Turkey, with its strategic geographical location, burgeoning economy, and dynamic market, continues to be a prime destination for international businesses seeking expansion. Establishing a subsidiary company in Turkey offers a robust legal framework and significant operational independence, making it an attractive option for foreign investors.
Expanding your business through a subsidiary in Turkey is a compelling step—especially in 2025. As a vibrant gateway between Europe and Asia, Turkey offers flexible regulations, robust incentives, and an investor-friendly legal landscape for foreign entrepreneurs and multinational corporations.
At Akkas & Associates Law Firm, located in the heart of Istanbul, we have been providing expert legal guidance for company formation since 1992, helping both local and international clients navigate every stage of the subsidiary setup process.
Table of Contents
Understanding Subsidiary Companies in Turkey
A subsidiary company in Turkey is a separate legal entity wholly or majority-owned by a foreign parent company. This structure offers significant advantages for foreign investors, including limited liability protection, operational flexibility, and access to Turkey’s dynamic market of over 84 million consumers.
The Turkish Commercial Code recognizes several types of subsidiary companies, with joint stock companies (Anonim Şirket – A.Ş.) and limited liability companies (Limited Şirket – Ltd. Şti.) being the most popular choices for foreign investors. Each structure offers distinct benefits depending on your business objectives and investment scale.
Why Choose Turkey for Your Subsidiary?
Turkey’s investment climate is increasingly favorable. Its young and skilled workforce, coupled with a robust infrastructure, provides a fertile ground for growth. A subsidiary company, as a distinct legal entity, offers limited liability for the parent company, shielding its assets from the subsidiary’s potential liabilities.
This independence allows for greater adaptability to local market conditions and compliance with Turkish legal and tax regulations.
Navigating the Legal Landscape: Key Company Types
Under the Turkish Commercial Code (TCC), foreign investors typically choose between two primary legal structures for their subsidiaries:
- Limited Liability Company (Limited Şirket – Ltd. Şti.): This is the most common choice for small and medium-sized enterprises (SMEs) due to its flexible structure and relatively lower capital requirement. It requires a minimum of one shareholder (individual or legal entity) and a minimum capital of TRY 50,000. Shareholders’ liability is limited to their capital contributions.
- Joint Stock Company (Anonim Şirket – A.Ş.): Preferred for larger operations, publicly traded companies, or those seeking significant capital investment, a Joint Stock Company has more stringent governance and auditing rules. It requires a minimum of one shareholder and a minimum capital of TRY 250,000.
The choice of legal entity significantly impacts the establishment process, compliance obligations, and future operational flexibility. It’s crucial to select the structure that best aligns with your business objectives.
7 Essential Steps to Establish Your Turkish Subsidiary
The process of establishing a subsidiary in Turkey requires meticulous adherence to legal procedures. Here are the key steps:
- Determine the Appropriate Legal Structure and Name: As discussed, choosing between an LLC or JSC is the first critical decision. Once decided, a unique company name must be selected and approved by the Turkish Trade Registry Office through the Central Registration System (MERSIS).
- Prepare and Notarize the Articles of Association (AoA): The AoA is the foundational document of your subsidiary, outlining its purpose, share capital, management structure, and operational guidelines. This document must comply with the Turkish Commercial Code and be drafted and notarized in Turkish. For foreign entities, parent company documents often require apostille or consular legalization and sworn translation.
- Obtain a Tax Identification Number (TIN): A TIN is essential for all financial and legal transactions. This can be obtained for the subsidiary from the local tax office. Foreign individuals involved as shareholders or directors will also need individual tax numbers.
- Deposit Minimum Capital into a Turkish Bank Account: The required minimum capital (TRY 50,000 for LLC, TRY 250,000 for JSC) must be deposited into a corporate bank account in Turkey. Proof of this deposit is a mandatory document for registration. This step underscores the financial commitment required for official establishment.
- Register with the Trade Registry Office: This is the formal registration of your subsidiary. All prepared documents, including the notarized AoA, proof of capital deposit, identification documents of shareholders and directors, and a declaration of establishment, are submitted to the relevant Trade Registry Office. Upon approval, the subsidiary’s registration is published in the Turkish Trade Registry Gazette, granting it legal personality.
