Common Mistakes Foreigners Make When Forming a Company in Türkiye

Starting a business in Türkiye presents tremendous opportunities for foreign entrepreneurs. With its strategic location bridging Europe and Asia, a growing economy, and increasingly business-friendly regulations, Türkiye has become an attractive destination for international investors. However, the path to successful company formation in Türkiye is often more complex than many foreigners anticipate.

At Finlexia Turkish Accounting Firm, we have witnessed countless foreign entrepreneurs stumble over the same preventable obstacles since 2017. Drawing from over three years of experience helping international clients establish businesses in Istanbul and throughout Türkiye, we have identified seven critical mistakes that can derail your company formation process, drain your resources, and jeopardize your business venture before it even begins.

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Türkiye continues to be a strategic gateway for foreign investors seeking access to Europe, the Middle East, Central Asia, and Africa. With its dynamic economy, customs union with the EU, and investor-friendly legislation, company formation in Türkiye remains highly attractive in 2026.

However, despite the relative ease of incorporation, foreign entrepreneurs frequently make avoidable legal, tax, and operational mistakes that lead to delays, penalties, or long-term compliance risks. As Finlexia Turkish Accounting Firm, a full-service company formation and governance accounting firm based in Istanbul and serving international clients since 2017, we regularly advise foreign investors on how to avoid these pitfalls.

Below, we outline the most common mistakes foreigners make when forming a company in Türkiye—and how to prevent them.

1. Choosing the Wrong Company Type

One of the most fundamental errors is selecting an unsuitable legal structure. Foreigners often choose a company type based on familiarity rather than Turkish legal realities.

In Türkiye, the most common forms are the limited liability company (Ltd. Şti.) and the joint-stock company (A.Ş.). Each has distinct capital requirements, governance rules, and suitability for foreign investment, fundraising, or exit strategies.

Failing to assess future growth plans, shareholder structure, or regulatory requirements can result in costly restructuring later.

2. Underestimating Capital and Cash Flow Requirements

Although Türkiye allows relatively low minimum capital thresholds, foreigners often underestimate actual operational needs. Capital must not only meet legal requirements but also cover:

• Office setup or virtual office fees
• Initial tax payments
• Social security contributions
• Professional service fees

Insufficient capitalization may raise red flags during bank account opening or tax inspections.

3. Ignoring Tax Planning at the Incorporation Stage

Tax planning is frequently postponed until after incorporation—an approach that can be financially damaging. Foreign investors often overlook:

• Corporate income tax optimization
• Withholding tax obligations
• Double taxation treaty benefits
• VAT registration timing

Early involvement of experienced company formation lawyers ensures that the corporate structure aligns with tax efficiency and international compliance standards.

4. Using Generic or Non-Compliant Articles of Association

Many foreigners rely on template articles of association without adapting them to their business model. This can create problems related to:

• Share transfer restrictions
• Director appointment and dismissal
• Dividend distribution
• Minority shareholder protections

Well-drafted articles are essential for avoiding shareholder disputes and governance deadlocks.

5. Failing to Appoint Qualified Directors and Managers

Turkish law imposes specific duties and liabilities on directors and managers. Foreign investors often appoint nominal directors without understanding:

• Personal liability risks
• Criminal and administrative sanctions
• Reporting and filing obligations

In joint-stock companies, director responsibilities are broader and more strictly regulated, increasing the importance of proper appointments.

6. Overlooking Work Permit Requirements for Foreign Shareholders

A common misconception is that company ownership automatically grants the right to work in Türkiye. In reality, foreign shareholders and directors often require work permits to actively manage the company.

Failure to obtain the correct permits may lead to fines, deportation risks, and restrictions on company operations.

7. Delays in Opening a Corporate Bank Account

Opening a corporate bank account in Türkiye has become increasingly compliance-driven. Foreigners often face delays due to:

• Incomplete documentation
• Poorly explained source of funds
• Mismatch between company activity and shareholder profile

Early legal preparation and coordination with banks are critical to avoid operational standstills.

8. Not Registering for VAT and Social Security on Time

Foreign entrepreneurs sometimes delay mandatory registrations, assuming that operations can begin informally. This is a serious compliance error.

Late registration with tax offices or the Social Security Institution (SGK) can result in:

• Retroactive penalties
• Interest charges
• Increased audit risk

9. Using Inadequate Accounting and Bookkeeping Services

Accounting in Türkiye is rule-based and highly formalistic. Foreign investors often use low-cost or inexperienced accountants unfamiliar with international structures.

Errors in bookkeeping, payroll, or tax filings may trigger inspections and significant fines, even if unintentional.

10. Misunderstanding Share Transfer and Exit Rules

Exit planning is often overlooked at the incorporation stage. Foreigners may later discover that:

• Share transfers require notarization and registration
• Capital gains tax applies differently to individuals and companies
• Shareholder approvals may be mandatory

These issues are particularly relevant in joint-stock companies with multiple shareholders.

11. Failing to Protect Intellectual Property

Foreign entrepreneurs frequently delay trademark or IP registration, assuming international protection applies automatically in Türkiye. This exposes businesses to:

• Brand infringement
• Bad-faith trademark registrations
• Loss of market exclusivity

Early IP protection is essential, especially in consumer-facing sectors.

12. Attempting DIY Company Formation Without Legal Guidance

Perhaps the most costly mistake is attempting to manage the entire process without professional support. While Türkiye allows relatively fast incorporation, the legal, tax, and regulatory layers require coordinated expertise.

Working with experienced professionals in company formation in Türkiye ensures full compliance, long-term efficiency, and risk mitigation from day one.

Why Professional Guidance Matters

Every foreign investment project is unique. Regulatory requirements vary depending on nationality, sector, capital structure, and long-term business objectives. A properly structured limited liability company may be ideal for one investor, while another may require a more sophisticated joint-stock structure.

At Akkas & Associates, we provide end-to-end legal support—from incorporation and bank account opening to governance, compliance, and exit planning.

Contact us for Common Mistakes Foreigners Make When Forming a Company in Türkiye

At Finlexia Turkish Accounting Firm, we have been guiding foreign entrepreneurs through the complexities of Turkish company formation since 2017. Our multilingual team of experienced corporate lawyers provides comprehensive services from initial structure selection through ongoing compliance and governance.

We understand the unique challenges foreign investors face and offer tailored solutions that protect your interests while ensuring full compliance with Turkish regulations.

Do not let preventable mistakes jeopardize your Turkish business venture. Contact Finlexia Turkish Accounting Firm today for a consultation. Our Istanbul-based team is ready to help you establish your company correctly from the start, saving you time, money, and unnecessary complications.

Reach out to us to discuss your company formation needs and discover how our three years of expertise can support your success in Türkiye’s dynamic business environment.