Set up a Company in Turkey

Thanks to its central location situated in the middle of three continents, enabling to comprehend and smooth approach to each culture with ease, Turkey creates such a dignified base for setting up a company that provides you to control many countries from different regions such as Balkans, Northern Africa, the Middle East and a wide range of Asia. In addition to the cultural mixture, the country stands out with low-cost but experienced workforce due to the currency difference between euro, dollar, other currencies and Turkish Lira. Under these circumstances, setting up your business in Turkey makes sense in all aspects. On this issue, the most preferred company systems are featured as an individual company, limited company, and joint-stock company structures despite being numerous company types.

Work Permits in Turkey

I – Individual Company

 

Individual companies are the types of companies in which the partners are %100 responsible for their personal assets and liabilities.

 

● When considered the loss of everything in terms of running into bankruptcy, it may cause devastating consequences.

● The advantage of this company type is that they are highly easy to set up and costs lower than the others.

● It’s not able to meet the long-term needs of most entrepreneurs due to being opposite to partnership structure

● Under all these circumstances, this company type is going to be an ideal one if your investment model is shaped within the framework of small businesses such as grocery, carpenter, tailor which are lined on a low scale.

 

II – Limited Company

 

The most sought after company type can either be set up alone as well as it can be the compound of many shareholders depending on your will. 

 

● The required amount of money can be fulfilled with at least 10.000 Turkish Lira.

● Capital for %100 shares and your capital should be deposited in the company bank account as your capital commitment within 2-year time.

● The liability of shareholders is limited to the amount of shared capital that is invested in advance.

● Company's main agreement defines the rules of the company and can turn out different forms by the majority of shareholders in time.

 

III – Joint-stock Company


Although it shows similarity with the limited company a little bit, it includes many other rules as well.

● The lowest amount for this type is at least 50.000 capital commitment

● A board of directors is needed

● As a shareholder, you can become a board chairman as well as you can assign a Turkish manager from outside who is unnamed on shareholders’ list.

● If your capital passes over 250.000 Turkish Lira, the employment of a company lawyer is a must.

● The choice of the joint-stock company seems better for companies that require easier management with many shareholders such as stock market business, the larger business structure so that the company can run out remotely with ease.  

 

Setting up a Company (Step by Step)

 

● You should reach an agreement with a freelance accountant from Turkey to deal with your company books.

● With the accountant’s contributions, you need to determine the name and rules of the company. (such as type of business you attempt to do and other issues)

● Receive a personal tax number from any tax office.

● Translation of your passport into Turkish from the notary.

● To run your business in Turkey, you need to have at least a 6-month residency permit.

● The physical address for your company is a must. (It can be either rental office, virtual, common offices, or a part of your house designed as an office in Turkey. Tax officer visits you at your address and these visits are performed periodically)

● You first sign the documents of your company launch at the trade office.

● If you decide to join a joint-stock company, %25 of capital commitment should be paid into the company bank account by each shareholder dating from day 1. (for the rest amount or limited company shareholders, the 2-year legal duration is valid for this capital commitment promise)

● Acquired approval from tax & trade offices by your accountant that provides to make last signatures at the trade office in the next step so that you can get Power of Signature from notary to represent your company as a general manager or manager director afterward. 

● Depending on how many employees you are working with, location and your company structure, it costs $1,000 for setting up besides approximately $1000 additional running expense for each year.

 

Significance of a Company for Real Estate

 

On commercial issues, a company should be founded to get revenue from short- term leasings legally. Unlike long-term contracts such as annual rental assignments requiring just a yearly declaration to the tax office on paper, you should invoice separately for each customer who rents your apartment or villa daily. To invoice your guests, you need to have a company for constant usage of daily purposes. On the other hand, another necessity of the company comes out to buy farmland. It is because foreign nationals don’t have the right to register farmland directly on their name. That’s why setting up a company in Turkey makes the process valid due to including Turkish identity so that you can have farmland on your company name. In addition to trade flow, foreigners are limited to buy and sell a certain amount of cars and real estate in a year. However, you can easily overcome that issue if you plan to operate a multi-sale business on property and vehicle.

 

What are the Tax Regulations?

 

As a foreigner, it is going to be a manageable issue to comprehend legal procedures and steps before leading up to your company in Turkey. Thus, tax regulations, consisting of a huge part of your company workload, should be excessively swallowed in a detailed way.

 

Value-Added Taxes (V.A.T.)

 

There are several VAT percentages in Turkey scaling as %18 for services, %8 for restaurants and accommodations as well as it’s seen some VAT exemptions on products that are exported abroad. In parallel with it, you either pay VAT or collect VAT each month to make a deduction from the next month.

 

Withholding Tax (Stoppage Tax)

 

It is a type of tax you pay additional situations without invoicing in addition to your expenses such as renting an office from a person who is not able to invoice you which is the percentage of withholding tax that is always stabilized %20 for it. What’s more, the percentage changes as %10 if you buy a service from an individual according to his/her profession.

 

Income Tax (Profit Tax)

 

Income tax is the other subcategory of tax that is deducted from your company when you hopefully make a profit. Together with changing related to your company type;

 

● Between %15 – %35 for individual companies

 

● %20 for limited and joint-stock companies (%15 withholding tax is deducted from each profit of shareholder if the company decides to distribute the profit among shareholders)

 

Turkey is a homeland of numerous world brand headquarters due to providing to the Balkans, the Middle East and Asia in a place and the value of Istanbul has increased globally day by day thanks to its perfect location for business amenities. If you are interested in setting up a company in Turkey and eager to have your own office at the heart of Istanbul, don’t hesitate to contact us for further information and check the offices on the website.

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