Company Formation in Turkey with a Foreign Shareholder (2026)

Foreign individuals and companies incorporated under foreign law may form a limited liability company or a joint-stock company in Turkey on their own, without looking for a Turkish partner; their foreign status does not require them to obtain prior approval. The founder does not need a residence permit, a particular type of visa or residence in Turkey, and the articles of association may be signed through an attorney-in-fact. Nor is there a minimum capital specific to companies with foreign shareholders: in 2026 the minimum is 250,000 Turkish lira (TRY) for a joint-stock company and TRY 50,000 for a limited liability company. What is specific to foreigners is the apostille (the certificate issued under the Hague Convention) or consular legalization of documents issued abroad together with their notarized Turkish translation, the foreign capital notification made after formation, and the separate work permit required for a foreign shareholder who will work in Turkey.

What Is a Company with Foreign Shareholders, and Can a Foreigner Form a Company in Turkey?

Yes. Individuals of foreign nationality and legal entities incorporated under the laws of foreign countries may form a new company in Turkey or become shareholders in an existing one; their foreign status does not require them to obtain prior approval from any authority.

A company with foreign shareholders (yabancı ortaklı şirket) is a limited liability company (limited şirket) or joint-stock company (anonim şirket) formed in Turkey under the Turkish Commercial Code No. 6102 (TCC), at least one of whose shareholders is a foreign individual or legal entity. It is not a separate type of company; the rules on foreign shareholders are found in the Foreign Direct Investment Law No. 4875 (Doğrudan Yabancı Yatırımlar Kanunu). Under Article 2 of that Law, the term foreign investor covers individuals holding the nationality of a foreign country, Turkish citizens residing abroad, and legal entities incorporated under the laws of foreign countries. Forming a new company and acquiring shares in an existing company are, in the Law's own terms, foreign direct investment.

Article 3(a) of the Foreign Direct Investment Law No. 4875 (unofficial translation):
“Unless otherwise provided by international agreements and the provisions of special laws: 1- Foreign investors are free to make foreign direct investments in Turkey. 2- Foreign investors are subject to equal treatment with domestic investors.”

The Law does not provide for a separate prior permit or prior approval for foreign investors. There is no Turkish-partner requirement either. Article 573 of the TCC states that a limited liability company is formed “by one or more individuals or legal entities” (unofficial translation). A limited liability company whose shares all belong to a single foreign individual or a single foreign company may therefore be formed. For joint-stock companies, Article 333 of the TCC provides that, outside the fields designated by the Ministry of Trade by communiqué, the formation of a joint-stock company may not be made subject to the permission of any authority.

The general formation steps (preparing the articles of association in MERSİS, the Central Registry Recording System; registration; and the tax office, Social Security Institution and bookkeeping formalities) are the same as for a company with domestic capital and are explained in our article on company formation in Turkey. This article covers only the rules specific to foreign shareholders.

a) Fields Requiring Permission and Special Laws Limiting Foreign Ownership

In fields such as banks, financial leasing, factoring, consumer finance and card services, asset management and insurance companies, holding companies formed as joint-stock companies, companies operating foreign exchange offices, independent audit and inspection companies, and companies subject to the Capital Markets Law, the formation of a joint-stock company requires the permission of the Ministry of Trade (Article 5 of the relevant Communiqué). This permission applies equally to companies with domestic capital; it is not specific to foreign shareholders.

The freedom granted by Law No. 4875 applies unless a special law provides otherwise. If the company's field of activity is governed by a special law, that law's provisions on foreign ownership must also be checked. Examples:

