A liaison office in Turkey allows a company incorporated abroad to maintain a local presence for specified non-commercial activities without establishing a Turkish subsidiary or operating a revenue-generating branch.
The structure is deliberately limited. Under Foreign Direct Investment Law No. 4875 and its Implementation Regulation, the Ministry of Industry and Technology may permit a foreign company to establish a liaison office on the condition that the office does not conduct commercial activity in Turkey. The initial permission is granted for a defined activity and for a limited period.
For foreign companies, the main question is therefore not simply whether a liaison office can be established. It is whether the activities planned in Turkey genuinely fit within the non-commercial scope of a liaison office. A company intending to invoice customers, conclude local commercial transactions or generate revenue will generally need to consider a different structure.
What Is a Liaison Office in Turkey?
A liaison office is a presence established in Turkey by a company incorporated under the laws of another country, with permission from the Ministry of Industry and Technology.
It is not a Turkish company or subsidiary and does not have a separate legal personality independent from the foreign parent company. The foreign company remains the underlying legal entity, while the liaison office operates within the activities authorised by the Ministry.
Article 6 of the Implementation Regulation expressly conditions the permission on the foreign company not conducting commercial activity in Turkey.
This distinction is fundamental. A liaison office may perform activities such as market research, representation, supplier supervision, technical support or regional coordination where these fall within its authorised scope, but it cannot simply function as the Turkish sales office of the foreign parent.
In practice, the planned functions of the local team should be reviewed before choosing this structure. A liaison office may be appropriate where personnel collect information, coordinate relationships or support the foreign parent. It becomes problematic where the Turkey operation begins to negotiate and conclude commercial transactions, invoice customers or otherwise operate as a local revenue-generating business.
Permitted Activities for Liaison Offices in Turkey
The Ministry grants the initial permission for the activity declared in the application. The Implementation Regulation also identifies activity categories relevant to permit extensions.
The current regulatory categories include the following:
| Activity | Practical scope | Maximum extension period |
|---|---|---|
| Representation and hosting | Representation before sector organisations and relevant organisations; coordination of the foreign company’s business contacts and office requirements in Turkey | 5 years |
| Supplier control, inspection and procurement | Monitoring manufacturers producing for the foreign company against its quality standards and identifying suppliers/products | 5 years |
| Technical support | Training or technical support for distributors and support to suppliers aimed at improving quality standards | 5 years |
| Communication and transfer of information | Collecting and reporting information concerning market developments, consumer trends, competitors, distributor sales and distributor performance | 5 years |
| Regional management centre | Coordination and management services for the foreign company’s units in other countries across specified management and operational functions | 10 years |
| Market research | Research and analysis of the Turkish market | No extension |
| Promotion of the foreign company’s products or services | Non-commercial promotional activity | No extension |
These are extension periods, not the duration of the initial permit. The initial permit may be granted for a maximum of three years, regardless of the longer periods potentially available at the extension stage.
Regional management centres have a particularly broad description under the Regulation. Their permitted coordination activities may include investment and management strategy, planning, promotion, sales coordination, after-sales services, brand and financial management, technical support, R&D, external procurement, product testing, laboratory services, research and analysis, and employee training for units of the foreign company located in other countries.
That wording should not be read as permission for the liaison office itself to conduct commercial sales in Turkey. The overriding prohibition on commercial activity remains applicable.
Where Is the Boundary Between Promotion and Commercial Activity?
This is one of the most important practical issues.
A liaison office authorised for promotion may introduce the foreign company’s products, provide information, participate in relevant events and develop business contacts within the scope of its permit. However, promotion should not become a substitute for conducting the foreign company’s actual sales operation through the liaison office.
Activities such as issuing local invoices, collecting commercial revenue or otherwise conducting commercial transactions through the office are inconsistent with the basic liaison-office model.
