Open a Branch Office in Turkey

It is so easy to set up your branch office in Turkey by reading our article and consulting our lawyers. Our lawyers in Istanbul will also inform you about your duties as merchants. 

Open A Branch Office In Turkey 

With the easy citizenship opportunities for foreigner enterprisers and growing population enabling a potential consumer mass, Turkey has been one of the countries up-front in demand by investors. The Union of Chambers and Commodity Exchanges of Turkey (TOBB) announced the statistics of companies established on 2022.

According to the data published, the number of companies established during December of 2022 increased by 53,8 percent compared to the December of 2021. If evaluated on an annual basis, the number of companies established last year increased by 27.8 percent compared to the previous year, from 109.695 to 140.229. 

Our law firm in Turkey has established hundreds of companies and branch offices in Turkey for foreigner real persons and legal entities from different sectors thus possess an industrial knowledge beyond price. Lawyers of Mesci Law Firm are always prepared to legally assist you with your branch office formation in Turkey.

Our corporation lawyers in Turkey have years of experience in establishing branch offices in Turkey. Lawyers of Mesci Law Firm are also experienced on limited liability company formation in Turkey, joint stock company formation in Turkey, liaison office formation in Turkey and free zone company formation in Turkey and sole proprietorship establishment in Turkey enabling our lawyers to specialize deeply on setting up a business in Turkey for foreigners and foreign investments. Apart from that, we proudly can say that our law firm is also experienced on branding, company management and governance in Turkey. 

Our law firm in Turkey performs branch office formation services in Turkey to foreigners and within this scope, our lawyers have been assisting foreign clients from different continents to start their business providing them all they need in their swift immigration too such as obtaining residence permit, property purchase and applying for citizenship. We have clients from United States of America to Spain, from Holland to Italy, from England to China, from Poland to India. We know what our client and his business needs. 

Related: English Speaking Turkish Lawyers

We Can Open A Branch Office In Turkey Within 15 Days

We can open a branch office in Turkey within only fifteen days starting from the day we receive all the documents from your side and completion of certified translations of the documents to be presented to the Istanbul Chamber of Commerce for branch office formation. Within mentioned fifteen days for branch office formation in Turkey, we also notarize, obtain and prepare your corporate books and open up a bank account for your company. We have established over 290 companies for our foreigner clients from Holland, United Arab Emirates, Poland, Italy, Russia, Hong Kong, Lebanon, Saudi Arabia, Iraq, India, Germany, United Kingdom, Amman and United States of America.

The Characteristics Of A Turkish Branch

Many queries are received from our clients and client candidates these days regarding legal characteristic of a Turkish branch office and it’s relation with the parent company, in order to obtain information about the parent company when setting up a Turkish branch office in Turkey.

Pursuant to Article 118 of the Trade Registry Regulation, the branch offices are defined as the places and sales stores where industrial or commercial activities are carried out on its own, regardless of whether if it has an independent capital or accounting or not, whether it is within the registry area where its head office is located or in another registry area. 

A branch office does not operate independently and is subordinate to the head office thus it cannot be considered as a separate commercial enterprise as per Turkish regulations. Profit and loss of the branch is owned by the parent company thus owner of the rights and debts assumed through the branch is the parent company, not the branch office.

A branch formed in Turkey cannot engage in any commercial activity that are not specified in the parent companies’ Articles of Association (AOA). Although the branch is dependent to the head office, they act independently from the head office in their external relations.

It is accepted in the law doctrine that the branch has the authority to carry out certain transactions, such as the transactions carried out by the head office, in a way that will result in favour of third parties, and that they have active and passive litigation capacity due to related transactions made by them.

Of course, the independence of the branches in foreign relations is limited to the authority given to them by the headquarters. It is useful to indicate at this point, disputes arising from legal transactions to which the branch office in Turkey is a party, the capacity of the party should be determined according to whether the branch carried out the disputed transaction on its own behalf or on behalf of the head office. 

There is no legal capital requirement for branch offices to be established in Turkey however parent company is required to maintain a capital sufficient enough to run the branch office in Turkey. Such an information is being provided to the Istanbul Chamber of Commerce during establishment of branch office. On the other hand a branch office to be established in Turkey may have a separate capital if the parent company sees fit but in that case capital cannot be in foreign currency. 

