Company registration in Turkey
To register a company in Turkey or acquire a ready and active business in Turkey, compliance with the regulations of the Turkish Chamber of Commerce is required. Any type of business in Turkey, regardless of its purpose, requires formal declaration and registration with the relevant government agencies in Turkey. Objectives may include assisting a business in the form of representation, facilitating international receipts and payments, or other objectives broadly categorized under company registration. The services provided by the International Global Kadro Company in this sector are unique compared to other companies. This is because all matters, from the officially certified translation of documents, to necessary consultations and market analysis for your desired business, are overseen by consultants holding doctoral degrees in business management from Turkish universities.
Turkey has been a member of the International Chamber of Commerce since 1974, and the license for business activities (business license) obtained in Turkey is also acceptable in other European and American countries. For this reason, registering a company in this country has been widely welcomed by expats and has many enthusiasts.
According to the legislation passed in February 2012, to initiate any kind of work or activity in Turkey, it is necessary to first proceed with the registration of a company in accordance with Turkish laws.
Under Turkish commercial law, any foreign individual can register a company in Turkey with only a valid passport and commence business activities.
Documents required for registering a company in Turkey:
Valid passport with more than 6 months of remaining validity.
Two color passport-sized photos.
Additionally, the following items need to be determined before registering the company:
Choosing a name for the company.
Having the articles of association regarding the type of company activity.
Specifying the percentage of shares for each partner.
Selecting the manager or managers of the company.
Providing the address and location of the company.
Choosing a financial advisor.
Decisions of the Turkish Chamber of Commerce regarding company registration in Turkey:
In Turkish commercial law, there are 550 legal articles related to company registration in Turkey. However, some of these legal provisions are still incomplete, and laws are gradually completed over time and as the need arises.
Three important principles are examined by the Turkish Chamber of Commerce when registering a company in Turkey.
The first matter concerns the partners and managers of the company in Turkey. Managers and partners should not have a criminal or penal record. A person who previously had a company in Turkey and had debts with their previous company may face challenges when registering a new company.
According to the laws of company registration in Turkey, an official address is required for company registration. This is because company notifications are sent to the official address provided during registration. Additionally, in meetings held for company decisions (such as decisions on share transfers, etc.), it must be stated that the meeting took place at the company’s registered address.
Previous taxes and public debts that have not been paid are also considered. Public debts refer to the debts that the company owner owes to the government, including taxes.
Mersis system in Turkey (Central Registration System):
The High Planning Organization in Turkey, in 2006, took steps to centralize information about legal entities and companies in Turkey by establishing a central information system. This central system is known as the Mersis system in Turkey (Central Registration System) and was launched on a trial basis on April 19, 2010, at the Central Registration Office in the city of Mersin. Before this, company records were accessible through trade registration offices.
With technological advancements and evolving needs, the system was updated on March 6, 2019.
The application of the Mersis system in Turkey:
Having a Mersis number allows access to all records, debts, and relevant information associated with a company in Turkey.
Taxation for Company Registration in Turkey:
One of the crucial aspects of company registration is the discussion surrounding taxes. It is necessary to understand the tax regulations for a company in Turkey to avoid complications in managing the company.
The taxation for companies in Turkey can be categorized into two groups. The first category is income tax, and the second category comprises taxes related to turnovers. Income tax is calculated annually at the end of the fiscal year based on the invoices issued by the company. Turnover taxes, on the other hand, need to be paid quarterly. These include taxes on the rental of company premises, turnovers related to employee salaries, and financial consultancy. All these taxes from the second category must be paid every three months.
For companies that are not active, value-added tax (VAT) is applicable, and it is settled by submitting empty declarations at the end of the year.
The Necessity of Hiring a Financial Consultant in the Stages of Company Registration in Turkey
In the initial stages of company registration in Turkey, it is essential to first hire a Turkish financial consultant for the company. Having a financial consultant is mandatory for company registration, and without one, a company cannot be registered.
