A branch is a registered extension of a foreign company rather than a separate legal entity. It is taxed in Turkey only on income sourced here, it needs no minimum capital, and it must have a fully authorised commercial representative resident in Turkey. The parent company remains liable for everything the branch does.
Branches are chosen most often for project-based work, for regulated activities that require a registered local presence, and where the group wants the Turkish operation to trade under the parent’s name and balance sheet. They are chosen less often than the marketing suggests, because two of the advantages commonly attributed to them do not survive contact with the numbers.
Branch, Subsidiary or Liaison Office?
This is the decision the whole project turns on, and it is worth making before any document is sent for legalisation. The three structures are not interchangeable: one of them cannot trade at all, and the other two differ mainly in liability rather than in tax.
| Criterion | Branch | Subsidiary | Liaison office |
|---|---|---|---|
| Separate legal personality | No | Yes | No |
| Commercial activity | Permitted | Permitted | Prohibited |
| Parent’s liability | Unlimited for branch obligations | Limited to the capital subscribed | Unlimited, but activity is restricted |
| Minimum capital | No statutory minimum | TRY 50,000 or TRY 250,000 | None; funded from abroad |
| Corporate tax | 25% on Turkey-sourced income | 25% on worldwide income | Not a taxpayer on income |
| Tax on profits sent to the parent | 15% on the remitted amount | 15% dividend withholding | Not applicable |
| Deductibility of interest or royalties paid to the parent | Not deductible | Deductible, subject to transfer pricing and thin capitalisation | Not applicable |
| Establishment authority | Trade registry; sector permission where applicable | Trade registry | Ministry of Industry and Technology, time-limited permit |
| Document burden at set-up | High: parent’s documents legalised abroad | Low where shareholders are resident; high where a foreign corporate shareholder is involved | High: parent’s documents legalised abroad |
| Employing staff | Yes | Yes | Yes, but only for representation activities |
“A branch is taxed more favourably.” A branch pays 25% corporate tax on its Turkish profit and a further 15% when the after-tax profit is transferred to the head office — a combined 36.25%. A subsidiary pays 25% and a 15% withholding on the dividend, which is also 36.25%. The rates are identical. The branch is taxed only on Turkey-sourced income while a subsidiary is taxed on worldwide income, but a Turkish subsidiary of a foreign group rarely has foreign-source income, so in practice that distinction changes very little. A double taxation agreement may reduce the 15% on either side, and the analysis has to be done on the specific treaty.
“A branch is simpler and cheaper to set up.” It generally is not. Incorporating a limited liability company with resident shareholders can be completed in days with locally issued documents. A branch requires the parent’s constitutional documents, a resolution of its authorised body and supporting registry records to be legalised abroad by apostille or consular certification and then translated and notarised in Turkey. That chain is normally the longest and most expensive part of any Turkish entry, and it applies to the branch route in full.
When a Branch Actually Makes Sense
Where the presence exists for a defined project and will be closed afterwards. The branch trades under the parent’s name and track record, which matters in tenders, and it can be liquidated without unwinding a share structure.
Certain regulated activities require a registered presence in Turkey and permit a branch. Where the regulator recognises the parent’s licence, a branch avoids re-establishing credentials in a new entity.
Counterparties assess the parent, not a newly incorporated company with minimum capital. For large contracts and bank facilities this is a genuine and often decisive advantage.
Some jurisdictions allow branch losses to be set against the parent’s own profits, which a subsidiary’s losses cannot be. This has to be confirmed under the parent’s domestic law, not Turkish law.
Conversely, a branch is usually the wrong choice where the group wants to ring-fence Turkish risk, where local partners or future investors may take equity, or where the Turkish operation will pay licence fees or interest to the parent — because those payments are not deductible for a branch.
How a Branch Is Taxed in Turkey
A branch is a limited taxpayer, assessed on income sourced in Turkey. When the profit remaining after corporate tax is transferred to the head office, a further withholding applies to the transferred amount. That rate was raised from 10% to 15% at the end of 2024 by the same decision that raised the dividend withholding rate, so the two routes now carry the same effective burden. Where a double taxation agreement applies, the branch profits provision — usually within the dividends article — may cap the rate below 15%, and a tax residency certificate of the parent is required to apply it.