The distinction can become more fact-sensitive where employees participate in customer discussions or coordinate relationships while contracts and invoicing remain abroad. In such cases, both the Ministry permit and the broader Turkish tax position — including possible permanent-establishment considerations for the foreign parent — should be assessed based on the actual functions and authority exercised in Turkey.
Who Can Establish a Liaison Office in Turkey?
The Regulation allows the Ministry to grant liaison-office permission to companies established under the laws of a foreign country.
There is no universal statutory rule that every foreign parent must already have existed for at least one year.
There is, however, an important qualification for newly established foreign companies. Article 6 of the Implementation Regulation allows the Ministry, after considering matters such as the company’s business activity, capital and number of employees, to require that at least one year has elapsed since the company’s establishment before granting permission.
Accordingly, the one-year point should be understood as a matter the Ministry may require when assessing a newly established applicant, rather than an automatic eligibility condition applying identically to every foreign company.
Applications in regulated sectors may also require a different analysis. Applications relating to financial activities governed by special legislation, including areas such as capital markets and insurance, are evaluated by the authorities competent under the relevant sector legislation. The Ministry may also consult the competent licensing authority for other regulated sectors.
How to Establish a Liaison Office in Turkey
The competent authority is the Ministry of Industry and Technology, General Directorate of Incentive Implementation and Foreign Investment.
The application is made under the Foreign Direct Investment Law Implementation Regulation using the prescribed liaison-office forms.
Article 7 currently requires the following core documents:
- the liaison-office application form (Annex 6);
- the undertaking describing the activities to be carried out and confirming that the office will not conduct commercial activity (Annex 7);
- evidence of the signing foreign-company representative’s authority;
- the foreign company’s certificate of activity;
- an activity report concerning the foreign company or its balance sheet and income statement;
- an authorisation document for the person or persons appointed to conduct the liaison office’s activities; and
- a power of attorney where the establishment procedure is handled through another representative.
The foreign company’s certificate of activity must be authenticated by the relevant Turkish Consulate or in accordance with the Hague Apostille Convention, where applicable.
Foreign-issued documents used in Turkish administrative procedures commonly also require appropriate Turkish translations and notarisation depending on the document and filing procedure. The exact formalisation package should therefore be confirmed for the applicant’s jurisdiction before documents are executed abroad.
Is a Lease Required Before the Application?
The Implementation Regulation does not list the liaison-office lease among the core documents required by Article 7 for the initial application.
Instead, once permission has been obtained, the liaison office must provide the General Directorate with a copy of its tax-office registration document and lease agreement within one month.
This distinction can be useful in practice because a foreign company does not necessarily need to commit to a final lease merely to assemble the statutory application package, although the proposed location and the practical requirements of the application should still be considered when planning the establishment.
How Long Does the Application Take?
Under Article 6 of the Regulation, establishment and extension applications are to be concluded within 15 working days from the application date where the requested information and documents are complete.
This is a regulatory processing period for a complete application, not a guarantee that every project will receive approval within 15 working days. Missing documents, questions concerning the proposed activities or consultation with another competent authority may affect the practical timetable.
Initial Permit and Extension of a Liaison Office
An initial liaison-office permit may be granted for a maximum of three years within the scope of the activity declared in the application.
A liaison office wishing to continue after that period must apply to the General Directorate before the existing permit expires.
Extension is not automatic.
When considering an extension, the General Directorate may examine:
- the office’s activities during the previous period;
- the foreign company’s future business plan and objectives in Turkey;
- existing and anticipated expenditure; and
- the number of employees.
The maximum extension depends on the authorised activity. Representation and hosting, supplier control, technical support, and communication/information-transfer activities may receive extensions appropriate to their activity category of up to five years, while regional management centres may receive an extension of up to ten years.
A liaison office authorised for market research or promotion of the foreign company’s products or services cannot have its operating period extended under Article 8.
