This guide compares the three on legal status, tax and cost.
A foreign company setting up in Türkiye chooses one of three vehicles, and the choice is made before any company is formed. A liaison office (irtibat bürosu) represents the parent but may not trade or earn a lira. A branch (şube) lets the foreign parent operate directly, without creating a separate entity. A subsidiary — an anonim şirket (A.Ş.) or limited şirket (Ltd. Şti.) — is a distinct Turkish company the parent owns. The framing rule is that Türkiye does not treat foreign capital as a special case: under the Foreign Direct Investment Law No. 4875, investment is free, needs no prior permission, and foreign investors are placed on equal terms with domestic ones. So the question is not whether you may invest, but through what structure — and the three answers differ sharply on legal status, tax and cost.
Should a foreign company open a liaison office, branch or subsidiary in Turkey?
A foreign company entering Türkiye should choose its corporate structure based on commercial intent, liability appetite, and capital requirements:
- Choose a Liaison Office (İrtibat Bürosu): If your goal is strictly non-commercial representation, local coordination, or supplier oversight. Under Foreign Direct Investment Law No. 4875 Article 3(h), the Ministry of Industry and Technology is authorized to permit liaison offices provided they do not engage in commercial activities. Under Article 8 of the Regulation on the Implementation of the Foreign Direct Investment Law, permits are issued for a maximum term of three years; for liaison offices operating for market research or promotion of products/services, this term cannot be extended.
- Choose a Branch (Şube): If you intend to execute commercial contracts directly on behalf of the foreign parent. Registered with the trade registry under Turkish Commercial Code No. 6102 (TTK) Article 40(4) through a fully authorized commercial representative residing in Türkiye, a branch does not possess separate legal personality from the parent company. Consequently, the foreign parent bears direct, unlimited liability for all debts, contracts, and obligations incurred by the branch.
- Choose a Subsidiary (Anonim Şirket or Limited Şirket): If you intend to trade, hire employees, build a local balance sheet, and ring-fence parent liabilities behind independent corporate personality. A subsidiary is an independent Turkish legal entity whose shareholders have limited liability. Under Presidential Decree No. 7887 (effective 1 January 2024), statutory minimum share capital is 250.000 TRY for an A.Ş. and 50.000 TRY for a Ltd. Şti., and existing companies whose capital falls below these thresholds must complete capital increases by 31 December 2027 pursuant to TTK Provisional Article 15 (as extended by the Ministry of Trade communiqué in the Official Gazette of 17 October 2026).
The one principle that frames everything
Law No. 4875 does two things that shape every option below. First, it makes foreign direct investment free: there is no general approval or screening step before a foreigner may invest. Second, it guarantees equal treatment — a foreign-owned company is subject to the same company law, tax and registration rules as a Turkish-owned one, and a foreign investor may hold 100% of a Turkish company with no local-partner requirement. The exceptions are sector-specific licences (banking, insurance, media, energy and the like) that apply to Turkish investors too. Everything that follows is therefore a commercial and tax decision, not a permission problem. The Investment Office of the Republic of Türkiye sets out the same three-way choice in its official guide to establishing a business.
Vehicle 1 — The liaison office
A liaison office is the lightest footprint, and the most constrained. It is authorised under Article 3(h) of Law No. 4875 on the express condition that it does not carry on commercial activity in Türkiye. It cannot invoice, sell, or generate income; it is funded entirely from abroad by the parent, and it exists to do things like market research, representation, promotion, sourcing and coordination.
The permit is granted by the Ministry of Industry and Technology (through its General Directorate of Incentive Implementation and Foreign Investment), for an initial period of up to three years, and it can be extended on application according to the office’s field of activity. Because a liaison office earns nothing, it sits outside the corporate tax base — but that is the whole point and the whole limit: the moment the business needs to trade, invoice or contract in its own name, the liaison office is the wrong vehicle.
Vehicle 2 — The branch
A branch lets the foreign parent operate in Türkiye as itself. It is registered in the Turkish trade registry under the Turkish Commercial Code No. 6102, but it is not a separate legal entity — only commercial companies have legal personality under the Code, and a branch is an extension of the parent, not a company. Its capacity, and its liabilities, run back to the parent abroad.
