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Subsidiary vs. Branch in Turkey

Subsidiary vs. Branch in Turkey

Updated on Wednesday 10th August 2016

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Many foreign investors who want to start doing business in Turkey choose to open a branch or a subsidiary of their parent-company. There are important differences between the two types of companies and the most important one is that the branch depends on the parent-company and the subsidiary is a total different company that could be formed as a limited liability company or a joint stock company.

The limited liability company, that can be private or public, is preferred by most investors because it is simple to incorporate and operate.

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Documents and capital share for the subsidiary

The subsidiary is required to pay corporate tax calculated on its total income per year. Its capital comes from the parent-company, but the managers, who are appointed by it, can decide on their own and they don’t need the consent of the parent-company. The tax on profits is to be paid in the country of origin for the parent-company.

For opening a subsidiary in Turkey, you need a minimum capital share that is different in accordance to the type of company you choose to set up. For a limited liability company, the minimum capital share is 50,000 TRY if it is public and 10,000 TRY if it is private. You will also need at least one founder, a board of directors and the decisions will be taken in the general meeting of the shareholders.

At the incorporation with the local Trade Register, you will need a few documents, such as the articles of association, copies of the passports of the managers, specimen signature of the manager etc. Our Turkish lawyers will help you drafting the documents required by the local laws.

What you need for a branch in Turkey

Foreign companies may also open branches in Turkey. This structure is not a legal entity and it depends mostly of the parent company that is liable for all the obligations of the branch. The branch must be registered with the Trade Register, like an ordinary company, and then the activity can start.

You will need a special permit from the Turkish Ministry of Industry and Trade and you can obtain this document after you fill in an application. Only after you obtain this permit, you can go to the Trade Register in order to incorporate the branch.  You will need the same documents as for registering a subsidiary.

If you need more information or legal assistance for opening a branch or a subsidiary of your company in Turkey, you may contact our law firm in Turkey that will handle the entire procedure.

We invite you to watch a video about opening a subsidiary or a branch in Turkey: