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Complete Guide to Setting Up a Subsidiary in Turkey

Turkey has become a popular market for business expansions. Several companies are now setting up subsidiary businesses in Turkey due to its geopolitical position, thriving economy, and hard-working community. The country provides great opportunities for tourism, food processing, cotton, and machinery, attracting several investors. 

The country is an exciting market as it is the trading center of Europe and the Middle East. The country’s annual GDP stands at $692 Billion and is ranked 23rd in terms of GDP among all nations. As per the World Bank Ease of Doing Business 2020 report, Turkey ranks 33 out of 190 countries. Turkey is a part of the CIA World Factbook’s list of developed countries. The country is also labeled as an emerging market economy by the International Monetary Fund, so it is an ideal location to set up your business or expand it. 

Also, the taxation of foreign subsidiaries in Turkey is quite straightforward, making it lucrative for foreign companies. Turkey is a part of the G-20 nations and promises immense growth. The country falls under the upper-middle economy category with a per capita GDP of $8,081. The labor laws of Turkey are both employee and employer-friendly. Hence, you can easily set up a subsidiary in Turkey. Also, Turkey has a vast network of talented workers that will aid you in working for your Turkish subsidiary.

If you consider expanding in Turkey, you can begin with a subsidiary established in the country. This write-up will help you set up a subsidiary in Turkey by easily navigating through the entire process.

What are the Types of Subsidiaries in Turkey?

You can establish different kinds of subsidiary businesses in Turkey. You need to check the suitability and weigh all the options that you have in hand. Some of the common types of subsidiaries in Turkey include:

Joint Stock Companies:

  • Joint stock companies in Turkey have a definite capital divided into shares for a subscription. The company’s shares are floated in the market and traded on Turkey’s national stock exchange.
  • You need a minimum of TRY 50,000 to set up a joint stock company in Turkey.
  • You must have the Articles of Association before operating in Turkey.
  • The company must provide at least a quarter of the share value in cash before the incorporation of the company. Companies can pay the remaining amount across the next 24 months.
  • The Board of Directors of a Joint Stock company in Turkey should at least have one member. However, the member may or may not be a Turkish resident.


Limited Company:

  • A limited company is one of Turkey’s most popular kind of subsidiaries.
  • In the case of a limited company, the definite capital of the company is divided into shares.
  • The company owners have limited liability in the organization and are supposed to pay just their share of the capital. However, the shareholders are responsible for capital debts.
  • The shares of a limited company are not available to the general public and can be subscribed to by a fixed set of people.
  • A limited company can have one to 50 shareholders. 
  • You must have a capital of at least TRY 10,000 to start a limited company in Turkey. 


Collective Company:

  • A collective company, also termed a partnership company, is established with at least two partners.
  • Each partner has the right to manage the company separately. The partners must pay the company’s debts beyond their capital share. Hence, they have unlimited liability.
  • Minimum capital is not required for a collective company.
  • Only a real person can be a partner in a collective company. Different co-operations cannot come together to form a collective company.


Limited Partnerships:

  • Limited companies are partnerships that work as private companies.
  • The liability of the shareholders is limited.
  • A limited partnership company must have at least two partners, out of which one is an active partner, and the other is a dormant partner.
  • There is no limit on the number of partners in a limited liability partnership.
  • A limited partnership has a mix of fixed and unlimited active partners. The partners with an unlimited liability will have to cover any debts the company encounters.



  • These are partnerships where legal persons come together to form a business. 
  • These companies are incorporated to protect a specific set of economic interests. The provisions of the company are listed in the Articles of Association of the company.
  • The company appoints an auditor through the General Assembly and is a part of the board.
  • You can form a cooperative company for trade and commerce.
  • There must be at least seven partners to start a cooperative company in Turkey.
  • Every partner can subscribe to a minimum of one and 5,000 shares. The value of each share is TRY 100.
  • The board of directors must have at least 3 Turkish citizens.


Joint stock companies and partnerships are the most commonly established subsidiaries in Turkey. You must compare all the options and the costs associated with forming different types of subsidiaries before you decide on the business form your subsidiary can take.

How to Set Up a Subsidiary in Turkey?

Turkey has an ideal business environment for subsidiaries. The FDI laws in Turkey are highly flexible, and foreign companies enjoy similar rights to the country’s local companies. You can benefit from these reforms and incorporate a subsidiary in Turkey.

