Establishing a company in Turkey is relatively straightforward from a procedural perspective. However, the decisions made before incorporation can have a much longer impact than the incorporation process itself.
For foreign investors, company setup should therefore not be treated simply as a registration exercise. The amount of capital, legal form, ownership and management structure, financing model, tax position and relationship with the foreign parent company can all affect the company’s future operations in Turkey.
A structure that works at the incorporation stage may become inefficient once the company starts hiring employees, receiving intercompany funding, making cross-border payments or expanding its Turkish operations.
For this reason, several tax, legal and operational questions should ideally be addressed before the articles of association are finalized.
For a detailed overview of the incorporation procedure, required documents and registration steps, see our [Company Formation in Turkey guide].
Choosing the right capital when establishing a company in Turkey
One of the first decisions when establishing a company in Turkey is the amount of share capital.
The statutory minimum capital is currently TRY 50,000 for a limited liability company (Limited Şirket) and TRY 250,000 for a joint stock company (Anonim Şirket). However, using the statutory minimum simply because it is legally possible is not always the best approach.
The expected scale and financing requirements of the Turkish business should also be considered.
A company established with very limited capital may soon require additional funding from its foreign shareholder. This can result in recurring shareholder loans or other intercompany financing arrangements that need to be properly documented and accounted for.
Capital may also become relevant for practical reasons. For example, the financial position of the Turkish company can matter in certain work permit applications, banking relationships, tenders, commercial agreements or other regulatory processes.
Foreign investors should therefore ask a broader question before incorporation:
How much capital will the Turkish company realistically need during its first 12–24 months of operation?
Starting with an appropriate capital structure can be considerably easier than repeatedly financing an undercapitalized subsidiary after incorporation.
Choosing the right structure for establishing a company in Turkey
Most foreign investors considering company formation in Turkey initially focus on establishing either a limited liability company or a joint stock company.
However, the decision should not automatically be limited to choosing between an LTD and an AŞ.
Depending on the investor’s circumstances, it may also be appropriate to consider establishing a Turkish branch of the foreign company rather than a separate subsidiary.
A subsidiary is a separate Turkish legal entity, while a branch remains legally connected to the foreign head office. This distinction can affect corporate governance, profit repatriation, liability, accounting and taxation.
The applicable double tax treaty should also be reviewed where relevant, particularly where payments such as dividends, interest, royalties or certain service fees are expected between Turkey and the investor’s home jurisdiction.
The appropriate structure therefore depends on what the Turkish operation will actually do.
An investor planning to hire a substantial local team, enter into Turkish customer contracts and operate independently may reach a different conclusion from a company establishing a smaller local presence primarily supporting its foreign headquarters.
The legal structure should follow the business model rather than the other way around.
Management and representation when establishing a company in Turkey
Another issue frequently treated as an administrative detail is the management structure of the new company.
Who will have authority to represent the Turkish entity? Will representation be individual or joint? Will a foreign shareholder or executive become a manager or board member? Will a Turkey-based person need signing authority for day-to-day operations?
These questions can affect much more than the trade registry process.
The management structure may have practical consequences for banking, contracts, tax procedures, payroll administration and government applications. It may also create immigration or work permit considerations where foreign nationals will actively manage the Turkish business.
Changing representation authorities later is possible, but designing a workable structure during incorporation usually avoids unnecessary corporate resolutions, notarizations, apostilles and trade registry procedures.
Consider aligning the fiscal year with the foreign parent company
Another point that foreign investors may overlook when establishing a company in Turkey is the accounting period.
The standard fiscal year in Turkey follows the calendar year, from January 1 to December 31. However, companies may apply for a special accounting period with the approval of the Ministry of Treasury and Finance.
This can be particularly relevant for Turkish subsidiaries of international groups whose parent company follows a different fiscal year. For example, if the foreign parent closes its financial year in March, the Turkish company may consider whether aligning its accounting period with the group would simplify consolidation, financial reporting, budgeting and internal reporting processes.
