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Investors may want to set up a company overseas for various reasons. Fiscal advantages of the relevant country, ease of access to a specific market, favorable laws, the quality and quantity of the workforce, incentives, and other circumstances may be counted among these reasons. On the other hand, companies should not limit themselves to a single region if they wish to grow their business and scale their investments. Turkey, with its growing economy, geopolitical position, and workforce, is a good alternative for companies looking to expand their business. In this article, we will briefly discuss company law in Turkey, then explain the types of companies, and finally, examine the steps on how to set up business in Turkey.
COMPANY LAW IN TURKEY
Company law in Turkey is regulated by the Turkish Commercial Code. Matters such as the establishment, management, change of type, merger, and demerger fall within the scope of company law. Both foreigners and locals can establish and manage companies in Turkey. Foreigners are treated the same as local individuals. Companies in Turkey have separate legal personalities, so shareholders are generally not personally responsible for company debts. Turkey supports the establishment or acquisition of companies by foreigners to attract foreign investment.
COMPANY TYPES IN TURKEY
The types of companies that can be established in Turkey are limitedly listed in the Turkish Commercial Code. Corporations include joint-stock companies, limited liability companies, and limited partnership divided into shares. In these types of companies, shareholders are only responsible for the capital they commit to the company. Personal companies include ordinary limited partnerships and collective companies. In personal companies, shareholders are personally responsible for company debts, so they are usually not preferred by investors.
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HOW TO START A BUSINESS IN TURKEY
Opening a company in Turkey for foreigners is subject to the same rules as Turkish citizens. The procedures are completed shortly after the preparation of the necessary documents and their submission to the trade registry offices. However, if there are mistakes, the company set up application will be rejected, resulting in time and money loss. Therefore, it is recommended to seek assistance from a law firm in Turkey. The general steps on how to set up a business in Turkey are outlined below:
1. Decide on the trade name
The first thing to do to set up a business in Turkey is to decide on the trade name and type of the company. Since multiple companies cannot be registered under the same name, it is useful to conduct research before starting the establishment procedures. Although business owners can freely choose the trade name, there are some rules to be observed. These rules are regulated in the Turkish Commercial Code and the Regulation on Trade Names. In short, the trade name should not be used by others, should not mislead third parties about the scope, importance, and financial status of the business, should not be contrary to public order, national interests, and morality, and the business subject and company activity in the trade name should be in Turkish.
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2. Decide on the type of company
The next step after deciding on the trade name is to decide on the type of company. This issue is closely related to the trade name, as the selected type of company is added to the end of the trade name. Foreigners wishing to set up a business in Turkey generally prefer to establish a limited liability company or a joint-stock company. A single-shareholder joint-stock or limited liability company can be established. Since both limited liability and joint-stock companies are capital companies, the company is primarily responsible for company debts. However, steps should be taken in accordance with the law, as there may be responsibilities in certain matters related to tax and insurance law. It is also recommended to consult a lawyer both during and after the establishment of the company.
Limited liability companies are equivalent to companies in other countries such as Limited Liability Company (LLC), Societas Privata Europaea (SPE), Gesellschaft mit beschränkter Haftung (GmbH), Private Limited Company (Ltd, Limited), Societé à Responsabilité Limiteé (SARL, SàRL), Società a Responsabilità Limitata (Srl), Sociedad Limitada (S.L.), Sociedad de Responsabilidad Limitada (S.R.L., S. de R.L.). Natural or legal persons can be shareholders of limited liability companies. In 2026, the company capital must be at least 50,000 TRY and must be paid within 24 months from the registration of the company.
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Joint-stock companies are equivalent to companies in different countries such as Corporation (Inc., Corp.), Societas Europaea (SE), Aktiengesellschaft (AG), Societé Anonyme (SA), Public Limited Company (plc), Società per Azioni (SpA), Sociedad Anónima (S.A.). Natural or legal persons can be shareholders of joint-stock companies. In 2026, the capital must be at least 250,000 TRY, and 25% must be paid before the registration of the company, and the remaining amount must be paid within 24 months from the registration.
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General assembly approval is required for the transfer of shares in limited liability companies. General assembly approval is not required for the transfer of shares in joint-stock companies, and shares can be freely transferred.
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Which company type is better for foreigners?