• Media: Under Article 19 of Law No. 6112 (Radyo ve Televizyonların Kuruluş ve Yayın Hizmetleri Hakkında Kanun, the broadcasting law), the total direct foreign capital share in a media service provider may not exceed 50% of its paid-in capital, and a foreign individual or legal entity may be a direct shareholder in no more than two media service providers. If foreigners become indirect shareholders through a company that is a shareholder of the media service provider, the chair, deputy chair, majority of the board of directors and general manager of the broadcaster must be Turkish citizens, and the majority of votes at the general meeting must be held by Turkish individuals or legal entities.
• Private security: Under Article 5 of Law No. 5188 (Özel Güvenlik Hizmetlerine Dair Kanun, the private security law), private security activity requires the permission of the Ministry of Interior, and the shares must be registered shares. The ability of foreign persons to form a private security company depends on reciprocity; in addition, Turkish citizenship is required of the founders, the managers and the representative appointed by a corporate shareholder (Article 5(3) and Article 10(1)(a) of the Law).
• Acquisition of real estate: Companies established in Turkey in which foreigners hold 50% or more of the shares, or in which foreigners can appoint the majority of the persons holding management rights, may acquire real estate to carry out the fields of activity stated in their articles of association (Article 36 of the Land Registry Law No. 2644 (Tapu Kanunu)). Acquisition in military restricted and security zones requires the permission of the Turkish General Staff or the commands it authorizes, and acquisition in special security zones requires the permission of the governor's office where the property is located. Real estate acquired or used in breach of this provision is liquidated and converted into its monetary value if the owner does not liquidate it within the period given.

Amounts, Thresholds and Time Limits for Companies with Foreign Shareholders (31 October 2026)

The amounts and time limits below were confirmed from official sources as of 31 October 2026. Because minimum capital amounts can be changed by Presidential Decision and work permit criteria by Ministry announcement, they should be checked again on the date of the transaction.

The work permit criteria are not a regulation; they are evaluation criteria published on the website of the Ministry of Labour and Social Security. Article 22 of the Implementing Regulation of the International Labor Force Law authorizes the Ministry's General Directorate of International Labor Force (Uluslararası İşgücü Genel Müdürlüğü) to update and publish these rules in six-month periods.

Does the Foreign Founder Need a Residence Permit or Visa?

No. The TCC, the Trade Registry Regulation and the Communiqué on the Signing of Company Formation Agreements at Trade Registry Directorates (Şirket Kuruluş Sözleşmesinin Ticaret Sicili Müdürlüklerinde İmzalanması Hakkında Tebliğ; the Signature Communiqué), which govern company formation, do not require the foreign founder to hold a residence permit or a particular type of visa or to be resident in Turkey.

Under Article 5 of the Signature Communiqué, a founder of foreign nationality presents a valid passport with the application. Article 4 of the Trade Registry Regulation likewise defines the identification number of foreign nationals in registry transactions as “the foreign identification number or the tax identification number” (unofficial translation). A founder without a foreign identification number carries out registry transactions with a tax identification number.

Nor do these rules contain any provision preventing a foreigner who is in Turkey on a tourist visa, or without a visa, from signing the articles of association at the registry. Forming a company and working in the company are, however, separate matters: a foreigner who forms the company and will work in it in Turkey must also obtain a work permit or a work permit exemption (see below).

There is no “five years' residence in Turkey” requirement for forming a company either. Five years is the requirement listed among the conditions for applying for citizenship through the general route in Article 11 of the Turkish Citizenship Law No. 5901: “to have resided in Turkey without interruption for five years preceding the date of application” (unofficial translation); it has nothing to do with company formation.

What Is the Minimum Capital for a Company with Foreign Shareholders?

No separate minimum capital is set for companies with foreign shareholders; such a company is formed with the same amount as a company with domestic capital. Article 3 of Law No. 4875 subjects foreign investors to equal treatment with domestic investors. The amounts applicable since 1 January 2024 under Presidential Decision No. 7887 are as follows (Ministry of Trade announcement):

• Joint-stock company: at least TRY 250,000 of share capital.
• Limited liability company: at least TRY 50,000 of share capital.
• Non-public joint-stock company that has adopted the registered capital system: at least TRY 500,000 of initial capital.

