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After establishing the desired type of business (limited liability companies, joint stock companies, commandite companies, collective companies or commercial partnerships), the registration process doesn’t take longer than a week. The foreign investor must also benefit from a certain amount of capital before starting a business; for example, the limited liability company requires a minimum share capital of 10,000 TRY, while the joint stock company must deposit at least 50,000 TRY. Our attorneys in Turkey can offer assistance with respect to all the procedures required at the incorporation process and can also help you to submit the documents at the Turkish authorities.
One of the most important steps in opening a company in Turkey is the preparation of the documents needed to register the business with the Trade Registrar. The main set of documents which need to be drafted and notarized is the Articles of Association which need to contain all the details of the shareholders – their names, their places of residence, their contribution to the share capital of the company and the number of shares they own in the business. The Articles of Association must also contain information about the managers of the company, including their name, the way in which they are appointed and can be revoked and their duties and obligations.
The same document must clearly state the Turkish company’s trade name, its address in this country and a description of the object of activity. The Articles of Association can also contain other clauses, related to the amendments which can be brought to the company and dispute resolution methods if any problems appear between the shareholders. It is very important for the Articles of Association to be drafted in accordance with the provisions of the Commercial Code. If you are a foreign entrepreneur and want to open a company in this country, our law firm in Turkey can help you with the preparation of these documents.
An important aspect which should be considered is that in the case of setting up a sole proprietorship, a simple application form needs to be filed with the Trade Register. In the case of partnerships which in Turkey are known as commandite companies, the partnership deed stands at the base of their creation.
Shareholders in a company in Turkey
The shareholders are the founders of the company, or better said the owners of the business. These can be natural persons or companies and have various rights, but also duties in the company. The minimum number of shareholders a Turkish company can have is one in both private and public companies. These can be Turkish citizens or residents; however, foreigners can also act as sole shareholders when opening a company in this country.
One of the main responsibilities of the shareholders is to contribute to the share capital of the business. Based on their contributions, they will acquire more or fewer rights in the company. The greatest advantage of the shareholders is that their liability towards the company’s debts and other obligations will be limited to the amount of money they invested in the company in the case of limited liability companies. In the case of partnerships, the role of shareholders is completed by the partners or members.
Company management in Turkey
One of the most important roles in a Turkish company is taken on by the managers of the company. The shareholders are required to appoint at least one company director in the case of a private company. A board of managers must ensure the management of a public company in Turkey. The same type of company must have at least one auditor appointed. In the case of private companies, the auditor will be an independent one and will be called only when the financial documents of the business need to be audited. It should be noted that no matter the type of company, at least one of the shareholders must be a company director. The manager role can also be fulfilled by another company with the conditions that it appoints a natural person as a company representative.
The trade name and legal address when opening a company in Turkey
The first step for registering a business in Turkey is finding a suitable trade name for the business. The name must be unique and must not be offensive. In order to make the company name is unique, the applicant can file for validation 3 different names, out of which he or she will choose the appropriate one based on the company’s requirements. We remind investors that branch offices need to bear the same name as the parent company. Another important requisite for the company to be considered a Turkish resident business is for it to have a local address. The registered address must be in the city where the company will operate. For this purpose, we can help with virtual office services.
How easy is it to hire personnel in Turkey?
If the newly founded company in Turkey is interested in hiring foreign personnel, the procedure can be performed only in the situation in which the foreign employees receive a working permit, issued by the Turkish authorities. There are two ways of obtaining work permits for foreign employees: with the Ministry of Labor and in the country of the resident of the foreign worker through the Turkish embassies or consulates. The necessary documents for the Turkish Consulate or Embassy are the following:
the passport of the applicant which must be in its validity period;
a work visa application which will be handed to the applicant at the time;
one recent passport-size photo; and one copy of the work contract – the future employer must send the copy;
letter of assignment, which confirms the appointment of the future employee.
In the situation in which a company hires a foreign employee, the Turkish employer must submit to the Ministry of Labor and Social Security an online application and the following documents:
work permit application letter;
foreign personnel application form;
a balance sheet;
the latest profit/loss statement.
The online application must be submitted in a maximum of ten working days at the Turkish Consulate after the foreign employee has applied for the position. Foreign employees can be hired in Turkey under the regulation regarding the Employment of Foreign Nationals within the Framework of Foreign Direct Investments. Foreign direct investment refers to companies set up in Turkey or to a branch of a foreign company; under the law no.4875, a company set up in Turkey may hire foreign personnel as long as the foreign shareholders own a minimum of TRY 1,062,691 of the company’s capital. Our Turkish law firm can provide you with further information on the provisions set up under this law. The residents must fill out an online application to the Ministry. The decision of granting the work permit is released in maximum one month.
What are the main points of interest for foreign investors?
The main points of interests for the foreign investors are represented by three major special investment zones:
the free zones (20 zones especially designed to increase the number of export investments, with 100% exemption for custom duties, corporate income tax for the manufacturing enterprises, VAT, income tax on the personnel’s salary for companies which exports at least 85% of the goods produced here, the possibility to deposit goods free of charge unlimited and with the possibility to transfer the profits abroad and to Turkey);
organized industrial zones (276 zones with low costs on natural gas, water, telecommunication, no municipality tax on construction or on solid waste - the last one, if the zone doesn’t benefit from the municipality service, no VAT on land acquisition, exemption from the real estate duty for five years from the construction);
technology development zones (50 zones with major exemptions until 2024 on corporate and income taxes on the revenue coming from software development, VAT on software application sales, salaries of R&D personnel - but without exceeding 10% of the number of employees);
at the moment, only 34 technology development zones are functioning, while the others are still under construction. Also, you should know that a highly developed industry in Turkey is hair transplantation. This business sector is highly competitive and attractive for investors, as there are many customers that are in need of these types of medical aesthetic services.
Other incentives offered to the foreign investors are granted by the double tax treaties (which provide the release of paying the same taxes in the country of residence and in Turkey) and by the Free Trade Agreements (signed with Albania, Bosnia and Herzegovina, Chile, Croatia, Egypt, Georgia, Iceland, Israel, Jordan, Lebanon, Liechtenstein, Mauritius, Macedonia, Montenegro, Morocco, Norway, Palestine, Serbia, South Korea, Switzerland, Syria, Tunisia) which allow the trade between each of these countries and Turkey with no custom taxes.
How much does it cost to open a company in Turkey?
Opening a company in Turkey is not expensive, however, the business owner must consider the company registration fees, the notary fees and the honorary of the Turkish law firm handling the procedure (if one is appointed).
How long does it take to set up a business in Turkey?
It takes about 3 weeks to set up a company in Turkey. The procedure takes longer in the case of a branch office. If you need further information on the procedures applied by the Turkish authorities at the incorporation of a company, please contact our team of lawyers in Turkey. We can help with personalized company registration services in Turkey.
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Cagatay Altunsoy is the the co-founder and coordinator of CS Yonetim ve Destek Hizmetleri and he is an experienced specialist in company formation and business consulting services provided for foreign investors all over the world.