Foreigners planning to set up a company in Turkey usually choose between a Limited Liability Company (LLC) and a Joint Stock Company (JSC). LLCs are more suitable for small and medium-sized businesses, while JSCs provide flexibility, prestige, and the option of public offering.
| Criteria | Limited Liability Company (LLC / Ltd. Şti.) | Joint Stock Company (JSC / A.Ş.) |
|---|---|---|
| Minimum Capital | TRY 50,000 | TRY 250,000 |
| Shareholders | 1 to 50 | Minimum 1 (no maximum) |
| Management | Managed by one or more directors | Managed by a Board of Directors |
| Share Transfer | Requires notarization and Trade Registry approval | Easier, can be transferred without notary in most cases |
| Liability | Limited to the amount of capital committed | Limited to the amount of capital committed |
| Public Offering | Not possible | Possible (JSCs can be listed on the stock exchange) |
| Preferred by | SMEs, startups, family businesses | Larger companies, foreign investors planning growth or IPO |
| Audit Requirement | Only if certain size thresholds are met | Mandatory for certain JSCs regardless of size |
3. Lease or purchase the location where the company will be established
To establish a company in Turkey, it is mandatory to determine a registered business address where the company's headquarters will be located. This address may be secured either by leasing a commercial property or by purchasing an immovable property in the name of the company or one of its shareholders. The declared address is not a formality; it is a legally significant element of the company registration process and is subject to verification by the tax authorities.
In practice, most newly established companies, especially those founded by foreign investors, prefer to operate from a leased office. Once the commercial lease agreement is executed, it must be submitted to the relevant tax office as part of the incorporation process. The tax office reviews whether the address stated in the lease agreement matches the address declared during company registration and may conduct a physical inspection to confirm that the premises are suitable for business use. If inconsistencies are identified, the incorporation or subsequent tax registration procedures may be delayed.
The lease agreement also determines the tax treatment of the rental relationship. Depending on the status of the landlord, withholding tax and value added tax may apply to the rental payments. These tax obligations must be properly assessed and fulfilled by the tenant company, as failure to comply may result in tax penalties and interest. For this reason, lease agreements should be reviewed carefully before execution, particularly with respect to tax clauses and the intended use of the premises.
Alternatively, companies may choose to acquire ownership of a property to be used as their registered office. In such cases, the title deed records are submitted to the authorities instead of a lease agreement. While ownership eliminates rental obligations, it introduces additional considerations such as property taxes, maintenance costs, and zoning compliance. It is also essential to ensure that the property is legally eligible to be used as a commercial address, as residential-use restrictions may prevent registration in certain cases.
Virtual offices and shared office arrangements are also commonly used, especially during the early stages of business setup in Turkey. Although these solutions are generally accepted by the trade registry and tax offices, the service provider must comply with regulatory requirements, and the contractual relationship must clearly establish the company's right to use the address as its registered headquarters. Improper or informal arrangements may lead to challenges during tax inspections.
Accordingly, when setting up a business in Turkey, foreign investors should approach the selection of the company address with due care. Ensuring that the lease or ownership structure is legally sound and tax-compliant at the outset helps avoid delays during incorporation and reduces the risk of future administrative or financial disputes.
4. Obtain a tax number
The tax number is like the identification number for companies or foreigners in Turkey. Therefore, the tax number is used to distinguish between foreign investors or companies. For this reason, one of the requirements for foreigners to establish a company in Turkey is obtaining a potential tax number. To obtain the potential tax number, shareholders must apply to the tax office before starting the procedures and obtain the tax number.
Corporate Tax in Turkey (2026)
Once the tax number is obtained, foreign investors should also be aware of the corporate taxation system. The corporate income tax rate for companies in Turkey is 25% in 2026. In addition, VAT, withholding tax and social security contributions apply.
| Tax Type | Rate (2026) | Notes |
|---|---|---|
| Corporate Tax in Turkey | 25% | Applies to worldwide income of resident companies in Turkey and Turkey-sourced income of non-residents. |
| Value Added Tax (VAT) | 20% (reduced rates 1% / 10%) | Standard rate for most goods and services. Essential for any business setup in Turkey. |
| Withholding Tax | Varies (e.g. 10–15%) | Levied on dividends, interest, royalties, and certain payments to foreign shareholders who set up a company in Turkey. |
| Social Security Contributions | ~22.5% (employer) + ~15% (employee) | Based on gross salary. Required for all employees in companies registered in Turkey. |
When planning to register a company in Turkey, investors must consider not only the corporate tax rate but also VAT, withholding tax on cross-border payments, and social security obligations. These expenses significantly affect the total cost of starting a business in Turkey as a foreigner and should be planned carefully. Professional accounting and legal assistance is strongly recommended.