TRY 500,000 is not a general formation requirement for foreigners. The figure appears in two separate places: the initial capital of a non-public joint-stock company that opts for the registered capital system, and the evaluation of a work permit application by a foreigner who is a shareholder of the company. For a foreign shareholder who will not work in Turkey, the work permit threshold does not arise. Because the work permit criterion looks at paid-in capital, not subscribed capital, the company of a foreign shareholder who will work must have capital paid in to that amount.

Payment of capital. In a joint-stock company, at least 25% of the nominal value of shares subscribed in cash is paid before registration, and the balance within 24 months after registration (Article 344 of the TCC). In a limited liability company, the requirement to pay 25% before registration does not apply; however, because Article 585 of the TCC applies the joint-stock company provisions by analogy to the payment of share prices, capital subscribed in cash is paid within 24 months after registration (Articles 344 and 585 of the TCC). If the articles of association provide for payment before registration, a bank letter showing that the amount has been deposited with the bank is attached to the registration application (Article 90 of the Trade Registry Regulation). Newly formed joint-stock and limited liability companies also pay a Competition Authority contribution (Rekabet Kurumu payı) of four ten-thousandths of their capital (Article 39 of Law No. 4054); the document showing payment is an attachment to the registration application.

Capital brought from abroad. Article 2 of Law No. 4875 lists, among the instruments of foreign direct investment, cash capital brought from abroad in the form of convertible currency bought and sold by the Central Bank of the Republic of Türkiye, machinery and equipment, and industrial and intellectual property rights. The value of non-cash capital is determined in accordance with the TCC (Article 3(f) of the Law).

Becoming a shareholder in an existing company. Instead of forming a new company, a foreigner may also become a shareholder by acquiring shares in an existing company. Joint-stock and limited liability companies whose capital has remained at the old minimum amounts must raise their capital to the new amounts; otherwise they are deemed dissolved (infisah) (Provisional Article 15 of the TCC). The date of 31 December 2026 in the Law was extended to 31 December 2027 by the Ministry of Trade's Communiqué of 17 October 2026. The capital of the company whose shares are to be acquired should therefore be checked on this point before the transfer.

What Documents Are Required from a Foreign Shareholder?

A foreign individual shareholder provides a passport and a tax identification number; a foreign corporate shareholder provides documents issued in its own country showing its representative's authority. Every document issued in a foreign country is submitted to the registry with an apostille or legalization by a Turkish consulate and a notarized Turkish translation.

a) Foreign Individual Shareholder

• Passport: If the founder is of foreign nationality, a valid passport is presented at the registry (Article 5 of the Signature Communiqué).
• Tax identification number: For a shareholder without a foreign identification number, the tax identification number is used in registry transactions. The Potential Tax Identification Number Application for Foreigners of the Revenue Administration (Gelir İdaresi Başkanlığı) is made online; the form asks for the passport number and address details.

b) Foreign Corporate Shareholder

A foreign company signs the articles of association through its own representative or through an attorney-in-fact. Under Article 5 of the Signature Communiqué, representatives signing on behalf of a founder present a document showing their capacity and authority and that they are permitted to carry out the transaction, and show their valid identity documents. Because the authority of a foreign company's representative is shown by documents issued in the company's own country, those documents are subject to the legalization and translation chain described below. Turkish missions abroad limit the execution of powers of attorney for foreigners to individuals and do not execute powers of attorney on behalf of foreign trading companies (announcement of the Consulate General of the Republic of Türkiye in Guangzhou). A foreign corporate shareholder's power of attorney is therefore executed before a notary in the country where the company is located and submitted with an apostille or consular legalization and a notarized Turkish translation. A foreign individual shareholder, by contrast, may also give the power of attorney at a Turkish consulate.

If the foreign company will also be a board member in a joint-stock company or a manager in a limited liability company, the registration application must be accompanied by the name and surname of the individual who will act on behalf of the legal entity and a notarized copy of the resolution of the competent body designating that individual (Articles 69 and 90 of the Trade Registry Regulation). Because this resolution is adopted in a foreign country, it too is submitted with an apostille or consular legalization and a translation.

c) Apostille, Consular Legalization and Turkish Translation

Trade registry records are kept in Turkish, and the documents on which registration is based must also be in Turkish. The rule for documents issued in a foreign country is as follows:

Article 32(2) of the Trade Registry Regulation (unofficial translation):
“Documents issued in a foreign country subject to a foreign law must be certified by a Turkish consulate or in accordance with the provisions of the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, and must be submitted to the directorate together with their notarized Turkish translation.”

