03/04/2024
Explore the complete process of forming a company in Turkey efficiently.
Setting up a company in Turkey can be a strategic move for entrepreneurs looking to tap into the diverse market of Eurasia. With its growing economy and favorable business environment, Turkey offers numerous opportunities for both local and foreign investors.
In the vibrant economic landscape of Turkey, entrepreneurs and investors from around the globe can select from a variety of company structures tailored to meet their business needs and investment scales. This diversity allows for flexibility and strategic alignment with both local and international market demands. Among the most common and beneficial types of companies in Turkey are the Joint Stock Company (A.Ş.), Limited Liability Company (Ltd. Şti.), and partnership-based entities like Commandite and Collective Companies. Understanding the distinct features, benefits, and limitations of each company type is crucial for making an informed decision that aligns with your business objectives.
The Joint Stock Company, or Anonim Şirket (A.Ş.), represents a widely favored business structure for larger investments and corporate ventures. Ideal for those aiming to make a significant market impact, A.Ş. companies offer a high degree of flexibility in share transfers and are apt for public offerings, facilitating easier access to capital markets.
A defining feature of the A.Ş. is its capital structure, which is divided into shares, allowing for a broad shareholder base. This type of company is governed by a board of directors, which can include members who are not shareholders, providing an opportunity to involve expertise from outside the shareholder pool. The liability of shareholders is limited to their investment in shares, protecting personal assets from company debts and liabilities.
The formation of an A.Ş. requires a minimum capital, part of which must be paid up front, with the rest subject to call as the company requires. This capital threshold, along with the necessity to adhere to stringent reporting and governance regulations, makes it a more suitable option for larger, established companies or startups with substantial backing and a clear growth trajectory.
The Limited Liability Company, or Limited Şirket (Ltd. Şti.), is the go-to choice for small to medium-sized enterprises (SMEs) due to its relatively simple setup, operation, and the limited liability it offers its members. The Ltd. Şti. is particularly attractive to entrepreneurs and family-owned businesses looking for a structure that allows for direct management while also providing protection for personal assets against company liabilities.
One of the appealing aspects of the Ltd. Şti. is its flexibility in terms of capital requirements, which are generally lower than those for an A.Ş. The company's capital is divided into quotas, which are not as freely transferable as shares in a Joint Stock Company, making it less attractive for those looking to eventually go public or seek significant external investment. However, this can also be a benefit for those seeking to retain more control over the company's ownership and operations.
For those interested in partnership models, Turkey offers the Commandite Company (S.K.) and the Collective Company (K.O.). These structures are less common but can be suitable for specific business scenarios, especially for professional services and family businesses looking for simple and traditional partnership arrangements.
The Commandite Company is a type of partnership where at least one partner has unlimited liability (the commandite partner), and at least one partner's liability is limited to the capital they contribute (the silent partner). This structure is advantageous for businesses that benefit from having a partner with unlimited liability while also raising capital from silent partners without giving them a direct role in management.
The Collective Company, on the other hand, is a full partnership where all partners have unlimited liability, similar to a general partnership in other jurisdictions. This structure fosters a high degree of trust and collaboration among partners, suitable for small businesses and professional practices where partners are actively involved in the management and operations.
Embarking on company formation in Turkey involves a series of strategic and bureaucratic steps, starting with crucial initial decisions on business structure and objectives. This journey to establish a corporate entity in Turkey navigates through numerous pivotal stages, each significant in laying the foundation for a successful business operation.
The first step in the process is selecting a unique name for your company. This name must not only capture the essence of your business but also comply with local regulations and be distinguishable from existing entities in the Turkish Commercial Registry. Securing the chosen name involves a preliminary search and reservation to ensure it is unique and unclaimed.
Given the complexities involved in navigating Turkish company law and the registration process, granting a Power of Attorney to a local lawyer specialized in corporate law is a strategic move. This not only facilitates smoother interaction with government agencies and the Commercial Registry but also ensures that all legal requirements are meticulously met without unnecessary delays.
The next phase focuses on accumulating all required legal documents. This includes preparing a comprehensive set of paperwork that outlines the structural, operational, and financial blueprint of your company. Key documents often encompass articles of association, identification documents of shareholders and directors, and any other paperwork mandated by Turkish law for the specific type of business entity being established.
