A foreign company planning to carry out commercial activities in Turkey does not necessarily need to establish a separate Turkish subsidiary. Depending on the intended business model, opening a branch office in Turkey may provide a more direct way to operate through the existing foreign company.
A branch is not a separate legal entity from its foreign head office. It operates as an extension of the parent company, while being registered with the Turkish Trade Registry and maintaining its own tax and accounting obligations in Turkey. There is no general statutory minimum capital requirement for a foreign-company branch, although a budget or capital amount may be allocated to its Turkish operations.
This distinction makes a branch materially different from both a Turkish subsidiary and a liaison office. A branch can conduct commercial activities, issue invoices and generate revenue in Turkey. A liaison office, by contrast, is limited to authorised non-commercial activities.
For international groups, the choice between a branch and a subsidiary should therefore be made by considering not only establishment requirements, but also liability, taxation, profit repatriation and the applicable double tax treaty.
What Does Opening a Branch Office in Turkey Mean?
A Turkish branch represents the foreign parent company in Turkey rather than creating a new legal entity.
The foreign company remains the underlying legal person, and the branch operates within the scope of the activities of its head office. The official Investment Office guidance confirms that a branch has no shareholders of its own, has no independent legal personality and may be established only for purposes falling within those of the parent company.
This has several practical consequences.
The parent company remains responsible for the obligations of the branch. There is no separate shareholder structure or board of directors at branch level. Instead, the foreign company appoints a representative authorised to conduct the Turkish branch’s affairs.
Unlike a liaison office, however, the branch is a commercial operation. It can enter into contracts, employ personnel, invoice customers and earn revenue from its activities in Turkey.
Branch Office vs Turkish Subsidiary
The main distinction is legal separation.
A Turkish limited liability company or joint stock company is a separate Turkish legal entity. A branch remains part of the foreign company.
| Issue | Branch Office | Turkish Subsidiary |
|---|---|---|
| Separate legal entity | No | Yes |
| Shareholders | No separate shareholders | Required |
| Commercial activity | Yes | Yes |
| Local invoicing | Yes | Yes |
| General statutory minimum capital | No | Yes |
| Liability | Ultimately remains with foreign company | Generally rests with subsidiary, subject to applicable legal rules |
| Corporate governance | Branch representative | Managers or board, depending on company type |
| Profit repatriation | Branch profit remittance | Dividend distribution |
| Turkish accounting and tax compliance | Required | Required |
A subsidiary can therefore be preferable where the international group wants a legally separate Turkish operation, local shareholders, a distinct corporate structure or separation of liabilities.
A branch may be more suitable where the foreign company wants to operate directly in Turkey without incorporating a separate subsidiary.
Foreign investors considering a separate local company can also review our guide to company formation in Turkey before deciding which structure best fits the intended operation.
Branch Office in Turkey vs Liaison Office
The distinction between a branch and a liaison office is even more important.
A liaison office in Turkey is established for authorised non-commercial activities such as representation, market research, technical support or regional coordination. It cannot ordinarily conduct commercial activities or generate local sales revenue.
A branch does not have this restriction. It can carry out the commercial activities for which it has been registered, provided those activities remain within the purposes of the foreign parent company.
Accordingly, a foreign business that initially entered Turkey through a liaison office may need to consider a branch or Turkish company if its activities develop into local contracting, sales or invoicing.
Capital Requirements for Opening a Branch Office in Turkey
There is no general statutory minimum capital requirement for establishing a foreign-company branch in Turkey. Official investment guidance expressly distinguishes branches from Turkish capital companies in this respect.
This does not mean that the branch operates without financial resources. An amount may be allocated to the branch for its operations and recorded during establishment, but this should not be confused with the statutory minimum capital applicable to Turkish limited liability and joint stock companies.
The appropriate funding level will depend on the branch’s planned activities, employees, premises and operating expenses.
Representative of a Foreign Branch in Turkey
When opening a branch office in Turkey, the foreign company must appoint a fully authorised commercial representative who resides in Turkey. The representative may be a Turkish citizen or a foreign national; the relevant requirement is that the appointed representative is resident in Turkey.
The representative acts for the branch in Turkey within the authority granted by the foreign company. The branch-opening resolution and/or power of attorney should therefore clearly define the representative’s powers.
The representative does not need to be a shareholder because the branch itself has no shareholders. Where a foreign national is appointed, any applicable immigration and work-permit requirements should be considered separately from the Trade Registry requirements.
