Companies with headquarters abroad can operate in Turkey by establishing a branch or a company. There are significant differences between these two structures, and in certain cases, setting up a branch may be more advantageous.
Comparison of Foreign Branch and Company in Turkey
| Criteria | Company | Branch |
| Legal Entity and Management | Has an independent legal entity; operates under its own name. | Does not have an independent legal entity; operates as an extension of the parent company. |
| Taxation | Considered a full taxpayer in Turkey; taxed on all earnings. | Taxed only on income generated in Turkey; profit transfers are simpler. |
| Liability | Liability depends on company type (limited liability for joint-stock companies). | The parent company is fully responsible for financial and legal liabilities. |
| Capital Requirements | Minimum capital of 250,000 TL required for joint-stock companies. | No independent capital requirement, but the parent company must fund it. |
| Establishment Process | Requires notarized articles of association, capital commitment, and approvals. | Registered as an extension of the parent company; a faster process. |
| Operational Freedom | Can engage in any type of commercial activity independently. | Limited to the activities of the parent company; cannot enter different business sectors. |
When to Establish a Branch in Turkey?
Setting up a branch is usually preferred in the following cases:
1. Low-Cost Market Entry
- Allows a company to enter the Turkish market without forming a fully-fledged company.
- Lower setup and operational costs make it a cost-effective option.
2. Tax Advantages
- The branch is only taxed on earnings generated in Turkey, which may be beneficial for some companies.
3-Full Control by Parent Company
- The parent company maintains full management and financial control.
4. For Limited-Term Projects
- Used for project-based work in industries like construction, engineering, and consulting.
- A branch can be easily closed once the project is completed.
5. Faster and Simpler Setup Process
- Requires less paperwork and bureaucracy compared to establishing a new company.
6. Leverage Parent Company’s Reputation
- A branch can benefit from the brand recognition and financial strength of the parent company.
- It helps build trust with banks and suppliers more quickly.
7. Legal Requirements
- Some industries require a local legal presence to operate in Turkey.
- In such cases, opening a branch instead of a company can be more cost-effective.
How to Get Started?
If you’re considering establishing a foreign branch or a company in Turkey, our experts can guide you through every step of the process. Contact us, today!