5. Prepare the company documents and contracts
Articles of association are the constitution of the company. These contracts include information such as the company's name, purpose, subject, field of activity, shares of partners, management of the company, representation, and distribution of duties. If there are multiple partners, it is suggested to regulate the relationships between partners. Therefore, the shareholders' agreement should be prepared, taking into account the requests and expectations of the parties, and the will of the parties should be accurately reflected in the agreement.
Turkish institutions ask for Turkish documents. Therefore, foreigners who want to set up a company in Turkey must translate documents such as contracts, passports, signature circulars, and residence permits into Turkish, obtain the apostille if necessary, and notarize them. If the partner is a legal person, documents such as the operating certificate, board resolution approving the establishment, and documents indicating who will represent the company should be prepared, translated, and submitted to the file.
6. Obtain official permits
While many business activities in Turkey can be carried out through a standard company registration process, certain sectors are subject to additional regulatory oversight and require prior approval from the relevant ministries or public authorities. In such cases, obtaining the necessary official permits is a mandatory prerequisite and must be completed before the company establishment process can be finalized or before commercial operations begin.
Activities such as operating an exchange bureau, engaging in financial services, insurance-related activities, energy production, education, healthcare, or tourism are commonly regulated and require authorization from specific institutions. These permits are granted only after a detailed review of the company's capital structure, shareholders, managers, business plan, physical premises, and, in some cases, professional qualifications of key personnel. For foreign investors, additional scrutiny may apply depending on the sector and the origin of the shareholders.
If the intended business activity is subject to ministerial or regulatory approval, proceeding with company registration without securing the required permits may lead to the rejection of the application, suspension of activities, or administrative sanctions. In practice, many delays in business setup in Turkey arise because permit requirements are identified too late or because applications are submitted with incomplete or improperly prepared documentation.
Therefore, when planning to set up a business in Turkey, it is essential to determine at an early stage whether the intended activity falls within a regulated sector and which authority is competent to issue the relevant permit. Proper legal guidance ensures that the approval process is coordinated with the company registration timeline, preventing unnecessary delays and enabling the business to commence operations in full compliance with Turkish law.
7. Visit the competent trade registry office for establishment
After applying online, depending on the type of company, the required documents are taken to the competent trade registry office. In the office, the company's records are approved, documents are reviewed, and if everything is in order, the company establishment process is completed. Subsequently, the registry office informs the tax office and the Social Security Institution about the company's establishment.
8. Open a bank account
Foreigners wishing to establish a company in Turkey must open a bank account for the company to operate effectively and ensure full transparency. Banks perform AML/KYC checks and typically request the Trade Registry documents, tax number, signature circular, and notarized Turkish translations of passports. For JSCs, a 25% capital deposit may be required before registration (blocked capital letter), while LLCs generally complete capital funding after incorporation within the statutory period. When opening a company in Turkey for foreigners, ask for multi-currency accounts and corporate internet banking from day one.
| Bank Type | Bank | Foreign-Currency Accounts | English Support | Notes |
|---|---|---|---|---|
| Public Banks | Ziraat Bankası | USD/EUR/GBP | Limited | Wide branch network; suitable for standard company registration in Turkey. |
| VakıfBank | USD/EUR/GBP | Limited | Consistent fee structure; strong nationwide coverage. | |
| Private Banks | İşbank | USD/EUR/GBP | Good | Comprehensive corporate services; trusted for business setup in Turkey. |
| Garanti BBVA | USD/EUR/GBP | Good | Robust online banking; helpful for foreign investors. | |
| Yapı Kredi | USD/EUR/GBP | Good | Strong merchant & card services post company formation in Turkey. | |
| QNB Finansbank | USD/EUR/GBP | Good | Relationship managers for foreign-owned companies. | |
| Participation Banks | Kuveyt Türk | USD/EUR/GBP | Moderate | Interest-free banking; trade finance tools available. |
| Ziraat Katılım | USD/EUR/GBP | Limited | Public participation bank; Sharia-compliant structure. |
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9. Hire Employees
Employing staff in Turkey is not merely an operational choice but also a legal and financial responsibility that must be carefully planned when starting a business. Certain companies are subject to mandatory employment obligations arising either from their size, the nature of their activities, or the specific licenses they seek to obtain. These obligations may apply at different stages of the company's lifecycle and, in some cases, from the very first day of operation.
Under Turkish legislation, companies that exceed statutory thresholds may be required to employ additional personnel such as disabled employees, occupational safety specialists, and workplace physicians. These requirements are primarily regulated under labor and occupational health and safety laws and are strictly enforced through administrative audits. Non-compliance may result in significant administrative fines and, in some cases, restrictions on business operations.
