Setting up a Company in Turkey
The main company types in Turkey are Limited companies, Joint Stock companies and partnerships of Commandite and Collective companies and Holding Companies. Sole proprietors can be established. All business are can be 100% foreign owned. Foreign businesses can also open a Liaison Office or a Branch Office in Turkey. Participation to a previously established company can be done in two ways, through either share transfer or contribution to the companies’ capital increase.
Regulated sectors such as Banks, Private Finance Institutions, Insurance, Financial Leasing, Factoring, Holdings, Foreign Currency Exchange Offices, Public Warehousing, founders and operators of Free Trade Zones and companies are subject to the Capital Markets Law and must register with The Ministry of Commerce and Industry. These entities are also subject to an Audit.
To find out more about VAT Rates please click here
To find out more about Double Taxation Prevention Treaties please click here
Setting up a Company in Turkey
The steps to establish a company are to prepare and notarize the Articles of Association, deposit 0.04% of the capital at the Central Bank, register the company at Trade Registry Office and Chamber of Commerce. Thereafter the Articles of Association are published in the Trade Registry Gazette. Once established, the Company must be registered at Tax the office and receive its Tax plate which must be clearly displayed at the place of business. A Tax inspector will make a visit to verify it and the place of business within a few days of incorporation. The Registry Office also notifies the Ministry of Labor and Social Security of the incorporation and both the company and its employees must be registered with that administration. The Registered address of the Company is stated in the Articles of Association, and any changes must be registered. The legal books of the company – the Journal, Ledger, Case book and Inventory book, must be certified by a notary on the day the company is registered.
If all company capital is not paid in advance, 25% of the initial capital must be deposited within three months of company incorporation, and the balance of the subscribed capital must be paid within three years of incorporation. The capital can be used immediately. The bank transfer of capital from abroad must be clearly marked as ‘Capital Transfer’.
To set up a LIMITED COMPANY in Istanbul
Step 1
Execute and notarize articles of association, signature declaration of the managers, copies of each manager’s identity card or passport and commercial books.
Step 2
Deposit of 0.04% capital to the account of the Competition Authority.
To register with the Commercial Registry, founders must obtain the original receipt from Ziraat Bank. This receipt shows that 0.04% of the company’s capital has been paid to the Competition Authority at the central bank or a public bank.
Step 3
File the incorporation notice, commitment letter, and Chamber registration statement at the Trade Registry Office. Membership fess of the Chamber of Commerce are based on turn over
The Commercial Registry Office notifies the Tax Office and the District Employment Office about the company incorporation. The Registry arranges for an announcement in the Commercial Registration Gazette within about 10 days of company registration
A Tax identification plaque is obtained from the local Tax office after the Commercial Registry Office notifies it. The Registry Office also notifies the Ministry of Labor and Social Security, Directorate of the Social Security Institution of the incorporation. A social security number is obtained from the relevant Social Security Administration office, and company employees must be registered with that administration.
Step 4
Have a notary certify the legal books of Journal, Ledger, Case book and Inventory book
Step 5
Follow up with the Tax office on Commercial Registry’s notification
Step 6
Deposit the initial capital in a bank and obtain the certificate of paid-in capital.
Kapital is an expert in setting up a company for you here in Turkey. Please contact us for further information Company Set up Services.
Differences between a Limited or Joint Stock Company
The most significant difference between limited companies and joint stock companies is about the capital and shareholders structure. Limited companies can be established with less capital and shareholders. There is no obligation to have an annual board meeting for limited companies which have less than 20 shareholders. But joint stock companies have an obligation to have an annual board meeting. Decisions such as a capital increase, dividend distribution, appointing a local manager and exit strategy must be taken unanimously by the shareholders not by the size of their shareholding in limited companies. Joint stock companies can make a decision with 51% positive vote. Transferring shares is subject to income Tax in limited companies but it’s usually free of Tax in joint stock companies.
When a shareholder of a limited company is subject to legal execution proceedings the creditor should request dissolution or liquidation of the limited company. In joint stock companies only dividend and shares of the debtors can be subject to execution proceedings. Shareholders of a limited company are liable personally as capital of the company for public debts of the company. In joint stock companies they are not liable for more than the stipulated capital. Joint stock companies can go public according to Capital Market Law, but limited companies do not have such an opportunity.
For more information see our Doing Business in Turkey Guide and please do not hesitate to contact us.