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Everyone agrees that starting a business outside of your native country is more difficult than starting one in your own country. The fundamental reason for this is because you must not only comprehend your company’s tax requirements, but also the business environment of the country in question, which in this case is; Turkey.
As a result, regular accountants who merely fill out tax returns will not suffice in your journey; you will need business consultants to assist you in successfully starting a business in Turkey.
Turkey’s ideals are founded on fairness and an expanding economy, which allows international investors to have the same rights as Turkish investors, and vice versa. For both foreign and domestic investors, the terms and conditions for founding a corporation in Turkey are the same. Foreign investors can now form any type of company that can be formed by local investors.1
Below is a list of company types in Turkey:
- One-person Company,
- Limited Company,
- Joint-Stock Company,
- Cooperative Company,
- Collective Company,
- Simple Commandite Company,
- Limited Partnership.
Opening a Business in Turkey
Due to its unique trading location between Asia, Europe, and the Middle East, Turkey has attracted investment from foreign investors who are keen on opening a business in Turkey for many years. Many public and international businesses have opened headquarters in and around Turkey’s major cities, demonstrating the country’s worldwide relevance. The vast majority of these bigger corporations are based in Istanbul and Ankara, both significant Turkish cities, with Ankara serving as the capital.
The monetarily booming European country called Turkey is a great destination for setting up new businesses. The country’s position as a NATO member, trade tariff deals with neighboring nations, and the resultant growing economy only adds to the reasons that support the cause of starting a business in Turkey.
This tutorial will teach you all you need to know about starting a business in Turkey if you don’t have concise knowledge. We’ll also go over some fast suggestions and benefits that will help you better understand the advantages of establishing a business in Turkey.
The Procedure of Opening Business in Turkey
Beyond its biggest benefactors, the tourist and agricultural industries, Turkey’s geolocation is quite ideal for supporting many business types for its economy. Whether you’re a native Turkish citizen or a foreigner, starting a business of any kind in Turkey has a few conditions that can make the process go more smoothly.
You’ll need an accountant and/or a lawyer who are both familiar with providing business advisory roles. In addition to a translator, you’ll need one or more attorneys, especially if you’re a foreigner or an ex-pat. While that takes care of the human resources part you’ll need to start a new business in Turkey, let’s look at the legal requirements.
The registration process takes no more than a week after determining the type of business (limited liability corporations, joint-stock companies, commandite businesses, collective companies, or commercial partnerships). Before opening a business, the foreign investor must have a particular amount of capital; for example, a limited liability company requires a minimum share capital of 10,000.00₺, while a joint-stock corporation requires a minimum deposit of 50,000.00₺.2
Before opening a business in Turkey, foreign companies must fulfill a series of stages. These steps are as follows:
- Choosing the type of business they wish to start and having the necessary documentation drafted and notarized in accordance with the Companies Law,
- Establish a corporate bank account and deposit the needed share capital,
- Appoint the company’s directors or management in accordance with the law,
- File the articles of incorporation, as well as the names and addresses of the shareholders and managers, with the Trade Register,
- Obtain tax and VAT numbers, as well as register with the tax office for social security purposes.
What are the documents needed for starting a business in Turkey?
Preparing the documentation required to establish a business in Turkey and registering to the Trade Registrar is one of the most crucial procedures in starting a business in Turkey. The Articles of Association are the most important documents to draft and notarize since they must include all of the information about the shareholders, including their names, addresses, contributions to the company’s share capital, and the number of shares they possess in the company. The company’s management must also be listed in the Articles of Association, including their names, how they are appointed and revoked, and their roles and responsibilities.
The Turkish company’s trade name, its address in this country, and a description of the operation must all be properly stated in the same document. Other clauses in the Articles of Association can relate to adjustments that can be made to the business and dispute resolution processes if any problems arise amongst the shareholders. The Turkish Commercial Code requires that the Articles of Association be written per its regulations before starting a business in Turkey.
A crucial point to remember is that when forming a sole proprietorship, a simple application form must be filed with the Trade Register. In Turkey, where partnerships are known as commandite companies, the partnership deed is the foundation of their formation.
If a partner is an individual:
- The copy of the partner’s passport translated into Turkish and notarized,
- ID photo of the partner,
- Partner’s Tax number,
- Partner’s residence permit (if there’s one),
- Rental agreement,
- Power of attorney for Company Formation In Turkey.
If a partner is a legal entity:
- The decision of Headquarters and Board of Directors regarding legal entity partnership in Turkey
- The decision about appointing a legal entity as a Manager of a Company if any,
- Company’s Trade Registry Certificate,
- Authorization Letter of the Company,
- Rental agreement,
- Power of attorney for setting up a company in Turkey.
Remember to seek advice from an experienced law firm if you are not completely knowledgeable about the process.
