Registration of a company (limited liability company) in Turkey. Service offer

Turkey has a civil law system which has been wholly integrated with the continental European system. For instance, the Turkish civil law has been modified by incorporating elements of the Swiss Civil Code and the Code of Obligations, as well as the German Commercial Code. The administrative law bears similarities with the French counterpart and the penal code with the Italian counterpart.

The principal forms of business organization in Turkey are:

A limited liability company can be formed with one member and one director. Both directors and members of a company can be foreign individuals (a company can be wholly owned by foreigners). In accordance with Turkish law, the signatory to the bank account must be one of the directors.

Every company in Turkey must have a name. The requirements for a company name are as follows:

• it must be distinct from the names of all other existing companies;
• the name must contain a suffix indicating the type of legal entity: Limited Şirket / LS; if a company name contains the first name and surname of an individual, the phrasing that indicates the type of legal entity cannot be abbreviated;
• the name must contain a wording to indicate the business activity of the company (main activity) – in Turkish;
• it cannot contain words Turkey or Turkish.
• the presence of foreign words in a company name is permitted unless such words contradict the law, national and the cultural and historical heritage of Turkey and where the name or brand promoting the goods or services constituting the business activity is in a foreign language or the investment is made by foreign members.

1. company name check;
2. entering the territory of Turkey;
3. obtaining a Turkish TIN (can be obtained remotely, after entering Turkey);
4. depositing 25% of the capital in a temporary bank account (payment can be made from the founder’s account / in cash at the bank);
5. having the documents of the founder and director translated and certified at a local notary;
6. issuing a power of attorney to a representative to perform the registration;
7. signing a lease agreement for the company’s office;
8. submitting the company registration documents to the Chamber of Commerce;
9. signing an agreement and a power of attorney for provision of accounting services to the company.

After the electronic documents on company registration are received, one can proceed with opening a bank account at a local bank. To start the procedure, the director must personally visit the bank.

• Notarized and apostilled copy of the founder’s international passport;
• Notarized copy of the founder’s proof of address (utility bill/national passport/ID card);
• 4 photos of the founder in electronic form or on paper;
• Email;
• Telephone;
• Full name of the founder’s mother and father;
• Name of the future company;
• Types of business activities (up to 5 activities can be specified);
• Lease agreement for the company’s office.

*This list is made for the simplest case when a company is registered with a single founder who will also be the company’s director. If there are several founders, the list of required documents and information will grow accordingly.

• Notarized and apostilled articles of association of the founding company (if the founding company’s country of registration is not party to the Hague Apostille Convention of 1961, consular legalization of the articles will be required);
• Resolution of the directors of the founding company to form a company in Turkey;
• Resolution on appointment of a director in a new company;
• Consent of the individual who will be appointed as director of the company;
• Power of attorney for a representative;
• Company name;
• Types of business activities (up to 5 activities can be specified);
• Lease agreement for the company’s office;
• TINs of the founder and of the director;
• Notarized and apostilled copy of the director’s international passport;
• Notarized copy of the director’s proof of address (utility bill/national passport/ID card);
• 4 photos of the director in electronic form or on paper;
• Email of the director;
• Telephone of the director.

It is possible to register a company without visiting Turkey – using an apostilled power of attorney issued to our employee.

The estimated time of company registration without a personal visit is 3-4 weeks.

A company is a resident of Turkey if its registered office or place of management is located in Turkey. If both the registered office and the place of management are outside Turkey, this company is non-resident for tax purposes. Resident companies are taxed on their worldwide income, and non-resident companies – only on income received in Turkey.

The standard corporate income tax rate is 20%. It was temporarily increased in 2021 (25%) and 2022 (23%), and returned to its norm (20%) in 2023.

Turkey has no difference in the criteria for registering a company for corporate income tax and for value added tax (VAT) purposes (many other countries require VAT registration if certain turnover thresholds are exceeded). Therefore, tax resident companies are by default obliged to pay all types of taxes and levies.

The standard VAT rate is 18%. Reduced rates of 8% and 1% apply to certain goods and services.

Dividends are subject to withholding tax at a rate of 10% (the rate used to be 15%). This rate applies to dividends paid by a resident company to an individual (wherever resident) and to a non-resident company. However, no withholding tax applies to dividends paid by a resident company to another Turkish resident company.

Royalties are subject to withholding tax at the rate of 20%.

Different tax rates apply to interest payments. For example, interest on bank loans granted by foreign banks is subject to 0% withholding tax, interest on other loans is taxed at the 10% rate, interest on deposits – at a rate from 0% to 18% depending on the currency and period of the deposit. The tax rates may be reduced under double tax treaties (DTAs).

Stamp duty applies to various documents, including agreements and financial statements, at the rates ranging from 0.189% to 0.948%. Stamp duty is normally levied on salaries at the rate of 0.759%. In some cases, fixed duties in Turkish lira are charged.

Turkey has some restrictions on foreign exchange transactions. In particular, individuals are prohibited from attracting foreign-currency loans, and Turkish companies are restricted from attracting such loans. Transactions between residents must be made in Turkish lira. Turkey also has a special levy on borrowings from abroad. The rate depends on the loan currency and period. The highest rate for borrowings in foreign currency for a period up to a year is 3% of the loan amount. This levy does not apply to banks or other financial institutions.

Turkish companies are required to keep accounting records and prepare financial statements in accordance with Turkish Financial Reporting Standards, which are fully compliant with the International Financial Reporting Standards. Financial statements must be presented at the annual meeting of members and need not be submitted to any government authorities.

Limited liability companies are only subject to audit of their financial statements if they meet two of the following criteria in two consecutive financial periods:

• total assets are or exceed TRY 35 000 000;
• net annual sales are or exceed TRY 70 000 000;
• number of employees is or exceeds 175.

There is no requirement to file the annual return for Turkish companies (in many jurisdictions, such a return contains corporate identification data and information about the structure of the company and is filed annually with government authorities such as the Registrar of Companies).

As a general rule, the tax period for corporate income tax is the calendar year. The tax return is filed by the 30th day of the fourth month after the reporting period end-date (usually this is 30th April). Quarterly advance payments are made throughout the year. The final tax is paid on the tax return filing deadline date.

[1] The fees are valid as of May 2023.

[2] An apostilled copy of the founder’s passport is required for the registration of a company (both remote and with a visit to Turkey), but the client can prepare it without our help.

[3] It is required in the case of remote company registration (without vising Turkey). The client can prepare an apostilled power of attorney and submit it to us (we will provide the required text of the power of attorney).

[4] The minimum fee for keeping accounting records and preparing financial statements for a Turkish company is USD 500 per month (this fee does not include the audit of financial statements).