Can Foreign Companies Open a Branch or Liaison Office in Turkey? Establishment, Trade Registry, Tax, and Manager Appointment Process

Regarding the ability of a foreign commercial company to enter the Turkish market directly without establishing a new Turkish company, two main structures stand out: Opening a branch in Turkey and establishing a liaison office. These two structures differ from each other in terms of their legal nature, scope of commercial activities, trade registry procedures, tax consequences, and representation authorities.

If the foreign company intends to make sales, conclude contracts, conduct commercial activities, and generate income from these activities in Turkey, the branch model comes into question. Conversely, a liaison office may be established for the purpose of conducting permitted activities such as market research, promotion, communication, and similar functions, provided that it does not engage in commercial activities in Turkey. Article 40 of the Turkish Commercial Code No. 6102 regulates the registration of branches of foreign-headquartered commercial enterprises in Turkey, while the Foreign Direct Investments Law No. 4875 regulates the establishment of liaison offices on the condition of not engaging in commercial activities.

The distinction between the establishment of companies by foreigners in Turkey and the right to work is additionally important. Foreign work permit requirements with work permit through company establishment and processes must be evaluated independently of one another.

1. Establishment of Branches by Foreign Companies in Turkey

Legal basis and legal nature of the branch

Branches in Turkey of commercial enterprises whose headquarters are located outside Turkey are registered in the trade registry like domestic commercial enterprises, pursuant to Article 40/4 of the Turkish Commercial Code No. 6102. The same provision mandates the appointment of a fully authorized commercial representative with a residence in Turkey for the foreign company's branch. Current provision of the Turkish Commercial Code No. 6102 is the primary legal source on this matter.

A branch is not a separate legal entity independent of the foreign parent company. However, it operates under a separate trade registry registration in Türkiye and may engage in commercial transactions regarding its branch activities. The legal and economic existence of the branch does not constitute a new legal entity independent of the parent company.

Article 12 of Law No. 6103 on the Enforcement and Application Procedure of the Turkish Commercial Code also contains special provisions regarding the registration of Turkish branches of commercial enterprises headquartered outside of Türkiye.

Documents Required for Branch Establishment

Article 122 of the Trade Registry Regulation regulates in detail the documents to be submitted during the registration of a Turkish branch of commercial enterprises headquartered outside of Türkiye. Accordingly, although the contents of the file may vary depending on the specific case and the law of the source country, the following documents are fundamentally required:

• An official letter from the competent authority demonstrating that the conditions required under the law of the source country for opening a branch have been fulfilled, along with its Turkish translation,
• Documents required for the registration of the branch in the source country,
• A document showing the current registry records of the headquarters and a certified copy of the articles of association, together with their Turkish translations,
• The resolution of the competent body regarding the opening of a branch in Türkiye and the appointment of a fully authorized representative resident in Türkiye,
• A declaration containing the information of the headquarters and the branch, as well as the information of the persons who will represent the branch,
• A power of attorney demonstrating the power of representation, when necessary,
• Signature declarations of the persons who will represent the branch.
• If the activity requires the permission or approval of another institution, the relevant permission or approval document.

If these documents are issued in the source country, depending on the nature of the document and the situation of the relevant country, an apostille or consular legalization, and duly certified Turkish translation procedures for use in Turkey, will come into question. Article 122 of the Trade Registry Regulation sets forth the detailed framework regarding the submission of source country documents in branch registration.

Documents required under Article 122 of the Trade Registry Regulation the outline of the current document list can be reviewed via. This link is not an official institution website; therefore, it should be considered as a secondary regulatory source rather than an official legislation source.

Branch trade name and registration procedure

The trade name of the foreign company branch must be determined in compliance with the legislation so as to reflect the name of the parent company and the location of the branch in Turkey. The registration of the branch is carried out at the relevant trade registry office.

MERSİS and trade registry procedures are of significance during the registration process. As a result of the registration, the branch acquires a separate registry record in Turkey in terms of the trade registry; however, this does not grant the branch a legal entity independent of the parent company.

Branch manager and fully authorized commercial representative

Pursuant to Article 40/4 of the TTK, for a foreign company branch in Turkey, a fully authorized commercial representative resident in Turkey must be appointed.

The express requirement under the law is not Turkish citizenship, but rather that the representative's place of residence is in Turkey. The appointment of a foreign national as a branch manager or representative must also be evaluated in terms of labor and residency legislation.

If a foreign national is to actively work in Turkey as a company partner, manager, or employee, the establishment of the company must be distinguished from the right to work. In this regard, 2026 work permit evaluation criteria must be examined separately.

2. Establishment of Liaison Offices by Foreign Companies in Turkey

Legal basis of the liaison office

Article 3/h of the Foreign Direct Investments Law No. 4875 constitutes the primary regulation regarding the granting of permits to companies established under the laws of foreign countries to open liaison offices in Turkey, provided that they do not engage in commercial activities.

The establishment and operation of liaison offices are regulated under Articles 6, 7, and 8 of the Implementation Regulation on the Foreign Direct Investments Law. Invest in Türkiye's official investment guide regarding the establishment of businesses in Turkey by foreign companies also explains the prohibition of commercial activities and the application documents with respect to liaison offices.

A liaison office is not a branch established for the foreign company to directly conduct commercial activities in Turkey. The fundamental limitation is that no commercial activities may be conducted in Turkey.

Activities that a liaison office may perform

The activities that a liaison office may conduct within the scope of its permit are evaluated within the framework of the scope of activity declared during the application and the relevant legislation. Operations that do not bear the character of commercial activities, such as market research, promoting the foreign company's products or services, and gathering information regarding the foreign headquarters' activities in Turkey, may come into question within this scope.

However, directly making sales in Turkey on behalf of the liaison office, generating sales revenue, or conducting commercial activities through the liaison office is incompatible with the prohibition of commercial activities under Law No. 4875.

Documents required for the establishment of a liaison office

Pursuant to Article 7 of the Implementation Regulation on the Foreign Direct Investments Law, the following documents are generally required:

• Activity certificate of the foreign company,
• Activity report or balance sheet and income statement of the foreign company,
• Authorization document to be granted to the person who will conduct the activities of the liaison office,
• Power of attorney if the application procedures are to be carried out by another person.

The official investment guide also specifies the application form, a commitment letter stating that no commercial activities will be conducted, and documents demonstrating the operational status of the company.

Permit duration and extension

Regarding the permit duration for liaison offices, the current regulation as of the application date must be taken as the basis. According to the official investment guide, the initial establishment permit is granted for a maximum period of three years .

As a significant update, it is not possible to extend the permit duration of liaison offices operating for the purpose of market research or the promotion of foreign company products and services. For other activity types, extension evaluations are conducted by taking into account elements such as past activities, business plan, future targets in Türkiye, expenditures, and number of employees. Therefore, the general statement in previous texts indicating that "market research offices can be extended for up to five years" is not compliant with the current official source.

In terms of current practice, Invest in Türkiye liaison office guide shall be taken as the basis.

Annual activity report

Pursuant to Article 8 of the Implementing Regulation on the Foreign Direct Investments Law, liaison offices must submit the activity information form regarding the previous year's activities by the end of May each year at the latest and present documents showing that the expenditures of the previous year were financed with foreign currency sent from abroad.

3. Comparison of Branch and Liaison Office

4. Tax and Accounting Aspects

Corporate tax status of a foreign company branch

Pursuant to Article 3 of the Corporate Tax Law No. 5520, foreign institutions whose legal and business centers are both not located in Turkey are taxed under the principle of limited liability, solely over their earnings derived in Turkey.

The taxation of earnings derived from commercial activities carried out through a branch in Turkey is evaluated within the framework of the branch's activities in Turkey and the relevant tax legislation. The text of the Corporate Tax Law No. 5520 by the Revenue Administration sets forth the fundamental framework of limited liability.

The tax obligations of the branch are not limited to corporate tax alone. Depending on the nature of the activity, VAT, tax procedural provisions, documentation requirements, accounting, and other filing obligations must also be evaluated separately.

Tax evaluation for liaison offices

It is a fundamental legal requirement that a liaison office does not engage in commercial activities in Turkey and does not generate commercial income. Therefore, it is not possible for a liaison office to be evaluated as an enterprise generating commercial profits like a branch.

However, a general statement such as 'a liaison office has no tax obligations whatsoever' is incorrect. Special provisions in the tax legislation regarding rental payments, personnel payments, service acquisitions, and other transactions must be examined separately.

Taxation of liaison office personnel salaries under Income Tax Law (GVK) Art. 23/14

Article 23/14 of Income Tax Law No. 193 provides an income tax exemption for certain salaries paid in foreign currency out of earnings generated outside Turkey by limited-liability employers whose legal and business headquarters are not located in Turkey.

