General characteristics of companies that foreigners can establish in Turkey

In most workplaces and business areas, opening a business and establishing a company are not subject to any pre-approval.However, companies that will operate in the following areas have to obtain pre-approval from the ministry before they are established and determine their articles of association:

 

İnsurance Companies

Joint stock company established in the form of holdings

Companies that operates exchange office

Banks

Financial lease companies

Factoring companies

Consumer finance or credit card service companies

İndepedent Audit Company

İnspection company

Technology development area management company

Companies that establish and operate the Free Trade Zone

Asset management companies

Companies dealing with general warehousing

Companies engaged in licensed warehousing of agricultural products

Commodity exchange market company

 

With 4857 numbered Direct Foreign İnvestment Act foreigners can establish trading companies listed in the Turkish Commercial Code and also ordinary companies regulated in the Turkish Code of Obligations.

 

Brief information about the companies that can be established in this context is given below.

 

                                     Joint Stock Company

Joint stock companies are capital companies in which the company's legal entity is liable only with its own assets, due to the debts of which the company capital is determined and divided into shares, and the shareholders are liable only for the capital shares they have committed and only against the company.Minimum capital amount is 50.000 Turkish liras.This company establish at least with one real person or one legal entity.All partners can be foreigners.Also there is no requirement that the members of the board of directors be Turkish citizens and be resident in Turkey.

 

                                       Limited Company

 

Limited companies are capital companies whose capital is determined and divided into shares and whose debts are only liable with their assets.İt can be established with a single partner.Partners in company couldn't exceed 50 person.Limited companies partners can be real person or legal entity .Main capital of the limited company is at least 10.000 Turkish Liras.The partners are not responsible for the debts of the company, they are only obliged to pay the basic capital shares they have committed and to fulfill the additional payment and ancillary performance obligations stipulated in the company contract.All partners can be foreigners.Also there is no requirement that the members of the board of directors be Turkish citizens and be resident in Turkey.

 

                                     General Partnership

A general partnership is a sole proprietorship established between real persons for the purpose of operating a commercial enterprise under a trade name, and the liability of any of its partners is not limited to the creditors of the company.It is a sole proprietorship as of its partnership structure and is established with at least two partners.

İn general partnership there is no condition for capital.The partners of the company have unlimited second degree liability to the creditors of the company.

 

                                Limited Partnership

 

There is two kinds of commandite company:

First ordinary limited partnership

Second is a limited partnership company whose capital is divided into shares.

 

Ordinary limited partnership

An ordinary limited partnership company is a sole proprietorship company established for the purpose of operating a commercial enterprise under a trade name, the liability of one or more of the partners to the creditors of the company is not limited and the liability of the other partner or partners is limited to a certain capital.Partners whose liability is not limited are called limited partners.Partners with limited liability are called commandites, and those with limited liability are called commandiers.Commandite partners can be only real persons.Commandier partners can be real persons and legal entity..Ordinary limited partnership may consist of at least two persons

 

Limited Partnership company whose capital is divided into shares

Limited partnership whose capital is divided into shares, is a capital company whose capital is divided into shares, and one or more of its partners are liable to the creditors of the company as a general partner, and the others as a joint stock company shareholder It is at least five in limited partnership whose capital is divided into shares.Both managers and representatives can be foreign nationals.

 

                                  Cooperative Company

Cooperatives are partnerships with variable partners and variable capital, established by real and legal persons in order to provide and protect the specific economic interests of the members, and especially their professional or livelihood needs, by means of mutual assistance, solidarity and surety with their labor and monetary contributions.Although not a cooperative company, sole proprietorship or capital company, it is a trading company like other listed companies. A cooperative is established with at least seven partners, without prejudice to special types. The board of directors consists of at least three natural or legal persons who are Turkish citizens and meet the other conditions sought in the Law.

 

                                 Ordinary company

 

The ordinary company regulated in the Turkish Code of Obligations does not have a legal personality. Although it can be established with at least two real or legal persons, there is no legal upper limit on the number of partners. An ordinary company does not have a minimum capital as determined by law. All partners can be foreign nationals.

 

Since the ordinary company does not have a legal personality, the responsibility for the debts of the company belongs to the partners or the representative who carries out the transaction in person, depending on the form of representation.

 

Although Sole proprietorships from the above-mentioned companies very advantegous by reason of can be establish very easily,has no capital debt and have low accounting costs in practice people mostly prefer limited company and joint stock company.

 

2)Establishment Procedures for Companies

 

The establishment of a company in Turkey by foreign real and legal persons is subject to the same rules as domestic investors.