In addition to general labor law obligations, certain sectors impose employment requirements irrespective of the number of employees. For instance, companies applying for a travel agency license must employ at least one qualified individual who meets the professional criteria set by the relevant authorities. These criteria may include formal education in tourism or hospitality, possession of a professional guiding license, or certification demonstrating foreign language proficiency for designated information officer roles. Without fulfilling these staffing requirements, the licensing process cannot be completed successfully.
When opening a company in Turkey as a foreigner, investors must also consider the minimum wage and the total cost of employment. As of 2026, employees in Turkey cannot be paid below the statutory minimum wage, which is determined annually by the government and applies uniformly across all sectors. However, the employer's actual cost is significantly higher than the net salary paid to the employee, as it includes social security premiums, unemployment insurance contributions, and other mandatory employer-side charges. These costs must be calculated accurately at the planning stage, as they directly affect the sustainability and cash flow of the business.
Moreover, employment relationships in Turkey are governed by strict labor protection rules. Issues such as severance pay, notice periods, overtime payments, annual leave entitlements, and termination procedures must be managed in compliance with Turkish labor law. For foreign-owned companies, failure to comply with these rules often leads to disputes and unexpected liabilities, particularly during employee termination processes.
For these reasons, setting up a business in Turkey as a foreign investor requires a realistic assessment of employment obligations, minimum wage compliance, and long-term labor costs. Proper legal and financial planning at the incorporation stage helps prevent regulatory risks, protects the company from labor disputes, and ensures that employment structures remain compliant as the business grows.
10. Obtain Work Permits for Foreign Employees or Shareholders
Some partners may want to work in Turkey. Foreigners who wish to work in Turkey must obtain a work permit before starting work. The employment of foreign workers is subject to certain conditions, the most important being the requirement to employ five Turkish citizens for each foreign worker. According to the relevant law, five Turkish citizens must be employed before hiring a foreign worker, and a separate work permit application must be made for each foreign worker. However, there are some exceptions for company partners, allowing them to work in Turkey for a certain period without a work permit.
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11. Apply for Licenses
Opening a company in Turkey is the first step to doing business. After opening the company, foreigners must obtain the relevant licenses based on their activity area. For example, a company looking to establish a travel agency must first apply for a business title, register with TÜRSAB, and finally obtain a license from the Ministry of Culture and Tourism. Companies that operate without obtaining the necessary licenses may face administrative and legal penalties and may not achieve the expected benefits from their investments in Turkey.
12. Get Legal Advice
Establishing and operating a company in Turkey involves far more than completing registration formalities. Choosing the appropriate company type, structuring shareholder relations, drafting articles of association and shareholders' agreements, preparing and legalizing foreign documents, applying for sector-specific licenses, employing personnel, and ensuring ongoing compliance with Turkish commercial, labor, and tax legislation all require careful legal assessment. Each of these steps carries potential legal and financial consequences if handled incorrectly.
For foreign investors in particular, the Turkish legal system may differ significantly from their home jurisdiction in terms of mandatory rules, formal requirements, and enforcement practices. Issues such as representation authority, director liability, capital commitments, employment termination risks, and regulatory approvals are often underestimated during the initial stages of business setup. A lawyer experienced in company law in Turkey not only ensures that the incorporation process is completed smoothly but also helps investors anticipate and mitigate risks that may arise after the company becomes operational.
Working with a lawyer during the company formation process provides protection against unforeseen costs, delays, and compliance failures. Proper legal guidance allows the company to be structured in a way that supports long-term growth, facilitates future investments or share transfers, and aligns with the investor's commercial objectives. In practice, many disputes and regulatory problems encountered by foreign-owned companies in Turkey stem from decisions made at the incorporation stage without adequate legal advice.
Although engaging a lawyer is not mandatory for every company, Turkish legislation requires certain companies to have a contracted lawyer once they meet specific criteria, such as capital size or operational scale. Even where no statutory obligation exists, obtaining legal advice from the outset significantly reduces the risk of costly disputes and administrative sanctions and ensures that the business setup in Turkey proceeds in a legally secure and efficient manner.