For tax, a branch is a limited taxpayer (dar mükellef): under the Corporate Tax Law No. 5520, a company whose legal and business centres are both outside Türkiye is taxed only on the income it earns in Türkiye. A branch can trade and invoice, which the liaison office cannot; what it does not give is the separation between the Turkish operation and the parent. For that, most investors incorporate.
Vehicle 3 — The subsidiary (A.Ş. or Ltd. Şti.)
A subsidiary is a separate Turkish company the parent owns — and for a foreign investor that intends to operate, hire and grow, it is the default. It has its own legal personality, so it contracts and litigates in its own name and, in principle, confines liability to the company. It is a full taxpayer (tam mükellef) on its worldwide income under Law No. 5520.
The choice is then between the two workhorse forms:
- The anonim şirket (A.Ş.) — the joint-stock company — suits larger operations, capital raising and eventual share transfers; shares are freely transferable and board governance is more formal.
- The limited şirket (Ltd. Şti.) — the limited company — is simpler and cheaper to run and is the common choice for a wholly-owned operating subsidiary.
Both can be formed and wholly owned by a single foreign shareholder. Getting the ownership and control terms right at the outset — especially in a joint venture — is a subject in its own right, covered in our guide to shareholders’ agreements in Turkish joint ventures. The mechanics of incorporation itself — MERSIS, the trade registry, the tax and SGK steps — are set out in our step-by-step guide to setting up a company in Türkiye.
The three side by side
| Liaison office | Branch | Subsidiary (A.Ş./Ltd.) | |
|---|---|---|---|
| Separate legal entity | No | No — extension of the parent | Yes |
| May trade / earn income | No | Yes | Yes |
| Taxed on | Nothing (no income) | Türkiye-source income (dar mükellef) | Worldwide income (tam mükellef) |
| Parent’s liability | N/A | Parent directly exposed | Limited to the company |
| Authorising body | Ministry of Industry and Technology | Trade registry | Trade registry |
| Typical use | Market research, representation | Operating as the parent | Operating, hiring, growing |
Cost, capital and tax
For a subsidiary, the minimum share capital — raised by Presidential Decree No. 7887 and in force since 1 January 2024 — is 250.000 TRY for an A.Ş. and 50.000 TRY for a Ltd. Şti. (A non-public A.Ş. that adopts the registered-capital system needs at least 500.000 TRY of initial capital.) These replaced the long-standing 50.000 and 10.000 TRY figures, so older guides online are out of date.
On the tax side, the general corporate income tax rate is 25%, reduced by five points to 20% on earnings from qualifying exports; a domestic minimum corporate tax of 10% of pre-incentive earnings has applied from the 2025 tax year. Standard VAT is 20% under the VAT Law No. 3065, with reduced 10% and 1% rates for listed goods and services. A subsidiary is taxed on its worldwide income, a branch only on Türkiye-source income — a distinction that often drives the choice between them.
A deadline to diarise now: under Provisional Article 15 of the Turkish Commercial Code, existing A.Ş. and Ltd. companies whose capital is below the new minimums must raise it to 250.000 / 50.000 TRY by the deadline. The Code set it at 31 December 2026; the Ministry of Trade extended it to 31 December 2027 by a Communiqué published in Official Gazette No. 33403 of 17 October 2026, and one further extension is possible. A company that fails to do so is deemed dissolved. Any foreign investor holding a Turkish company incorporated before 2024 should check its capital against this figure well before the deadline.
How to choose
Strip the labels away and the decision is about income and separation. If the Turkish presence will earn nothing and only represent the parent, the liaison office is the cheapest lawful option — but it is a hard ceiling, not a stepping stone to trading. If the parent is content to operate in its own name and accept direct exposure, a branch works. If the business will trade, hire staff, sign leases and grow — which is most inbound investment — a subsidiary gives it a separate legal identity, limited liability and a clean base to build on. That last point connects straight to the next decisions: forming the company, structuring the investment, and employing staff in Türkiye, each of which is easier when the vehicle underneath them is the right one.
None of these choices is irreversible, but changing course later — converting a branch, winding up a liaison office to incorporate, restructuring share capital — costs more than choosing well at the outset. The most valuable hour a foreign investor spends in Türkiye is usually the first one, spent on the structure. Our corporate practice exists to make that hour count.