What the branch may and may not deduct
Because a branch and its head office are the same legal person, they cannot contract with each other, and this drives a set of rules that surprise groups accustomed to subsidiaries:
- Not deductible: interest, commissions and similar amounts paid to the head office or to the company’s other branches abroad in connection with the branch’s own purchases and sales.
- Not deductible: allocations to the general administration expenses or losses of the head office or of other branches abroad, as a general rule.
- Deductible by exception: shares of head office costs that relate to earning and maintaining the Turkish income, allocated on keys determined in accordance with the arm’s length principle, together with contributions to the cost of auditing the Turkish operation.
The practical consequence is that the allocation methodology has to be documented from the first year, not reconstructed during an audit. A subsidiary in the same position could pay a deductible management fee or royalty subject to transfer pricing rules; a branch cannot.
Establishment Process Step by Step
- Confirm whether sector permission is neededBranches are registered directly at the trade registry like domestic branches. A separate permission or favourable opinion from the Ministry of Trade or another authority is required only where the activity itself is subject to it. Establishing this first avoids legalising a file that then has to wait.
- Prepare and legalise the parent’s documentsThe resolution of the authorised body, the current registry records and the articles of association are legalised abroad by apostille or by certification at the Turkish consulate, then translated by a sworn translator and notarised in Turkey. This step sets the timetable.
- Appoint the commercial representativeA fully authorised commercial representative resident in Turkey must be appointed. Where the branch opening resolution does not itself grant full representation authority, a separate power of attorney is required. A non-Turkish representative who will actually work in Turkey needs a work permit.
- Register the trade name and open the fileThe branch record is created in the central registry system, which also generates the potential tax number. The trade name follows a fixed format described below.
- File with the trade registryThe file is submitted to the trade registry directorate of the place where the branch will operate. Registration and announcement in the Trade Registry Gazette follow.
- Certify the statutory books and register for taxThe branch keeps its own books in Turkish and in Turkish lira, certified at the registry directorate. The tax office opening inspection, electronic invoicing and ledger enrolment where thresholds are met, and social security workplace registration before the first employee starts.
- Notify the foreign investment authoritiesBranches of foreign companies fall within the foreign direct investment reporting regime and file their information through the electronic system operated for that purpose. This is easily missed because it sits outside the registry and tax processes.
Documents Required for Branch Registration
| Document | Requirements and notes |
|---|---|
| Petition | Signed by the authorised persons, stating the tax office, branch trade name, allocated capital, head office, opening date and activity code, with a declaration of accuracy; where signed by a proxy, the power of attorney is attached |
| Establishment notification form | Completed and signed by the authorised person |
| Chamber registration declaration | Signed by the representatives, with photographs |
| Resolution of the parent’s authorised body | Authorising the branch opening and appointing a fully authorised representative resident in Turkey; notarised copy |
| Power of attorney | Required only where the branch opening resolution does not itself grant full representation authority |
| Declaration signed by the head office representatives | Stating the parent’s trade name, type, activity, capital, registration number, governing law, website, the branch trade name, the capital allocated to the branch and the branch representatives |
| Letter from the competent authority of the country of origin | Confirming that the conditions for opening a branch have been met and listing the documents required. Not required separately where the declaration above already states those matters — a point that saves a full legalisation cycle |
| Registry records and articles of association of the parent | Current records certified in the country of origin, with the articles of association |
| Documents required in the country of origin | Whatever the home jurisdiction requires for branch registration, in notarised copy |
| Signature declarations | Of the branch representatives under the branch trade name, certified by a notary or by the registry directorate; representatives abroad may have their signature certified at the Turkish consulate |
| Passport copy of a foreign representative | Notarised Turkish translation, with the tax number and, where resident in Turkey, the residence permit |
| Sector permission | Where the branch opening is subject to the permission or favourable opinion of the Ministry of Trade or another authority |
Documents issued abroad must be certified by the Turkish consulate or apostilled under the Hague Convention, then translated by a sworn translator and notarised in Turkey. Confirm which route applies to the parent’s country before starting: an apostille is sufficient for parties to the Convention, and consular certification is required for the rest. Settle the branch trade name, the allocated capital and the identity of the representative before the resolution is legalised, because amending any of them afterwards means repeating the whole chain.