Foreign companies using a liaison office primarily to test the market should therefore plan from the beginning for what happens when the initial permit ends. If the business has progressed from research or promotion into actual commercial operations, establishing a branch or Turkish company may become the more appropriate structure.
Funding and Banking
A liaison office is not intended to finance itself through Turkish commercial revenue.
Its operating expenditure is therefore funded from abroad by the foreign parent. This funding model is also reflected directly in the annual reporting requirements: the office must provide documentation demonstrating that its previous year’s expenditure was covered by funds sent from abroad.
For practical purposes, a liaison office will normally require Turkish banking arrangements to receive parent-company funding and pay salaries, rent and operating expenses. However, it is better to distinguish this practical banking requirement from claiming that a particular type or number of bank accounts is itself mandated by the liaison-office provisions.
Bank records and transfer documentation are especially important because they support several separate issues:
- demonstrating how the non-commercial office has been financed;
- supporting the annual Ministry filing;
- documenting payroll funding; and
- where applicable, supporting the conditions for the employee wage income-tax exemption.
The source of funds therefore matters more than simply maintaining a foreign-currency account.
Tax Treatment of a Liaison Office in Turkey
The tax position of a liaison office should not be described as a blanket exemption from Turkish taxation.
The starting point is its permitted activity.
A properly operating liaison office is prohibited from carrying on commercial activity and generating commercial income through the office. Accordingly, it ordinarily does not have Turkish commercial profits on which corporate income tax would arise merely from its authorised non-commercial liaison activities.
This is conceptually different from saying that a liaison office enjoys an unconditional corporate-tax exemption.
Under Corporate Tax Law No. 5520, a foreign entity whose legal and business centres are both outside Turkey is generally subject to Turkish corporate taxation only on income regarded as derived in Turkey. Commercial profits generated through a Turkish workplace or permanent representative can fall within limited corporate-tax liability.
This becomes particularly important if the activities actually performed by the office depart from its authorised non-commercial role.
The VAT analysis follows a similar logic. VAT Law No. 3065 generally subjects supplies and services made in Turkey within commercial, industrial, agricultural and professional activities to VAT. A liaison office conducting only its permitted non-commercial activities does not ordinarily make commercial supplies to customers through the office.
That does not mean every transaction connected with a liaison office is outside the Turkish tax system. The office may still have tax-registration, withholding, payroll, stamp-tax or other administrative obligations depending on the transaction.
For this reason, the more accurate formulation is:
a liaison office operating within its authorised non-commercial scope ordinarily does not generate taxable commercial income or make commercial supplies through the office, but its individual tax and filing obligations must still be considered separately.
Employee Salary Income-Tax Exemption
Salaries paid to employees of a liaison office may qualify for an income-tax exemption under Article 23/14 of Income Tax Law No. 193. The exemption applies where the statutory conditions are satisfied, including that the salary is paid in foreign currency from the foreign employer’s earnings generated outside Turkey.
In practice, liaison offices should retain appropriate payroll and banking records demonstrating that salaries and operating expenses are funded from abroad. The exemption concerns income tax on qualifying employment income; it does not by itself remove SGK or other payroll obligations.amined where the liaison office operates specifically under a regional-management-centre permission.
Social Security and Payroll Obligations
An income-tax exemption does not mean that payroll administration or social-security obligations disappear.
Employees working under an employment relationship in Turkey will generally fall within the Turkish social-security framework under Social Insurance and General Health Insurance Law No. 5510 unless a specific exclusion or an applicable international social-security agreement changes the result.
For Turkish employees hired by the liaison office, this normally means employer registration, employee registration, monthly payroll administration and payment/reporting of applicable social-security contributions.
Foreign employees require a separate analysis.
Law No. 5510 contains an exclusion for a person sent to Turkey by an organisation established abroad, on behalf and account of that organisation, for no more than three months, where the individual can document coverage under the foreign social-security system. Applicable bilateral social-security agreements remain reserved and may provide different assignment periods or coverage rules.
