Most Preferred Company Types in Turkey: The Best Comparison

Turkey offers a dynamic and thriving environment for businesses, making it an attractive destination for entrepreneurs and investors. Understanding the most preferred company types in Turkey, the formation process, and their responsibilities is crucial for anyone looking to establish a presence in this vibrant market.

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Company Types in Turkey

In Turkey, selecting the most suitable company type is a vital decision for entrepreneurs and investors, as it determines the regulatory framework, operational flexibility, and fiscal responsibilities. The most preferred company types in Turkey, including Limited Liability Company (LLC), Joint Stock Company (JSC), Branch Office, Liaison Office, and Free Zone Company, each offer distinct advantages tailored to various business needs.

Limited Liability Company (LLC – Limited Şirket)

What is it?
A Limited Liability Company (LLC) is the most popular business structure in Turkey due to its flexibility and straightforward formation process. It can be established by a single person or multiple shareholders.

How is it formed?

• Preparation of Articles of Association: The foundational document outlining the company’s name, scope, capital, and management structure.
• Notarization and Registration: The Articles of Association must be notarized and submitted to the Trade Registry Office.
• Capital Deposit: A minimum capital requirement must be fulfilled, with at least 25% deposited before registration.
• Tax Office Registration: The company must be registered with the local tax office.
• Social Security Institution Registration: The company must also be registered with the Social Security Institution.

Responsibilities:

• Tax Compliance: Regular filing of VAT, corporate tax, and other relevant taxes.
• Financial Reporting: Maintenance of accurate financial records and submission of annual financial statements.
• Employment Regulations: Compliance with labor laws, including employee registration and social security contributions.

Joint Stock Company (JSC – Anonim Şirket)

What is it?
A Joint Stock Company (JSC) is another prevalent business structure in Turkey, ideal for larger enterprises that require significant capital. Shareholders’ liability is limited to their share capital.

How is it formed?

• Drafting the Articles of Association: Detailed document specifying the company’s purpose, capital, and governance.
• Notarization and Registration: Articles of Association must be notarized and submitted to the Trade Registry Office.
• Capital Requirements: A minimum capital requirement must be fulfilled, with a portion deposited before registration.
• Tax Office and Social Security Registration: Similar to LLC, registration with tax and social security authorities is required.

Responsibilities:

• Board of Directors: A JSC must have a board of directors to oversee management.
• Financial Audits: Mandatory external audits to ensure financial transparency.
• Regulatory Compliance: Adherence to corporate governance standards and reporting obligations.

Branch Office (Şube)

What is it?
A Branch Office is an extension of a foreign parent company. It is not a separate legal entity but operates under the parent company’s authority.

How is it formed?

• Parent Company Documentation: Submission of the parent company’s Articles of Association and financial statements.
• Trade Registry Application: Registration with the local Trade Registry Office.
• Tax Office and Social Security Registration: Compliance with local tax and employment regulations.

Responsibilities:

• Local Operations: Conducting business activities within the scope defined by the parent company.
• Reporting: Regular reporting to the parent company and adherence to local financial regulations.
• Tax Compliance: Filing of local taxes and adherence to Turkish tax laws.

Liaison Office (İrtibat Bürosu)

What is it?
A Liaison Office is established by a foreign company to conduct non-commercial activities such as market research and networking.

How is it formed?

• Permission from the Ministry of Industry and Technology: Required approval before establishment.
• Registration: Registration with the local Trade Registry Office.
• Non-Commercial Activities: Liaison offices are prohibited from generating revenue in Turkey.

Responsibilities:

• Non-Revenue Generating Activities: Engaging in activities like market research, networking, and representing the parent company.
• Reporting: Annual reporting to the Ministry of Industry and Technology.
• Compliance: Adherence to local regulations regarding liaison office operations.

Free Zone Company

What is it?
A Free Zone Company is a special type of company established in one of Turkey’s free zones. These zones offer various incentives and advantages to promote export-oriented investments.

How is it formed?

• Application to the Free Zone Directorate: Submission of an application detailing the business plan and scope of activities.
• Approval and Licensing: Obtaining the necessary approvals and licenses from the Free Zone Directorate.
• Capital Requirements: Compliance with the minimum capital requirements specified for the free zone.
• Trade Registry and Tax Registration: Registration with the Trade Registry Office and the local tax office.

Responsibilities:

• Export-Oriented Operations: Conducting business activities primarily focused on export markets.
• Tax Benefits Compliance: Adhering to the specific tax incentives and exemptions provided to free zone companies.
• Reporting: Regular reporting to the Free Zone Directorate and compliance with local and zone-specific regulations.
• Employment Regulations: Compliance with labor laws, including employee registration and social security contributions.

Conclusion

Choosing the appropriate company type is a critical step in establishing a successful business in Turkey. Each structure offers unique advantages and responsibilities, tailored to different business needs and scales. Whether opting for a Limited Liability Company, Joint Stock Company, Branch Office, Liaison Office, or Free Zone Company, understanding the formation process and compliance requirements is essential for smooth and efficient operations.

For more detailed guidance on setting up a company in Turkey, contact Finlexia Accounting Firm. Our team is dedicated to providing comprehensive support throughout the establishment process and beyond.

Company Setup in Turkey

Moreover, we have established more than 260 companies for our foreign clients including Spain, UAE, Ukraine, Russia, UK, Morocco, Lebanon, Syria, S. Korea, Germany, Italy, Jordan, Vietnam, Poland, France, Pakistan, China, Hong Kong, USA, Malaysia, Iran, Portugal, Norway, Canada, Saudi Arabia, Iraq, and Kuwait.

How Many Days Needed to Setup Company in Turkey?

We can form your company and open bank accounts and get online banking in 1-2 days if partners are in Turkey and the company formation process will be faster and cost less.

We can form your company remotely if you are not in Turkey, however, the setup process will be longer and cost more.

How to Setup a Limited Company in Turkey?

According to the Turkish Commercial Code, a limited company (LLC) requires a minimum of one partner and it can be a legal entity or a real person, there can be a maximum of 50 shareholders. The partner/partners can be Turkish or foreign as well. Foreigners can own 100% of a company and transfer their profit out of Turkey without any problems.

The minimum required capital for a limited liability company is 50,000. -TL (Turkish lira). The capital of the company shall be paid in two years and up to four installments.

We Need the Following Documents for Establishing a Limited Company

From Real Persons;

• 2 Translated and notarized passport copies
• 2 Passport photos
• Power of Attorney to us for incorporating the company from each shareholder

Reach us for Company Types in Turkey

Understanding the nuances of each company type and their respective requirements is essential for a successful company formation process. At Finlexia Accounting Firm, our expertise in Turkish company law ensures that you make informed decisions when choosing the most suitable company type for your business needs.

You may reach us for company types in Turkey through our Contact page.