Registering A Branch In Turkey

In order to register your branch office in Turkey, we will file a branch office registration application before the Istanbul Chamber of Commerce. Registration application is made by our lawyers electronically through MERSIS system, and then unlike an LLC establishment without an appointment, our lawyers go to the Relevant Chamber of Commerce for physical establishment.

Approval and registration of the branch will only take a day if there is no document missing or if an additional document is not required by the Chamber of Commerce. It is worth noting that after the establishment of the branch, the signature circular of the branch office must be issued before a Notary Public based in Istanbul in which representative of the branch office shall attend.

Later on, a Power of Attorney must be issued for an independent accountant before a Notary Public in order to start your companies’ accounting transactions and completion of VAT registration.

Again unlice LLC establishment corporate books will not be prepared by Istanbul Chamber of Commerce, books shall be notarized and issued through a notary public in Turkey. After issuance of signature circular and after you obtain the certificate of trade registry through MERSIS, you can present both of these aforementioned documents to the notary public for issuance of the corporate books. After the procedures stated herein, a bank account must be opened for the branch office for capital transfer. 

There is no legal requirement for capital allocation for branch office. Mother company can take a resolution providing that capital of the branch office will be covered from mother companies’ capital. If allocation of a separate capital for the branch office is desired, again, a resolution shall be taken by the parent company.

Capital that will be transferred is not considered as profit thus cannot be subject to any tax. In other words, you can transfer to your branch office bank account the TL amount stated within the resolution as capital without problem. However we should mention here, any amount that will be transferred to the branch office after establishment and exceeding the amount stated as capital shall be recorded to the capital advance account.

Mentioned amount shall be registered as capital in 1 year following it’s transfer to the foreign exchange deposit account according to 2 numbered Announcement issued regarding 95/6690 numbered Foreign Capital Framework Decree, Article 6.

Getting Permission From The Ministry Of Industry and Technology 

As per Article 122/1-g of the2012/4093 numbered Trade Registry Regulation, for branches whose establishment is subject to a permission or approval of the ministry or other official institutions, a permission or a letter of approval must be obtained. However this permission is not required for every branch office establishment so it is important to get the opinion of the relevant Chamber of Commerce by stating the area of activity of the parent company.

If no permission is required from administrative entities, an additional document which is named as 122/A shall be filled and presented to the relevant Chamber of Commerce with other documents to be presented during physical establishment of the branch office establishment in Turkey. 

Documents Required For Branch Office Formation In Turkey 

We hereby provide to our client candidates a list of the documents required for branch office formation in Turkey, having its head office in a foreign country:

• In order for a foreign company to open a branch office in Turkey, the capital of the company must be divided into shares. If the capital of the company is not divided into shares, it is necessary to amend the articles of association.

• Power of Attorney. The draft power of attorney, which includes the Powers requested by ITO, is sent to our clients before the establishment procedures. The POA must be given by the foreign company and it shall be apostilled by the relevant Turkish Consulate.

• Petition form, establishment notification form and chamber registration declaration declared by ITO shall be filled by our lawyers related to branch office establishment. These documents are physically presented to Istanbul Chamber of Commerce (ITO) during the physical establishment.

• The decision (generally a Board of Directors resolution) of the authorized body of the headquarter on opening a branch and appointing a fully authorized representative residing in Turkey to the branch shall be presented. A sample is being provided to our clients by our attorneys. We would like to draw your kind attention to the fact that the trade title, address and potential tax number of the branch office; potential tax number obtained for the headquarter; identity, address and contact information of the representative must be stated correctly in the content of the decision.
• The address stated in the resolution shall match the address information we enter to MERSIS. The resolution shall contain the information related to branch capital. If additional capital is allocated to the branch office, the capital should be shown in TL in the resolution.

• A signature circular containing the identity, address and signature information of those who signed the decision of the authorized body should be presented to ITO.

• If the person or persons who will represent the branch in Turkey and/or that these persons are fully authorized to represent in all matters are not indicated in the resolution, the Power of Attorney(s) provided for them must be presented to ITO.

• APPROVAL LETTER FROM THE FOREIGN AUTHORITY. Documents required for the registration of a branch in the relevant foreign country must also be submitted to ITO. For this, it is necessary to receive a letter from the competent authority of the country where headquarter is located, stating that a branch can be established in or outside of mentioned country.
• In such an approval letter, list of required documents for a fictitious branch office establishment shall be listed. And the information indicating that the headquarter is able to and has also provide these required documents shall be stated in the same letter.

• 122/A document we will provide to clients shall be filled and signed by the branch office representative.

