Articles
Establish a Subsidiary in Turkey
Updated on Wednesday 10th January 2024 Rate this article
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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.
| Quick Facts | |
|---|---|
| Applicable legislation (home country/foreign country) | Turkish Company Law |
| Best used for | - natural resources, - manufacturing, - banking, - insurance, - energy |
| Minimum share capital | Yes |
| Time frame for the incorporation (approx.) | Around 2 months |
| Management (local/foreign) | Local |
| Legal representative required | No |
| Local bank account | Yes |
| Independence from the parent company | Yes |
| Liability of the parent company | No, the subsidiary is fully liable |
| Corporate tax rate | 20% |
| Possibility of hiring local staff | Yes |
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.
We can also help you if you need accounting in Turkey or you want to open a company in a free zone in Turkey.
Even though there are 5 structures under which a subsidiary can operate, the limited liability company is the most popular and appreciated. A minimum share capital of TRY 10,000 is required in a local bank account in Turkey.
Establishing subsidiaries in Turkey comes with a wide range of advantages, like experienced and affordable local workforce, reduced business registration and operational costs, and great infrastructure compared to other European countries.
How to open a Turkish subsidiary in 2024
The limited liability company is the most common type of company preferred by entrepreneurs who choose to open a subsidiary in Turkey in 2024. The limited liability company can be public or private depending on the minimum capital and the number of founders. Hree are other formalities to consider in 2024:
- A minimum share capital of TRY 50,000 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 TRY 10,000 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:
Having a subsidiary in Turkey means no more than 50 founding members are allowed. However, there are no restrictions regarding their nationality. One or more managers can be appointed by the shareholders of the subsidiary.
The advantages of the subsidiary
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.
A subsidiary in Turkey can have other activities too, besides the ones of the parent enterprise because it can have an independent structure. The formalities for incorporation can be explained and managed by our team of local agents.
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. You can also watch the video below on how to open a subsidiary in Turkey:
FAQ about 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:
- 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.
- 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.
- 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.
- 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.
- 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.
Payroll in Turkey is necessary for the correct and timely distribution of salaries in a company. An accounting expert can take care of everything that these services entail, mentioning that first of all the related taxes will be paid to the state. Do not hesitate to contact our team and benefit from the services offered in this regard.
Flexibility and freedom are some of the characteristics of subsidiaries in Turkey, great advantages for international entrepreneurs. The Turkish subsidiary can carry out the activities expending its own independent organization.
If you are interested in opening a company in Turkey in 2024 and in other European countries, such as: Spain, Sweden or Ukraine, you may contact our local representatives. Investors interested in opening a startup company in Turkey can benefit from representation from our local experts.
Meet us in Istanbul
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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- - 24 hour response time guaranteed;
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