Turkey is a party to the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, commonly known as the Hague Apostille Convention; according to the records of the Hague Conference on Private International Law, Turkey ratified it on 31 July 1985 and it entered into force for Turkey on 29 September 1985. For a document issued in a state party to the Convention, the only formality that may be required is the apostille issued by the competent authority of the state in which the document was executed (Article 3 of the Convention). If the document was issued in a country that is not a party to the Convention, the signature and seal of that country's competent authority are legalized by a Turkish consulate (Article 195 of the Notaries Law No. 1512 (Noterlik Kanunu)).

Which authority issued the apostille, and to which document, matters. In its decision of 18 February 2019 (Case No. 2017/4867, Decision No. 2019/1249; in Turkish citation E. 2017/4867, K. 2019/1249), the 11th Civil Chamber of the Court of Cassation (Yargıtay) dealt with a case in which the apostille on a power of attorney executed by a notary in the United States had been issued by a British authority and it could not be determined to which document the apostille belonged. The Chamber held (unofficial translation): “Accordingly, it is not possible to accept the apostille at issue in the case as a duly issued apostille,” and reversed the first-instance court's judgment, which had allowed the claim. The decision was made by majority; the dissenting opinion argued that the defect had been cured with a proper apostille after the reversal and that allowing the claim was correct. The subject of the decision was the withdrawal of money from a bank account under a power of attorney, not the trade registry. The test the Chamber applied, however, is the same as Article 3 of the Convention: the apostille must be issued by the competent authority of the state in which the document was executed, and to that document. An apostille on a foreign document to be submitted to the registry should also be checked on both of these points.

Can a Foreign Shareholder Form a Company Without Coming to Turkey?

Yes. The articles of association may be signed by an attorney-in-fact on the founder's behalf; the foreign shareholder does not have to come to Turkey for the formation.

The articles of association are prepared in MERSİS (Article 4 of the Signature Communiqué). In a limited liability company, the founders sign the articles of association in the presence of authorized staff at the Trade Registry Directorate (Article 575 of the TCC). In a joint-stock company, the founders' signatures may be notarized, or the articles of association may be signed in the presence of the trade registry director or deputy director (Article 335 and Article 339(1) of the TCC). Under Article 5 of the Signature Communiqué, the articles of association are signed at the Trade Registry Directorate by the founders in person or by their representatives. If an attorney-in-fact will sign, the original of the power of attorney certified by an authority empowered to execute powers of attorney or by a notary is presented. A power of attorney executed abroad is subject to the apostille or consular legalization and notarized Turkish translation rule described above.

If a foreign founder will sign the articles of association in person and does not speak Turkish, a sworn interpreter (yeminli tercüman) must be present, and the signing in the interpreter's presence is recorded in minutes (Article 7, as amended by the amendment to the Signature Communiqué of 13 March 2018). The former provision requiring a founder who does not speak Turkish to sign the articles of association before a notary was repealed on 17 April 2018.

Signature declaration. The signatures of persons authorized to represent the company are recorded in the registry. If the founder signs the articles of association through an attorney-in-fact and will also be authorized to represent the company, no separate signature declaration is required:

Article 13/A(3) of the Signature Communiqué (unofficial translation):
“Where the articles of association are signed by proxy in the presence of the director or deputy director or authorized staff, and the founder is also authorized to represent the company, no separate signature declaration shall be submitted, provided that the power of attorney bearing the founder's wet-ink signature is submitted to the directorate and placed in the registry file. Where the power of attorney is issued in a foreign country, the same rule applies if it is certified by a Turkish consulate or in accordance with the provisions of the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents and submitted to the directorate together with its notarized Turkish translation.”