How to Open a Branch Office in Turkey: Registration Process
The branch is registered with the competent Trade Registry Directorate.
Unlike a liaison office, establishing an ordinary foreign-company branch does not generally require a preliminary liaison-office permission from the Ministry of Industry and Technology. However, businesses operating in regulated sectors may require sector-specific licences, approvals or permissions.
The establishment process normally begins with a corporate decision by the foreign parent company approving the opening of the Turkish branch and appointing its representative.
The foreign-company documents are then prepared for use in Turkey and the branch registration application is submitted to the relevant Trade Registry.
Following registration, the branch completes the necessary tax, accounting, invoicing, payroll and other operational registrations depending on its activities.
Documents Required to Open a Branch Office in Turkey
The exact documents required for opening a branch office in Turkey should be confirmed with the relevant Trade Registry based on the foreign company’s jurisdiction and the circumstances of the application. The Ministry of Trade’s registration guidance includes documents concerning both the foreign parent and the Turkish branch.
These generally include:
- the branch registration petition;
- the foreign company’s resolution to establish the Turkish branch;
- evidence of the foreign company’s registration and current legal status;
- the foreign company’s constitutional documents;
- documents showing compliance with the requirements of its home jurisdiction where applicable;
- information concerning the foreign company’s registered office, capital and activities;
- details of the Turkish branch, including its title, address and allocated capital or budget;
- appointment and authorisation documents for the branch representative;
- power of attorney where required;
- passport or identification documentation for the representative;
- signature declarations; and
- sector-specific approvals where the planned activity is subject to regulatory permission.
The precise forms and number of copies can vary with current Trade Registry practice.
Apostille, Legalisation and Turkish Translation
Documents issued outside Turkey must generally be prepared in a form acceptable to the Turkish Trade Registry.
Where the issuing country is a party to the Hague Apostille Convention and the relevant document falls within its scope, an apostille will generally be used. Otherwise, consular legalisation may be required.
Foreign-language documents submitted to the Turkish authorities must also be accompanied by the required Turkish translations and notarisation formalities.
Official investment guidance similarly states that documents executed outside Turkey must be apostilled or otherwise appropriately authenticated and officially translated for Turkish registration purposes.
Because authentication procedures vary by jurisdiction and document type, it is useful to confirm the required format before originals are issued abroad.
Taxation After Opening a Branch Office in Turkey
A foreign-company branch conducting business in Turkey is registered as a taxpayer in Turkey.
The Revenue Administration’s 2026 Corporate Income Tax Guide expressly states that where a foreign company opens a branch in Turkey, tax registrations are required for corporate income tax, VAT and provisional corporate tax. Where the circumstances require withholding and payroll filings, the relevant withholding obligations also arise.
In practical terms, the branch maintains Turkish statutory accounting records, issues invoices for its Turkish operations, files the applicable tax returns and calculates the taxable profit attributable to its activities in Turkey.
The fact that the branch is not a separate legal entity does not remove these Turkish tax and accounting obligations.
Corporate Income Tax and Profit Attribution
The profits attributable to the Turkish branch are subject to Turkish corporate income tax under the applicable rules.
Because the branch and head office form part of the same legal enterprise, transactions and allocations between the Turkish operation and the foreign head office require particular attention. Expenses charged to the branch, head-office allocations, financing arrangements and dealings with related group companies should be supported and treated consistently with Turkish tax rules.
Where relevant, the applicable double tax treaty should also be considered in determining the taxation of the foreign enterprise’s Turkish business activities and the attribution of profits to the Turkish operation.
Profit Repatriation and Double Tax Treaties
One issue that should be considered before deciding between a branch and a subsidiary is the tax treatment of profits transferred out of Turkey.
A Turkish subsidiary generally transfers its after-tax profits to its foreign shareholder through a dividend distribution. A branch, because it is not a separate legal entity, may transfer its after-tax branch profits directly to its foreign head office.
Both types of profit repatriation may be subject to withholding tax in Turkey. However, the applicable double tax treaty between Turkey and the country of the foreign parent or shareholder may provide a reduced rate, and the treaty treatment of dividends and branch profit remittances may differ.
For this reason, foreign investors should review the relevant double tax treaty before choosing between a Turkish subsidiary and a branch. Depending on the country and the applicable treaty provisions, the tax cost of transferring profits abroad may be different under the two structures.
The choice should therefore be made based on the specific treaty and ownership structure rather than assuming that a branch or subsidiary is always more tax-efficient.