Branch trade name rules
The trade name of a branch of a foreign company must state the location of both the head office and the branch, and must identify the entity as a branch. The first branch registered in Turkey carries the parent’s trade name, the country of the head office, the city, and the designation marking it as the head branch. Branches registered after the first do not carry that designation and are registered in the same way as branches of domestic businesses.
Post-Registration Procedures
Each transaction requires a petition signed by the authorised persons, with the power of attorney attached where a proxy signs. Resolutions issued abroad must be legalised and translated in the same way as at registration.
| Transaction | Principal documents |
|---|---|
| Address change | Notarised copy of the resolution, which may be issued either by the parent or by the branch; legalised and translated if issued abroad |
| Appointment of the branch representative | Notarised copy of the parent’s appointment resolution, the representative’s signature declaration and acceptance letter, and for a foreign representative the notarised passport translation and tax number |
| Increase of the allocated capital | Notarised copy of the parent’s resolution on the increase |
| Commencement of liquidation | Notarised copy of the parent’s liquidation decision, the liquidator’s signature declaration and acceptance letter; at least one liquidator authorised to represent must be a Turkish citizen resident in Turkey |
| Completion of liquidation | Notarised copy of the parent’s decision approving the final liquidation balance sheet, and the balance sheet itself prepared as at the decision date and signed by the liquidator |
Ongoing Obligations
- Books kept in Turkish and in Turkish lira
- Corporate tax return on Turkey-sourced income
- Withholding on profits remitted to the head office
- Value added tax and withholding tax returns
- Documented head office cost allocation keys
- Foreign direct investment reporting
- Electronic invoicing and ledger where thresholds are met
- Independent audit where the thresholds are exceeded
The independent audit thresholds were raised for financial years beginning on or after 1 January 2026: total assets of TRY 500 million, annual net sales of TRY 1 billion, or 150 employees, with at least two exceeded in two consecutive financial years.
How Long Does It Take?
Six to ten weeks from first instruction is a realistic assumption, and legalisation abroad accounts for most of it. Bank onboarding for a branch is typically slower than for a locally incorporated company, because the compliance file has to run up the ownership chain of the foreign parent.
Common Mistakes Made by Investors
- Choosing a branch for the tax. The combined burden is the same as a subsidiary’s once the profit is remitted. Choose on liability, regulation and credibility instead.
- Planning to charge royalties or interest from the parent. A branch cannot deduct them. If the model depends on those charges, a subsidiary is the right structure.
- Legalising documents before the details are fixed. A change to the trade name, the allocated capital or the representative means repeating the entire chain abroad.
- Obtaining a separate competent authority letter unnecessarily. Where the head office declaration already states those matters, a separate letter is not required.
- Appointing a representative who is not resident in Turkey. Residence is a registration requirement, and a foreign representative who will actually work here also needs a work permit.
- Leaving head office cost allocations undocumented. Only allocations made on arm’s length keys and relating to the Turkish income are deductible.
- Overlooking the foreign investment reporting obligation. It sits outside the registry and tax processes and is routinely missed.
- Appointing a liquidator who is not a Turkish citizen resident here. At least one liquidator authorised to represent must meet both conditions.
Frequently Asked Questions
Is a branch taxed more favourably than a subsidiary in Turkey?
Does a branch in Turkey need minimum capital?
Is Ministry of Trade permission required to open a branch?
Can a branch pay royalties or interest to its parent company?
Who can represent a branch in Turkey?
How long does it take to establish a branch in Turkey?
What is the difference between a branch and a liaison office?
What are the branch trade name rules?
As the Ozbek CPA team, we advise on the choice between a branch, a subsidiary and a liaison office, and we handle branch registration in Turkey end to end — coordinating the legalisation of the parent’s documents, the registry filing, book certification and tax registrations, head office cost allocation methodology, profit remittance planning and the accounting and payroll work that follows. Contact us.