A foreign employee working locally for a longer period should therefore not simply be assumed to remain outside SGK because the employer is foreign or because the employee’s salary qualifies for an income-tax exemption.
Employment law, income tax, SGK and immigration status are separate questions and should be handled as such.
Foreign Employees and Work Permits
Foreign nationals working for a liaison office may also require a Turkish work permit under International Labour Force Law No. 6735 and the applicable secondary legislation.
There is a specific framework for foreign personnel in liaison offices.
Current Ministry of Labour guidance states that, for liaison offices operating under Law No. 4875, a work permit may be granted to at most one foreign national holding an authorisation document, provided the office has a valid activity permit from the Ministry of Industry and Technology. The permit is limited by the liaison office’s authorised operating period.
The applicable foreign-direct-investment regulation also provides that, for this specific liaison-office route, the office must demonstrate that at least USD 200,000 or the equivalent in foreign currency was brought from abroad during the preceding year for the office’s activities. Current Ministry application guidance continues to request evidence of this funding, such as bank transfer records or bank confirmations.
The older regulatory framework uses the concept of “key personnel”, including, for liaison offices, the maximum of one person for whom the foreign parent has issued an authorisation document. That terminology remains relevant to the specific foreign-direct-investment work-permit framework, but it should not be simplified into a general statement that every foreign employee of a liaison office is automatically exempt from ordinary work-permit requirements.
The work-permit position should therefore be checked separately from the liaison-office establishment permission itself.
Annual Reporting and Ongoing Compliance
A liaison office has continuing reporting obligations even though it does not conduct commercial activity.
By the end of May each year, the office must submit the Liaison Offices Activity Information Form (Annex 4) and its supporting documents to the Ministry concerning the previous year’s activities.
The filing is intended to demonstrate what the office actually did during the year and how its expenditure was financed. Documentation showing that the previous year’s expenses were covered by funds sent from abroad is part of this reporting framework.
The information maintained for annual reporting should therefore be consistent with:
- the activity authorised in the Ministry permit;
- the functions actually performed by employees;
- expenditure incurred in Turkey;
- funding transferred from abroad; and
- the office’s staffing position.
Failure to submit Annex 4 and its supporting documents has specific regulatory consequences. The Regulation provides that an extension application will not be considered where the annual filing has not been submitted, and the activity permit may also be cancelled ex officio.
Changes During the Life of the Office
Certain changes must be notified to the General Directorate within one month.
These include changes to:
- the office address;
- the liaison-office representative or representatives; and
- the foreign company’s title.
The relevant supporting document — such as the new lease, authorisation document for a newly appointed representative or documentation of the foreign company’s name change — must accompany the notification.
What Happens If a Liaison Office Exceeds Its Permitted Activities?
The Ministry may inspect whether a liaison office is operating in accordance with the legislation and the activity stated in its permit.
Where an office is found to be conducting an activity outside its authorised scope, the Regulation allows the Ministry to give it 30 days to apply for permission covering the activity actually being conducted. That period may be extended by up to a further 30 days where justified. If the required application is not made, the activity permit may be cancelled.
The treatment is stricter where the Ministry determines that the office has engaged in commercial activity: the permit is cancelled and the matter is notified to the relevant authorities.
This distinction is useful. Not every departure from the authorised activity results automatically in immediate cancellation, but commercial activity strikes at the fundamental condition on which liaison-office permission is granted.
There may also be tax consequences independently of the Ministry permit. If the foreign company is in substance conducting income-generating business through its presence in Turkey, corporate-tax, VAT, permanent-establishment and other tax questions may arise based on the actual facts.
