Includes steps involved in establishing a local office.
Last Published: 6/17/2019

Ever since Turkey’s foreign investment policy changed from a screening system to a monitoring system, foreign investors no longer need to obtain permission or approval.
The 2003 Foreign Direct Investment (FDI) Law was passed to “encourage FDI; protect the rights of foreign investors; to define ’investment’ and ’investor’ in line with international standards; to establish a notification-based system for FDI rather than screening and approval; and thus regulate the principles to increase FDI through established policies.”  Legally, foreign-invested companies or foreign subsidiaries established in Turkey are treated equal to Turkish companies (though in practice, politics and policy concerns may lead to a less than even playing field).

The FDI law establishes the following treatment to be applied to FDI:

  • No FDI-related screening or approval procedures to set up a business (company or branch) and share transfers, except in certain critical sectors.

  • The conditions for setting up a business and share transfers are the same for comparable local investors.

  • There are no pre-approval requirements for most transactions – capital increase, change of business activity, etc. - foreign investment companies and foreign capital companies follow the same procedures as local companies.

  • There are no requirements for registration of licenses, know-how, royalty and technical assistance agreements.

  • There are no minimum capital requirements.

  • Foreign investors may form partnerships and any form of company included in the Turkish Commercial Code.

  • Valuations by international credit agencies as well as courts or competent authorities of the investor’s country will be accepted in determining share value for marketable securities that are contributed as capital in-kind.

The law also confirms foreign investors’ existing rights:

  • Based on the principle of equal treatment for domestic and foreign investors; foreign investors have the same privileges and obligations as domestic capital and enjoy free transfer of profits, dividends, proceeds from sale or liquidation of an investment, fees and royalties and interest payments on foreign loans.

  • National or international arbitration is allowed for disputes arising from contracts involving government concessions as well as for disputes arising from private agreements, provided that the required conditions are met.

  • Foreign capital entities may employ foreign personnel in Turkey, provided that work permits are obtained from the Ministry of Family, Labor and Social Services.

Liaison offices are special offices whose main activity is to conduct market research and feasibility studies and to research investment opportunities in Turkey.  They are not permitted to carry out commercial activity. Foreign investors are required to obtain permission from the General Directorate of Incentives and Foreign Investment under the Ministry of Trade to open a liaison office in Turkey.  Initial permission is valid for three years and may be extended depending on prior activities and future plans.

A foreign company is free to choose between a corporation (Anonim Sirket--A.S., or "Societe Anonyme” type Corporation), limited liability company or branch office for its operations in Turkey.  The “A.S.” structure is more suitable for larger enterprises, as corporations may attract a large number of shareholders.  A limited liability company structure is typically more appropriate for establishing sales and distribution entities.

The Presidency of the Republic of Turkey Investment Office website outlines the steps for registering and establishing a company.  According to the Investment Office, the process can typically be completed in just one day.

CS Turkey recommends retaining an attorney or other relevant expert to obtain additional information as well as handle the application process and entity formation.  Use of an accountant for tax planning is also recommended.  Listings of some American and Turkish lawyers and accountants in major Turkish cities are available here.

Prepared by the International Trade Administration. With its network of more than 100 offices across the United States and in more than 75 markets, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.