Under this provision, a foreign shareholder abroad can form a limited liability company as both founder and manager without coming to Turkey. If a manager or board member who is not a founder and who is abroad is to be appointed, two provisions must be read together. Article 12(4) of the Communiqué states that the signature declaration of an authorized signatory in a foreign country may be executed at the Turkish consulate in that country or by the authorities competent under that country's legislation. Article 12(5), on the other hand, provides that in the registration of the formation of limited liability companies, if the signature record cannot be obtained electronically, a physical signature declaration is executed only at the Trade Registry Directorate. How a non-founder foreign manager of a limited liability company will give the signature declaration should therefore be clarified with the relevant Trade Registry Directorate before the application.

Time limit for registration and objection to a refusal. The application for registration of formation is made within 30 days after all founders of a limited liability company sign the articles of association at the Trade Registry Directorate in the presence of its authorized staff, or, in a joint-stock company, after the signatures are notarized or the articles are signed at the Directorate in the presence of the director or deputy director (Articles 69 and 90 of the Trade Registry Regulation). A decision of the Trade Registry Directorate on a registration request may be challenged by petition within eight days from service before the Commercial Court of First Instance where the registry is located; as a rule, the objection is examined on the file (Article 34 of the TCC). This eight-day time limit deserves particular attention for refusals based on a defect in a foreign document.

Can a Foreign Shareholder Be a Manager or Board Member?

Yes. The TCC does not require a manager of a limited liability company or a member of the board of directors of a joint-stock company to be a Turkish citizen or resident in Turkey; the provisions of special laws in fields such as private security and media are reserved (see above). In a joint-stock company, the board of directors consists of one or more persons; the members, and the individual to be registered on behalf of a legal entity, must have full legal capacity (Article 359 of the TCC). For the management of a limited liability company, the following rule applies:

Article 623(1) of the TCC (unofficial translation):
“The management and representation of the company are governed by the articles of association. By the articles of association, management and representation may be entrusted to one or more shareholders holding the title of manager, to all shareholders, or to third parties. At least one shareholder must have the right to manage and the authority to represent the company.”

This provision is decisive in a single-shareholder foreign limited liability company: if the foreign shareholder is the company's only shareholder, the right to manage and the authority to represent the company must rest at least with that shareholder. A manager who lives in Turkey and is not a shareholder can be appointed only alongside that shareholder. If the manager or board member is a legal entity, an individual is designated to perform the role on its behalf (Articles 359 and 623 of the TCC).

The nationality and domicile of board members and of persons authorized to represent the company are registered with the trade registry (Article 70 of the Trade Registry Regulation). This is registration information; domicile in Turkey is not required. The position is different when a foreign company opens a branch in Turkey: under Article 40(4) of the TCC, a branch must appoint “a fully authorized commercial representative domiciled in Turkey” (unofficial translation).

Does a Foreign Shareholder Need a Work Permit to Work in the Company?

Yes, if the foreign shareholder will work in the company in Turkey. Forming a company or becoming a shareholder does not by itself confer the right to work in Turkey; under Article 6 of the International Labor Force Law No. 6735 (Uluslararası İşgücü Kanunu), foreigners may not work, or be employed, in Turkey without a work permit.

Article 10(5) of the International Labor Force Law No. 6735 (unofficial translation):
“Foreigners who are, in companies established under the Turkish Commercial Code No. 6102 of 13/1/2011, a) the manager of a limited liability company who is a shareholder of the company, b) a member of the board of directors of a joint-stock company who is a shareholder of the company, c) the managing general partner of a partnership limited by shares, may work by obtaining a work permit.”