• Documents showing the tax identity and trade registry information of the headquarter and abstract of record must be presented.

• Statement providing the information required by ITO regarding both the headquarter and the branch office shall be presented to the Chamber of Commerce. We provide the sample form to our clients.

• If the person or persons who will represent the branch are foreign nationals, notarized copies of passports must be presented. For these persons, a potential tax number must also be obtained. As mentioned above, passport number, address, contact information, potential tax number and identity number of the foreigner representative shall be indicated in the resolution. If the person representing the branch is a Turkish citizen, Turkish identity number will replace the tac identification number.

• Signature declaration of the representative issued in accordance with Article 40 of Turkish Commercial Code must be presented during physical establishment. If the representative will not present during physical establishment meeting, he shall also present a declaration of acceptance indicating he is accepting the authorizations provided with the resolution.

• Potential tax numbers must be obtained for the headquarter and for branch. Documents provided to us by the tax office must be presented during the establishment.

• Lease contract or title deed showing the branch address shall be presented to our team.

• For branches whose establishment is subject to a permission or approval of the ministry or other official institutions, this permission or a letter of approval must be obtained. This permission is not required for every branch office establishment so it is important to get the opinion of the Chamber of Commerce by stating area of activity of the headquarter.

• Documents stated above that are issued in foreign language shall be translated and notarized in Turkey. All legal documents shall be sent to our team in apostilled form and apostille shall be sealed by the relevant Turkish Consulate General.

Taxation Of Branches In Turkey 

Through this sub-article we aim to provide our client candidates willing to establish a branch office in Turkey information regarding taxation of branches in Turkey. Our law firm in Turkey and the accountants we are collaborating with will assist your firm in the best manner with tax liabilities and obligations of your branch office to be established in Turkey.

Although it varies depending on the commercial activity of the branch, branches that generate commercial earning are taxpayers. Therefore, branch office which will be established in Turkey will be responsible of corporation tax, value added tax, provisional tax, as occasion requires income tax, withholding tax return. Nevertheless, I believe, it is important to determine limits of tax liability of branch according to the characteristics of the concrete event. 

In this context, branch office that will be established in Turkey will be also responsible to declare all taxes through its certified public accountant. When year-end profit comes to existence as a result of tax returns and if this profit will be sent to the mother company, amount of profit transfer will be subject to income and withholding tax. Percentages of income and withholding tax are being determined by international agreements signed between countries and generally are around %10, %15. 

Evaluation In Recognition Of Corporate Tax

According to Corporate Tax Code, if a foreign company has a workplace or a permanent representative in Turkey and if this company makes commercial earnings through mentioned workplace or the permanent representative, commercial earnings of this company shall be taxed as ‘company profit subject to limited liability to tax’.

According to Article 30 of the same Code which is titled as ‘Tax Deduction in Limited Liability to Tax’, corporate tax deduction in the rate of %15 shall be applied to the part that is transferred by limited taxpayers that declare annual or special tax return to the mother company from the portion (net amount) remained after the deduction of calculated corporate tax which was made to the corporate income before reduction and exceptions.

However, according to Article 10 of Corporate Tax Code, profit that a limited taxpayer company earned through selling of the goods to entities based in foreign countries in Turkey, without selling them in Turkey and which were purchased from entities based in Turkey or produced in Turkey with the aim to export only and cannot be considered as profit earned in Turkey.

In order for a limited taxpayer to benefit from this article, mentioned goods shouldn’t be sold in Turkey. In such cases, branch office that will be established in Turkey will be exempted from corporate tax thus profit earned will be subject to tax within the scope of limited liability to tax. Selling of the goods in Turkey comes into existence when the buyer or sender or both of them are based in Turkey or sales contract was made in Turkey.

Evaluation In Recognition Of Value Added Tax (VAT)

According to Value Added Tax Code, export deliveries and services provided in relation to these deliveries and services provided to the customers in abroad are exempted from value added tax.

Exemption from value added tax can come into existence only if services are provided to customers based outside of Turkey, if mentioned customers are benefiting from these services in abroad, if related invoice was issued on behalf of mentioned customers based in abroad and if handling fee was transferred to Turkey with foreign currency.

