A foreign company that wants a presence in Turkey has three legal forms to choose from, and the choice is usually made for the wrong reason. The liaison office is chosen because it is "simple", and a year later the company discovers it cannot invoice a single customer. The branch is chosen because it "is not a separate company", and the parent discovers that it has exposed its whole balance sheet to Turkish claims and that the branch's profits are taxed twice on the way home. The subsidiary is chosen because everyone else has one, without anyone asking whether the activity is commercial at all. In my files the right answer follows from one question, whether the Turkish presence will earn income in Turkey, and from two others, who will be liable for what it does and how its money will leave. This page sets out the three forms as the Foreign Direct Investment Law, its regulation, the Commercial Code and the tax laws define them in September 2026: what each may do, how each is set up, how each is taxed, whom each may employ, and how each is closed.
Sources, checked 9 September 2026. Foreign Direct Investment Law No. 4875, Articles 2 and 3; Regulation on the Implementation of the Foreign Direct Investment Law (Official Gazette 25205, 20 August 2003), Articles 5 to 8; Turkish Commercial Code No. 6102, Article 40 and the provisions on joint-stock and limited companies; Corporate Tax Law No. 5520, Articles 3 and 30(6); Income Tax Law No. 193, Article 23(14); International Labour Force Law No. 6735.
The liaison office: presence without commerce
Article 3(h) of Law 4875 authorises the Ministry to permit companies established under foreign law to open liaison offices in Turkey on condition that they do not engage in commercial activity. That condition is the whole of the form. A liaison office has no legal personality, cannot invoice, cannot sign sales contracts for its own account, cannot earn income in Turkey and must be funded from abroad in foreign currency by the company that opened it. What it may do is listed in the regulation: represent and host, control and audit the quality of Turkish suppliers, provide technical support, communicate and transfer information, conduct market research and product promotion, and, for larger groups, act as a regional management centre coordinating the group's affiliates in the region.
The regulation sets the procedure. Under Article 6 the applicant must be a company established under foreign law, and the Ministry may require that at least a year has passed since its incorporation; a complete application is decided within fifteen working days. Article 7 lists the documents: the application form, a declaration and authorisation, the parent's certificate of activity legalised through the Turkish consulate, its balance sheet and income statement, and the authority of the person who will run the office. Under Article 8 the first permit is granted for at most three years within the declared activity; extensions are granted by activity, five years at a time for representation and hosting, quality control and supplier sourcing, technical support and communication and information transfer, and ten years for a regional management centre, while offices for market research and product promotion are not extended at all, on the reasoning that a market has been researched after three years and the company should either trade or leave. The office files an activity information form each year by the end of May, and its expenses must be met from abroad; an office that earns income or trades has breached the condition of its permit and is treated by the tax administration as a permanent establishment with everything that follows.
The form has one tax advantage that keeps it alive. Under Article 23(14) of the Income Tax Law, wages paid in foreign currency by an employer whose legal and business seat are both outside Turkey, out of that employer's earnings abroad, to staff working for it in Turkey, are exempt from income tax; the same applies to staff a regional management centre employs within its permit. A liaison office's Turkish employees are therefore paid gross, subject to social security but not income tax, provided the salary comes from the parent's foreign earnings in foreign currency, which is the arrangement the exemption assumes. A foreign national working for the office needs a work permit under Law 6735 through the route described on the founder work permit page, the office being treated as the employer for permit purposes even though it has no personality.
The branch: the parent itself, registered in Turkey
A branch is not a separate person. It is the foreign company itself carrying on business in Turkey through an establishment registered here, and Article 40(4) of the Commercial Code states the registration rule: the Turkish branches of commercial enterprises whose seat is abroad are registered like domestic enterprises, subject to their home law's rules on the trade name, and a fully authorised commercial representative resident in Turkey must be appointed for them; after the first branch, further branches are registered like those of a domestic enterprise. The branch takes the parent's name with an addition showing the seat and branch status, registers in the trade registry with the parent's constitutional documents and a resolution to open the branch, all legalised and translated, and is notified to the Ministry as a foreign direct investment under Article 2 of Law 4875, which counts opening a branch, like founding a company, as an investment. Under Article 5 of the regulation the notifications run through the Ministry's electronic system and changes are updated within a month.