Foreign nationals, by registering a company in Turkey according to the laws of the country, can engage in commercial activities in Turkey. Hiring and employing a Turkish financial consultant is crucial for registering a company in Turkey. With the assistance of a financial consultant, you can proceed with the registration of the company in Turkey.
The hiring and deployment of a prominent financial consultant in the company are crucial due to the complex tax laws in Turkey. Continuous consultations with a financial consultant during the company’s operations are of great importance.
After hiring a Turkish financial consultant, you will prepare and sign a power of attorney in the name of the financial consultant in the notary for the establishment of the company. It should be noted that if you do not speak Turkish, you must bring an official translator with you to the notary for the preparation and signing of the power of attorney. Care must be taken in preparing the power of attorney, and attention should be paid to details such as mentioning the company’s name and specifying the tasks for which the power of attorney is granted, especially for banking matters such as deposit and withdrawal of funds, which must be carried out in person.
Following the preparation of the power of attorney, the financial consultant initiates the tasks related to the company registration process in Turkey. Additionally, the financial consultant, after completing the stages of company registration in Turkey, assists in the maintenance of the company and handles tasks such as calculating taxes, income, and company accounts.
Types of Companies in Turkey
In general, there are three types of companies that can be registered in Turkey: Sole Proprietorship Company, Limited Liability Company (LİMİTED ŞİRKET), and Joint-Stock Company (ANONİM ŞİRKET). It’s important to note that a joint-stock company in Turkey does not have public or private categories.
Sole Proprietorship Company Registration in Turkey:
Individuals who immigrate to Turkey may wish to register a sole proprietorship company to start their activities and generate income. These businesses can include enterprises such as beauty salons, supermarkets, or restaurants. in Turkey, they are registered as sole proprietorship companies.
Sole proprietorship companies cover licenses for single-profession businesses such as supermarkets, beauty salons, tailoring, etc. Registering a sole proprietorship company in Turkey is straightforward.
Work Permit for Sole Proprietorship Registration in Turkey:
If you register a sole proprietorship company, you, as a foreign individual, cannot obtain a work permit in Turkey. To obtain a work permit, you need to register a company with high capital. Since there is no capital requirement for registering a sole proprietorship company, it doesn’t meet the criteria for obtaining a work permit in Turkey.
Limited Liability Company (LİMİTED ŞİRKET) Registration in Turkey:
The most common type of company registration in Turkey is the Limited Liability Company. This type of company can have one or several shareholders. In a limited liability company, shareholders are liable for the company’s debts and loans only to the extent of their shares. When the company goes bankrupt, creditors can claim their debts proportionate to each shareholder’s shares.
A limited liability company can be registered for any business purpose, and there are no restrictions on the type of company that can be registered. The minimum initial capital for a limited liability company is 100,000 Turkish Lira, and 25% of it must be demonstrated during registration, with the full amount to be shown within one year, although recent laws have eliminated the need to show the initial 25%.
Manager in Limited Liability Company in Turkey:
The manager must be one of the shareholders but can also be an external individual. A limited liability company can have one or multiple managers. When setting up a signature certificate, the signatures of all managers can be collectively or individually valid, depending on the agreement. In the collective mode, all managers’ signatures are required, while in the individual mode, each manager’s signature is valid on its own.
The duration of a manager’s term can be defined, or it can be unlimited. Typically, a specific time frame is determined due to the holding of annual general meetings, usually lasting one to three years. The most important member of the shareholders is the chairman of the board, who also has the right to sign.
Cost of Registering a Company in Turkey – Limited Liability Company Costs:
Every company incurs two types of costs: fixed and variable costs. Fixed costs occur monthly, quarterly, or annually and include expenses like office rent, salaries, and insurance for financial and employee consultants, as well as utility bills. Variable costs, such as rent and income taxes, occur every three months. The tax on rent for every three months is roughly equivalent to one month’s rent. The income tax is 23% of the company’s income.