Evaluation In Recognition Of Income Tax

According to Income Tax Code Article 75/4, portion remained upon calculated corporate tax deduction made from the corporate earnings of limited taxpayers that declare annual and special tax return in accordance with corporate tax code, before these earnings were subject to any reduction and exceptions are stated as earning on movable assets and income tax cut with the rate of %10 shall be applied to these earnings on movable assets that which were transferred to the mother company. In other words, %10 income tax cut shall be applied to the earnings of the branch office that were transferred to the mother company. 

Evaluation In Recognition Of Salaries Of The Employees

If an employee resident in Turkey signs an employment agreement with your branch office, salary shall be subject to income tax.

According to income tax code, there is an exception clause in Article 23/14-a of the Income Tax Code, regarding exemption towards the employer that are based in a foreign country. According to this article, employees that work in limited taxpayer companies which has their legal and head offices out of Turkey, if an employee is working in a limited taxpayer company who has it’s legal and head office out of Turkey, salaries paid in foreign currency to the employee over earnings of the company outside of Turkey are exempted from income tax. This exemption involves each employee that are being employed by limited taxpayer companies whether if these companies are liaison offices or not.

This exemption shall be applied only if the company in Turkey meets the following terms and conditions together: company shall be a limited taxpayer; company shall not earn profit in Turkey through carrying out trade activities in Turkey; the amount transferred by the company to the employee shall be deemed salary in accordance with law; amount transferred to the employee as salary shall be received by the mother company from its foreign earnings; salary shall be paid with foreign currency and through the account of the mother company; salary paid shall not be recorded as expense of the company based in Turkey.

However, we would like to inform you that such exemption finds execution area in respect to liaison offices only and not for branch offices. Because branch offices are established to earn profit in Turkey. Thus we always suggest our clients that are not willing to earn profit in Turkey, to establish a liaison office in Turkey.

If you are not willing to earn profit in Turkey, establishing a liaison office will be more advantageous. Salaries paid to employees working in a liaison office based in Turkey will be exempted from income and withholding tax but still, such an entity that has no legal personality has to pay social security institution premiums of its employees. Liaison offices can only be exempted from paying social security institution premiums if a foreigner employee was assigned to the liaison office for temporary duty, if there is a social security agreement between Turkey and related country and if certificate of exemption is obtained. 

If you are not willing to carry out trade activities in Turkey, we suggest you to establish a liaison office because liaison offices are also exempted from value added tax, corporate tax and provisional tax. Liaison offices shall only declare withholding tax return. Liaison offices can be established for 3 years but their operating period can be extended so you will be able to benefit from tax exemption for years.

Evaluation Of The Funds That Will Be Transferred From Mother Company

There is no legal requirement for capital allocation for branch office. Mother company can take a resolution providing that capital of the branch office will be covered from mother companies’ capital.

If allocation of a separate capital for the branch office is desired, again, a resolution shall be taken by the mother company. Capital that will be brought is not considered as profit thus cannot be subject to any tax. In other words, you can transfer to your branch office the amount stated in the resolution as capital without problem.

However we should mention here, any amount that will be transferred to the branch office after establishment and exceeding the amount stated as capital shall be recorded to the capital advance account. Mentioned amount shall be registered as capital in 1 year following it’s transfer to the foreign exchange deposit account according to 2 numbered Announcement issued regarding 95/6690 numbered Foreign Capital Framework Decree, Article 6.

If any amount other than capital will be transferred to the branch office, branch office based in Turkey will be obliged to issue an invoice included the value added tax with the explanation of consultancy at least. Branch office in this case will be obliged to pay value added tax.

We have seen that a few client asks whether if they can make international payments and money transfers by using the amount transferred by parent company to branch office bank account. In such cases our government would like to examine the purpose of and the addressee of the amount that will be transferred.

This means that the addressee based in abroad shall issue an invoice and the transaction will look like you are benefiting from a service in Turkey or buying goods to sell in Turkey. Please note that if you establish a liaison office in Turkey it will be hard for the office to transfer any amount outside of Turkey because these transactions are generally considered by the government as commercial activity and it is forbidden for liaison offices to carry out trade activities.

In order to obtain more information, you can consider obtaining legal consultancy from our tax lawyer in Turkey and accountants based in Turkey.

Our Law Firm In Turkey Will Open A Branch Office In Turkey 

Mesci Law Firm with her dedicated lawyers specialized in branch office formation in Turkey is here for you and ready to assist you when you need. Our law firm has managed to establish different types of trading companies for foreigner investors and entrepreneurs from different continents over years. Our law firm in Turkey will also be there for you when you need for any legal issue to be occurred after branch office establishment in Turkey. Our law firm provides pocket services to her clients arranging also credible certified public accountants and virtual office (office address) service providers.