These persons may be granted an independent work permit under Article 29 of the Implementing Regulation of the International Labor Force Law. A work permit application is made directly to the Ministry from within Turkey, or, from abroad, to the embassy or consulate general of the Republic of Türkiye in the country of which the foreigner is a national or in which the foreigner is legally present (Article 7 of the Law). For an application from within Turkey, the foreigner must, as a rule, hold a valid residence permit of at least six months and a foreign identification number. Except for exceptions determined by the General Directorate of International Labor Force, a foreigner who does not meet this condition, such as a shareholder who came on a tourist visa and formed the company, applies to the Turkish mission in the country of which they are a national or in which they are legally present (Articles 15 and 16 of the Implementing Regulation of the International Labor Force Law).

Work permit exemption. Article 13(7) of the Law places within the scope of the work permit exemption a board member of a joint-stock company who does not reside in Turkey and a shareholder of other companies who does not hold the status of manager. The exemption does not operate automatically; these foreigners may work provided they obtain a work permit exemption. Article 48 of the Regulation limits this exemption to three months for these persons who will work in Turkey and for foreigners who are not shareholders but are authorized to represent and bind the company at the highest level. An application for the same exemption cannot be made again before 12 months have passed from the date the exemption was issued; consecutive three-month exemptions cannot be used to work throughout the year. Work exceeding the exemption period requires a work permit from the Ministry (Article 53 of the Regulation). An exemption application is made through the system to the Ministry from within Turkey, or to the Turkish mission from abroad (Article 49 of the Regulation). Periods spent under an exemption are not taken into account in calculating the statutory periods for work permits or residence permits.

A shareholder who is the manager of a limited liability company is not covered by this exemption. In a single-shareholder limited liability company, the foreign shareholder holds the management and representation authority under Article 623 of the TCC, so if they will work in the company in Turkey, even briefly, they must obtain a work permit (Article 10(5) of the Law). In a joint-stock company, by contrast, a board member not residing in Turkey may work for up to three months under an exemption.

The Law and the Regulation tie the permit to working in Turkey, not to holding shares: under Article 12 of the Regulation, “a foreigner who will work in Turkey must obtain a work permit before starting work” (unofficial translation). The position of a foreigner who lives abroad and is only a shareholder must be assessed separately, according to the work they will take on in the company in Turkey.

Criteria for a foreign shareholder. Under the evaluation criteria of the Ministry of Labour and Social Security published as of 31 October 2026, a work permit application by a foreigner who opens a new workplace or becomes a shareholder in a workplace subject to balance-sheet accounting requires:

• that the foreigner's capital amount be at least TRY 500,000 and their shareholding at least 20%, provided that the paid-in capital of the workplace in which the foreigner is a shareholder is at least TRY 500,000; and
• that at least five Turkish citizens be employed at the workplace.

The first work permit is issued with an annotation to this effect; from the beginning of the seventh month of the first permit, employment of at least five Turkish citizens at the workplace every month is required. These two criteria do not apply to a foreign shareholder with a capital share of USD 100,000 or more.

Refusal and sanctions. A refusal of a work permit or exemption application may be challenged through the system before the Ministry within 30 days from service; if the objection is rejected, an action may be brought before the administrative courts (Article 66 of the Regulation). Separate administrative fines are imposed on a foreigner working without a work permit and on the employer employing the foreigner. The amounts in the Law are increased every year by the revaluation rate (Article 17(7) of the Law on Misdemeanors No. 5326, Kabahatler Kanunu); the 2026 amounts announced by the Ministry are TRY 82,010 for an independently working foreigner, TRY 40,977 for a foreigner working for an employer, and TRY 102,503 per foreigner for the employer. The fine is imposed by the provincial director of the Labor and Employment Agency (Çalışma ve İş Kurumu il müdürü); it is payable within one month from service and is doubled if the act is repeated. The employer must also cover the accommodation, return travel and, where necessary, medical expenses of the foreigner working without a permit and of their spouse and children, if any. A foreigner found to be working without a work permit is reported to the Ministry of Interior for deportation (Article 23 of Law No. 6735).

Does Forming a Company Give a Foreigner a Residence Permit?

Not automatically. Forming a company is one of the grounds that may be relied on for a residence permit; a residence permit is granted through a separate application and on the administration's assessment.

