24/06/2023

A Comprehensive Guide to Corporate Structures in Turkey

corporate structures turkey

Establishing a business in Turkey requires careful consideration of the appropriate corporate structure. The choice of corporate structure can have significant implications for legal obligations, taxation, governance, and operational flexibility. This article serves as a comprehensive guide to corporate structures in Turkey, providing an overview of the available options and their key features.

Sole Proprietorship

A sole proprietorship is the simplest form of business structure in Turkey. It involves a single individual who owns and operates the business. While easy to set up and manage, a sole proprietorship does not provide a separate legal identity for the business. The owner is personally liable for all debts and obligations, and there is no distinction between personal and business assets.

Joint Stock Company (JSC)

A Joint Stock Company is a popular choice for larger businesses in Turkey. It requires a minimum of five shareholders and can be publicly or privately held. JSCs have their own legal identity, and shareholders’ liability is limited to their capital contributions. JSCs are subject to more regulatory requirements, including financial reporting and corporate governance obligations.

Limited Liability Company (LLC)

The Limited Liability Company is the most common corporate structure in Turkey. It provides a balance between simplicity and limited liability protection. An LLC requires a minimum of one shareholder, and the liability of each shareholder is limited to their capital contributions. LLCs offer flexibility in terms of management structure and are not subject to the same level of regulatory requirements as JSCs.

Branch Office

Foreign companies seeking to establish a presence in Turkey can do so by setting up a branch office. A branch office is not a separate legal entity but an extension of the parent company. It is subject to the same legal and tax obligations as the parent company and has no limited liability protection. Setting up a branch office requires obtaining the necessary permits and registrations from the relevant authorities.

Joint Venture

Joint ventures involve two or more parties coming together to undertake a specific business venture. They can be established as a separate legal entity or as a contractual agreement between the parties. Joint ventures allow for sharing of resources, expertise, and risks. The structure and governance of joint ventures can be tailored through a legally binding agreement, outlining the rights and responsibilities of each party.

Conclusion

Choosing the right corporate structure is a critical decision when establishing a business in Turkey. Each structure has its own advantages and considerations, depending on factors such as liability protection, tax implications, and operational requirements. Entrepreneurs and investors should carefully evaluate their business goals, risk tolerance, and long-term plans before making a decision. Consulting with legal and financial professionals familiar with Turkish corporate law can provide valuable guidance and ensure compliance with local regulations. With the right corporate structure in place, businesses can navigate the Turkish market effectively and maximize their chances of success.

Azkan Group can support you in your Employer of Record (EOR) and payroll requests (also called Umbrella Company) in Turkey. We can manage your HR requests even if you don’t have a legal entity in Turkey.