelf company comes with numerous advantages which are why is often on the list of international entrepreneurs interested in Turkey for business. There are no financial activities connected to a ready-made company, therefore, no liabilities. A ready-made company is registered for taxation and it has a bank account. In most cases, shelf companies run under the rules of limited liability companies in Turkey. But for a proper verification of a shelf company in Turkey, it is best to ask for company due diligence and see who this method can help you. One of our company formation agents in Turkey can tell you more about the ways in which you can purchase a shelf company in Turkey, plus the formalities implicated.
FAQ about company types in Turkey
1. What is the proper business structure for activities in Turkey?
The limited liability company is the most popular business structure available in Turkey. The formalities of this kind of entity are straightforward and allow foreign investors to start their activities relatively fast.
2. Can I open a joint-stock company in Turkey?
Yes, joint-stock companies are normally suitable for big businesses in Turkey. A joint-stock company in Turkey is a great option for large entrepreneurs from overseas. Talk to our agents and see how they can help you with the registration formalities.
3. Can branches and subsidiaries be established in Turkey?
Yes, branches and subsidiaries are available for incorporation in Turkey. Depending on the business needs of an investor, a branch can be a better option for future activities. We mention that subsidiaries are 100% independent and can have other activities instead of the main ones.
4. What is the legislation that oversees the company activities in Turkey?
The Company Act in Turkey is the main legislation that mentions all the provisions related to business in this country. Investors should ask for assistance and guidance for opening a company in Turkey.
5. How can I open a limited liability company in Turkey?
Limited liability companies in Turkey can be registered with the Articles of Association that represent the main documents. These comprise information about the owners, activities, general rules, voting rights, and other relevant aspects. Opening a bank account and register for taxation in Turkey are compulsory. More about the available types of companies in Turkey can be offered by our agents.
6. What is the minimum share capital for LTD in Turkey?
TRY 5,000 is the minimum share capital required for a limited liability company in Turkey. This sum must be deposited in a local bank account in Turkey.
7. How do I open a bank account in Turkey?
Opening a corporate bank account in Turkey is relatively simple if you provide the company documents to the financial institution you want to work with. One of our company formation agents in Turkey can offer more details on this topic.
8. Can I ask for support for tax registration in Turkey?
Yes, tax registration is mandatory for companies in Turkey, and it is a process that can be entirely handled by one of our specialists. Talk to our agents and see how they can help you.
9. Can I register partnerships in Turkey?
Yes, participation in partnerships is possible in Turkey, if you believe this type of company is suitable for your needs. General and limited partnerships are available types of companies in Turkey.
10. Is it hard to choose the type of company in Turkey?
No matter the type of company you register in Turkey, it is best to have a plan in this sense and to see what suits you most. We have a dedicated team of specialists who can help you make the proper business decisions in Turkey.
We would also like to present you some interesting facts and figures that show the economy and business direction of Turkey:
In terms of total FDIs in Turkey, the country registered around USD 165 billion.
Turkey ranked 33rd out of 190 worldwide economies, according to the 2020 Doing Business report issued by the World Bank.
In 2019, nearly 15% of the total FDIs was directed to the finance and insurance sector in Turkey.
The wholesale and retail trade sectors absorbed more than 15% of the total FDIs for the same year.
The Netherlands was the main investor in Turkey in 2019, with around 20% of the country’s total FDI stock.
UK, Qatar, Germany, USA, Japan, and Azerbaijan are important business collaborators and investors of Turkey.
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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