The Process of Starting a Business in Turkey
A person who wants to start a new business would first require to have the capital sum of at least 10,000.00₺ (approximately $2000) ready to pay for various registration fees and other expenses tied to setting up the business legally. This sum isn’t inclusive of the cost of acquiring land and other necessary investments such as capital evaluation of the company itself and so on.
Note: If you are a Turkish Citizen, you can skip the Visa step to read the Location section.
Visa: If you’re an ex-pat, you’ll need to obtain a visitor’s visa or an equivalent type of visa that allows you to support or participate in the below-mentioned procedures. You can obtain it by applying to the Turkish Consulate or the Embassy in your own country.
Location: After acquiring the visa, you could enter the country (Turkey) to determine the type of company or corporate body you will open to commence your business. Before you decide on the kind of company you will open, you must determine whether you’ll acquire Turkish land or instead rent one for setting up your company. Based on whichever option you choose, you’ll need to register your property purchase with the Commercial Register Office and the Chamber of Commerce Office of Turkey before starting a business in Turkey.
Company Type: You need to choose which company type you are going to establish in Turkey, and it must suit your needs.
Taxes: Now you’ll also need to obtain a Tax Identity Number from Trage Registrar Office where you will be required to submit the necessary documents. After getting the TIN, your business will gain the legal capability of performing transactions and paying taxes.
Notarizing the Company: Your accountant can begin the process of preparing the master agreement for your business so that it can be submitted to the Trade Registry, where your tax records and power of attorney paperwork will be created. You will be requested to sign the circulars and power of attorney of your business after they have been created and obtained from the Trade Registrar’s office, where your sworn statement will also be collected. Inevitably, bring your translator with you.
Capital Deposit: Any respective type of company you pick to open will involve a need to notarize the capital. You can do so by depositing the minimum required amount based on the respective company type you pick in a Turkish bank authorized by The Central Bank of the Republic of Turkey. Suppose your company possesses an asset of intangible currency that you want to use to guarantee capital deposit. In that case, it will undergo evaluation by bank personnel to derive a figure. This figure can be appealed and repealed until acceptance, but it will delay the process by a margin. You will need to show an additional hundred grand Turkish lira of capital in your company’s account if you want to gain the ability to hire foreign personnel in your company. When your company’s shareholder is a foreigner, or your manager isn’t a native to Turkey, the shareholder will be demanded to produce residency papers by some banks.
Final Steps: After acquiring the documents mentioned above and properly registering them, your accountant or lawyer will procure for you the crucial company documents. Once all the order with Registrar Office is performed in the correct validation with the Turkish laws and VAT application is obtained with other essential documents, you can begin running your business.
Tips on Opening a Business in Turkey
Just like you won’t blindly trust an opportunity if you’re someone who invests wisely, you should also consider performing an in-depth analysis of the type of company you want to build for the services or products you will provide.
- Have enough monetary arrangements of running the business initially for at least four months after opening it,
- Have a business plan ready in a documented format that you can produce before potential investors and partners to attract investment,
- Hire the services of an expert translator without hesitation if you aren’t fluent in the Turkish language,
- Hire the appropriate staff right away to handle different roles such as accounting, marketing, legal issues, etc.
What are the advantages of opening a Business in Turkey?
- A Limited Liability Company can be established within a week with a minimum of one shareholder and one director, allowing for complete foreign ownership of the company.
- Companies operating on certain free zones in Turkey are exempted from paying VAT, corporate tax, and customs duty.
- Companies in free zones can send their earnings to their parent company without paying charges on it.
- Turkey shares trade relations with European and Asian countries and its trade route connects both continents, making it geologically perfect for claiming business opportunities.
Some other advantages and benefits include; low operating costs, strong consumer spending, local manufacturers, incentives granted by the Turkish Government, and Turkish Citizenship.
Final Words and Conclusions on Opening a Business in Turkey
A foreign investor has a lot to look forward to for starting a business in Turkey, with its positive behavior to incentivize the investors. Some laws also provide limited funding to companies setting up their base in specific locations throughout the country to make opening a business in Turkey a fantastic aspect.
Remember to take advice from an experienced law firm during the entire process.
Frequently Asked Questions about starting a business in Turkey (F.A.Q.)
- Do I need a local address for starting a business in Turkey? Yes, your company should have a registered address.
- How long does opening a company bank account take? It may take two or three weeks.
- Do I need to come to Turkey to establish a business? No, you don’t need to. The authorized consultancy firms can solve this problem for you.
- Does the company need a local manager? No, your company doesn’t need a local manager.
- What is the rate of corporation tax in Turkey? The corporation tax rate is 20% in Turkey in 2021.
- How much is the cost of establishing a company in Turkey? Although forming a business in Turkey is not expensive, the company’s owner should consider the company’s required tuition expenses as well as the notary fees (if applicable) of the Turkish consultancy firm handling the process service charges.
- How long does establishing a company takes in Turkey? It takes only three days.