Opening a Branch in Turkey for Foreign Companies in 2026

Understanding the Branch Structure in Turkey

A branch is an extension of a foreign parent company. It is not a separate legal entity. The parent company remains fully liable for the branch's debts and obligations. In Turkey, branches operate under the Turkish Commercial Code (TCC). They must carry out the same business activities as the parent company. For foreign investors in 2026, branches offer a direct way to enter the Turkish market without the complexity of forming a new corporation.

Branch vs. Subsidiary: Key Differences

Choosing between a branch and a subsidiary is a critical decision. A subsidiary is a separate Turkish company (usually an LLC or JSC) where the foreign parent is a shareholder. A branch is simply an office of the parent company. While a subsidiary has limited liability, a branch does not. However, branches are often easier to manage for specific projects or service-based operations.

Feature	Branch Office	Subsidiary (LLC/JSC)
Legal Entity	Part of the parent company	Separate Turkish legal entity
Liability	Parent company is fully liable	Limited to the company's assets
Minimum Capital	No statutory minimum (but must be sufficient)	50,000 TL (LLC) / 250,000 TL (JSC)
Taxation	Taxed on Turkish-sourced income	Taxed on worldwide income

Legal Requirements for Opening a Branch in 2026

According to Article 40 of the Turkish Commercial Code, foreign branches must be registered with the relevant Trade Registry. A key requirement is the appointment of a fully authorized commercial representative. This representative must reside in Turkey. They handle all legal and administrative interactions with Turkish authorities.

The parent company's capital must be divided into shares to qualify for branch opening. If the parent company is a partnership or a non-corporate entity, different rules may apply. Most foreign corporations (Limited or Joint Stock) meet this requirement easily.

Step-by-Step Guide to Branch Establishment

The process involves several bureaucratic layers. Following this sequence ensures a smooth setup:

1. Ministry Permission

The first step is obtaining permission from the Ministry of Industry and Technology. You must submit a formal application detailing the parent company's status and the intended activities of the Turkish branch.

2. Trade Registry Registration

Once the Ministry grants permission, you must register the branch with the local Chamber of Commerce and the Trade Registry Office. This step officially creates the branch's legal presence in Turkey.

3. MERSIS System Entry

All commercial records in Turkey are managed through the Central Registry System (MERSIS). The branch must be registered here to obtain a tax number and legal standing for contracts.

4. Post-Registration Notifications

After establishment, you must notify the General Directorate of Incentive Implementation and Foreign Capital. This includes reporting capital payments and annual activity reports by the end of May each year.

Required Documents and Legal Formalities

All documents issued outside Turkey must be notarized and apostilled in the country of origin. They must also be translated into Turkish by a sworn translator and notarized in Turkey.

• Application Letter: Signed by the authorized representative, stating the branch's purpose and capital.
• Parent Company Resolution: A formal decision by the board of directors to open a branch in Turkey.
• Articles of Association: The current bylaws of the parent company.
• Certificate of Activity: Proof that the parent company is active and in good standing.
• Power of Attorney: A specific document granting the Turkish representative full authority to act for the branch.

Tax Obligations for Foreign Branches in Turkey

Branches are subject to Turkish tax laws for all income generated within the country. Turkey has a robust network of Double Taxation Treaties with over 80 countries. These treaties prevent investors from being taxed twice on the same profit.

Key taxes include:

• Corporate Tax: Applied to the branch's net profit.
• Value Added Tax (VAT): Applied to goods and services sold in Turkey.
• Withholding Tax: Applied to profit transfers from the branch to the headquarters.
• Social Security: If the branch hires employees, it must pay employer contributions.

Managing and Modifying Your Branch Operations

Operational changes require formal updates to the Trade Registry. If you change the branch address or appoint a new director, you must follow specific legal steps.

Changing the Representative

If a representative resigns or is replaced, the parent company must issue a new Power of Attorney. This change must be registered and announced in the Trade Registry Gazette.

Capital Increases

While branches do not have the same rigid capital requirements as companies, they often need capital increases for expansion. This requires a resolution from the parent company and notification to the Ministry.

Advantages of Expanding to Turkey

Turkey serves as a bridge between Europe, Asia, and the Middle East. In 2026, the country continues to offer a skilled workforce and competitive operational costs. Foreign investors enjoy the same rights as local businesses. There are no restrictions on transferring profits back to the home country, provided tax obligations are met.

Commercial Title Regulations

The branch must use the parent company's full title. It must also include the word "Merkezi" (Headquarters), the location of the headquarters, and the word "Şubesi" (Branch). For example: "[Parent Company Name] [City of HQ] Turkey Istanbul Branch." Any change in the parent company's name must be reflected in the branch title immediately.

Liaison Offices: An Alternative

If your goal is only market research or promotion, a liaison office might be better. Liaison offices cannot engage in commercial activities or generate invoices. They are strictly for non-commercial representation. If you intend to sell products or services, a branch is the correct choice.

Final Considerations for Foreign Firms

Opening a branch is a strategic move that requires precision. Legal errors during the setup phase can lead to fines or delays in obtaining work permits for foreign staff. Working with legal experts who understand both Turkish law and international business standards is the best way to ensure compliance and long-term success.

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