Unlocking Business Potential: Navigating Company Formation in Turkey.
As a crossroads between Europe, Asia, and the Middle East, Turkey enjoys a uniquely advantageous geographic position that serves as a gateway to a flourishing market. With a robust economy, strategic location, and an expanding dynamic business landscape, it is no wonder why Turkey has become an attractive destination for entrepreneurs and investors alike. In this blog post, we will explore the key aspects of company formation in Turkey, discussing the requirements, advantages, and important considerations for those seeking to establish their presence in this promising business hub.
I. Legal Entities and Corporate Structures:
To begin the process of company formation in Turkey, investors need to understand the various legal entities and corporate structures available. The most common options include:
1. Limited Liability Company (LLC): An LLC in Turkey is a preferred choice for many entrepreneurs due to its simplified procedures and flexible regulations. It requires a minimum of one shareholder and enables limited liability for shareholders, helping protect personal assets. An LLC can be formed by both local and foreign individuals or legal entities.
2. Joint Stock Company (JSC): A JSC, also known as a public company in Turkey, is recommended for businesses aiming for significant growth or those planning to go public. It can be established with a minimum of one shareholder, and shares can be freely traded on the stock exchange. A JSC may require more complex procedures and stringent compliance with regulations.
3. Branch Office: Foreign companies have the option to establish branch offices in Turkey. While this does not act as a separate legal entity, it allows the parent company to conduct business activities in the Turkish market. Branch offices are subject to the regulations of the parent company's home jurisdiction.
II. Legal Requirements and Steps:
Setting up a company in Turkey involves several standard procedures, including:
1. Name Approval: Selecting an appropriate and unique name for the company is the initial step. Proposed names must adhere to Turkish naming conventions and should not conflict with existing trademarks or companies.
2. Share Capital: Determining the share capital for your company is crucial. In Turkey, LLCs require a minimum share capital of 10,000 Turkish Lira (TRY), while JSCs need a higher capital, usually no less than TRY 50,000. However, these amounts can vary depending on industry-specific regulations.
3. Articles of Association: Preparing the Articles of Association is a vital step, as it outlines the company's internal regulations, ownership structure, shareholder rights, and authorities. Engaging corporate lawyers in Turkey familiar with Turkish corporate law is recommended to ensure compliance.
4. Notarization: The foreign legal entity must first make a general assembly decision on the establishment of a company in Turkey, with the content required by the chamber of commerce, and then this decision must be Apostilled and notarized in the country of its origin and its translation must be notarized in Turkey.
5. Company Registration and Obtaining Tax Identification Numbers: Registering the company in Turkey typically occurs at the local Trade Registry Office, where the provided documentation will be verified and officially recorded. Following successful registration, the company obtains its official Tax Identification Number.
6. Opening a bank account and Depositing Initial Capital: To operate a company in Turkey, you must open a corporate bank account in Turkey. It is necessary to provide the company's registration documents, identification papers of authorized signatories, and the notarized AoA to the bank. The banking sector in Turkey is well-developed, with various options available for choosing the most suitable financial institution for your requirements. An essential step is depositing the initial capital, which can be facilitated through a certified public accountant (CPA) to ensure compliance with regulations.
7. Office Space: Once the Turkish company is registered in and the bank account is opened, the next step is to secure a suitable office space. Having a physical presence is essential for your company's operations in Turkey. Choose an office space that suits your business needs and goals. Whether it's a traditional office, shared workspace, or virtual office, ensure that it complies with local regulations and provides a productive and professional environment.
8. Accountant: Complying with tax regulations and maintaining accurate financial records are vital aspects of running a successful business in Turkey. To ensure compliance, it is advisable to hire a professional accountant who can handle your company's bookkeeping, tax filing, and financial reporting requirements.
9. Finalizing the Process: The last stage of the company setup process includes:
a. Notary Validation: The notarization of the articles of association by a public notary, appending his/her seal and signature.
b. Social Security Registration: Registering the Turkish company and employees with the Social Security Institution (SGK).
c. Chamber of Commerce Registration: Enrolling the company in the relevant Chamber of Commerce based on its location and industry.
III. Time frame for setting up a company in Turkey:
Establishing a company in Turkey is a relatively streamlined process that can take anywhere from 5 to 15 days. However, it is important to note that this time frame can be extended when it comes to setting up a branch or liaison office for a foreign company. In such cases, additional steps and requirements may need to be adhered to, resulting in a longer timeframe for establishment.
To navigate through the intricacies and legalities involved in establishing a company in Turkey, it is advisable to seek the guidance and expertise of corporate lawyers in Turkey. Our team of corporate lawyers in Istanbul specializes in providing comprehensive advice and assistance regarding the various processes and procedures followed by Turkish authorities in establishing a company in Turkey. With our in-depth knowledge and understanding of the local business landscape, we can offer tailored solutions and customized business registration services in Turkey to suit your specific needs.
IV. Monthly cost for a company in Turkey:
The monthly cost for a company in Turkey consists of various expenses that must be taken into account. One of the key aspects is the accounting fees, which typically range between 4000-5000 TRY per month. However, it is important to note that these fees may increase if the number of employees within the company also increases. Another crucial expense pertains to virtual office fees. To establish a virtual office for a Turkish legal entity, the estimated cost for a one-year duration would amount to approximately 1,200.00 EUR.
V. Advantages of Company Formation in Turkey:
Turkey offers numerous advantages for entrepreneurs seeking to establish their businesses, including:
Access to Emerging Markets: Situated at the crossroads of continents, Turkey provides a gateway to the Middle East, Central Asia, and the European Union, facilitating access to a market of over 1.7 billion consumers.
Incentives and Tax Benefits: The Turkish government has implemented various investment incentives and tax breaks to encourage foreign investments. These include VAT exemptions, reduction in corporate income tax rates, and customs duty exemptions on imported equipment.
Skilled Workforce: Turkey boasts a young, well-educated, and multilingual workforce, offering a competitive advantage in sectors such as technology, manufacturing, and services.
Infrastructure and Logistics Excellence: Investments in infrastructure projects have significantly enhanced Turkey's connectivity, including the development of modern ports, efficient transportation networks, and advanced telecommunications systems. This infrastructure advantage facilitates efficient supply chain management and international trade.
VI. Important Considerations and Challenges:
While Turkey presents immense opportunities, entrepreneurs should be mindful of the following considerations:
Legal and Regulatory Framework: Understanding and navigating Turkish legal and regulatory requirements can be complex. Engaging local legal experts or business consultants will help overcome potential hurdles and ensure compliance throughout the establishment process.
Cultural Factors: Turkey's unique cultural aspects can impact business operations. Adapting to local customs, language barriers, and maintaining favorable relationships with local stakeholders are crucial for long-term success.
Political and Economic Stability: Monitoring political and economic developments in Turkey is essential, as fluctuations can impact business operations. Staying informed and adapting to changes will help mitigate potential risks.
Establishing a company in Turkey opens doors to a vibrant market, abundant resources, and a strategic location connecting continents. Understanding the legal requirements, exploring various corporate structures, and leveraging the advantages offered by Turkey's favourable business environment are key elements for success. By conducting thorough research, seeking expert guidance, and adapting to local customs, entrepreneurs can tap into Turkey's immense potential and participate in its fast-growing economy.