Foreign companies expanding operations can opt-in for a subsidiary entity set up in Türkiye and establish a foothold for ‘testing the market. This can be a risky move – costly both in time and money – with no guarantee that the effort and financial investment will bring success. Many international companies set their sights on the Republic of Türkiye, a nation at the crossroads of Europe and Asia with coastlines on the Black Sea and the Mediterranean – a prime location for further International Expansion.
The most popular choice for opening a subsidiary in the private sector is a limited liability company, which operates under the new Turkish Commercial Code (TCC). With the subsidiary in place – essential for hiring staff and managing payroll – the parent company can register employees with the Social Security Institution (Sosyal Güvenlik Kurumu, SSI or SGK) and the Turkish Revenue Administration (Gelir İdaresi Başkanliği GİB). Beware! If the move fails, companies face the added costs and hassle of closing their operation, selling property and paying off employees. These are unwanted distractions while you also concentrate on building business in the home territory. Expanding overseas is a significant step.
The sensible alternative is to use a Professional Employer Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to locate the finest local talent and administer your payroll in Türkiye. Your company will be up-and-running in days rather than weeks or months without any risks.
The first decision for foreign companies planning a move into the Turkish economy is which business structure best suits their plans. The typical choice in the private sector is to open a subsidiary as a limited liability company, signified by the suffix Ltd. Şti. which operates under the new Turkish Commercial Code (TCC).
Establishing a subsidiary is essential before hiring staff and running their payroll, and since implementing the new TCC, all registration has been handled through the Central Registration System (Merkezi Sicil Kayit Sistemi, MERSIS).
Registration and other procedures include:
Once the subsidiary is incorporated, the new company must follow other procedures before it can operate payroll for its staff. These include:
The benefits of setting up a subsidiary in Türkiye include having a separate legal identity from the parent company and being treated the same as a local operation. The parent company’s liability is generally restricted to the invested share capital; neither is it responsible for any debts or liabilities of the subsidiary. Partners or managers are generally liable only for the value of their contribution, although they can be liable for public debts that the company cannot pay.
Türkiye’s location at the crossroads of Europe and Asia is ideal for further expansion throughout the region – both east and west – adding to the attraction for foreign companies to establish subsidiaries. Additionally, the subsidiary can ‘test the market’ by following its business ideas and entering into different areas of operation for the owning company. The subsidiary can also draw up its contracts and agreements with clients.
Other benefits for a subsidiary entity set up in Egypt include the following:
However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Türkiye. By working with Bradford Jacobs and using our global Professional Employer Organisation (PEO) networks, your staff can be sourced, placed in their roles and be up and running within days instead of months. All the payroll, taxation and compliance difficulties are under control thanks to our Employer of Record (EOR) services. Meanwhile, your employees are totally under your control.
Subsidiaries established in Türkiye operate under the new Turkish Commercial Code (TCC) of 2012, bringing corporate legislation more in line with the European Union, of which Türkiye is an associate member. Among changes, the new Code allows a board of directors to comprise one individual instead of the previous minimum of three.
Incorporation and registration procedures for a limited liability company are generally completed through the Central Registration System (Merkezi Sicil Kayit Sistemi, MERSIS), which has been operational since the new Code came into force.
Incorporation procedures include the following categories:
Registration and Documentation:
Accounts and Taxation: