Setting Up a Foreign Company Branch & Liaison Office in Turkey 2026: Tax & Rules
2026
07 Sep
In 2026, international multinational corporations and regional enterprises frequently seek market entry into Turkey without necessarily creating an independent corporate entity. Establishing a formal commercial Branch (Şube) or a non-commercial Liaison Office (İrtibat Bürosu) under Foreign Direct Investment Law No. 4875 offers powerful operational and structural advantages across Europe and the Middle East.
In this strategic corporate handbook from Gars Consulting, our corporate structuring lawyers examine: statutory distinctions between branches, liaison offices, and subsidiaries; Ministry of Industry and Technology permit procedures; the 100% income tax exemption on expatriate salaries; and commercial registration with the Trade Registry.
1. Core Structural Comparison: Liaison Office vs. Commercial Branch vs. LLC
| Evaluation Metric | Liaison Office (İrtibat Bürosu) | Commercial Branch (Şube) | Subsidiary LLC (Limited Şirket) |
|---|---|---|---|
| Commercial Invoicing Rights | Strictly Prohibited; limited to market research, liaison, and promotional coordination. | Fully Permitted; authorized to execute commercial deals, invoice, and trade. | Fully Permitted across all authorized commercial sectors. |
| Legal Juridical Personality | Direct operational division of the overseas parent company; no independent equity. | Direct legal branch tied to the overseas parent company's legal domicile. | Independent Turkish corporate entity with ring-fenced legal liability. |
| Taxation Treatment | 100% Exempt from Turkish corporate income tax and staff salary withholding. | Subject to 25% Turkish Corporate Income Tax on domestic operational profit. | Subject to standard 25% Turkish corporate taxation. |
| Capital Funding Requirements | Must be financed exclusively via foreign convertible currency remittances wired from abroad. | Financed via allocated branch equity capital and domestic revenue earnings. | Funded by statutory shareholder contributions and bank facilities. |
| Statutory Term | Granted for an initial term of up to 3 years, renewable upon ministerial review. | Indefinite duration (coterminous with parent entity existence). | Indefinite legal existence. |
2. Establishing a Liaison Office: Ministry of Industry Licensing
Liaison offices operate under the regulatory mandate of the Ministry of Industry and Technology (General Directorate of Incentive Implementation and Foreign Investment). Key dossier components include:
- Statement of Purpose & 3-Year Operational Plan: Detailed analysis justifying promotional and representation activities in Turkey.
- Certificate of Incorporation & Activity: Proof that the parent company has actively traded for at least one full fiscal year.
- Audited Balance Sheet & Financial Statements: Certified financial disclosures confirming parent solvency.
- Board Resolution: Official corporate resolution authorizing the liaison office opening and appointing the resident representative.
3. Establishing a Commercial Branch (Şube)
For international corporations requiring immediate commercial invoicing, contracting, and warehousing within Turkey, a commercial branch registration entails:
- Securing preliminary authorization from the Ministry of Trade.
- Remitting designated branch operating capital into a Turkish commercial banking institution.
- Registering branch articles with the local Trade Registry Directorate (e.g., Istanbul Chamber of Commerce - İTO).
- Appointing an authorized resident branch manager holding comprehensive, notarized commercial management powers.
4. Extraordinary Tax Benefits of Liaison Offices in 2026
- 100% Personal Income Tax Exemption on Salaries: Pursuant to Article 23(14) of Income Tax Law No. 193, salaries disbursed to employees of liaison offices are completely exempt from Turkish income tax withholding, provided payment is transferred in foreign currency from parent corporate bank accounts overseas.
- 0% Corporate Tax Exposure: Zero corporate tax filings, eliminating substantial administrative compliance costs.
- Stamp Duty Relief (Damga Vergisi): Exemption from stamp taxes on domestic employment agreements and operational filings.
5. Work Permits for Foreign Resident Representatives
Both foreign corporate branches and liaison offices enjoy expedited privileges to sponsor executive Turkish Work Permits (Çalışma İzni) for foreign country managers and specialized personnel, bypassing standard domestic workforce ratio quotas during initial operational phases.
6. End-to-End Corporate Legal Escort with Gars Consulting
Gars Consulting delivers sophisticated corporate governance solutions for global firms expanding into Turkey:
- Drafting parent board resolutions, articles of association, and powers of attorney complying with Turkish ministerial standards.
- Managing sworn translations, Hague Apostilles, and Trade Registry filings through our bilingual legal practice.
- Managing bank onboarding and annual ministerial operational activity reporting.
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