The application of the exemption is not automatic. The employer and the source of payment must meet the statutory conditions, and the payment must be made in the manner prescribed by the legislation. The Revenue Administration also emphasizes conditions such as the foreign employer lacking a legal or business center in Turkey and the salary being paid in foreign currency from earnings derived abroad.

The Revenue Administration's explanation regarding the application of GVK Art. 23/14 allows for the examination of concrete conditions.

Regarding stamp tax, if the salary is exempt under GVK Art. 23, the relevant wage documents must also be evaluated in terms of the exemption provisions of the Stamp Tax Law. The Revenue Administration has clarified that documents pertaining to wages evaluated under GVK Art. 23 may be exempt from stamp tax subject to certain conditions.

5. Social Security and Work Permits for Foreign Personnel

In the event that personnel are actually employed in Turkey at a branch or liaison office, employer obligations arising from social security legislation must also be fulfilled.

Work permit legislation applies separately regarding the actual employment of foreign personnel. Establishing a company, becoming a company shareholder, or opening a liaison office does not automatically grant a foreigner the right to work.

As of 2026, the Ministry of Labor and Social Security's current evaluation criteria include specific provisions for foreign shareholders, alongside general employment and financial adequacy criteria. For instance, for foreigners opening a new workplace or partnering in a workplace subject to balance-sheet accounting, criteria such as paid-in capital, the foreigner's capital share, partnership ratio, and the employment of Turkish citizens are separately regulated. The current work permit evaluation criteria of the Ministry of Labor and Social Security must be checked as of the application date.

For SSI (SGK) notifications of foreign employees, additionally SSI (Social Security Institution) registration and notification periods for foreign employees current statements on the subject can be reviewed.

6. Comparative Concrete Scenario Analyses

Scenario 1: Market research by a foreign software company

Assume that a Germany-based software company wishes to conduct market research in Turkey, analyze potential customers and suppliers, and evaluate market conditions in Turkey. If the company will not make direct sales in Turkey and will not sign commercial contracts through the liaison office, the liaison office model may be considered, provided that the activities remain within the permitted scope.

However, in the event that personnel in Turkey actually carry out software sales, take orders, collect payments, or conclude commercial contracts with customers in Turkey on behalf of the foreign company, the boundaries of such activities must be further evaluated.

Scenario 2: Direct sales by a foreign machinery manufacturer in Turkey

In the event that an Italy-based machinery manufacturer wishes to sell machinery, sign contracts, issue invoices, sell spare parts, and provide after-sales services in Turkey, the commercial activity prohibition of the liaison office must be taken into account.

If these activities are planned to be carried out in Turkey, legal structures such as establishing a branch or a separate company in Turkey must be evaluated. Article 40/4 of the TTK and relevant trade registry provisions shall apply to the establishment of the branch.

7. Representation and Capacity to Sue in Light of Court of Cassation Case Law

Decision of the General Assembly of Civil Chambers of the Yargitay dated 25.06.2025

The decision of the General Assembly of Civil Chambers of the Yargitay dated 25.06.2025, numbered E. 2024/113, K. 2025/389 concerns a dispute of significance regarding the standing to sue and capacity to be a party of a foreign bank's representative office/liaison office in Turkey.

In the decision, the dispute arising in terms of the capacity to be a party and procedural conditions for lawsuits of the representative office of the foreign headquarters in Turkey was evaluated, and the matter of remedying a specific procedural deficiency by obtaining a power of attorney from the foreign headquarters in the specific case was addressed.

The core dispute of the judgment centers on whether a negative declaratory action filed by the representative office—following the use of its representative office address in Turkey in enforcement proceedings conducted against the foreign headquarters—is admissible, and whether the defect regarding procedural capacity can be remedied. The General Assembly of Civil Chambers decided to overturn the resistance decision in the specific case of the dispute.

Yargıtay HGK E. 2024/113, K. 2025/389 judgment text published in a secondary legal source. This link is not an official Yargıtay link; since the official judgment URL’could not be verified, it is not presented as an official source.

Decision of the 11th Civil Chamber of the Yargıtay dated 22.09.2022

Of the 11th Civil Chamber of the Yargıtay dated 22.09.2022, numbered E. 2021/299, K. 2022/6183 numbered decision is cited regarding the dispute over liability arising from the powers of the foreign company's representative in Turkey and the transactions conducted on the company account.