In tandem with document preparation, fulfilling regulatory requirements is paramount. This includes obtaining a tax identification number from the local tax office, which is a prerequisite for various subsequent steps such as opening a bank account and registering for VAT. Each shareholder and director must also provide passport copies, underscoring the need for clear identification in line with regulatory compliance.
Determining the capital investment for your company is a critical financial decision. This involves setting aside a specified amount of funds that reflects the scale and scope of your business operations. The chosen capital should align with the minimum requirements for the chosen type of company structure, ensuring compliance with Turkish commercial codes.
Defining the primary activities of your company is crucial, as this will guide the operational framework and strategic direction. This decision involves selecting the appropriate NACE (Statistical Classification of Economic Activities in the European Community) codes that accurately represent your company's intended business activities, which is essential for registration and future compliance.
Securing a physical location for your company through a rent contract is not just a legal requirement; it also establishes your business's operational base.
Why It's Important: The registered office address serves multiple purposes, from legal correspondence to establishing a presence in the local market. It is a vital element in the legitimacy and operational infrastructure of your business.
Obtaining a tax number is a critical step in the formation of your company in Turkey. This involves visiting the local tax office relevant to your company’s registered address and submitting the necessary documents, which typically include:
The incorporation deed or articles of association.
Identification documents of shareholders and directors.
Proof of your company's registered address.
Upon submission, the tax office will issue a tax identification number for your company, which serves as a unique identifier for all tax-related activities and is essential for legal and financial operations within Turkey.
An essential part of the documentation process involves collecting and submitting the passport and official identification details of all shareholders. This step is crucial for verifying the identity of the company's legal owners and is a standard requirement for the registration process.
Why It's Important: The identification of shareholders plays a key role in ensuring transparency and accountability, serving as a measure against fraud and legal complications. It aids in the clear delineation of ownership and responsibility within the company.
With all preparatory steps completed, the final procedural hurdle is the official registration of your company with the Turkish Trade Registry. This step formalizes your company's existence as a legal entity, enabling you to commence operations. It involves submitting the accumulated documents, including the rent contract and evidence of capital, to the registry and fulfilling any final compliance checks.
Opening a corporate bank account marks the culmination of the registration process and the beginning of your company's operational phase. This account is essential for managing finances, receiving payments, and fulfilling tax obligations. The requirement for a tax identification number and the necessity of having a legal and physical presence underscore the interconnected nature of these steps.
Establishing a company in Turkey offers numerous advantages for entrepreneurs seeking growth and expansion opportunities. With its stable economy, strategic location, and favorable business environment, Turkey provides a conducive setting for business success. By understanding the legal requirements, tax implications, and procedural steps involved in company formation, investors can navigate the process effectively and establish a strong presence in this dynamic market.
Is it necessary to have a local partner to form a company in Turkey?
No, foreign investors can establish wholly-owned companies in Turkey without the need for a local partner.
What is the minimum capital requirement for company formation in Turkey?
These figures are constantly being updated, and there is a separate mandatory capital amount for each type of company. The current capital requirements for 2024 are as follows:
According to Presidential Decree No. 7887 published in the Official Gazette dated November 25, 2023, the minimum capital requirement for joint-stock and limited companies has been increased. For joint-stock companies, the minimum capital requirement is set at 250,000 TL (previously 50,000 TL). Non-public joint-stock companies that have adopted the registered capital system must have a minimum initial capital of 500,000 TL (previously 100,000 TL). Limited companies are now required to have a minimum capital of 50,000 TL (previously 10,000 TL). Additionally, with the "Correction" published in the Official Gazette dated November 26, 2023, the effective date of the new regulation has been changed to January 1, 2024.
How long does it take to register a company in Turkey?
The registration process typically takes a few weeks to complete, including the preparation of documents, submission to authorities, and final approval.
Are there any incentives or tax breaks available for new businesses in Turkey?
Yes, the Turkish government offers various incentives and tax breaks to encourage investment and entrepreneurship, including tax incentives for strategic investments and research and development activities.
Can foreign-owned companies repatriate profits from Turkey?
Yes, foreign-owned companies can repatriate profits and dividends from Turkey, subject to certain tax regulations and reporting requirements.
Unlock a world of exclusive updates and insights! Subscribe to our newsletter and be the first to receive compelling content, exciting news, and special offers.