A special accounting period does not eliminate the company’s Turkish tax and compliance obligations, and certain filings, such as VAT returns, continue on their applicable periodic schedules. However, aligning the fiscal year can make group-level financial management considerably more practical.
The appropriate accounting period should therefore be considered during the initial structuring of the Turkish operation rather than only after reporting difficulties arise.
For more information on eligibility, application requirements and tax implications, see our Special Accounting Period in Turkey guide.
Prepare for transfer pricing from the beginning
Transfer pricing is often considered only after a Turkish subsidiary has been operating for some time.
For multinational groups, it should normally be considered much earlier.
A Turkish company may immediately begin entering into transactions with related foreign entities. Common examples include management services, software or licensing arrangements, shared service costs, loans, technical support, cost allocations and purchases or sales of goods.
These transactions should have a commercial basis and should generally be conducted on arm’s-length terms.
The important question is not simply whether an invoice can be issued between the Turkish company and its foreign parent.
The group should be able to explain what service or transaction took place, why the Turkish company incurred the cost or earned the income, how the price was determined and what documentation supports the arrangement.
Intercompany agreements and pricing methodologies are therefore better designed before transactions accumulate rather than reconstructed retrospectively during a tax review.
Foreign-owned companies expecting regular or material related-party transactions should review Turkey’s transfer pricing rules from the beginning and determine the appropriate pricing methodology and documentation requirements.
For certain cross-border related-party transactions, an Advance Pricing Agreement (APA) with the Turkish Revenue Administration may also provide greater certainty by agreeing the applicable transfer pricing methodology in advance.
Tax obligations after establishing a company in Turkey
Foreign investors sometimes assume that tax compliance begins once the Turkish company starts generating revenue.
In practice, the compliance cycle starts much earlier.
Once the company is incorporated and its tax registration becomes active, periodic tax and accounting obligations may arise even where commercial activity is limited or the company has not yet generated revenue.
For example, a standard VAT return is generally filed by the 28th day of the month following the relevant taxation period. Other declarations and payments may also become applicable depending on the company’s activities, employees, payments and transactions.
A company incorporated near the end of a month can therefore enter its first reporting cycle very quickly.
For this reason, the accounting function should ideally be arranged as part of the incorporation process rather than several weeks after registration.
The first accounting period is also when opening balances, capital payments, incorporation expenses, shareholder transactions and initial invoices need to be recorded correctly.
Complete the electronic tax and accounting setup
Modern Turkish tax compliance is increasingly electronic.
A newly established company therefore needs more than a tax number and trade registry registration. Its electronic compliance infrastructure should also be reviewed immediately after incorporation.
This may include the company’s electronic notification arrangements with the Turkish Revenue Administration, commonly referred to as e-Tebligat, as well as access to the relevant electronic tax systems.
The company’s e-Ledger (e-Defter) obligations should also be identified and the necessary setup completed where applicable.
From 2026, companies newly registered with the trade registry are also subject to the Electronic Commercial Ledger System (Elektronik Ticari Defter Sistemi – ETDS) for certain corporate books, including the share ledger and general assembly meeting and discussion ledger.
These systems should not be treated as post-incorporation housekeeping. They form part of the company’s ongoing statutory compliance infrastructure.
Do not overlook e-Invoicing and the financial seal
The company’s invoicing model should also be considered early.
Depending on the applicable rules and the company’s circumstances, registration for Turkey’s electronic invoicing applications may be required. Even where a particular electronic application is not immediately mandatory, understanding the company’s future e-Fatura and related electronic document obligations can prevent disruption later.
Foreign-owned companies should also consider the practical process for obtaining and managing the company’s financial seal (mali mühür) and determining who will have access to the relevant systems.
This becomes particularly important where the finance team or parent company management is located outside Turkey.
Plan shareholder funding before money starts moving
Foreign subsidiaries commonly require funding before they generate sufficient local cash flow.