 

Establishment procedures for joint stock,limited,commandite and cooperative companies

 

Preparation of partnership deed and attesting the signatures of the founders

 

In the organization, first of all, the title of the company, the scope of the subject of activity, the center, who will be the director / representative, the capital and shares should be determined by the management. Subsequently, it is necessary to prepare a articles of association in accordance with the provisions of the legislation on joint-stock, limited, collective, commando and cooperative companies. The articles of association are signed by the partners or by their representatives based on the notarized power of attorney of the partners, and the signature of the partners or their representatives is notarized. The articles of association are prepared by the partners or their proxies in the Central Registration System (“MERSIS”) and sent to the approval of the relevant trade registry manager, and an appointment is made for establishment operations with the application number defined by MERSIS.

The other necessary documents are prepared and made available at the relevant registry office on the date and time of the appointment.

Documents issued outside of Turkey must have an apostille annotation and be approved by the consulate or notaries.

 

         Preparation of company officials statements of signatures

 

Representatives of companies of their signature statements  under the company title must be prepared and approved by the competent authority.For documents prepared outside of Turkey, the apostille annotation must be obtained and approved by the consulate or notary public.

 

      Payment of Competition Authority's Share and Cash Capital

 

0.04% of the company's capital must be deposited into the bank account of this institution as "Competition Authority Share".Also addition, at least 25% of the shares committed in cash by the joint stock company owners must be deposited into a bank account opened in the name of the company before the company is registered.

 

           Applying to the Trade Registry Office for registration

 

Upon the application of the Founders of the company to the registry office together with the relevant documents, the trade registry office completes the registration process.(For documents prepared outside of Turkey, the apostille annotation must be obtained and approved by the consulate or notary public.). İn addition to establishment of joint stock company ,limited company and cooperative company the commercial books to be kept by the companies are approved by the trade registry directorate and given to the relevant person following the registration. With the registration in the trade registry the company acquires legal personality.

 

Afterwards, it may be necessary to obtain a work permit for foreign partners.

 

                Establishment procedures for ordinary company

 

It is sufficient to reach an agreement, albeit verbally, on an articles of association between the partners in accordance with the provisions of the TCO on ordinary companies.But it is crucial to state that  it should be emphasized that it is not possible for a foreign natural person to establish a sole proprietorship without a work permit.

 

A residence permit alone is not sufficient, and for this reason, a sole proprietorship can be established only if a work permit is applied after a residence permit for 5  years.

 

Trading companies in Turkey have to keep a number of books. The certification of these books is carried out by the employees of the Trade Registry Office during the establishment process. These notebooks are:

 

Day-book:It is the book in which commercial transactions are recorded item by item in chronological order based on documents.

 

General Ledger:It is called the book that takes the transactions recorded in the day- books and distributes them to the accounts in a systematic way.

 

Book inventory:After the determination and valuation, the results are compared with the accounting records and the accounts are made to express the real situation.

 

Stock register:It is the book that shows how the capital of the company is divided into shares and its details.

 

Minute-book:It is called the minute book where the transactions and decisions regarding the board of directors meetings are kept.

 

General Assembly Meeting Minute Book:It is called the minute book where the transactions and decisions regarding the general assembly meetings are kept.

 

These incentives and supports are regulated by different laws and regulations. The most known of them are;

 

Decision on State Aids in Investments numbered 2012/3305 published in the Official Gazette dated 06.2012 and numbered 28328,

 

Communiqué on the Implementation of the Decision on State Aids in Investments numbered 2012/1,

Decision on Granting Project-Based State Aid to Investments numbered 2016/9495, published in the Official Gazette dated 11.2016 and numbered 29900,

Decision on Supporting Investments within the Scope of Attraction Centers Program No. 2018/11201,
Technology Development Zones Law No. 4691

 

Documents Required for the First Application to the Trade Registry Office

 

a total of four copies of The original company contract  signed by all the founders in the presence of TSM personnel or a notary public, a total of four copies

 

Passport copy of each shareholder,

İf the shareholder is foreigner two copy of passport

 

Activity certificate about the current status of the company and authorized signatories.The legal entity registered as a partner must be issued by the authority in the investor's country

 

Decisions of the competent corporate body showing the approval of the legal entity shareholders for the establishment
If there will be any special conditions (company name, field of activity, etc.) in the establishment of the company, these conditions should be specified in the decisions.

 

The name of the natural person to act on behalf of the legal person and the decision containing the assignment (Required if a legal person is appointed as a member of the board of directors)

 

Notarized copy of the power of attorney authorizing the proxies who will follow the application in the presence of authorized TSM and other official authorities.