Because the branch is the parent, the parent is liable without limit for everything the branch does; a Turkish creditor of the branch is a creditor of the foreign company. That is the branch's first cost. Its second is tax. Under Article 3 of the Corporate Tax Law a company whose legal and business seats are both outside Turkey is a limited taxpayer, taxed only on its Turkish-source income, and the branch's commercial profits earned through the Turkish place of business are that income, taxed at the ordinary corporate rate. When the branch then transfers its after-tax profit to head office, Article 30(6) imposes withholding on the amount transferred, calculated on the profit before deductions and exemptions less the corporate tax, at the rate the President sets, fifteen per cent since Decision 9286 of December 2024, as explained on the dividend page. A treaty may cap that branch tax, the Turkey-United Kingdom treaty doing so at fifteen per cent, which in 2026 changes nothing. The branch keeps Turkish books, files Turkish returns, registers as an employer and pays Turkish VAT like any company; what it saves is the share capital, the general assembly and the second legal entity, and what it gives up is the shield.
The subsidiary: a Turkish company owned from abroad
The subsidiary is a Turkish joint-stock or limited company whose shares are held by the foreign parent, formed under the Commercial Code with the capital, deadline and registration rules described on the company formation page, and notified to the Ministry as a foreign direct investment. It is a full taxpayer under Article 3 of the Corporate Tax Law, taxed on its worldwide income at the corporate rate, and its profits reach the parent as dividends subject to the withholding and treaty rules on the dividend page. Its liability is its own: the parent's exposure is the capital it subscribed and, in the situations the Commercial Code's group provisions address, the consequences of instructions it gave to the subsidiary's detriment. It may hold licences, employ without limit, own real estate under the rules for foreign-capital companies described on the foreign investment guide, apply for the incentive certificate described on the investment incentives page and take a free zone licence under the free zone page. Its costs are the capital, which the Commercial Code sets at a minimum of 250,000 lira for a joint-stock company and 50,000 lira for a limited company, the corporate formalities of a separate entity, and the second layer of tax on distribution, which is the same fifteen per cent the branch pays on remittance.
Choosing between them
The activity decides first. If the Turkish presence will earn nothing in Turkey, and exists to represent, source, support or study, the liaison office is the only form that is not over-engineered, and the wage exemption makes it cheap to staff; the limits are the three-year clock for research offices and the absolute bar on trading. If the presence will earn income, the liaison office is unavailable, and the choice is between branch and subsidiary.
Liability decides second. A branch exposes the parent in full; a subsidiary confines the exposure to its capital and to the group-law situations in which the parent directed the harm. A foreign company entering a market it does not yet know, employing staff under Turkish labour law described on the employment law page, and contracting with Turkish counterparties will usually prefer the shield.
Tax decides third, and less often than clients expect. Branch and subsidiary pay the same corporate rate on Turkish profits and the same fifteen per cent on the way out, the subsidiary as dividend withholding and the branch as remittance withholding. The differences are at the edges: a branch's losses may, depending on the parent's home law, be usable against the parent's profits, which a subsidiary's cannot; a subsidiary can defer the second layer indefinitely by retaining or capitalising profit, which a branch does the moment it remits; a subsidiary can be sold as shares, a branch only as assets; and treaty relief on the branch tax depends on the treaty having a branch clause at all.
Perception decides last, and it is not nothing. Turkish customers, banks, landlords and public bodies deal more readily with a Turkish company than with the branch of a foreign one, and a subsidiary's Turkish trade registry extract answers questions that a branch's legalised foreign documents raise. For most operating businesses that is where the decision lands; for a regional coordination function or a sourcing office, it lands on the liaison office; the branch is the right answer for a narrower class, typically regulated businesses whose home regulator requires branch form or short projects whose losses the parent wants at home.