Reach Us For A Safe, Quick and Cost-effective Branch Formation In Istanbul

Setting Up A Branch Office in Turkey

Setting up a branch office in Turkey can be a smart business move for companies seeking to expand their global web. Turkey has a rapidly growing market in different sectors with a strategic location that bridges Europe and Asia, making it an attractive destination for foreign investment. Setting up a branch office in Turkey can provide a number of advantages, including access to a large consumer base, reduced transportation costs and easier access to neighboring markets. The first step in opening a branch office in Turkey is to choose the legal entity that best suits your business needs. As per Turkish Commercial Code, there are several options available to foreign investors, including a branch office, liaison office, joint venture or limited liability company. A branch office is the most common choice foreign investors prefer as it allows an easy establishment procedure and operation while still retaining the parent companies legal entity and areas of activity.

Once the legal entity has been chosen, the next step is to complete the required paperwork and obtain the required permits. The application process for setting up a branch office in Turkey can be complex for foreign legal entities and time consuming, so it is advisable to seek legal assistance from an experience law firm. Our law firm in Turkey experienced many years on setting up a branch office in Turkey can assist you to prepare the required documents along with the Articles of Association, submit them to relevant authorities and file your application. 

One important requirement for opening a branch office in Turkey is to appoint a local representative who is authorized to act on behalf of the parent company. The representative must be a Turkish citizen or a legal resident of Turkey, and must be appointed in writing by the parent company. The representative will be responsible for handling all legal and administrative matters related to the branch office, such as obtaining permits and licenses, opening a bank account in Turkey and signing contracts. Another important thing to consider before setting up a branch office in Turkey is taxation.

The branch office will be subject to Turkish law which may be entirely different from the tax laws of the parent company is based in. It is important to understand the tax implications of operating a branch office in Turkey and to seek the advice of a tax specialist who can assist you navigate the complex tax regulations. Our law firm in Turkey is working with teams of certified public accountants making it easy for foreign investors understand tax regulations. 

Opening a branch office in Turkey can be a rewarding and profitable business move for companies looking to expand their global reach. The process of establishing a branch office in Turkey can be much easier with legal assistance of a law firm. For over a decade our law firm has been providing foreigner legal entities company governance and company establishment services. We have been assisting clients from America, Russia, Africa, Asia and Europe to start their businesses and enable their swift migration to Turkey. You can reach us for setting up a branch office in Turkey through our Contact page. 

Opening A Liaison Office in Turkey 

Opening a liaison office in Turkey too can be a strategic move for companies looking to expand their global presence in the market. A liaison office is a cost effective way to establish a presence in a foreign market without the need to establish a legal entity and enter into trade activities. It can provide numerous advantages, including market research, business development, and communication with local suppliers and customers.

The first step in opening a liaison office in Turkey is to determine the scope of the offices activities. As per Turkish law and regulations, liaison offices are limited to conducting market research, promoting the parent companies’ products and services, and facilitating communication with local suppliers and customers. The liaison office is not permitted to engage in commercial activities or generate revenue in Turkey. Once the scope of the liaison offices activities has been defined, the next step is to obtain the necessary permits and approvals.

The application process for establishing a liaison office in Turkey can be complex so it is advisable to seek legal guidance from a reputable law firm. Our law firm in Turkey can legally help you to prepare the required documents, such as the letter of intent and submit them to the relevant authorities and file your application. For opening a liaison office in Turkey is to appoint a local representative who is authorized to act on behalf of the parent company.

It is also important to note that activities of the liaison office will be subject to supervision of the general directorate and each year required documents shall be submitted to the general directorate, otherwise, the permit may be cancelled or extension may not be provided if the initial period for activity chosen is over. It is important to note that general directorate cancels the permits of the liaison offices that engage in commercial activities in Turkey. 

Another important consideration when opening a liaison office in Turkey is taxation. The liaison office will not be subject to Turkish tax laws, as it is not permitted to generate revenue in Turkey. However, the parent company will still be subject to taxation in its home country and it is important to understand the tax implications of operating a liaison office in Turkey. The liaison office established in Turkey do not have to make value added tax declarations before the tax office. Salaries of the employees working in the liaison office are also exempted from tax income and withholding taxes since these salaries shall be transferred from the parent company in foreign currency.