Expanding into Türkiye often begins with speed and flexibility. For many international companies, using an Employer of Record (EOR) is the fastest way to hire employees without establishing a local legal entity. An EOR allows businesses to enter the Turkish market, employ talent legally, and remain compliant with local labour laws while avoiding the time and administrative burden of incorporating a company.
However, as operations grow, many business leaders begin asking the same question: At what point does it make more sense to establish a Turkish subsidiary instead of continuing with an Employer of Record?
The answer depends on several operational, financial, and strategic factors rather than simply the number of employees.
At Azkan Group, we help international companies evaluate the right time to transition from an Employer of Record to their own Turkish entity while ensuring a smooth and compliant expansion.
Why Companies Start with an Employer of Record
An Employer of Record enables companies to hire employees in Türkiye without first incorporating a local business.
This approach offers several advantages:
- Faster market entry
- Reduced administrative burden
- Full payroll compliance
- Employment law support
- Local HR administration
- No immediate incorporation costs
For businesses testing the Turkish market, an EOR significantly reduces both risk and complexity.
There Is No Legal Employee Threshold
A common misconception is that companies must establish a Turkish subsidiary after hiring a certain number of employees.
In reality, Turkish legislation does not impose a fixed employee threshold requiring businesses to create a local entity.
Many companies successfully employ teams through an Employer of Record for extended periods.
The decision is primarily commercial rather than legal.
When Your Team Begins Growing Rapidly
As employee numbers increase, internal requirements also become more complex.
Growing teams often require:
- Department managers
- Internal HR processes
- Performance management
- Local procurement
- Office administration
- Larger payroll budgets
At this stage, companies often evaluate whether maintaining their own legal entity provides greater operational flexibility.
The decision should consider long-term business objectives rather than headcount alone.
When Türkiye Becomes a Strategic Market
Some companies initially enter Türkiye to explore business opportunities.
Over time, Türkiye may evolve into a strategic regional hub.
Indicators include:
- Long-term hiring plans
- Permanent commercial operations
- Local management teams
- Significant customer relationships
- Regional expansion responsibilities
Once Türkiye becomes a core part of the business strategy, establishing a subsidiary may become increasingly attractive.
When Local Contracts Become Necessary
An Employer of Record employs workers on behalf of the foreign company.
However, some businesses eventually require a local legal entity to support activities such as:
- Entering commercial agreements
- Signing local supplier contracts
- Leasing office premises
- Participating in certain tenders
- Building long-term local operations
A Turkish subsidiary provides greater commercial independence for these activities.
When You Want Greater Operational Control
As organizations mature, they often seek more direct control over local operations.
Owning a Turkish entity allows companies to manage:
- Internal HR policies
- Corporate governance
- Local accounting
- Banking relationships
- Procurement
- Administrative processes
For businesses with established operations, this additional control may justify incorporation.
When Cost Efficiency Becomes a Priority
Employer of Record services provide significant value during the early stages of expansion.
However, as operations grow, companies often compare:
- EOR service costs
- Incorporation expenses
- Accounting costs
- HR administration
- Payroll management
- Corporate compliance obligations
The most cost-effective solution depends on workforce size, operational complexity, and long-term business plans rather than any single financial calculation.
A comprehensive cost analysis is recommended before making a decision.
When Investors or Corporate Policies Require It
Some organizations establish subsidiaries because of internal governance rather than legal necessity.
Examples include:
- Investor requirements
- Group restructuring
- Internal compliance policies
- Regional reporting structures
- Audit requirements
In these situations, creating a Turkish entity supports broader corporate objectives.
Challenges of Establishing Your Own Entity
Opening a Turkish subsidiary provides greater independence but also introduces additional responsibilities.
These typically include:
- Company incorporation
- Accounting obligations
- Corporate tax compliance
- Payroll administration
- Labour law compliance
- Financial reporting
- Banking administration
- Corporate governance
Businesses should ensure they have appropriate local support before making the transition.
Why Many Companies Continue Using an Employer of Record
Despite business growth, many companies continue using an Employer of Record because it allows them to:
- Focus on business development
- Reduce administrative complexity
- Outsource payroll compliance
- Receive local HR expertise
- Avoid managing corporate administration
- Expand quickly without additional legal infrastructure
For many organizations, the operational simplicity of an EOR continues to outweigh the benefits of establishing a local entity.
Transitioning from an Employer of Record to a Turkish Entity
When the time comes to establish a subsidiary, careful planning is essential.
A successful transition generally includes:
- Workforce planning
- Employment contract transfers
- Payroll migration
- HR process implementation
- Corporate registration
- Tax registration
- Banking setup
- Compliance reviews
Proper planning minimizes disruption for employees while ensuring continuity of operations.
How Azkan Group Supports Both Models
One of the advantages of working with Azkan Group is that we support companies throughout every stage of their expansion into Türkiye.
Our services include:
- Employer of Record (EOR) solutions
- Company incorporation support
- Monthly payroll processing
- HR administration
- SGK compliance
- Tax reporting support
- Labour law guidance
- Corporate compliance
- Ongoing payroll and HR consulting
Whether you remain with an Employer of Record or establish your own Turkish subsidiary, our specialists ensure your workforce remains fully compliant with local legislation.
Which Option Is Right for Your Business?
There is no universal answer.
An Employer of Record is often the ideal solution for companies that:
- Are entering Türkiye for the first time
- Want to hire quickly
- Have a relatively small local workforce
- Prefer outsourcing payroll and HR compliance
- Wish to avoid immediate incorporation
A Turkish subsidiary may become more appropriate when businesses:
- Plan long-term operations
- Require greater operational control
- Need a local corporate presence
- Have expanding commercial activities
- Want to integrate Türkiye into their global corporate structure
The decision should always be based on long-term business strategy rather than assumptions about employee numbers alone.
An Employer of Record is an excellent solution for entering the Turkish market quickly and compliantly, but it is not necessarily a permanent or temporary solution for every business. As your operations expand, your workforce grows, and your strategic objectives evolve, establishing a Turkish legal entity may offer greater flexibility and control.
The key is to evaluate the transition based on operational needs, financial considerations, and long-term growth plans—not on arbitrary employee thresholds.
Azkan Group helps international companies assess the best expansion model for Türkiye, offering both Employer of Record services and full support for establishing and managing Turkish subsidiaries with complete payroll, HR, and compliance expertise.