The Trade Registry Directorates manages the incorporation of subsidiaries in Turkey, and all the formalities will finish within a day. 

To set up a subsidiary company in Turkey, you can take the following steps:

Selecting a suitable structure

  • Choose a suitable structure for a subsidiary business in Turkey.
  • Companies can opt for the best structure per their business idea. 

Obtaining a tax identity number

  • The company should get the potential tax number for all the official procedures. You can reach out to the tax officials of Turkey for this. Also, the non-Turkish board members should acquire a tax identification number for themselves, as it is a requirement to open a bank account for capital deposits.

Submitting the address of the company

  • Before the company’s incorporation, you need to submit a valid legal address for the subsidiary. Even if your company works remotely, it should have a registered address. 

Incorporating a company

  • Create a free membership via the MERSIS website. Turkish citizens must add ID numbers, whereas foreigners can add passport numbers. 
  • Foreigners have to provide a tax number and then register with MERSIS. 
  • The founding members or the members of the parent company handling the formation of a subsidiary in Turkey must submit the Articles of Association and the Memorandum on the MERSIS system.
  • The notarized copies of signed declarations of the shareholders, along with the identity proofs, should be submitted for incorporation.

Opening a bank account

  • It is important to set up a Turkish bank account for the company.
  • You must submit the tax identification number of your company to open a bank account.

Paying the share capital

  • The company’s shareholders must transfer at least 0.04% of the company’s total capital to the Competition Authority’s bank account. You need to contact the Trade Registry Directorate to make the transaction. 
  • Additionally, you must pay at least 25% of the amount of the subscribed share capital before the company starts its operations in Turkey. 
  • Companies can pay the remaining 75% across two years. This rule applies to all companies, except for limited companies, where they can pay the entire amount across two years.

Registering the company with the Trade Registry Directorate

  • You must submit the company’s essential documents and the petition for registration to the Trade Registry Directorate. 
  • After the documents’ approval, the Directorate notifies the relevant tax authorities about the company’s formation. 
  • The registration announcement will be published in the Commercial Registry Gazette within the next ten days of incorporation. 

Collect the tax and social security certificates

  • Once the Trade Registry Directorate notifies the tax authorities about the incorporation, reach out to them to collect the tax certificate of the company.
  • Also, contact the Social Security Institution and apply for the company’s social security number.

Issuance of the signature circular

  • Signatories of the company must issue a signing circular in front of authorized Trade Registry Directorate staff on the day the company registers with them. ​

Benefits of Setting Up a Turkey Subsidiary

Setting up a subsidiary in Turkey comes with its own set of advantages. Some benefits of having a subsidiary in Turkey are:

  • Turkey ranks among the top 33 countries in terms of ease of doing business. The ranking is based on the flexible laws governing corporations, easy company incorporation process, encouraging foreign investments, etc.
  • Companies have to bear operating costs that are pretty low compared to other developing and developed economies. 
  • The country has a young population and strong consumer spending. Hence, with the right marketing strategy, you can reach out and attract young consumers by establishing a subsidiary in Turkey.
  • Turkey has a robust network of local manufacturers that can help you produce your goods at a low cost. 
  • The Government of Turkey has reduced several investment costs to promote more foreign companies in the economy. Companies with an Investment Incentive Certificate are exempt from paying VAT and customs duties. Also, the companies receive support for paying social security premiums.
  • Turkey has several Double Taxation Avoidance Agreements with more than 80 countries. Therefore, the subsidiaries and employees are protected from paying taxes more than once.

Documents to Prepare When Opening a Subsidiary in Turkey

You must submit a few vital documents while opening your subsidiary business in Turkey. 

  • The Memorandum and the Articles of Association of the parent and the subsidiary company
  • Two copies of shareholders’ passports if the shareholder is a non-resident
  • Notarised resident permits for the shareholders who are residents of Turkey
  • A tax identification number from the tax office
  • The Certificate of Activity states the general activities that the subsidiary will carry out in Turkey.
  • Notarised signature declarations
  • A copy of the tenancy contract with the official legal address of the business
  • A copy of a power of attorney stating the name of the person who will represent the firm in front of the tax authorities.
  • A petition for registration request
  • Incorporation notification form
  • Founders’ declaration 
  • Chamber of Commerce registration form
  • A written declaration by the non-shareholder members with a list of their duties
  • Bank Certificate that shows the payment of at least 25% of the minimum share capital

After the documents are validated, you will receive a certificate of incorporation from the relevant authorities. 

