How to Start a Business in Turkey?

Turkey's strategic location for trade between Asia, Europe, and the Middle East has drawn foreign investment for many years. Several public and foreign businesses have opened offices in and around Turkey's major cities, demonstrating the country's widespread recognition as a nation of considerable importance. These bigger businesses are based primarily in Istanbul and Ankara.

Why open a company in Turkey?

Establishing a business in Turkey is now simpler than ever thanks to recent legislation aimed at encouraging foreign investment. Given that half of Turkey's 80 million people are under 30, educated, financially secure, and willing to spend, it is understandable why the country is a desirable location for new businesses. Trade ties with Europe and the Middle East have significantly strengthened, and the infrastructure for banking and communications has greatly improved. 

The following are recent government incentives for new ventures and investors: 

• The right for foreign companies to hold "Turkish Company" status, giving new business owners the same rights and obligations as existing Turkish companies;
• Guarantee of existing investment rights;
• Conformity with international standards;
• Changing the definition of a foreign investor to include companies registered outside the country, non-Turkish nationals and Turkish nationals living outside the country;
• Imports of certain machinery and equipment are now exempt from customs duties, levies and VAT; 
• Certain exemptions from income tax and social insurance contributions;
• Energy subsidies;
• Incentives available in Turkey's free trade zones, including exemptions from a number of taxes and customs duties;
• Better protections for foreign investors.
• As of 2018, it is possible for business owners to gain citizenship in Turkey. Skip to the bottom of the page to find out more.

So, how does one go about opening a company in Turkey?

There are several choices available if you're thinking about opening a business in Turkey. Initially, you should consult a knowledgeable attorney and conduct research with the appropriate authorities. Options available to foreigners include collective companies, joint stock companies, commandite companies (businesses organised to operate under a trade name), liaison offices, and opening a branch of an already-existing foreign company. However, the setup of a private limited company is the subject of this article because it is more popular due to its ease of use and manageability.

Does Turkey allow foreigners to establish private limited companies?

Absolutely. Two or more non-Turkish nationals can establish a private limited company, which is the most common business structure for foreigners. For this kind of business to be formed, at least one shareholder and a minimum share capital of 10,000TL are needed.

Where can I get guidance on opening a company in Turkey?

For many, the lawyer is the first person they contact. Make sure you work with a reputable legal counsel who is knowledgeable about Turkish company law and has experience assisting foreigners in establishing prosperous enterprises. Additionally, the majority of the information in this article comes from the following, all of which have accurate and up-to-date information:

• The Turkish Embassy
• British Chamber of Commerce Turkey (BCCT)
• The Turkish British chamber of Commerce and Industry (TBCCI)

Do I need to hire a company formation agency?

Like in the UK, more and more company formation agents are offering their services in the local press and can be found in most towns and cities. This is a popular path taken by expats because, with the right agent, it can save a lot of time and hassle. Do your homework on them first and find out what other foreign businesses they have assisted in starting if you are thinking about hiring one. Like everything, some of these businesses are significantly superior to others.

Which types of businesses can foreigners open in Turkey?

The majority of expats typically launch companies that cater to the needs of other foreigners or are somehow related to tourism. It seems commonplace for foreigners to organise and manage bars, restaurants, hotels, vacation rental companies, estate agencies, shops, and maintenance companies. Without prior approval from the Ministry of Commerce and Industry, foreigners are prohibited from opening a number of businesses in Turkey. These comprise financial institutions such as banks, factoring firms, private finance establishments, foreign exchange offices, businesses governed by Capital Markets Law, public warehouses, and free-trade zone operators. If in doubt, get in advance advice from the authorities and your lawyer.

How much does it cost to form a Turkish limited liability company?

Turkey has different business setup laws and expenses than the UK and the majority of other nations. 10,000TL is the total amount required to form a private limited company, and this money must be deposited at the time of incorporation.The amount of the shareholders' liability is capped at the share capital they have contributed to the business.

Which procedure is the setup?

The investor can start trading within a week if everything is in order, and the company incorporation process in Turkey is quite simple. 

The articles of association must be written and signed by the directors of the company. Article 279 of the Turkish Commercial Code stipulates that the articles of association must be drafted lawfully. The trading name of the company must include the word "limited" in the document. Founders must provide their full names, surnames, addresses, trading address, and nationality. Next, the document is taken to be notarized formally and, if needed, translated.

A bank account bearing the name of the company must receive the minimum share capital. Following this, investors with the required paperwork can start the registration process by paying a fee to the Turkish Commercial Registry Office. The company's incorporation is announced in the Turkish Gazette and a registration certificate will be issued by the Registry Office. The business must then register with the appropriate tax body for VAT.

Rules in Turkey about trading names

It is required that your trading name be unique and unregistered. The terms "Turkiye; Turk; Cumhuriyet; Milli" cannot be used without the express consent of the Turkish Council of Ministers, and it should not deceive any third parties. Only foreign words and titles that do not violate any cultural or governmental laws or policies may be used in the trading name.

The Trade Registry Office's registration process for Turkish companies

The majority of Turkey's towns and major cities are home to Turkish Chamber of Commerce offices. Once your articles of association have been completed and duly notarized, get in touch with them to arrange for the official trade registry within a fortnight. A completed company registration application form, a written request for application, appropriate identification proving you are the founding members, a letter of commitment in accordance with Trade Registry Regulations Article 29 and a receipt of payment for the deposit required to open the Customers Fund Account—typically 1/1000 of the company's capital—are all required when applying to the registry. If you want to avoid long waits and needless confusion, make sure you have enough legal knowledge or assistance and that you can speak, read, and write enough Turkish. This may sound more difficult than it is. Generally speaking, it's best to have a native speaker accompany you. Your company can begin trading as soon as it is registered.

Trade and Taxes in Continuence

All profits earned and declared by a private limited company established and residing in Turkey are subject to full taxation. Additionally, you will need to hire an accountant. Bear in mind that Turkish accountants function differently from their UK counterparts and typically charge a monthly fee, which can seem expensive for relatively little work at times.  Please consult a competent accountant before forming your business as laws and taxes are subject to frequent changes.

All Around Advice and Tips

Finish your homework. Make sure you've done your homework before considering establishing any kind of business in Turkey. To determine whether it is truly a viable option or if you would be better off investing elsewhere, talk to other expats in the business world, your lawyer, and an accountant. There are numerous terrifying tales from foreigners who have founded businesses, restaurants, and retail establishments that have failed and become difficult to close down as a result. Make sure it's a winning idea!

Create a business plan. Prior to starting your business, make sure your expectations and goals are well-defined. Examine how much starting and continuing business expenses will cost (accountant fees, marketing, taxes, etc.). Although presenting a business plan is unlikely to be requested in Turkey, it will force you to carefully analyse and contemplate your endeavour.

Language Disparities. Establishing a business in Turkey will require you to complete paperwork and a process in Turkish, so make sure you are fluent in the language or have a reliable Turkish speaker assist you at every turn.

Investment in citizenship for entrepreneurs

For those looking to establish a business in Turkey, there has been an additional incentive since 2018. Citizenship by Turkish government is now available to those who invest $250,000 in Turkish real estate. This will eliminate a great deal of red tape for business owners. Continue reading: Turkish nationality through investment guidance.  

In addition to purchasing real estate, entrepreneurs can also become citizens by:

1. Provide employment for at least 50 people in Turkey
2. Make a fixed capital investment of at least $500,000;
3. Deposit a minimum of $500,000 into a Turkish account;
4. A venture capital investment fund worth $500,000.