Rent, payroll, professional fees, deposits, equipment and operating expenses may all need to be paid before the Turkish company has meaningful revenue.
The parent company should therefore determine in advance how the Turkish entity will be funded.
Funding through share capital, capital increases, shareholder loans and commercial intercompany transactions can have different accounting, tax and documentation consequences.
Simply transferring funds whenever the Turkish company needs cash may create a confusing intercompany account over time.
A basic treasury and funding policy established at the beginning can make future accounting and reconciliation significantly easier.
Review the planned activities before drafting the articles of association
The company’s registered scope of activity should reflect the business that will actually be carried out in Turkey.
This is particularly important where the planned activities may require licences, permits, sector-specific registrations or other regulatory approvals.
Investors should also consider what the company may reasonably need to do in the near future rather than drafting an unnecessarily narrow scope based only on its first transaction.
At the same time, including unrelated activities simply to create extremely broad articles of association is not a substitute for regulatory analysis.
For regulated sectors, incorporation and regulatory approval are separate questions.
Consider employment and work permits before hiring
If the Turkish company will employ staff, payroll and employment compliance should be incorporated into the setup plan.
Employment contracts, payroll registration, social security procedures, workplace registrations and recurring payroll processes may need to be established before or immediately after employees start working.
The issue becomes more important where foreign employees or foreign managers are expected.
Turkish work permit applications can involve criteria relating to the employer, its workforce, salary levels, financial position and other factors. A company structure created without considering the expected immigration requirements may therefore create unnecessary complications later.
If foreign employees are part of the initial expansion plan, work permit feasibility should be reviewed before the company structure is finalized. For further information on the applicable criteria, application process and employer requirements, see our Work Permit in Turkey Guide.
Establish intercompany agreements early
Many foreign-owned Turkish companies receive services from their parent company or provide services back to other group companies.
These relationships should be documented.
Depending on the business model, the Turkish company may need service agreements, licence agreements, cost-sharing arrangements, loan agreements, distribution agreements or other intercompany documentation.
These agreements are relevant not only for transfer pricing.
Cross-border payments may also raise Turkish VAT, withholding tax, corporate tax and double tax treaty questions depending on the nature of the transaction.
The contractual structure and the tax treatment should therefore be considered together.
Identify the beneficial ownership and complete the UBO filing
The ownership chain of a foreign-owned Turkish company should be mapped clearly before incorporation.
Where the shareholder is another legal entity, the group should be ready to identify the individuals who ultimately own or control the structure and provide the relevant supporting information where required.
An important post-incorporation step is the Ultimate Beneficial Owner (UBO) declaration. Once the company has been established and its tax registration is active, the beneficial ownership information should be submitted to the Turkish Revenue Administration within the applicable timeframe. This step can easily be overlooked when the focus is on completing the trade registry and incorporation procedures.
UBO reporting should also be incorporated into the company’s ongoing compliance process, particularly where there are subsequent changes in the ownership or control structure.
For companies with multi-layered foreign ownership, identifying the ultimate beneficial owners in advance is particularly important, as additional corporate documents may be needed to establish and document the ownership chain.
Establishing a company in Turkey is only the beginning
The incorporation itself is usually only one stage of establishing operations in Turkey.
A better approach is to view company formation as the creation of a compliance framework that will support the Turkish operation over the following years.
Before establishing a company in Turkey, foreign investors should therefore consider not only how quickly the company can be registered, but also:
What will the company do? How will it be funded? Who will manage it? Will it hire foreign employees? What transactions will it have with the parent company? How will profits eventually be distributed? Which tax filings will apply? Which electronic systems must be activated? Has the UBO declaration been completed?
Addressing these questions before and immediately after incorporation can prevent structural changes, unnecessary shareholder financing, tax exposure and administrative work later.
For international groups entering Turkey, good company formation planning is therefore less about completing the registration process and more about ensuring that the Turkish entity is ready to operate correctly from its first day.