31 August
Investment
Establishing a Limited Company or Opening a Branch in Turkey
- MHRPartner
- Establishing Company, Investment, Turkey
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Mehmet Akif Özmen | Sworn Financial Advisor - CPA | Founder, CEO
Establishing a company in Turkey is both a strategic step for foreign investors and a necessary process that opens the doors to a vast market. Turkey offers an attractive destination for investors with its dynamic economy, young and educated population, developing infrastructure, and strategic location. Foreign investors must follow specific legal and administrative procedures during this process to establish a limited company or open a branch in Turkey.
This article details the rules that apply to foreign investors regarding establishing a “limited company” or opening a branch, which is the most preferred type of company in Turkey.
Foreign Investors Establishing a Limited Company in Turkey
Foreign (i.e., non-Turkish) natural and legal persons can establish limited companies in Turkey and become board members in these companies. Foreign natural and legal persons establishing a company in Turkey are subject to the same rules as domestic investors.
The total paid-in capital of a limited company must be at least 50,000 TL (Fifty thousand Turkish Lira), and there must be at least 1 (one) shareholder for a limited company.
The nominal value of the principal capital shares can be determined as at least twenty-five Turkish Lira or multiples thereof. The entire capital brought in cash can be paid within twenty-four months after the registration of the company. The payment schedule can be arranged in the company agreement or determined by the directors.
Obtaining a Turkish Tax Identification Number for Foreign Partners and Foreign Managers of a Limited Company
Establishing a limited company and preparing its articles of association are carried out through the Central Registry System (“MERSIS”). Users start the company establishment process by creating a free membership via the MERSIS website.
In this system, Turkish shareholders and managers are identified with Turkish Identification Numbers, while foreign natural or legal persons are identified with Turkish Potential Tax Identification Numbers. A Turkish Potential Tax Identification Number must be obtained and registered in the MERSIS database for foreign natural or legal persons. The Turkish Potential Tax Identification Number does not define a tax liability; however, it allows foreign persons to be registered in the state database and to perform official transactions.
Documents Required to Obtain a Potential Tax Identification Number
The documents required to obtain a potential tax identification number are listed below:
i. The foreign legal person must have a trade registry summary (a document indicating the company’s capital, address, and authorized signatory). This document must be notarized and apostilled in the country abroad.
ii. The power of attorney authorizes the attorney to obtain a Turkish Potential Tax Identification Number. These documents must be notarized and apostilled in the relevant country abroad.
iii. The foreign company’s legal representative / authorized person from which the potential tax identification number will be obtained must also have a Turkish Potential Tax Identification Number. There are two ways to get a Turkish Potential Tax Identification Number for foreign natural persons.
The first method is to obtain a Turkish Potential Tax Identification Number online by entering the necessary information. Suppose a foreign individual has previously entered the Republic of Turkey’s borders with a passport. In that case, the essential information is automatically obtained from the police department’s system and can be easily obtained by entering information such as tax identification number, passport number, parents’ names, place of birth, telephone number, and address.
If it cannot be obtained online, a power of attorney and a copy of the passport must obtain a Turkish Tax Identification Number on behalf of the foreign individual. Both documents must be notarized and apostilled abroad.
iv. After obtaining a Turkish Potential Tax Identification Number for the foreign legal entity and its legal representative, these records will be added to the MERSIS system.
Required documents and information for this stage:
- Power of attorney for establishing a company in Turkey and Turkish Potential Tax Identification Number – notarized and apostilled in the relevant country abroad.
- Trade registry summary – notarized and apostilled in the relevant country abroad.
- An attempt will be made to obtain a Turkish Potential Tax Identification Number online for the company’s representative abroad. To follow this method, a scanned copy of the representative’s passport, parents’ names, birthplaces, phone numbers, and address information will be needed.
- If the overseas company’s representative cannot obtain a Turkish Potential Tax Identification Number online, a draft power of attorney, notarized and apostilled, will be provided. The representative’s passport must also be notarized and apostilled.
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Preparation of the Articles of Association of a Limited Company in the Central Registry System (MERSİS)
The articles of association of a Limited Company must include the following articles and information.
- Founders (Shareholders) of the Limited Company
- Title (Trade Name) of the Limited Company
Note: A similarity determination will be made after determining the trade name. The use of the expressions “Turkish,” “Turkey,” “National,” and “Republic” in the trade name requires a Presidential Decree.
- Objectives and Fields of Activity of the Limited Company
- Registration of Headquarters
Note: The newly established company must be a party to the lease agreement after the establishment procedures are completed. However, specifying the property address to be rented during the establishment phase is sufficient.
- Capital of the Limited Company
- Appointment of the Manager/Managers of the Limited Company
- Signing of the Articles of Association in the Presence of the Trade Registry
- Completion of the Establishment and Announcement of the Establishment in the Turkish Trade Registry Gazette
Types of Companies Subject to Permission for Establishment of a Company with Foreign Partners
The Foreign Direct Investment Law No. 4875 states that foreign persons can establish any company in the Turkish Commercial Code. On the other hand, if a company with foreign partners is to be established, in addition to all the necessary processes, permission must be obtained from the Ministry of Trade for some companies. In this context, the types of companies that are subject to permission to establish a company with foreign partners are as follows:
- Banks,
- Financial leasing companies,
- Factoring companies,
- Consumer finance and card services companies, asset management companies, insurance companies,
- Holdings established as joint stock companies,
- Companies operating foreign exchange booths,
- Companies engaged in general retailing,
- Licensed agricultural product warehousing companies,
- Product specialized exchange companies,
- Independent auditing companies,
- Surveillance companies,
- Technology development zone management companies,
- Companies subject to the Capital Markets Law No. 6362 dated 6/12/2012,
- Establishments of free zone founder and operator companies,
Read Advice
A guiding article for foreign investors who will do business in Turkey, who will establish a company or who will work in Turkey: Turkish Business Culture
Foreign Investors Opening Branches in Turkey
The branches of commercial enterprises headquartered outside Turkey are registered in Turkey as domestic commercial enterprises, provided that the provisions of the laws of their own countries regarding trade names are reserved. A fully authorized commercial representative located in Turkey is appointed for these branches. If the commercial enterprise has more than one branch, the branches to be opened after the registration of the first branch are registered as branches of domestic commercial enterprises.
Documents Required for Branch Registration
The documents that must be submitted to the relevant trade registry directorate for a foreign company to register its branch in Turkey are as follows:
- A letter from the authorized authority indicating that the conditions sought by the law of the source country where the company headquarters is located for the business to open a branch have been met and the documents required to be presented for the registration of the branch and a copy of its Turkish translation
- All documents required to be presented for the registration of the branch in the source country
Note: If the legal entity is a foreign national, this decision must be approved by the Consulate of the Republic of Turkey in the country where the company is located or by the provisions of the Convention on the Abolishing the Requirement to Legalize Foreign Official Documents and their notarized Turkish translations must be made.
- A certified copy of the document containing the company’s current registry records and the company agreement and one copy of its Turkish translation
- The original and one copy of the Turkish translation of the decision of the authorized body of the company regarding the opening of a branch and the appointment of a fully authorized representative resident in Turkey for the branch
- The company’s trade name, type, business subject, type and amount of capital, date of establishment, registration number, the law it is subject to, whether it is a member of the European Union, website, the title of the branch and the amount of capital allocated to the branch, the name and surname of the person or persons who will represent the branch with full authority before private institutions and public institutions and organizations, including the courts, the identity number and place of residence, and the address of the branch, signed by the authorized persons of the center, and one copy of its Turkish translation.
- If the person or persons who will represent the branch in Turkey with full authority before private institutions and public institutions and organizations, including the courts, and the authority granted to them are not specified in the decision to open a branch, the original and one copy of the Turkish translation of the power of attorney issued regarding these issues
- Signature declarations of the persons who will represent the branch
- For branches that are subject to the permission or approval of the Ministry of Trade or other official institutions, this permission or approval letter
- In case a legal entity is elected as a director, a notarized copy of the authorized body decision of the legal entity manager, including the name-surname, address, nationality and Turkish Republic identity number (tax identity number or identity number specific to foreigners for foreigners) of the real person determined by the legal entity selected as the director and who will act on behalf of the legal entity together with the legal entity selected as the director (Trade Registry Regulation Art. 90/1-ç).
- In case the natural person representative determined by the legal entity is a foreign national and resides in Turkey, a residence permit and a copy of the passport with a notarized Turkish translation.
- If the manager/partner is a foreign legal entity, a document containing the current registry records of the legal entity.
This document must be certified by the Consulate of the Republic of Turkey in the country where the company is located or by the provisions of the Agreement on the Abolishing the Requirement to Legalize Foreign Official Documents, and a notarized Turkish translation must be made (Trade Registry Regulation, Article 32/2).
- If there is a foreign legal entity partner / legal entity authorized person, the tax identification number must be specified in the company agreement.
What Can We Do For You?
As MHR & Partners, we are directly and indirectly active in more than 20 countries worldwide. We aim to operate with 10 branches in 100 countries in 10 years. We offer you end-to-end consultancy and support services in establishing a company, obtaining a residence permit, and in all operational processes abroad, primarily financial issues.
Our priority is to provide consultancy services to companies with a growth vision and business strategy abroad. We attach particular importance to the uninterrupted continuation of our services with the assurance of MHR & Partners (Mühür YMM AŞ) after the company establishment stages. Our core mission is to be a safe harbor and provide sustainable services.
We want to be a bridge to our customers’ business plans for growth and development, even in the most remote parts of the world.
To establish a business in Turkey or Europe (Germany, The Netherlands, Belgium, UK, Romania, Bulgaria, Montenegro), you can contact Sworn-in Certified Public Accountant Mehmet Akif Özmen directly (+90 542 830 3408 or akif.ozmen@mhrpartner.com).
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