Doing business in Turkey provides a good opportunity to earn money in a country with friendly tax laws and clear, transparent rules.
The Turkish authorities are doing a lot to attract foreigners who will create jobs, develop various service sectors, and conceive and implement ideas and startups.
The existing agreements to avoid double taxation with 87 countries make Turkey appealing from an investment standpoint.
The real estate agency Tolerance explains in this article how to set up a business in Turkey, and what things it is essential to take into account when considering launching a project or relocating there.
How to set up your own business in Turkey, legislative peculiarities for foreigners
The fundamental law that foreign entrepreneurs should follow is the "Direct Foreign Investments Act".
This document describes important aspects that regulate the establishment and operation of a business in Turkey.
It is crucial to note that a foreign business owner must obtain a work permit if they plan to actively participate in the company's operations.
Relocation of an existing business, buying and selling
You can begin a company in Turkey from scratch, or you can relocate an existing business.
The procedure varies in these cases. Besides, foreigners can buy shares in operating Turkish companies and immediately start making profit from their activities.
In other words, they have the opportunity to buy a business in Turkey, becoming its sole proprietor or one of the owners.
Features of running a business in Turkey
Those wishing to incorporate in Turkey encounter some features of doing business that are conditioned by the country's legislation.
Clearly, every company must have at least one director. There may be more than one, in which case each of them will have equal authority.
You can vest several directors with collective signing authority, which means they can only make decisions together.
There are several requirements for the company name as well.
- For instance, it must not coincide with the names of existing enterprises, at least in the first three words.
- To use the words "Turkish" or "national" in the name, special permission is required.
- If there are foreigners among the founders, the company name may include words in a foreign language.
Some activities require licensing. For instance, to export and import goods, you will need to apply to the Chamber of Commerce and Industry. It is officially prohibited to start operating without a license.
How to Incorporate in Turkey
How to start a business in Turkey? Begin by choosing the organisational form of the enterprise.
Foreign businesses, like domestic ones, have access to five types of corporate forms, although only three are commonly practiced:
●Sole Proprietorship (Individual Entrepreneur). This type of business has a single owner, who is also the shareholder. The size of the capital can be anything; there is no minimum limit.
However, if you wish to apply for a work permit once the business is running, you will need to increase it to a minimum of 100,000 lira.
●Limited Liability Company (LLC). The number of shareholders can range from 1 to 50, and they can be either individuals or legal entities.
The charter capital must be at least 10,000 lira. To obtain a work permit, the charter capital must be a minimum of 100,000 lira.
●Joint Stock Company (JSC). The company must have at least 5 shareholders (there is no upper limit), and the charter capital starts from 50,000 lira.
Once you've decided on your business structure, you can move on to further steps like registering the name, renting an office, hiring a director, and so on. We'll dive deeper into these steps later.
Documents needed to start a business in Turkey
To register a company in Turkey, the founders need to prepare a set of documents.
All documents obtained from another country (for instance, a copy of the passport) are notarised, apostilled if necessary, then translated into Turkish and affirmed by a local notary.
The document set may vary slightly depending on the chosen business structure, but in any case, you will need:
●An original company charter and 4 copies.
●An original and photocopy of the founder's passport.
●Receipts for a 0.04% deposit to the Competition Authority account, and 25% of charter capital to a bank account.
●Tax identification number (TIN), resident permit for the company's individual founders.
●A document specifying the total amount of charter capital and share allocation to shareholders or partners.
●Declarations of persons authorised to manage the company and represent its interests.
If the company's founder is a legal entity registered abroad, a certificate of entrepreneurial activity is also required.
Steps to start your own business in Turkey
Deciding to start your own business in Turkey, you will need to register in the electronic system MERSIS.
This procedure is carried out online where you can submit a company registration application as well as the company charter and memorandum.
You will also need to obtain a TIN, which also allows you to open an account in a local bank. Transactions can be conducted in Turkish lira, euros or US dollars.
By the time you submit your application to the tax service for a TIN, your company should already have a legal address and an office (which you can either purchase or rent).
A copy of the office lease agreement or a property ownership document will need to be submitted to the tax office.
Another compulsory requirement when registering a company in Turkey is the contribution of 25% of the company's capital in the form of a deposit in the company's account immediately, with the possibility of adding the remaining amount within two years. However, it is not against the law to pay the entire sum all at once.
Company registration is considered complete only after it is published in the official Gazette, under the 'commercial register' section. The Gazette is published once a month.
Minimum costs of opening up a business
The expenses incurred while opening your own business in Turkey will depend on the selected business sector.
In any case, you will need to factor in the costs for office lease, securing licensing, and accounting services. It is the accountant's responsibility to ensure that your taxes are being paid on time, and also to file financial accounts.
An accountant is the first person you should find when planning to set up a business in Turkey.
Your success largely depends on this choice. This professional is known as a Mali Müşavir.
Securing a license in the Free Economic Zone (FEZ) costs around 4–5 thousand euros, and a trading-export company usually requires several such permissions.
If your line of work does not require licensing, then you can consider these costs as unnecessary. You must, however, set aside money for translation services and notary fees.
Popular business sectors in Turkey
What sort of business can one open in Turkey? Foreigners typically choose the most popular sectors.
- In resort areas, it's typically tourism, entertainment, food and drink establishments, and the hotel industry.
- In Istanbul and Mersin, it's trade , as both these cities are significant international ports.
Additionally, the following enterprises may be attractive due to their profitability:
●Textile and clothing production.
●Beauty salons or spas.
●Producing souvenir goods.
●Tour agency (note that the guide must be a Turkish citizen and have a license).
●Car rental.
●Agriculture.
Is it possible not to hire Turkish citizens?
Yes, it is. You may simply own the company without active participation in its operations.
If you intend to serve as the company's director and be active in it, you'll need to secure a work permit first.
According to Turkish law, for every work permit issued to a foreign individual, a company needs to hire at least five local residents.
This requirement is waived for the first year of company operations. However, you'll still need to hire local employees, even if you set up a sole proprietorship and run the business on your own.
The only way to get around this is by obtaining citizenship for investment—like buying property valued at a minimum of 400,000 dollars (cadastral price considered), or opening a deposit account of at least 500,000 dollars in a local bank.
This proposal may not be the cheapest, but gaining citizenship offers many other benefits, including the opportunity to run your own business.
Starting a business in Turkey is a straightforward task, but it requires careful analysis, understanding of the nuances of taxation and other aspects. The country almost lacks bureaucracy, with well-established online services, thus many tasks can be resolved online.
Banks, tax authorities and other institutions operate strictly according to the law, and a good financial advisor can handle most of the complexities. If you decide to obtain citizenship by investment, and then run a business on par with local residents, our agency is always ready to help you.
We are happy to answer all your questions, reach us Whatsapp +90 (532) 158 42 44
If you want to move permanently or buy property in Turkey and enjoy life by the sea, write to our specialists who will select the best options for your budget.
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