However, since an accessible and verifiable official Yargıtay URL’could not be identified for this decision within the scope of this study, the third-party app.apilex.ai link has deliberately not been used. Furthermore, the citation of the judgment should not be interpreted as a definitive precedent without verifying it against a reliable official judgment database.

8. Frequently Asked Questions

1. Is it mandatory for a foreign company branch to allocate a separate capital in Turkey?

In terms of Article 40/4 of the TTK and Article 12 of Law No. 6103, a general minimum capital requirement, such as the one stipulated for joint-stock or limited liability companies, is not mandated by law for foreign company branches. Nevertheless, the capital allocated to the branch and related information are indicated in the registration documents. In the context of a specific trade registry application, the current practice of the relevant registry office and the special legislation regarding the activity must also be checked.

Can a liaison office later be converted into a branch or a joint-stock/limited liability company?

A liaison office and a company or branch do not share the same legal structure. Since a liaison office is not a company or branch registered with the trade registry, it should not be considered a structure that transforms into a branch through the direct application of the conversion provisions under the TTK. If commercial activities are to be commenced in Turkey, the appropriate legal structure must be established or registered separately, and the necessary procedures regarding the liaison office's permit must be completed.

3. Can a liaison office issue sales invoices in its own name?

Generating commercial revenue by conducting sales of goods or services in the name of the liaison office is incompatible with the rule prohibiting commercial activity, which is the fundamental condition for the establishment of a liaison office. On the other hand, the acceptance of documents issued to the office regarding its own administrative expenses, such as office rent, electricity, internet, consultancy, and similar costs, is a separate matter.

4. Is it mandatory for the branch manager to be a Turkish citizen?

No. The fundamental requirement set forth in Article 40/4 of the TTK is the appointment of a fully authorized commercial representative residing in Turkey for the branch of a foreign company. Whether a foreign national may actually work in Turkey is additionally evaluated under work permit regulations and relevant provisions of aliens law.

5. Are the salaries of liaison office employees exempt from income tax?

Exemption is not automatically applied in every case. The conditions set forth in Article 23/14 of the GVK must be met collectively. Specifically, conditions such as the employer not having a legal or business center in Turkey and the wages being paid in foreign currency from earnings derived by the foreign employer outside of Turkey are of importance. The specific wage payment structure must be analyzed on a case-by-case basis.

6. Is the foreign parent company liable for the debts of the branch?

A branch is not a separate legal entity independent of the foreign parent company. Therefore, when evaluating the legal nature of rights and obligations arising from branch operations, the legal status of the foreign headquarters and the relevant contract, tax, commercial, and procedural provisions must be taken into consideration together. Rather than a general statement that it "is unlimitedly and primarily liable for all debts of the branch under any circumstances," the legal basis of the specific type of debt must be examined.

7. Is a work permit required for a liaison office employee?

In the event that foreign personnel actually work in Turkey, work permit legislation shall apply accordingly. The mere establishment of a liaison office does not grant the right to work on its own. The employee's nationality, duties, application type, legal status in Turkey, and current work permit criteria must be evaluated together.

9. Conclusion and Legal Assessment

The structure a foreign company should utilize in Turkey must primarily be determined based on the nature of the activities intended to be carried out in Turkey. If commercial activities, sales, and contracting are planned, the options of establishing a branch or a separate company in Turkey should be evaluated. Conversely, for the purpose of conducting market research and other permitted activities without carrying out commercial activities in Turkey, the liaison office model may be considered.

Regarding branches, Article 40/4 of the TTK, Article 12 of Law No. 6103, and the relevant provisions of the Trade Registry Regulation; whereas regarding liaison offices, Law No. 4875 and the Implementing Regulation on the Foreign Direct Investments Law must be taken as a basis.

Although the legalization of foreign documents, trade registry registration, determination of representation authority, scope of liaison office activities, tax obligations, SSI (Social Security Institution) procedures, and work permits for foreign personnel are separate headings, they must be evaluated together in practice.

Whether the establishment of a company or partnership by a foreigner in Turkey creates a right to work must be evaluated separately. In this regard, work permit without residence permit and documents required for foreign work permit current information under the headings may also be taken into consideration.

Author Information

Atty. Batın YILMAZ
Istanbul Bar Association Bar Registry No: 77008

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