Frequently Asked Questions About Branch Opening of Foreign Companies in Turkey

Can foreign companies open branches in Turkey?
What documents are required to open a foreign company branch in Turkey?
What are the legal requirements for foreign companies to open branches in Turkey?
Which taxes do foreign company branches in Turkey owe?
How long does it take to open a foreign company branch in Turkey?
Can the manager of a foreign company branch in Turkey be a foreigner?
How is inflation accounting applied for foreign company branches in Turkey?
Is a foreign company branch opened in Turkey an independent legal entity?
Is there a capital requirement to open a foreign company branch in Turkey?
In which sectors can foreign company branches operate in Turkey?
What are the rights of personnel working in foreign company branches in Turkey?
Is a permit required for foreign personnel to work in foreign company branches in Turkey?
How does a foreign company branch in Turkey obtain a tax number?
How is address notification made for foreign company branches in Turkey?
How is the turnover of a foreign company branch in Turkey calculated?
How does a foreign company branch in Turkey carry out Social Security Institution (SGK) and payroll procedures?
Is it mandatory to hire a lawyer to open a foreign company branch in Turkey?
What are the tax obligations of foreign company branches in Turkey?
Are the transactions performed in foreign company branches in Turkey reported to the headquarters?
How can I obtain consultancy from KL Legal Consultancy to open a foreign company branch in Turkey?

Legal Basis and General Process for Foreign Companies Opening Branches in Turkey

To which legal regulations are foreign companies subject when opening branches in Turkey?

It is possible for foreign companies to open branches in Turkey for commercial activities, and this process is subject to various legal regulations. Turkey has a legal system that encourages direct foreign investments and has enacted regulations ensuring that foreign companies have similar rights to domestic companies.

For foreign companies to open branches in Turkey, procedures such as the official registrations in the country where the company's headquarters are located, activity certificates, and appointment of company officials must be properly completed. The establishment procedures of the branch are carried out before the relevant Trade Registry Office, and notarized, translated documents must be submitted.

A branch does not constitute an independent legal entity in Turkey; it operates under the foreign headquarters. Therefore, all financial and legal responsibilities of the branch belong directly to the foreign company. A branch manager must be appointed at the opening of the branch, and their authorities must be clearly defined.

If false declarations are made or documents are incomplete during this process, applications may be rejected or delayed. Therefore, it is recommended that branch opening procedures be conducted with the assistance of an experienced Izmir foreign nationals law lawyer or Izmir foreign company lawyer. This ensures that the process is completed legally, quickly, and smoothly.

Documents Required to Open a Foreign Company Branch in Turkey

Which documents must a foreign company submit to open a branch in Turkey?

Foreign companies must prepare certain documents completely and correctly to open branches in Turkey. However, these documents may vary depending on the legal system of the country where the company's headquarters is located and the business plan in Turkey. Most documents must be submitted as notarized Turkish translations, and some may require apostille certification.

Generally, the following documents are requested:

Current trade registry registration or activity certificate of the parent company,
Notarized translated copy of the articles of association,
Decision to open a branch (taken by the board of directors or authorized body),
Address information designated for the branch to be established in Turkey,
Decision regarding the appointment of the branch manager and identification details,
Signature declaration of the branch manager,
Authorization documents and powers of attorney (if necessary).

Even small errors in preparing these documents can seriously delay the branch opening process. Since translation, notarization, apostille processes, and trade registry applications require expertise, it is advantageous for the investor to conduct the process through an Izmir foreign company lawyer.

At KL Legal Consultancy, we provide services including preparation of appropriate document lists for foreign companies, document verification at each stage of the process, and correct submission to official institutions.

Tax Obligations of Foreign Company Branches in Turkey

How are foreign company branches taxed in Turkey?

Foreign companies opening branches in Turkey are considered taxpayers like domestic companies and are subject to Turkish tax legislation. It is mandatory to pay taxes on the earnings obtained by the branch in Turkey. In this respect, although the branch is not an independent legal entity, it is fully responsible in terms of financial obligations.

Types of Taxes

The main taxes that foreign company branches face in Turkey are as follows:

Corporate Tax: Only the profits earned by the branch in Turkey are taxed. The branch does not pay tax in Turkey for the headquarters' income from other countries.
Value Added Tax (VAT): Sales of goods and services in Turkey are subject to VAT.
Withholding Tax (Income Tax Withholding): Deductions can be made on rents, service fees, or some payments.
Stamp Duty: Levied on certain contracts and official documents.
Provisional Tax: Declared quarterly before the annual corporate tax.

Tax Declaration and Financial Responsibility

The branch's accounting must be kept in accordance with the Turkish accounting system, books must be certified on time, and declarations must be submitted fully. The branch manager or authorized person is legally responsible for these declarations. Also, the branch turnover, corporate tax base, and inflation adjustment practices are important.

Registration with the tax office, obtaining a tax number, and switching to digital systems (e-invoice, e-ledger, etc.) are indispensable parts of the establishment process.

Since mistakes in this process can result in severe financial penalties, managing the tax process along with branch opening with the support of an expert Izmir foreign nationals law lawyer and financial advisor provides a great advantage.

Inflation Accounting and Financial Reporting in Foreign Company Branch Opening

How is inflation adjustment applied for branches of foreign companies?

Since foreign company branches operating in Turkey are subject to Turkish tax legislation, they must fulfill certain financial reporting obligations. Inflation accounting is at the forefront of these obligations. Especially during periods of high inflation, inflation adjustment becomes compulsory to present financial statements fairly.

