How To Open A Subsidiary Company In Turkey

Establishing a subsidiary company in Turkey has become one of the most effective ways for foreign businesses to enter and expand within the Turkish market. With its strategic location connecting Europe, the Middle East, Africa, and Central Asia, Turkey offers access to over a billion consumers within a four-hour flight radius. Beyond geography, the country provides a business-friendly legal framework, competitive operational costs, and a young, skilled workforce—making it a preferred destination for multinational companies seeking a stable and scalable commercial base. A subsidiary offers complete legal independence, enabling the parent company to operate under a separate Turkish legal entity, engage in all forms of commercial activity, and benefit from limited liability protections.

Despite these advantages, many foreign investors initially confuse subsidiaries, branches, and liaison offices, leading to structural decisions that do not fully support their long-term goals. A Turkish subsidiary, unlike a branch, can enter contracts, issue invoices, hire employees, and manage operations with autonomy while still being fully owned by the parent company. Understanding the distinctions between these structures—and choosing the right one—is critical for compliance, tax efficiency, and operational success. In this guide, we explain what a subsidiary company is under Turkish law, how it differs from a branch, outline the step-by-step incorporation process, detail the required documents and timeline, highlight common mistakes foreign investors should avoid, and provide practical legal insights for establishing a subsidiary in Turkey with confidence.

What Is a Subsidiary Company in Turkey?

A subsidiary company in Turkey is a fully independent legal entity established and controlled by a foreign parent company. Unlike a branch—which operates as an extension of the parent— a subsidiary has its own commercial identity, its own tax number, its own management structure, and its own liability shield. This means that the subsidiary can enter contracts, hire employees, own assets, issue invoices, open bank accounts, and undertake all commercial activities in Turkey without exposing the foreign parent company to unlimited liability. From a legal perspective, a Turkish subsidiary is treated no differently than a company founded by Turkish nationals; foreign ownership is permitted at 100%, and there are no sector-wide restrictions unless a specific regulated industry is involved (e.g., aviation, broadcasting, or energy).

Under the Turkish Commercial Code, a subsidiary can be established in the form of either a Limited Liability Company (LLC)or a Joint Stock Company (JSC). Both structures offer limited liability protection and are commonly used by multinational groups, but an LLC is preferred in most cases due to its simpler management structure and lower compliance costs. A JSC, on the other hand, becomes advantageous for large-scale projects, capital-intensive operations, or when a company plans to issue shares or attract investors. In both forms, the subsidiary remains a separate legal person, meaning that its debts and liabilities do not automatically pass to the foreign parent unless the parent provides guarantees or engages in wrongful intervention.

For foreign investors, the autonomy of the subsidiary is often the biggest advantage. The Turkish subsidiary can freely conduct business within the country and abroad, while still being fully owned and strategically directed by the foreign parent company. This creates a balanced operational model because the parent company retains full control over corporate governance and strategic decisions, while the Turkish subsidiary ensures compliance with local regulations and allows seamless participation in Turkey's commercial ecosystem.

Subsidiary vs. Branch in Turkey (Key Differences)

Foreign investors often begin their market research assuming that a subsidiary and a branch serve similar functions in Turkey. However, the two structures differ significantly in terms of legal personality, liability, taxation, and operational flexibility. Choosing the correct structure is one of the most strategic decisions a company will make when entering the Turkish market. Selecting the wrong model can lead to unnecessary tax burdens, exposure to legal risks, or limitations in commercial activities.

Legal Personality and Autonomy

A subsidiary is a separate Turkish legal entity—either an LLC or a JSC—fully capable of entering into contracts, hiring employees, owning property, opening bank accounts, and engaging in any commercial activity allowed under Turkish law. A branch, by contrast, is not a separate entity but an extension of the foreign parent company. This means the parent company bears direct and unlimited liability for the branch's activities, debts, and obligations in Turkey. For multinational groups seeking risk management and operational independence, this distinction alone often makes the subsidiary structure far more attractive.