Article 31 of the Law on Foreigners and International Protection No. 6458 states that a short-term residence permit “may be granted” (unofficial translation) to foreigners who will establish commercial connections or start a business, and provides that this permit may be granted for periods of up to two years at a time. The Law's implementing regulation, however, grants short-term residence permits for periods of up to one year at a time (Article 28(1) of the Regulation). A foreigner who does not work in Turkey and who makes an investment within the scope and in the amount determined by the President, and their family, may be granted a residence permit of up to five years at a time under Article 31(1)(j) of the Law (Article 31(5)). Applications are made from abroad to a Turkish consulate and, where an application may be made from within Turkey, to the governor's office; applications may also be received electronically (Article 21 of the Law; Article 19 of the Regulation). If a residence permit request based on establishing commercial connections or starting a business is for more than three months, the foreigner may be asked for an invitation letter or similar documents from the persons or companies they will deal with (Article 28 of the Regulation on the Implementation of the Law on Foreigners and International Protection). If the foreign shareholder works in the company under a work permit, a valid work permit counts as a residence permit (Article 27 of the Law). The details of residence permits based on company shareholding are the subject of a separate article.

How Is the Foreign Capital Notification (E-TUYS) Made After Formation?

After formation, a company with foreign shareholders reports information on its foreign capital through the Electronic Incentive Implementation and Foreign Capital Information System (Elektronik Teşvik Uygulama ve Yabancı Sermaye Bilgi Sistemi, E-TUYS) of the Ministry of Industry and Technology. The legal basis is Article 4 of Law No. 4875:

Article 4(3) of the Foreign Direct Investment Law No. 4875 (unofficial translation):
“Foreign investors report statistical information on their investments to the Undersecretariat in accordance with the procedures and principles set out in the regulation to be prepared by the Undersecretariat. Such information may not be used as a means of proof for any purpose other than statistics.”

The duty assigned in the text of the Law now lies, under the Implementing Regulation of the Foreign Direct Investment Law, with the General Directorate of Incentive Implementation and Foreign Capital (Teşvik Uygulama ve Yabancı Sermaye Genel Müdürlüğü) of the Ministry of Industry and Technology. First, the user who will carry out transactions in E-TUYS on the company's behalf is authorized. The user must hold a qualified electronic certificate, and the company must have a registered electronic mail (KEP) account (Article 9 of the Regulation). The authorization application is sent to the KEP address of the General Directorate of Incentive Implementation and Foreign Capital; the letter of undertaking attached to it is executed before a notary for each user and, if executed abroad, must be certified by a Turkish consulate or in accordance with the Apostille Convention (Article 10 of the Regulation).

Under Article 5 of the Regulation, the company:

• completes the “Investor,” “Shareholder List” and, if any, “Affiliates” fields no later than one month after authorization;
• completes the Activity Information Form (Annex 1) every year by the end of May at the latest;
• updates the “List of Shareholders” field no later than one month after a capital increase or decrease;
• enters payments made for a capital increase or share transfer in the Capital Information Form (Annex 2) within one month after the payment;
• updates the “List of Shareholders” field no later than one month after a share transfer.

If a foreign investor becomes a shareholder in a company with entirely domestic capital through a share transfer or by participating in a capital increase, the company comes within the scope of the Law; the information is entered in E-TUYS no later than one month after the share transfer.

Law No. 4875 and its Implementing Regulation attach no specific administrative fine to failure to meet these time limits; the notification is nevertheless a statutory obligation and must be made on time (Article 4 of the Law).

Can Dividends Be Transferred Abroad, and Is There Withholding Tax?

Yes, transfer is free. Under Article 3(c) of Law No. 4875, net profits, dividends, and sale and liquidation proceeds arising from foreign investors' activities in Turkey “may be freely transferred abroad through banks or special finance institutions” (unofficial translation).