At the end of each year, there is also the cost of sealing the offices.
Joint-Stock Company (ANONİM ŞİRKET) Registration in Turkey:
A joint-stock company in Turkey consists of shares owned by shareholders. It can be formed with one or more shareholders. The minimum initial capital for a joint-stock company is 50,000 Turkish Lira, with 25% needed for registration.
There are no restrictions on the type of business that can be registered as a joint-stock company in Turkey, and any kind of company can be registered.
Manager in Joint-Stock Company in Turkey:
The manager in a joint-stock company can be a shareholder or external to the shareholder group. A joint-stock company can have one or multiple managers. When setting up a signature certificate, the signatures of all managers can be collectively or individually valid, depending on the agreement. In the collective mode, all managers’ signatures are required, while in the individual mode, each manager’s signature is valid on its own. The manager’s term can be defined or unlimited, but usually, a specific time frame is determined.
Conversion of Personal Bank Account to Business Bank Account in Turkey:
To convert a personal account to a business account, you need to register a company in Turkey. Even for personal accounts, you can convert them to business accounts by registering a company in Turkey. However, it’s crucial to note that taxes resulting from the company’s activities in Turkey must be paid. Therefore, registering a company in Turkey is required for converting a personal bank account into a business account.
Registration Cost of a Company in Turkey – Joint Stock Company Expenses
Monthly expenses include audits, offices, rent, salaries, financial advisor fees, and employee insurance.
Quarterly expenses include rental tax and income tax. The rental tax (stoppage) is equivalent to one rent for each quarter. The income tax is also 23 percent.
Annual expenses are for organizing general assemblies. Throughout the year, if any of the shareholders requests a change, an extraordinary general assembly must be convened. The decisions of this assembly are recorded in the minutes and sent to the company registration office. The cost of sealing offices is also part of the annual expenses.
Pros and Cons of Starting a Business in Turkey – Establishing a Successful Business in Turkey
One of the concerns of immigrating to Turkey is starting a business and generating income. Before anything else, studying the legal aspects and market aspects of the desired business is crucial.
Many franchises and Turkish companies have faced challenges due to the prevalence of the coronavirus. Therefore, entering the franchise discussion in Turkey requires experience and accurate information. Franchise conditions in Turkey can be different for foreigners and even for Turks, and it may result in significant financial losses for business owners.
Therefore, before taking any action, thorough research and attention to the capabilities of the business owner and the necessary certificates for starting a business are required. The suitable business should be sought based on capabilities and interests in the Turkish market.
Budget Required to Start a Business in Turkey
Before starting a business in Turkey, the budget needed for the business must be examined. Because with any budget, it may not be possible to start a business in the Turkish market, especially in a market where there are both foreign and Turkish competitors. Competition with them is necessary.
Attention to the location of the business and franchise agreements is among the aspects that require more detailed and accurate study and consultation.
Documents Required for Activity and Work in Turkey
Some specialized businesses, such as nursing and medicine, require document equivalence and obtaining document equivalence in Turkey. Businesses like hair salons require a valid certificate.
Solution to Corporate Account Issues in Turkey
Companies registered in Turkey, if facing difficulties in opening an account, can use financial and credit institutions that perform similar banking activities, such as Papara, to address the issue. Papara can help open a corporate account for the company and facilitate official payments.
Papara can be used for transactions within Turkey, but it cannot be used for transactions outside of Turkey. It is essential to note that when using Papara corporate accounts, the company’s financial statements must be provided for financial consultation to avoid tax penalties.
Reason for the Requirement of an Address for the Company Location
The demand for starting a company in Turkey is increasing every day, and the number of individuals wanting to start a business is growing. Foreign nationals are also interested in starting businesses in Turkey, and one way to invest legally in Turkey is by registering a company.
To register a company in Turkey, you must provide an address for the company location. You can present the lease agreement for the office location or, if you have purchased a place, provide the document as the address and location of the company. The company is registered based on the provided address, and during the final stage of registration, officials from the Department of Assets visit the provided address for inspection, requiring the presence of the company manager.