Liaison Office vs Branch vs Turkish Subsidiary
The appropriate structure depends primarily on what the foreign company intends to do in Turkey.
| Feature | Liaison office | Turkish branch | Turkish subsidiary |
|---|---|---|---|
| Separate legal entity | No | No | Yes |
| Foreign parent/company | Directly operates the office | Directly operates through its branch | Shareholder of separate Turkish company |
| Commercial activity | Not permitted | Permitted within registered scope | Permitted within corporate scope |
| Local invoicing/revenue | Not part of permitted liaison-office activity | Yes | Yes |
| Ministry liaison-office permission | Required | No | No |
| Trade Registry establishment | Not ordinary company/branch registration | Required | Required |
| Initial liaison-office term | Maximum 3 years | Not applicable | Not applicable |
| Corporate tax | No commercial profit should arise from authorised liaison activities; tax position changes if actual activities differ | Turkish-source branch profits subject to applicable corporate-tax rules | Turkish company subject to corporate-tax rules |
| VAT on commercial sales | Liaison office should not make commercial sales | Applicable according to ordinary VAT rules | Applicable according to ordinary VAT rules |
| Typical use | Representation, research, supplier oversight, information, coordination | Direct Turkish commercial operations without creating a separate subsidiary | Ongoing Turkish commercial operation through a separate local company |
A branch is not an independent legal entity separate from its foreign parent. Current official investment guidance also states that there is no general statutory capital requirement for a branch, although funds must naturally be allocated for its operations.
A Turkish limited liability company or joint stock company, by contrast, is a separate Turkish legal entity and can conduct ordinary commercial activities within its registered corporate purposes.
The practical dividing line is therefore relatively straightforward: if the planned Turkey operation itself needs to sell, contract, invoice and generate revenue, a liaison office is generally not the structure designed for that activity.
Foreign companies that require a separate local entity capable of conducting commercial activities may instead consider company formation in Turkey, typically through a limited liability company or joint stock company.
For some international trading businesses, establishing a Turkish company may also provide access to specific tax incentives. For example, qualifying transit trade activities in Turkey may benefit from a 95% corporate tax deduction where the statutory conditions are satisfied.
Can a Liaison Office Employ Personnel in Turkey?
Yes. A liaison office can employ personnel even though it cannot conduct commercial activity.
The office must still comply with the employment, payroll and social-security rules applicable to the employment relationship. Its non-commercial status does not turn employees into contractors, eliminate payroll administration or remove ordinary employment-law protections.
Employment contracts should therefore reflect the actual role of the employee and should not give local personnel commercial authority inconsistent with the office’s permitted functions.
This is particularly relevant for sales-oriented titles. An employee may support promotion, information gathering or relationship coordination within the authorised scope, but job descriptions and actual conduct should remain consistent with the non-commercial role of the liaison office.
Is a Liaison Office Necessary Just to Hire Employees?
Not necessarily.
A foreign company considering personnel in Turkey should first determine what those individuals will actually do and who will act as their legal employer.
A liaison office is one possible structure where the foreign company needs a genuine non-commercial presence that fits the Ministry’s permitted activities. A branch or Turkish company may be more appropriate where the personnel will support local commercial operations.
Depending on the facts, a foreign company may also consider another legally appropriate employment structure. Commercial Employer of Record arrangements are sometimes used in cross-border employment models, but EOR is not a statutory employment-contract category under Turkish law, and it should not automatically be equated with the temporary employment relationship regulated by Article 7 of Labour Law No. 4857.
The legal and tax consequences of a particular employment structure should therefore be analysed separately rather than treating liaison office, subsidiary and EOR as interchangeable alternatives.
Closing a Liaison Office
Where a liaison office ceases operations, it must submit to the General Directorate the termination document obtained from the relevant tax office.
The Regulation also provides that, apart from the balance remaining as a result of closure and liquidation, liaison offices cannot claim transfers of funds upon termination.
In practice, closure should also be coordinated with payroll, SGK, employees, lease arrangements, banking and other outstanding administrative matters.
Practical Considerations Before Establishing a Liaison Office in Turkey
A liaison office can be an effective structure where the planned activities genuinely remain non-commercial.