What is Inflation Accounting?

Inflation accounting refers to the adjustment of non-monetary items in the company's balance sheet and income statement (for example; fixed assets, capital, inventories) according to the effect of inflation. The goal is to ensure financial statements reflect the real situation.

Application Regarding Branches

Foreign company branches prepare their balance sheets and submit declarations independently, so they may need to apply inflation adjustment. These adjustments are made based on the income obtained in Turkey and financial records, in accordance with the Turkish Tax Procedure Law provisions.

The branch balance sheet is kept specific to activities in Turkey.
The branch turnover is calculated based on adjusted revenues.
Inflation differences are transferred to relevant accounts and reported.

Incorrect declarations or failure to adjust may cause significant risk during tax audits. Therefore, it is beneficial to proceed with financial advisor and, if necessary, Izmir foreign company lawyer support in inflation accounting practices.

At KL Legal Consultancy, we guide foreign company branches regarding their financial obligations in compliance with current regulations and minimize our clients’ risks.

Employees and Legal Responsibilities in Foreign Company Branches

What is the status of employees working in foreign company branches in Turkey?

Employees employed in foreign company branches opened in Turkey work under Turkish Labor Law. Although the branch is not a separate legal entity, it is effectively considered the employer in Turkey, and therefore all employer obligations apply regarding employees.

Legal Status of Personnel

All personnel employed by the branch in Turkey are evaluated under Labor Law No. 4857.
Social Security Institution (SGK) and Employment Agency (İŞKUR) registrations must be made, and premiums and obligations paid on time.
Employment contracts must be made for all employees including the branch manager, and legal periods must be observed.

Employment of Foreign Personnel

It is possible for the branch to employ foreign nationals; however, a work permit must be obtained for these individuals. The work permit application may require that the branch employs at least 5 Turkish nationals in Turkey.

Responsibilities

Occupational health and safety obligations,
Preparation of payrolls,
Issues such as overtime, annual leave, and severance pay rights must be managed diligently.

If foreign company branches do not fulfill these obligations, they may face administrative fines as well as lawsuits related to labor claims. Therefore, it is recommended that personnel processes be conducted under the guidance of an experienced Izmir foreign nationals law lawyer and with professional human resources support.

Points to Consider When Opening Foreign Company Branches in Turkey

What should foreign companies pay attention to when opening branches?

For foreign companies wanting to open branches in Turkey, the process is not limited to document preparation and registration procedures. Before application, all stages of the process must be carefully planned, and potential risks foreseen. Below are the most critical points regarding this process.

1. Eligibility Analysis

Not every foreign company may have the direct right to open a branch in Turkey. This situation must be evaluated based on the company's field of activity, country of origin, and limitations foreseen in Turkish law. Special permission may be required to open branches in certain sectors.

2. Correct Selection of Branch Manager

The branch manager is legally responsible for all activities in Turkey. Therefore, when selecting a manager, it is important to appoint a person suitable both in terms of representation ability and legal competence. It is preferred that the manager resides in Turkey.

Upon branch opening, a tax number must be obtained, necessary SGK registrations made, and a financial advisor appointed. Especially, responsibilities related to branch turnover and financial reporting must be fulfilled timely and correctly.

4. Trade Registry and Address Notification

The address declared in the trade registry registration application must be a real business address. Address changes, title changes, and manager changes must be notified immediately.

5. Obtaining Legal Consultancy

Completing all these processes completely and error-free is possible with the support of an experienced legal consultant. Considering the dynamic structure of the legal system in Turkey, changing tax practices over time, and company law regulations, lack of professional support poses a serious risk.

KL Legal Consultancy offers foreign companies strategic and practical solutions in compliance with the legislation during the branch opening process and secures all legal steps.

Importance of Lawyer Support During Branch Opening of Foreign Companies in Turkey

Why is professional consultancy necessary for foreign companies opening branches?

Opening a branch in Turkey by a foreign company is not merely an administrative procedure. This process is a multidimensional operation requiring detailed legal analysis, risk assessment, and correct strategy. Therefore, professional lawyer support is critical at every stage of the branch opening process.

1. Error-Free Process Management

A small mistake in document preparation can disrupt the entire application process. An Izmir foreign nationals law lawyer checks the compliance of documents with legislation and ensures the completion of notarization and translation procedures without deficiencies.

2. Prevention of Legal Risks

One of the biggest risks for foreign companies is acting without fully knowing the Turkish legal system. Details such as the branch manager's responsibility, areas requiring activity permits, and tax obligations can only be properly managed with expert lawyer guidance.

3. Follow-up of Permits and Notification Processes

All official applications, registration procedures, SGK and tax notifications to be made during branch opening must be submitted to the correct institutions at the correct times under lawyer supervision.

4. Long-Term Legal Support

After the branch is opened, commercial contracts, employee relations, and tax disputes require professional support. Therefore, legal consultancy is needed not only during the establishment phase but throughout the branch’s commercial activities.

KL Legal Consultancy secures the process legally with comprehensive legal consultancy services specially offered to foreign companies wishing to open branches in Turkey. Our expert lawyers plan every step of branch establishment strategically and safely guide your investment.

For legal compliance and to accelerate your branch opening process in Turkey, you can obtain professional support from KL Legal Consultancy. You may contact us to start your process correctly.

Branch Registration in Turkey