Registering a Company in Turkey Without the Need for an Office
For registering a company in Turkey and having a legally registered business, an address for registration is mandatory. This registration address can be a home address or the address of the company’s operational location. Global Cadro has provided a solution by offering a dedicated address without the need for an office in Turkey to register a company.
Stoppage or Rental Tax for Company Locations in Turkey
When you rent a property for your company in Turkey, it is important to note that the rental tax is the responsibility of the tenant, not the property owner. Therefore, if you rent a property for three thousand liras, 20% for net and 23% for gross amounts will be deducted as rental tax. This tax must be paid to the government every month.
In fact, the property owner deducts this portion of the tax from the rent and transfers it to the tenant’s responsibility. For every rent payment made for the company, you must consider 20% higher than the rent amount.
An important point to note is that if you are renting a property for a company, the tenant is responsible for paying stoppages and rental taxes. If an execution order (Haciz) is issued for that company and your property is registered as its address, it may be subject to government seizure until the debt is settled.
The execution order applies to the property and all items inside it. Therefore, controlling payments is crucial to avoiding legal issues.
Acquiring Permits or Municipal Licenses in Turkey
Obtaining a municipal license is mandatory for businesses such as supermarkets, restaurants, and beauty salons that are in the public eye. For obtaining a municipal license, a work permit is required, and to obtain a work permit, one must register a company and employ at least 5 Turkish citizens.
To obtain a municipal license, you need to register a limited liability company. You can seek assistance from Global Cadro to obtain a municipal license, also known as a “ruhsat,” through legal solutions and considering hiring a Turkish manager for your company or having the capability to employ Turkish employees.
If hiring 5 Turkish employees and obtaining work permits for them is not feasible for obtaining a municipal license, alternative legal solutions can be explored. The International Global Cadro Institute has executable solutions in this regard.
Points Regarding Company Registration in Turkey
As you know, when registering a company in Turkey, you must have a clear purpose and register the company for starting a business and conducting activities. Foreign nationals intending to register a company in Turkey should be aware that there are various types of companies, such as personal and limited companies, among others. Individuals registering a company can apply for a work residence permit for themselves. To apply for a work residence permit through company registration, it is necessary to insure five Turkish citizens. For newly established companies, meaning those not exceeding six months since their establishment, a commitment to employing 5 Turkish citizens for managerial positions can be made when applying for a work permit. If you intend to register a company in Turkey, you should consider tax matters such as income tax, rental tax, and value-added tax. The value-added tax is the responsibility of the company’s customer, and the income tax is the responsibility of the company owner, who must pay 20% of the net profit (after deducting expenses) to the government. The rental tax is 22% of the permit amount, which must be paid.
Residence through Company Registration in Turkey
An important point to note regarding company registration in Turkey is the issue of Turkish residence. Some individuals mistakenly believe that by registering a company in Turkey, they can obtain Turkish residence. However, it should be emphasized that registering a company alone does not grant Turkish residence. To obtain Turkish residence, one must obtain a work permit for their company. To obtain a work permit for a foreign individual in Turkey, it is necessary to employ 5 Turkish citizens for each person. In other words, if you intend to obtain a work permit for your company, you must employ and insure 5 Turkish citizens. Additionally, the initial capital of the company must be more than 100,000 Turkish liras, and your shares must be more than 40 percent.
Setting up a cafe or restaurant in Turkey can be a lucrative business, given the popularity of food-related activities in the country. However starting and managing a restaurant in Turkey poses its own challenges. Foreign individuals looking to establish and invest in a restaurant in Turkey need to consider legal matters such as company registration and obtaining municipal permits, also known as “ruhsat.”
Starting and operating businesses in Turkey involves adherence to legal requirements, and seeking legal and financial advice is crucial to navigate the complexities effectively.