Before applying, a foreign company should define the local team’s functions in practical terms rather than simply selecting a broad activity label from the Regulation.
For example, the company should determine:
- whether employees will only collect information or will also negotiate commercial terms;
- whether customer contracts will be concluded exclusively outside Turkey;
- whether the office will have any authority to invoice or collect revenue;
- whether personnel will support Turkey alone or coordinate other countries;
- how salaries and other operating expenses will be funded;
- whether foreign employees will require work permits;
- whether SGK coverage will apply; and
- what structure will replace the liaison office if commercial operations begin.
These questions affect not only the Ministry application but also employment, payroll, tax and permanent-establishment analysis.
The liaison-office structure works best when the legal form and the actual operation match. A foreign company that has moved beyond representation, research or coordination should reconsider whether a branch or Turkish subsidiary better reflects what the business is actually doing in Turkey.
Frequently Asked Questions
Can a liaison office conduct business in Turkey?
No. Permission under the Foreign Direct Investment Law framework is conditional on the office not conducting commercial activity in Turkey. The office may carry out the non-commercial activities authorised by the Ministry, but it cannot operate as an ordinary revenue-generating business.
Can a liaison office invoice customers?
A liaison office should not issue commercial invoices or generate commercial revenue through its activities. If local invoicing and commercial sales are required, a branch or Turkish company should generally be considered instead.
How long can a liaison office operate?
The initial permit may be granted for a maximum of three years. Extension depends on the activity and Ministry assessment. Market-research and product/service-promotion offices cannot be extended under the current Regulation; specified other activities may receive extensions of up to five years, while regional management centres may receive up to ten years.
Does the foreign parent need to be at least one year old?
Not in every case. The Regulation allows the Ministry to impose a one-year establishment-age condition when assessing applications by newly established foreign companies, taking factors such as activity, capital and employment into account.
Are liaison-office employees exempt from income tax?
Yes, where the conditions of Article 23/14 of Income Tax Law No. 193 are satisfied. The exemption applies to qualifying salary income and does not by itself remove SGK or other payroll obligations.
Are liaison-office employees subject to SGK?
Generally, employees working in Turkey remain subject to Turkish social-security rules unless a specific statutory exclusion or applicable social-security agreement applies. A qualifying temporary foreign assignment may be treated differently.
Can a liaison office employ a foreign manager?
There is a specific work-permit route for up to one authorised foreign person in a liaison office. Current rules include a requirement concerning at least USD 200,000 or equivalent foreign-currency funding brought from abroad during the preceding year, and the liaison office must hold the relevant activity permission.
When is the annual liaison-office report due?
The Annex 4 Liaison Offices Activity Information Form and supporting documentation must be submitted by the end of May each year for the previous year’s activities.
Is a liaison office a permanent alternative to establishing a company?
Not necessarily. Its suitability depends on the permitted activity. Market-research and promotion permissions cannot be extended after the initial period, and a business that develops into local commercial operations will normally need to consider a branch or Turkish company.
Conclusion
A liaison office in Turkey is a specific regulatory structure for a foreign company that needs a local presence without conducting commercial activity.
If the planned operation already includes local sales, invoicing or other commercial activities, the foreign company should consider establishing a company in Turkey rather than using a liaison office.
Its principal advantage is not that it is a universally “tax-exempt company.” It is that the foreign parent can maintain an authorised non-commercial presence for activities such as representation, research, supplier supervision, technical support, information transfer or regional coordination without establishing a separate Turkish subsidiary.
That benefit comes with a clear boundary: the office must remain within its permitted activity and cannot become a local revenue-generating operation.
For foreign companies evaluating this structure, the most important work should therefore take place before the application. The planned activities, employee responsibilities, funding model, payroll treatment, foreign-employee requirements and eventual commercial strategy should be mapped together. If the intended operation already includes local sales, invoicing or commercial execution, a branch or Turkish subsidiary may provide a more appropriate framework from the outset.