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How to open a business in Turkey?

How to open a business in Turkey?

A foreigner can start a business in Turkey from scratch or relocate it from his country – the republic provides equal rights to all investors. Of course, you must first obtain a residence permit of the country.

The most common type of residence permit is the so-called tourist permit. It can be obtained by renting or buying an apartment in Turkey, but not in all areas of cities – some locations are “closed” to foreigners or introduced quotas on the number of foreigners living in them.

The second type of residence permit, unlike the tourist, will provide an opportunity to further obtain Turkish citizenship, but in order to qualify for such a residence permit, you must purchase property above a certain price threshold (75 000 euros – for large cities, 50 000 euros – for small settlements).

It should be borne in mind that not all areas of business are available to foreigners in Turkey. If you are not a citizen of the republic, you have no right to provide services as a lawyer, notary, pharmacist, veterinarian, guide. These activities are possible only after obtaining a passport and subject to re-training in local educational institutions. Note that last year doctors and nurses were excluded from this list, they are now allowed to work in the country and without a Turkish passport, but proof of diploma will be required.

Becoming a Turkish citizen is relatively easy (compared with other European states), investing in real estate of 400 000 euros or mutual funds – from 500 000 euros. Another way is to obtain a residence permit with the possibility of naturalization and after 5 years of residence in the country to apply for citizenship.

Become a sole proprietorship or open a legal entity?

The most common legal forms of companies in Turkey are LLC (Limited Şirketi), JSC (Anonim Şirketi) and IE (Gerçek Kişi).

An individual entrepreneur – is a natural person, and there is no need for charter capital. However, you should keep in mind that, according to Turkish law, in order to issue one work permit, at least for yourself, you will need to hire 5 Turkish workers.

So, if in your home country you were self-employed and ran your own small business, such as baking cakes or doing hair, in Turkey legally you can have your own business only by opening a company and hiring at least 5 local employees. There are no other legal ways. Note also that this kind of unofficial “moonlighting” at home threatens deportation if someone informs the authorities.

The only indulgence on the part of the state can be considered the fact that the individual entrepreneur has the right to work for six months without a work permit. During this time a person usually understands whether his business is profitable and worth continuing.

Individual entrepreneurs pay income tax on a progressive scale. Up to 32,000 lira – 15%, up to 880,000 lira – 32%, over 880,000 lira – 40%.

According to experts, due to the peculiarities of Turkish law, foreigners today very rarely open a sole proprietorship. Those who would really suit this form of doing business cannot meet the condition of hiring a minimum of 5 Turkish employees. And businessmen who establish larger companies prefer other organizational-legal forms, for the most part, limited liability companies and joint-stock companies.

Registration of LLCs and JSCs requires licenses (if the selected activities are licensed), the presence in the staff of an accountant and a lawyer. In addition, charter capital is needed.

The minimum amount of the authorized capital for opening a LLC is 10,000 liras. These funds must be deposited within 2 years. The amount of the authorized capital for the registration of a JSC is 50,000 liras, with 25% paid in the first year and the rest within two years.

By law, a foreigner can become the founder of a company in Turkey alone. But as practice shows, the procedure for registering a legal entity is faster and easier if the entrepreneur has a partner who is a citizen of the country. The Turkish co-owner can have any share, even 1%, but he will have the right to sign.

There is a 23% income tax for LLCs (if the income does not exceed 600,000 lire). If the income is above 600,000, the tax rate is 40%.

If the owner of the company plans to hire foreigners, he should keep in mind that in order to get one work permit for a visitor, it is necessary to take the staff of 5 Turkish citizens.

Foreigners hiring in Turkey should take into account, among other things, that many specialties, for example, in the field of beauty, require retraining. So, the hairdresser must give you the local “crusts”, which show that the master has been trained in the host country and passed the exams. Otherwise, you do not have the right to employ a person, even if his professionalism does not cause you doubts.

Employment of foreigners in Turkey is quite difficult, as the government protects the interests, above all, the local population, to prevent an increase in unemployment among citizens who are already feeling the effects of the unfolding economic crisis in the country. The influx of people from abroad, mostly from the Middle East and Central Asia (more than 3.7 million migrants came from Syria alone) creates additional problems. The newcomers compete with the natives for jobs, which causes great resentment on the part of the latter.

Stages of opening a business in Turkey

The first thing to do is to determine the basics: the type or activities of the future enterprise, the legal form corresponding to them and your goals, as well as choose a unique name.

Experts working in Turkey for a long time advise to immediately contact an accountant-auditor, who will advise on the choice of legal form, tell about the requirements for the applicant from the state authorities, the upcoming costs. The accountant can take on the interaction with the authorities, acting on the power of attorney issued by you. In the future, this specialist will perform standard functions: pay taxes, make payments to the pension fund and social insurance fund.

If you do not know Turkish, it is worth hiring a sworn interpreter to assist you while you register your company.

Next, you should buy or rent premises for the business. The choice of a suitable option depends on the scale of the enterprise and financial capabilities. It should be borne in mind that the registration of a company at an address is not a formality, your organization will really have to be there.

The company registration procedure in the Republic of Turkey is quite simple, bureaucracy is kept to a minimum, and many of the steps are done digitally.

  1. Registration in the electronic system MERSIS of the company charter and memorandum of association (all documents must be notarized).
  2. Obtaining a provisional individual tax number.
  3. Payment of 0.04% of the authorized capital to the Antimonopoly Committee of the Central Bank of Turkey.
  4. Opening a deposit in a bank (for JSC – deposit of 25% of the share capital).
  5. Registration with the Turkish Chamber of Commerce. Obtaining constituent documents: certificate of inclusion in the Commercial Register, certificate of occupation.
  6. Signature circular in a notary’s office within 15 days of being entered in the registry.
  7. Registration of the company with the tax inspectorate.
  8. Opening a bank account. It is not necessary to have funds in a current account. You do not need to open an account for a sole proprietorship.

Company registration in Turkey takes from several weeks to several months, depending on the type of activity. For example, the approval of the opening of the travel agency may take up to 3 months, and the establishment of the company in the direction of “medical tourism” and up to six months.

Self-registration costs about $2,000, plus notary and translator fees.

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