Having a Turkish manager and addressing tax issues are crucial aspects that require legal and financial consultation initially.
Here are some key points to consider for starting a restaurant in Turkey:
Company Registration: Registering a company, either as a limited liability company or sole proprietorship, is the first step. The required documents, including qualifications in the culinary field, should be submitted for approval.
Municipal Permits (Ruhsat): Acquiring a municipal permit, or ruhsat, is mandatory for starting a restaurant. This requires obtaining a work permit, and having a Turkish person appointed as the manager is often necessary.
Advantages of Holding a Cafe or Restaurant in Turkey:
– High demand and potential income.
– Various business structures available, such as limited liability companies.
Starting a Beauty Salon in Turkey:
– Similar to a restaurant, opening a beauty salon requires company registration and obtaining municipal permits or ruhsat.
– Having a manager with Turkish citizenship or acquiring a work permit is necessary.
Obtaining a Currency Exchange License in Turkey:
– To start a currency exchange business, you must be a Turkish citizen.
– Educational background in management, economics, or accounting for the company’s manager is mandatory.
– Financial capabilities and a valid banking record are required for license approval.
Types of Currency Exchange Licenses in Turkey:
Currency exchange licenses in Turkey come in two types: Group A and Group B.
Group A: There is a limited number of Group A licenses in Turkey because these entities have capabilities similar to banks, such as performing SWIFT transactions and bank transfers. In other words, currency exchange offices in Group A can conduct activities akin to banks. However, at present, new licenses of this type are not issued. Those interested in obtaining such licenses must acquire the rights from existing license holders.
Group B: The optimal choice for obtaining a currency exchange license is Group B. While Group B license holders cannot perform SWIFT transactions similar to banks, having a currency exchange company with a bank account allows them to engage in lawful currency transfers. They can provide transfer services to their clients legally and also operate currency exchange offices in Turkey, facilitating the buying and selling of foreign currencies. Additionally, they can offer brokerage services.
It’s important to note that currency exchange regulations and licensing requirements may be subject to changes, and it is advisable to seek updated information and legal advice when pursuing such licenses in Turkey.
Operating in Health, Sports, and Obtaining Necessary Licenses:
– Starting a business in the health and sports sector, such as a gym or sports club, involves registering the company and obtaining relevant licenses from the Turkish Ministry of Youth and Sports.
Advantages and Disadvantages of Registering in Free Trade Zones:
– Registering a company in free trade zones offers advantages, but the costs of company registration and maintenance may vary.
– Limitations on employing foreign workers apply, requiring five Turkish citizens for each foreign individual employed.
Legal Risks of Abandoning an Inactive Company in Turkey
If you decide to abandon a company in Turkey that is inactive and has not been properly settled, there are legal risks associated with this action. If empty letters of resignation and company closure are not submitted by financial consultants, legal consequences may escalate over time. After a certain period, legal actions, including freezing of bank accounts, can be initiated.
Furthermore, if you plan to engage in future activities in Turkey, the unresolved matters of the inactive company can pose obstacles to your new endeavors. The best approach to conclude the affairs of an inactive company is to undergo a settlement process and officially close the company. This involves fulfilling legal requirements, clearing any outstanding debts, and completing the necessary paperwork for closure.
It’s crucial to comply with Turkish laws and regulations when winding up a company to avoid legal complications. Seeking guidance from legal professionals and financial consultants during this process is recommended to ensure a smooth and lawful closure of the inactive company in Turkey.
Registering a Holding Company in Turkey:
Holding companies are large entities formed by multiple joint-stock companies, characterized by high capital and unified management. Establishing and registering a holding company in Turkey is permissible for foreign nationals, and they can engage in activities in this field.
Any foreign individual can proceed with the registration of a holding company. Numerous companies utilize unregistered small limited liability companies as holdings.
This title is primarily for promotional purposes, and the use of the term “holding” does not transform a limited liability company into an actual holding. Holdings are typically composed of several joint-stock companies.
