Foreign Investment & Market Entry

Türkiye sits at the meeting point of Europe, the Middle East and Central Asia, combining a market of 85 million people, a customs union with the European Union and a broadly liberal investment framework. For foreign investors, the legal starting point is the Foreign Direct Investment Law No. 4875, which replaced an older screening regime with a principle of openness. The practical questions, however, are strategic rather than procedural: which entry structure fits the plan, whether the sector carries special rules, and how to capture the incentives on offer. This is where structuring decisions made at the outset shape the cost, tax position and flexibility of the investment for years.

The FDI Regime and Equal Treatment

The cornerstone of Turkish investment law is equal treatment, also called national treatment. Under Law No. 4875, a foreign investor has the same rights and obligations as a domestic one. In concrete terms this means three things. First, foreigners may, in most sectors, own 100% of a Turkish company, with no local-partner requirement and no minimum capital threshold beyond the ordinary company rules. Second, there is generally no prior approval or screening for an investment; the investor simply follows the standard establishment or registration process. Third, profit and capital transfers abroad are free, subject to the applicable foreign-exchange rules and tax obligations.

Equal treatment is a powerful default, but it is a default, not a guarantee that every sector is open on identical terms. Where a sector-specific rule exists — a licence, an ownership cap, a reciprocity condition — it applies to the foreign investor just as the general freedom does. Confirm the sector rules before committing to a structure.

This liberal regime is what makes the strategic questions, rather than the question of whether investment is permitted, the ones that matter.

Choosing the Entry Structure

How a foreign investor enters the market determines liability, tax treatment and the depth of local presence. Three structures dominate, and the mechanical steps to establish each belong to the company-formation process; what matters here is choosing correctly among them.

Structure	Legal personality	Commercial activity	Typical use
Company (A.Ş. / Ltd. Şti.)	Separate Turkish entity	Full	A genuine local operation, ring-fenced liability
Branch office	None — extension of the parent	Full, but parent remains liable	Extending an existing foreign business into Türkiye
Liaison office	None	Prohibited	Market research, coordination, representation only

A subsidiary company is the usual choice for an investor building a real operation, because it creates a separate Turkish legal person and ring-fences liability within the company’s capital. A branch office trades as an extension of the foreign parent and has no separate legal personality, so the parent stays liable for its obligations; it can suit a business that wants a Turkish footprint without a new entity. A liaison office is a different animal altogether: it may only conduct market research, coordination and representation, is prohibited from any commercial or income-generating activity, and operates under an authorisation from the Ministry of Industry and Technology. It is a way to observe and prepare, not to trade.

Sector-Specific Restrictions

While the general regime is open, a number of sectors carry special rules that can decide the whole structure of an investment. The most significant are these:

• Aviation and maritime cabotage — carriage of passengers and goods between Turkish ports (cabotage) and parts of the aviation sector are restricted, with rules limiting foreign participation.
• Broadcasting and media — foreign ownership in media service providers is subject to a shareholding cap under Law No. 6112.
• Banking, insurance and energy — these are licensed activities; entry requires authorisation from the relevant regulator and satisfaction of prudential conditions.
• Mining — exploration and operation are subject to a licensing regime.
• Real-estate acquisition — acquisition of immovable property by foreign nationals is governed by Article 35 of the Land Registry Law No. 2644, and is subject to a reciprocity principle, a prohibition on property in military forbidden and security zones, and a nationwide ceiling of 30 hectares per person.

A sector restriction discovered after incorporation can force a costly restructuring or stall the launch entirely. Where the activity touches aviation, media, a licensed financial sector or real estate, the ownership and licensing position should be confirmed at the planning stage, not after the entity is live.

Investment Incentives

Türkiye operates an active investment incentive system administered by the Ministry of Industry and Technology. Support is calibrated to the region, scale and sector of the investment, and typically runs through schemes described as regional, strategic and priority investment. Depending on eligibility, the available instruments include:

• Corporate-tax reduction on qualifying investment income.
• Customs-duty exemption on imported machinery and equipment.
• VAT exemption on eligible investment purchases.
• Social-security premium support, covering the employer’s — and in some cases the employee’s — share for a defined period.

Beyond the general incentive certificate, an investor’s chosen location can add material benefits. Establishing within a technopark, a free zone or an accredited R&D centre can bring further tax advantages and operational reliefs, particularly for technology, export-oriented and research-intensive businesses. Matching the investment to the right scheme and location is a planning exercise best done before, not after, the entity is established.

Foreign Staff: Work and Residence Permits

Most inbound investments involve bringing key personnel into Türkiye. The employment of foreign nationals is governed by the International Labour Law No. 6735, under which a foreign employee generally needs a work permit, which also serves as a residence permit for its duration. Work-permit applications are assessed against criteria including the company’s capital, staffing and the role of the foreign employee. Because permit planning interacts with the corporate structure — for instance, the number of Turkish employees a company maintains — it is best mapped alongside the entry decision rather than left until after establishment.

Our Approach

We help foreign investors turn an interest in the Turkish market into a sound, workable structure. That begins with a strategic review — the entry vehicle, the sector rules that apply to the activity, and the incentives and locations that fit the plan — and continues through establishing the structure, coordinating any required licensing, and supporting work and residence permits for the team. Where an investment touches real estate, a regulated sector or an incentive scheme, we align those workstreams from the outset so the structure holds together. Contact us to discuss your investment and market-entry plans in Türkiye.