Turkey has a large market for foreingers as well as turkish citizens . Foreign investors and Turkish investors are treated equally under Turkish law unless otherwise provided by a special law.
Foreign Direct Investment Law
Article 3 – a) Freedom of investment and national treatment
Unless otherwise provided by international agreements and special law provisions;
1- Direct foreign investment in Turkey by foreign investors is free.
2- Foreign investors are subject to equal treatment with domestic investors.
Net profits, dividends, sales, liquidation and compensation fees, amounts to be paid for licenses, management and similar agreements, and foreign loan principal and interest payments arising from the activities and transactions of foreign investors in Turkey can be freely transferred abroad through banks or special financial institutions.
g) Employment of foreign personnel
Foreign personnel to be employed in companies, branches and organizations established within the scope of this Law shall be granted a work permit by the Ministry of Labor and Social Security.
A limited company can be established by a legal entity or a real person. This person must have a company name and fixed capital. Persons who are shareholders are liable to the limited company with their capital shares. A limited company can be formed by at least one and at most fifty real and legal person partners, with a minimum capital of 10,000 TL. All partners can be foreign nationals and there is no requirement for the managers to be Turkish citizens and resident in Turkey.
There are documents that need to be collected and a preliminary preparation phase before applying to establish a company.
- A main contract need to be made and physical needs need to be met. The articles of association must contain certain conditions such as the company’s title, address, scope and purpose . Since the articles of association constitute the infrastructure of a company, the names of the company managers, their duties, responsibilities and, if any, the names of the other partners, where they reside and their share of capital participation should be specified.
- The prepared company establishment agreement must be registered in the system completely. The agreement created by entering the information sought in the system is prepared in Turkish. At this point, for foreign partners, the agreement must be translated. The articles of association is signed by the partners or by their representatives according to the notarized power of attorney of the partners and the signatures are certified by the notary. Documents prepared outside of Turkey must be apostilled and approved by consulates or notaries.
- 0.04% of the company capital must be deposited into the relevant bank account of this institution as the “Competition Authority Share”. In establishing a limited company by foreigners, it is not required for the capital to be deposited into a bank account at the beginning. In a limited company, it is sufficient and necessary to pay the establishment capital within 2 years following registration.
- If the founders apply to the registry office with the relevant documents, the trade registry office completes the registration process. In addition, the commercial books to be kept by the limited companies during their establishment are approved by the trade registry office. After being registered, they are given to the relevant party. The company gains legal personality by being registered in the trade registry.
In general, the documents required for foreigners to establish a company in Turkey are listed as;
• Company agreement
• Shareholders’ passport photocopy
• Authorized signatories’ activity certificate
• Signature declaration
• Registration request petition regarding potential tax number, articles of association, lease agreement, power of attorney
• When applying for registration, establishment notification form, company agreement, payment document to competition authority, establishment declaration, chamber of commerce registration form, bank receipt, documents regarding annotations, capital in kind expert report
Although these documents are generally required during the company establishment phase, they may change depending on the circumstances that develop during the process.
The documents required for the establishment of a limited company with foreign partners are the documents that must be submitted in the application made to the trade registry directorate. These documents are as follows:
• Company agreement in which the signatures of the company founders are certified by the authorized authorities,
• Written declarations of the board of directors members who are not partners of the company accepting their duties (2 copies),
• Receipt showing that the Competition Authority share was paid,
• Signature declarations of the company directors,
• If there is a legal entity on the board of directors, the name and surname of a person determined by the legal entity and on behalf of the legal entity. A notarized copy of the decision of the company body authorized to make this determination,
• If the company has in-kind capital or if businesses or in-kind assets will be taken over during the establishment, expert valuation reports regarding the value determination of in-kind assets (Expert is appointed by the court),
• If in-kind capital is determined as the company capital, a document stating that there is no limitation on the in-kind capital (obtained from the relevant registry),
• If in-kind capital is determined as the company capital, a document indicating that the real estate, intellectual property rights and other values added as in-kind capital are annotated in the registries where they are registered,
Agreements made between the company being established and the founders or between the company and other persons and related to the establishment of the company
Can a Foreigner Without a Work Permit Establish a Company?
The International Labor Force Law No. 6735 has made regulations regarding the establishment of companies by foreigners and work permits. During the old law, foreign partners of limited companies who were not authorized to be the company had to obtain a work permit. This requirement has been abolished with the new law.
While this is the new regulation for partners, there are different regulations for founders. It is not possible for a foreign real person to establish a sole proprietorship without a work permit.
In the Foreign Direct Investment Law No. 4875, it is stated that foreign persons can establish any type of company included in the Turkish Commercial Code. However, 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 types of companies. In this context, the types of companies that are subject to permission for the establishment of 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 products warehousing companies,
• Product specialized exchange companies,
• Independent audit companies,
• Surveillance companies,
• Technology development zone management companies,
• Companies subject to the Capital Markets Law No. 6362 dated 6/12/2012,
• Free zone founder and operator companies are subject to the permission of the Ministry of Trade.
If the types of companies listed above are established with foreign partners and the relevant prior permission is not obtained from the Ministry of Trade, the company establishment will be considered invalid. For this reason, it is very important to pay attention to whether the company to be established is among the companies subject to preliminary permission in accordance with the relevant legislation.
Within the scope of foreigners establishing a company in Turkey, they are exempt from the fees of limited and joint stock companies. In this respect, the book certification fee, establishment certification fee, Turkey Trade Sicily Gazette advertisement fee and advertisement expenses are not paid.
The current expense for opening a Limited Company Branch is 13,032.00 TL. (Fees may change over time, please check the current expenses) The things that need to be done after foreigners work in Turkey are; Fulfilling the notifications, fulfilling the tax-related work and transaction and ceasing the application of the labor law for the employees.
One of the things that needs to be done after foreigners within the scope of direct foreign investment establish a company in Turkey is; fulfilling the information within the scope of DYYK by going through E-TUYS and keeping it up to date.
These persons, for whom Articles 9 et seq. of the Direct Foreign Investment Law Implementation Regulation are kept, must perform the procedures listed below.
• Access to the Ministry’s web page is provided within 1 month at the latest as of the authorization dates. By logging in to E-TUYS, electronic data of the “Investor”, “Partner List” and “Affiliates” sections, if any, are stored.
• The fields in the ANNEX-1 Activity Information Form for Direct Foreign Investments in E-TUYS regarding the activities of the company or branch are filled in annually and by the end of May of each year at the latest.
• In case of a capital increase or decrease, the “Partners List” in ETUYS is entered within 1 month at the latest.
• If there are payments made based on capital increase or share transfer, the fields in the ANNEX-2 Capital Information Form for Direct Foreign Investments in ETUYS are filled in within 1 month following the payment.
• Following the transfer of shares between existing domestic or foreign partners or to any domestic or foreign investor outside the companies, the “Partners List” notification in E-TUYS is made at the latest following the transfer of shares. Updates within 1 month (DYYK Regulation Art.5).
Opening a bank account in Turkey by foreigners is one of the procedures required for foreigners to establish a company in Turkey. In order to carry out this procedure, an application must be made by the director or partners who have signature authority in the relevant company. The application is completed by applying to the bank with the necessary information and documents.
Capital companies operating in our country are obliged to pay corporate tax. In addition, individuals must pay income tax arising from their earnings and revenues during the year.
In addition, companies may benefit from tax exemptions and tax exemptions by meeting certain conditions in Turkish law. In addition, tax incentives may be on the agenda for those who meet certain criteria. Finally, international agreements.
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