- Register for Taxes and Social Security: After trade registry registration, the subsidiary must be registered with the local tax office for corporate tax purposes and with the Social Security Institution (SGK) for employee-related obligations. This ensures compliance with Turkey’s tax and labor laws. The corporate tax rate in Turkey is 25% as of 2025, and there are various VAT rates.
- Obtain Necessary Licenses and Permits: Depending on your industry and specific business activities, additional licenses and permits may be required from relevant ministries or regulatory bodies. This step is crucial for ensuring full legal compliance and avoiding future operational hurdles.
For a deeper dive into Turkish company law and its nuances, you may find our article on “Company Formation in Turkey” particularly insightful.
Critical Considerations for Foreign Investors
While establishing a subsidiary in Turkey offers numerous advantages, foreign investors should be aware of several key considerations:
- Local Representation: While not always mandatory, having local legal and financial advisors is highly recommended. They can navigate complex regulatory requirements, bridge cultural differences, and provide invaluable support throughout the establishment and operational phases.
- Work Permits for Foreign Employees: If your subsidiary plans to employ foreign staff, obtaining work permits from the Ministry of Labor and Social Security is a necessary step. There are specific regulations regarding the ratio of Turkish to foreign employees. For more information, refer to our guide on “Turkish Work Permit.”
- Intellectual Property Protection: Safeguarding your intellectual property is paramount. Registering trademarks, patents, and copyrights with the Turkish Patent and Trademark Office is essential to protect your business’s unique assets. You can learn more about this by visiting our page on “Intellectual Property Law in Turkey.”
- Ongoing Compliance and Reporting: Turkish law mandates regular financial reporting, auditing, and adherence to various compliance obligations. Engaging local accounting and legal professionals ensures continuous compliance and avoids potential penalties.
FAQs About Establishing a Subsidiary in Turkey
Q1: What is the main difference between a subsidiary and a branch office in Turkey? A1: A subsidiary is a separate legal entity from its parent company, offering limited liability. A branch office, conversely, is an extension of the parent company and does not have a separate legal personality, meaning the parent company is fully liable for its obligations.
Q2: What is the minimum capital requirement for an LLC in Turkey in 2025? A2: As of 2025, the minimum capital requirement for a Limited Liability Company (Ltd. Şti.) in Turkey is TRY 50,000.
Q3: Can a foreign individual be the sole shareholder of a Turkish subsidiary? A3: Yes, both Limited Liability Companies and Joint Stock Companies in Turkey can be established with a single shareholder, who can be a foreign individual or a legal entity.
Q4: How long does it typically take to establish a subsidiary in Turkey? A4: The company formation process in Turkey generally takes between 5 to 10 business days, provided all required documents are accurately prepared and submitted. However, delays can occur if additional permits are needed.
Q5: Are there any restrictions on the repatriation of profits from a Turkish subsidiary? A5: Turkey generally allows the free repatriation of profits, dividends, and capital by foreign investors, provided that all taxes and financial obligations are met.
Q6: Is it necessary to have a local director or manager for a Turkish subsidiary? A6: While not always legally mandatory for all company types, appointing a local representative or director can significantly streamline administrative processes and compliance with local regulations.
Q7: What are the primary tax obligations for a subsidiary in Turkey? A7: A Turkish subsidiary is subject to corporate income tax (25% as of 2025), Value Added Tax (VAT), and other applicable taxes such as withholding tax on dividends, interest, and royalties, depending on the nature of transactions and any relevant double taxation treaties.
Contact us for Establishing a Subsidiary in Turkey
Establishing a subsidiary in Turkey offers unparalleled opportunities for market entry and growth. The process, while requiring careful navigation of legal and administrative requirements, can be efficiently managed with expert legal guidance.
Akkas & Associates Law Firm, with its extensive experience in Turkish corporate law and dedicated team of English-speaking lawyers, is committed to providing seamless and comprehensive support to foreign investors throughout their journey.
For top-tier legal advice on establishing your subsidiary company in Turkey in 2025 or any other corporate law matters, do not hesitate to contact Akkas & Associates Law Firm today. Our experienced team in Istanbul is ready to assist you in making your investment a success.
Please fill out and submit the form below to make an appointment.