VAT and Other Tax Obligations
Because a branch can conduct commercial activities in Turkey, its supplies of goods and services are subject to the ordinary Turkish VAT framework where the relevant transaction falls within the scope of VAT.
The branch may therefore need to issue Turkish invoices, calculate output VAT, claim eligible input VAT and submit VAT returns in accordance with the nature of its business.
Other tax obligations may also arise depending on the transactions undertaken, including withholding taxes, stamp tax and sector-specific taxes.
The tax position should therefore be assessed according to the branch’s actual activities rather than treating “branch office” as a separate tax-exempt category.
Accounting and Payroll
A Turkish branch maintains accounting records and fulfils local filing obligations for its Turkish operations.
If employees are hired through the branch, Turkish employment, payroll and social-security requirements generally apply in the same way as they would to another Turkish employer, subject to any specific rules applicable to the individual employee.
This includes payroll calculations, social-security registration and filings, wage-related tax obligations and employment documentation.
Foreign employees should additionally be reviewed under Turkey’s work-permit rules. Commercial registration of the branch does not itself provide a foreign employee with permission to work in Turkey.
Transfer Pricing and Head-Office Transactions
The relationship between a branch and its foreign head office requires a somewhat different analysis from ordinary transactions between two separate group companies because the branch and head office are parts of the same legal enterprise.
Nevertheless, the allocation of income and expenses to the Turkish operation must be supportable for Turkish tax purposes. Transactions involving other related group entities may also fall within Turkey’s transfer-pricing rules.
International groups with material cross-border transactions should therefore review the allocation methodology, supporting documentation and applicable treaty provisions as part of the branch’s tax compliance.
Where relevant, our related analysis of transfer pricing regulations in Turkey provides further detail on the Turkish framework.
Branch Office or Turkish Company: Which Structure Fits the Business?
Neither structure is inherently preferable in every case.
A branch can be appropriate where a foreign company wants to maintain a direct legal connection between the Turkish operation and the foreign headquarters. It can also avoid creating a separate shareholder and corporate-governance structure in Turkey.
A subsidiary may be more appropriate where the group wants a separate Turkish legal entity, limited liability at entity level, local investors, a standalone corporate structure or greater flexibility for future ownership changes.
Tax should form part of this analysis, but should not be the only factor.
Before establishing either structure, foreign investors should normally compare:
- the intended commercial activities in Turkey;
- contractual and liability exposure;
- regulatory requirements;
- expected Turkish profitability;
- financing requirements;
- planned transactions with the foreign head office and group companies;
- the method and frequency of profit repatriation; and
- the applicable double tax treaty.
Foreign companies considering a separate Turkish legal entity can review our guide to establishing a company in Turkey alongside the branch alternative.
A Note on Tax Incentives
The availability of Turkish tax incentives should be examined according to the taxpayer and the underlying activity rather than assumed from the legal structure alone.
In particular, the previous version of this article referred broadly to the cash capital interest deduction as an advantage of establishing a branch. That statement should not be used as a general branch benefit. The statutory cash-capital deduction is framed around qualifying cash capital increases of capital companies and the cash-paid capital of newly established capital companies.
Other incentives may nevertheless be available where their specific conditions are met.
For example, recent legislation introduced a substantial corporate tax deduction for qualifying international intermediary trading activities where, among other conditions, the seller and buyer are outside Turkey and the statutory requirements are satisfied. Companies considering Turkey as a base for international trading should assess such activity-specific incentives separately from the basic choice between a branch and a subsidiary.
Conclusion
Opening a branch office in Turkey allows a foreign company to conduct commercial activities through a registered Turkish operation without incorporating a separate Turkish legal entity.
The structure can work particularly well where the parent company wants direct control over the Turkish operation and does not require a separate shareholder structure. At the same time, the foreign parent remains responsible for the branch’s obligations, while the branch itself is subject to Turkish corporate tax, VAT, accounting, payroll and other compliance requirements applicable to its activities.
The decision should therefore be made by comparing the branch with a Turkish subsidiary in the context of the specific business.
In particular, the double tax treaty between Turkey and the parent company’s country of residence should be reviewed before the structure is selected. The treaty treatment of branch-profit remittances and subsidiary dividends can materially affect the overall tax cost of repatriating profits from Turkey.
For companies that need only non-commercial representation, market research or similar activities, a liaison office in Turkey may instead be worth considering.