Setting up and closing down
| Liaison office | Branch | Subsidiary | |
|---|---|---|---|
| Legal basis | Law 4875 Art. 3(h); Regulation Arts. 6 to 8 | Commercial Code Art. 40(4); Law 4875 Art. 2 | Commercial Code; Law 4875 Art. 2 |
| Legal personality | None | None, part of the parent | Separate Turkish company |
| May earn income in Turkey | No | Yes | Yes |
| Authority and time to set up | Ministry permit, 15 working days on a complete file | Trade registry, with legalised parent documents and a resident representative | Trade registry, with capital paid in per the Commercial Code |
| Duration | 3 years, extended by activity for 5 or 10 years; research offices not extended | Indefinite | Indefinite |
| Funding | From abroad, in foreign currency | Parent's funds; branch capital allocated | Share capital, minimum 250,000 or 50,000 lira, plus loans within thin capitalisation limits |
| Corporate tax | None, if the condition is kept | Limited taxpayer on Turkish-source profit | Full taxpayer on worldwide income |
| Second layer | None | 15% on remittance to head office, Corporate Tax Law Art. 30(6) | 15% dividend withholding |
| Parent's liability | For the office's obligations, as the office is the parent | Unlimited | Limited to capital, subject to group-law rules |
| Staff | Turkish staff paid in foreign currency from abroad exempt from income tax, Income Tax Law Art. 23(14); foreign staff need work permits | Full employer under Turkish labour law | Full employer under Turkish labour law |
| Annual filing | Activity information form by end of May | Turkish books and returns | Turkish books and returns, general assembly |
| Exit | Notification to the Ministry and closure; no liquidation | Deregistration of the branch and settlement of its liabilities | Liquidation under the Commercial Code, or sale of the shares |
Whose side we are on, and how we are paid
The formation agent is paid to form something, and the something is usually a company whether or not the client needs one. The accountant who suggests a liaison office because "there is no tax" is not the one who will explain to the tax inspector why the office has been invoicing. The home-country adviser who prefers a branch because losses flow home is not weighing the Turkish liability exposure. None of them is paid to tell you that your activity forbids the form you like.
We take no commission or referral fee from formation agents, accountants, registered-office providers or banks, in any form, on any file. The fee you pay us is our only income from your matter, and it does not depend on which form you choose or whether you open anything at all. Because our position does not move with the structure, telling you that a liaison office is enough, or that you should wait a year before opening anything, costs us nothing to say.
One boundary, stated plainly. We are lawyers, not licensed investment advisers and not your home-country tax counsel. We do not tell you how your own country will treat the branch's losses or the subsidiary's dividends, and we do not tell you whether the Turkish market is worth entering. What we protect is the Turkish legal position: the form that matches the activity, the permit or registration done correctly the first time, the liability line drawn where you intend it, the tax on the way out understood before the money is earned, and the exit planned before the entry.
Before you open
Send us what the Turkish presence will do in its first three years, whether it will invoice anyone in Turkey, how many people it will employ and of what nationality, how it will be funded, and how the parent's home law treats foreign branches and subsidiaries. We will tell you which form the law allows for that activity, which we recommend and why, what the set-up requires and how long it takes, what the annual obligations and the exit will look like, and what the presence will cost in tax on the way out. Our company work is described on the company formation page.
What this page does not settle
The regulated sectors in which form is prescribed by the sector regulator, the group-law liability provisions of the Commercial Code in detail, the home-country treatment of branch losses and subsidiary dividends, permanent establishment risk for a company that has no Turkish presence but sells into Turkey, and the regional management centre regime's own conditions are separate subjects. The regulation's periods and the withholding rate are those in force on the date checked; the regulation's text was read from a reproduction, the official database's copy being unreachable on the day.
