How a Foreign Entrepreneur Can Open a Company in Turkey

The following post is a guest entry from http://www.companyformationturkey.com:

Turkey

Turkey is an attractive country for foreign investors who want to set up a company mainly in special investment zones, which offer a lot of incentives, such as the exemption from payment of income and corporate taxes, the VAT, real estate duty etc. What do you have to do before opening a company in Turkey?

Firstly, you must decide what type of firm you want to set up in this country. The most common type is a limited liability company, recommended for small and medium businesses. Also, you can choose to register a joint stock company, comandite, collective companies or commercial partnerships. No matter the type of company, the registration procedure lasts generally two weeks.

What is the minimum share capital for a company?

The minimum share capital for opening a limited liability company, the simplest type of firm, is 10,000 TRY and for a joint stock company you need 50,000 TRY. For the registration procedure, you can hire a local specialist in company formation, especially when you are abroad and you intend to go to Turkey after the company is ready for doing business.

According to the new commercial code in Turkey, there are four main types of companies: limited liability company (Limitet Şirket), joint stock company (Anonim Şirket), comandite and collective. Besides these, a foreign and local entrepreneur can set up commercial partnerships (Kollektif Sirket and Komandit Sirket).

A limited liability company can be formed by at least one shareholder, who will deposit the minimum share capital in a bank account, or a variable number of shareholders, but no more than 50. The management of the company will be provided by a manager or a council of managers and there is no obligation for them to be shareholders too.  According to the new commercial code, every entrepreneur who owns a limited liability company in Turkey must have a website.

For setting up a joint stock company in Turkey, it is necessary for at least one shareholder to register the company to the stock market. A board of directors will manage the joint stock company even if this structure is formed by a single member who is not necessarily a shareholder.

A few members with limited liabilities (commanditers) and others with unlimited liabilities can open a comandite company which is a commercial firm for which it is not necessary to subscribe a minimum share capital.

Another form of business for which it is not necessary to have a minimum share capital is a collective company. This type of firm has members with liability limited by their contribution to the capital.

The foreign entrepreneurs can also form an ordinary partnership, but this type of entity is not registered at the Turkish Trade Register. The partners in this type of company are united under an agreement and they don’t have a specific name for their partnership.

The commercial partnerships can be registered as general or limited related to the liability of their members.

The main steps for company registration

The first step is drawing the articles of association which will be notarized, together with the signature declaration of the managers and the commercial book of the new company. The minimum share capital must be deposited in a bank account and a small part of it (0.04%) will be paid at the Competition Authority.

The owner of the company has to go to the Trade Register in Turkey in order to file the registration form, commitment letter and the Chamber registration statement and then to register for paying taxes at the Turkish Tax Office and Social Security Administration.

Work permit for foreign citizens

If you will come to work in Turkey, you will need a work permit, as well as the other foreign citizens you want to hire. They can obtain their work permits from the Turkish consulates or embassies, if the foreign citizens are in their country of residence or directly from the Ministry of Labor in Turkey if they are already in this country and have residence permits.

This procedure can last longer (nearly a month) than the registration of the firm, so keep this in mind when you schedule your activities. You can also hire Turkish citizens and you can choose the best employees from 26 million people – the workforce of Turkey.

Double tax treaties

As a foreign entrepreneur, you can benefit from double tax treaties signed by Turkey and your parent country. These treaties can offer you the possibility to pay the taxes only in one country. Turkey has signed double tax treaties with the following countries: 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. These documents permit the trades with Turkey with no custom taxes.

If you are interested in opportunities offered by Turkish economy, the procedures for registering a company and other useful information, you can contact our local specialists.

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