Turkey Subsidiary Laws

Some of the laws that you must keep in mind while setting up a subsidiary in Turkey are:

Joint stock company: 

  • In Turkey, a joint stock company must be established with a minimum investment of TRY 50,000. ​
  • A minimum of one member is required for the board of directors of a joint stock corporation in Turkey. ​

Limited company

  • To establish a limited subsidiary company in Turkey, you must have at least one shareholder. 
  • However, there cannot be more than 50 stockholders. 
  • To establish a limited company in Turkey, you must have a minimum capital of 10,000 TRY. ​

Collective company

  • Various cooperatives can’t merge to establish a single firm. ​Only real people can come together to form a collective company. 

Limited partnerships

  • At least two people can only create a limited partnership firm. 
  • A limited firm needs to have at least one active partner.


  • In Turkey, a cooperative business must have a minimum of seven partners. 
  • Each partner is permitted to purchase between one and five thousand shares. Every share is worth 100 TRY. 
  • At least three Turkish citizens must be on the board of directors.

Apart from these laws, the subsidiary must submit all the financial documents and adhere to all the tax regulations in the country. You can work with lawyers or consultants to register a company in Turkey. 

Post Incorporation Compliance

Following registration, the subsidiaries must have access to the following to comply with foreign subsidiaries’ compliance in Turkey:

  • Visit the Trade Registry Directorate to obtain the certificate of incorporation.
  • Gather the tax identification number and the social security number for the company
  • Provide the Directorate with shareholders’ information 
  • In the case of a public corporation, provide share certificates to all stockholders.
  • Bring in an auditor for the business.
  • To begin all kinds of business transactions, open a bank account.

Taxes on Subsidiaries in Turkey

All the subsidiaries in Turkey have to pay corporate tax and a tax on their income earned from Turkey. A company’s net accounting income—after adjustments for exemptions and deductions and, to a certain extent, prior-year losses carried forward—is used to determine its taxable income.

  • The standard corporate tax rate applicable to all subsidiaries in Turkey is 20%.
  • However, in 2022, the taxes on income generated in Turkey will increase to 23%. 
  • In 2023, the applicable rates will go back to 20% if the legislation is amended.
  • For the financial institutions that fall under the scope of Law number 6361, the applicable corporate tax rate is 25%.
  • The tax rate on the profits earned by manufacturers and exporters is 22%, i.e., 1% lower than the regular tax rate.

Tax Incentives for Firms Setting Up a Subsidiary in Turkey

Turkey provides several investment incentives to companies with subsidiaries in Turkey. Some of these incentives include:

  • General incentives: The companies that meet the minimum fixed investment criteria receive some standard incentives. These incentives include VAT exemption, Custom duty exemption, stamp tax support, social security premium support, etc.
  • Regional incentive: Some industries are categorized by region and receive incentives like CIT deductions, VAT deductions, etc.

Other Important Considerations

You need to budget the time and money to set up a subsidiary in Turkey. The ideal course of action would be for you to prepare in advance by conducting cost research on the subsidiary setup process and coordinating payment with your accounting staff.

Also, you need time to travel back and forth to Turkey when signing paperwork, making hires, or working with other local vendors. If your hectic schedule stops you from making  the necessary trip arrangements, think about employing a delegate to handle the foundation of the company’s Mauritius subsidiary.

How Multiplier’s Employer of Record Can Help You Hire and Expand in Turkey

Planning a business expansion requires time and funding.  Setting up a subsidiary company in Turkey may be challenging to uphold that nation’s labor regulations and business practices.

Why not hire a third-party service provider like Multiplier to resolve this difficulty in your company’s growth?

Multiplier handles all the formalities involved in entering a new market, such as payroll processing, onboarding talent, etc., without starting a subsidiary. We help you onboard local and foreign talent while ensuring that all labor rules and regulations in Turkey are strictly followed.

Frequently Asked Questions

A VAT rate of 18% is applicable on goods and services in Turkey.

Several products come with a special consumption tax or SCT. These taxes are expenditure-based and are charged once in the product cycle.

Need help hiring in Turkey?

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