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TOP 5 MISTAKES FOREIGNERS MAKE WHEN STARTING A BUSINESS IN TURKEY
Starting a business in Turkey as a foreigner can be straightforward if the right steps are followed. However, many investors face delays, extra costs, or even legal issues due to common mistakes in the company registration process in Turkey. The five common mistakes are choosing the wrong company type, underestimating capital requirements, submitting incomplete documents, ignoring tax and social security, and delaying the corporate bank account. Avoiding these pitfalls ensures smoother company registration in Turkey.
| # | Mistake | Explanation |
|---|---|---|
| 1 | Choosing the Wrong Company Type | Many foreigners open an LLC without considering whether a JSC would be more suitable. JSCs offer more prestige and easier share transfers, while LLCs are simpler and fit SMEs. |
| 2 | Underestimating the Minimum Capital Requirement | Investors often forget that an LLC requires TRY 50,000 and a JSC requires TRY 250,000 (2026). In addition, JSCs must deposit 25% of capital before registration, unlike LLCs. |
| 3 | Incomplete or Improper Documentation | Errors in notarized Turkish translations, missing apostilles, or incomplete powers of attorney frequently cause company registration in Turkey to be rejected. |
| 4 | Ignoring Tax and Social Security Obligations | Founders focus on incorporation but neglect ongoing compliance: 25% corporate tax, 20% VAT, and mandatory social security contributions (SGK) for employees. Non-compliance leads to penalties. |
| 5 | Opening the Wrong Bank Account or Delaying It | Some foreigners delay opening a corporate bank account in Turkey or choose banks without English support. This causes problems in depositing capital, receiving payments, or managing online banking. |
CONCLUSION
There are certain rules to follow when establishing a company in Turkey, and these rules vary depending on the type of company. Making mistakes during the establishment process can lead to significant losses in the future. So, having legal support is essential during the initial stages. On the other hand, receiving legal consultancy after the company is established will help you make the right decisions to grow your investment and be prepared for any obstacles that may arise along the way.
FAQs
How much does it cost to start a business in Turkey?
The cost to start a business in Turkey depends on company type and sector. Mandatory expenses include notary, translation, Trade Registry fees, and legal consultancy. In addition, you must deposit the minimum capital requirement for company registration in Turkey: 50,000 TRY for an LLC and 250,000 TRY for a JSC (2026).
Can a foreigner set up a business in Turkey?
Yes. Foreign investors can set up a company in Turkey and own 100% of the shares. There are no restrictions for foreigners in registering a company in Turkey, provided that the required documents are notarized and translated.
How to open a business account in Turkey?
After completing the company registration in Turkey, you can open a corporate bank account. Banks require the Trade Registry Gazette, tax number, signature circular, and sometimes the physical presence of shareholders. Opening a company bank account is an essential step in the business setup in Turkey process.
How do you register your company in Turkey?
To register a company in Turkey, you must draft the Articles of Association, apply through the MERSİS system, notarize documents, deposit the minimum capital, and complete registration at the Trade Registry. Afterward, tax and social security registration is mandatory for operating your business.
How to open LLC in Turkey?
To open an LLC in Turkey, at least one shareholder and one director are required, along with a minimum capital of TRY 50,000. The LLC is the most preferred option for foreigners starting a business in Turkey due to its flexibility and relatively simple management structure.
How long does it take to open a company in Turkey?
The process of opening a company in Turkey usually takes 5–10 business days, depending on the preparation of documents and notarization. With proper legal support, registering your company can be completed quickly.
Can foreigners own 100% of the shares?
Yes, foreign companies or individuals can own 100% shares when they set up a company in Turkey. This makes opening a company in Turkey for foreigners attractive compared to many other jurisdictions that limit ownership.
Is it hard to start a business in Turkey?
It is not difficult to start a business in Turkey if you follow the legal procedures. With professional guidance, the company registration process in Turkey is straightforward, although bureaucracy and language barriers may pose challenges for foreigners.
How much is business tax in Turkey?
The corporate tax rate for companies in Turkey is 25% (2026). VAT generally applies at 20%, with reduced rates for certain goods and services. Proper tax registration is part of the business setup in Turkey procedure.
Is share transfer possible after registration?
Yes, share transfer is possible after company formation. In LLCs, transfers require notarization and Trade Registry approval, while in JSCs, the process is more flexible and usually faster.
What is the best city to setup company in Turkey?
The best city to set up business in Turkey is Istanbul, as it is the country's commercial hub. Depending on the industry, Ankara, Izmir, or Antalya may also be suitable for starting a business in Turkey as a foreigner.
What is the minimum capital requirement for setting up a company in Turkey?
The minimum capital requirement to set up a company in Turkey is TRY 50,000 for a Limited Liability Company (LLC) and TRY 250,000 for a Joint Stock Company (JSC), updated as of 2026. This capital must be registered during the incorporation process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