A company whose legal headquarters or business headquarters (the place where its business is actually managed) is in Turkey is a full taxpayer (tam mükellef) and is taxed on its entire income earned in and outside Turkey (Article 3 of the Corporate Tax Law No. 5520). Distribution of dividends to a foreign shareholder is also subject to withholding:

• Foreign corporate shareholder: Corporate tax is withheld at 15% under Article 30(3) of the Corporate Tax Law on dividends distributed by a full taxpayer company to limited taxpayer (dar mükellef) corporations; those that earn dividends through a workplace or permanent representative in Turkey fall outside this paragraph. Adding profit to capital is not considered a distribution of profit. The President is authorized to change this rate (Article 30(8)).
• Foreign individual shareholder: Withholding tax (tevkifat) is applied under Article 94(6) of the Income Tax Law No. 193 to dividends distributed to a limited taxpayer individual. The withholding rate is set by the President; the decision in force on the date of distribution applies.

The provisions of international agreements are reserved (Article 35 of the Corporate Tax Law). If there is a double taxation treaty between the shareholder's country and Turkey, the withholding should also be checked against that treaty.

Branch or New Company for a Foreign Company?

A foreign company may operate in Turkey by opening a branch or by forming a new company in Turkey; under Article 2 of Law No. 4875, both are foreign direct investment. The main differences affecting the choice are:

• Representative: A branch must appoint a fully authorized commercial representative (ticari mümessil) domiciled in Turkey (Article 40 of the TCC). A company formed in Turkey has no such requirement.
• Tax: A company formed in Turkey is a full taxpayer. A corporation whose legal headquarters and business headquarters are both outside Turkey is a limited taxpayer and is taxed only on income earned in Turkey (Article 3 of the Corporate Tax Law).
• Real estate: The regime for foreign-capital companies under Article 36 of the Land Registry Law applies to companies established in Turkey with legal personality.

For the registration documents and formation procedure of a branch, see our article on opening a branch of a foreign company in Turkey (in Turkish).

Frequently Asked Questions

Is a Turkish partner required to form a company with foreign shareholders? No. A limited liability company is formed by one or more individuals or legal entities (Article 573 of the TCC); all shareholders may be foreign, and a limited liability company with a single foreign shareholder may be formed. In a single-shareholder limited liability company, the right to manage and the authority to represent the company must rest at least with that shareholder.

Can a foreigner in Turkey on a tourist visa form a company? Yes. The formation rules do not require a particular visa type or a residence permit from the founder; a valid passport is required at the registry. Working in the company in Turkey, however, requires a work permit or a work permit exemption; a foreigner without a residence permit of at least six months generally applies for a work permit through a Turkish mission abroad.

Is there a five-year residence requirement for foreigners to form a company in Turkey? No. Five years' uninterrupted residence is one of the conditions for applying for Turkish citizenship through the general route (Article 11 of Law No. 5901); it is not required for company formation.

Is the minimum capital for foreigners TRY 500,000? No. The minimum capital is TRY 250,000 for a joint-stock company and TRY 50,000 for a limited liability company, and it is no different for a foreign shareholder. TRY 500,000 is the initial capital of a non-public joint-stock company under the registered capital system and the capital threshold applied in evaluating the work permit of a foreign shareholder who will work in Turkey.

Does forming a company give a foreigner a work permit or a residence permit? Not automatically. Working in Turkey requires a separate work permit or exemption; a residence permit is likewise granted through a separate application and at the administration's discretion. A valid work permit counts as a residence permit.

What happens if a foreign shareholder enters a domestic company through a share transfer? The company comes within the scope of Law No. 4875 and enters its investor and shareholder information in E-TUYS no later than one month after the share transfer. If the company owns real estate and the transfer brings the foreign shareholding to 50% or more, the rules in Article 36 of the Land Registry Law apply.

How should foreign documents be translated? A document issued in a foreign country is submitted to the Trade Registry Directorate, after an apostille or legalization by a Turkish consulate, together with its notarized Turkish translation (Article 32 of the Trade Registry Regulation). Registry records and the documents on which registration is based must be in Turkish.

This article is for general information only and does not constitute legal advice.