 

Two copies of notarized declarations of signature

 

Notarized copies of identity cards of company directors

 

The documents required by the Tax Office in the application for obtaining a potential tax number are as follows:

 

Documents Required for Potential Tax Number Application

 

Registration request letter

 

The original of articles of incorporation

 

Rental agreement showing the registered address of the company

 

A power of attorney authorizing an application to the tax office on behalf of the company is required if the process is to be followed by a proxy

 

In the application for registration with the Trade Registry Directorate, the following documents must be provided:

Documents Required for Registration Application

 

 

Application for Registration

 

4 copies of establishment notification form

 

A total of 4 copies of the Company Agreement required, one original signed by all the founders in the presence of TSM personnel or a notary public

 

Payment document to the Competition Authority Up to 0.04% of the company's capital

 

Signature statements for each person authorized to represent the founders of the company(This is required for limited company and it must be two copies)

 

Original of founding declaration

 

Chamber of Commerce registration form, which requires two different forms for natural person partner or legal person partner

 

Written statements of Non-partner members of the board of directors

(The statement in question must indicate acceptance of the assignment)

 

Bank receipt for minimum Paid capital deposit, which must be at least 25% of the subscribed capital

 

In-kind capital expert report, registration statement stating that there is no encumbrance on the real estate, document on annotations, written agreements on real estate

(Required in case of any capital contribution in kind)

 

As can be seen, very different documents may be required at different stages. These required documents refer to the most general documents. It will be the healthiest thing to get legal help from experienced lawyers in order not to interrupt the process due to procedural actions.

 

 

KVKK Compliance and Verbis Registration of the Company

 

The protection of personal data is an issue that has been enacted in Turkey as well as in the rest of the world.Therefore companies held consumer personal data has to protect according to the rules of the Law on the Protection of Personal Data.

 

This data may be taken from customers, partners or employees.

However, if these data are not legally protected, there will be serious sanctions in Turkey.This data must be registered in VERBİS.Otherwise there will be serious sanctions.

 

Compliance of the Company with the Commercial Electronic Message Regulation

 

Companies in Turkey define their commercial activities in various ways.İn this context companies send advertisements their consumers with email or etc.However, these transactions are subject to legal rules under the name of "commercial electronic messages", just like the protection of personal data.

 

İn case of foreigners establish company in Turkey they need to comply with commercial electronic message layout

 

Establishment of Branch Office or Liaison Office

 

Foreign trading company or companies establish in Turkey by foreigners may need to open branches due to the breadth of its commercial activities.

 

Essentially to open branch office more difficult process than from foreign company establishment.Therefore if is possible Establishing a company from scratch will be easier for the foreigner both during the establishment phase and afterwards.

 

The legal foundations must be laid very well so that the legal problems that may arise in the future can be prevented in advance.

 

 

İn addition to this there are liaison offices.They dont do business operation but they carry out activities such as market research, promotion, preparing the groundwork for company establishment and so on.

It may also be necessary for foreigners to establish a liaison office according to the needs of the concrete case.

 

                            Tax Liability for Foreigners

 

Stock companies in Turkey obliged to pay corporation tax(22 percent).

In addition, individuals are liable for income tax (proportional 15, 22, 35, 40) due to their earnings and revenues during the year.

 

İnviduals residing in Turkey or companies headquartered in Turkey can also say that they are taxed on the income they obtain from abroad.

 

İn addition to these there will be value added tax (VAT), special consumption tax (SCT) and stamp duty, which varies according to the concrete event.When the profit distribution of the partners of the company is made with that there will be ta cut.

 

Of course, apart from these, there may be tax exemptions, exemptions or tax incentives for companies or individuals.To get ahead of double taxation there are international agreements and domestic legislation on behalf of it.

 

                            Getting a Potential Tax Number

 

Potential tax number needed for foreign company partners or foreign board members.İt is can be take from tax office.Foreigners who want to open company foreigners should open a bank account where the company capital will also be deposited.After the registration of founding company signature circular of the authorities is issued.

Accounting power of attorney have certified by notary then and an application is made to obtain a potential tax number.This application can also be made online using the interactive tax office without going to the tax office.

 

   Final Procedures for Foreigners to Establish a Company in Turkey

 

1.Certification of Legal Books
 

Commercial companies serving in our country have to keep some books. These books are certified by the Trade Registry Office at the time of establishment:

 

Day-book

 

General Ledger

 

Book inventory

 

Stock register

 

Minute-book

 

General Assembly Meeting Minute Book

 

2. Follow-up of the Company Establishment Statement

 

After the registration application, the Trade Registry Office notifies the establishment of the company to the Social Security Institution and Tax Office.

Following this appointed tax man visits the company headquarters and draws up a determination report.The determination report must also have the signatures of two authorized persons from the company.

 

3.Arrangement of signature circular

 

For foreigners to establish a company in Turkey one of the last phase  is arrangement of the signature circular in the presence of the officials of the Trade Registry Office.

 

Signature circular ıt is a document showing the company representatives authorized to sign.

 

 

4. Transferring the Required Documents to the E-TUYS System

E-TUYS is a database created to collect information about the activities of foreign investors.Last phase of establishment company company officials should upload activity, capital and share transfer information forms for foreign direct investments to this database.