Liability Exposure

A subsidiary offers limited liability, meaning the foreign parent company is liable only up to its capital contribution. Creditors cannot pursue the parent company's global assets unless a specific guarantee has been issued. In contrast, a branch creates a situation where the parent company is fully responsible for the branch's debts in Turkey. For companies operating in sectors with litigation risk, regulatory exposure, or significant financial transactions, a subsidiary provides much stronger legal protection.

Taxation

A subsidiary is taxed in Turkey as a normal corporate entity. It has its own corporate income tax obligations, VAT filings, social security payments, and withholding responsibilities. A branch is also subject to taxation in Turkey, but profits transferred to the parent company abroad may trigger additional withholding tax, which does not apply to subsidiaries in the same way. Many international companies choose the subsidiary model specifically to optimize their tax structure and avoid unnecessary double-taxation complications.

Operational Flexibility

A subsidiary can engage in any commercial activity permitted under Turkish law and can expand into new sectors as needed. It may also open additional branches within Turkey after its establishment. A branch, however, can only conduct the activities performed by the parent company in its home jurisdiction and cannot exceed that scope. This often restricts growth plans or diversification strategies. For companies that plan to build a long-term local presence, hire teams, or operate independently from the parent's activities, a subsidiary is almost always the more suitable model.

Why Foreign Investors Prefer a Subsidiary in Turkey

Most multinational companies ultimately choose a subsidiary over a branch because it provides a far more secure and flexible foundation for long-term operations. The key advantages include:

• Stronger liability protection — The foreign parent company is shielded from the subsidiary's debts and obligations.
• Ability to operate freely in the Turkish market — Subsidiaries can conduct unrestricted commercial activities, issue invoices, hire staff, and enter into contracts.
• Tax efficiency and reduced exposure — Subsidiaries benefit from a clear corporate taxation regime, often avoiding the withholding tax burdens that apply to branch profit transfers.
• Better suitability for growth — A subsidiary can establish additional branches, acquire assets, and pursue new business opportunities within Turkey without needing approvals from foreign authorities.

For companies seeking a stable, scalable structure supported by strong legal and commercial autonomy, the subsidiary model aligns far better with long-term strategic goals than a branch.

Types of Subsidiaries Under Turkish Law

When establishing a subsidiary company in Turkey, foreign investors generally choose between two corporate structures: the Limited Liability Company (LLC) and the Joint Stock Company (JSC). Both offer limited liability protection and are fully accessible to foreign shareholders, but they differ in terms of governance requirements, compliance obligations, and long-term strategic benefits. Understanding these differences is essential, as the choice of structure can significantly affect operational efficiency, taxation, and investment plans.

Limited Liability Company (LLC)

The LLC is the most commonly used subsidiary structure among foreign parent companies due to its simplicity and cost-effectiveness. It can be established by a single shareholder—whether a natural person or a legal entity—and has a minimum capital requirement of TRY 50,000. Management is straightforward, typically handled by one or more directors, and corporate formalities are lighter compared to a JSC. LLCs are generally preferred for small to medium-sized investments, service companies, technology businesses, consulting firms, and subsidiaries that do not plan to go public or issue shares.

Related article: How to Register a Limited Liability Company in Turkey

Joint Stock Company (JSC)

A JSC is more suitable for large-scale operations, companies requiring a more complex shareholding structure, or businesses that aim to attract investors or eventually go public. The minimum capital requirement is TRY 250,000 (or higher for regulated industries), and corporate governance rules are more detailed. JSCs allow for easier transfer of shares and can issue different classes of shares, making them attractive for multinational groups planning extensive operations or partnerships in Turkey.

Related article: How to Register a Joint Stock Company in Turkey

Choosing the Right Structure for Your Subsidiary

Both LLCs and JSCs enjoy the same legal protections and are treated equally under Turkish commercial law. The decision usually depends on practical considerations such as capital needs, management style, long-term investment planning, and regulatory requirements. Most foreign investors start with an LLC due to its efficiency, unless their business model or sector requires the more advanced capabilities of a JSC.

Establishing a subsidiary in Turkey is a structured legal process governed by the Turkish Commercial Code and implemented through the online MERSİS system and local Trade Registry Directorates. While the overall procedure is straightforward for experienced practitioners, foreign investors often face delays due to documentation issues, apostille requirements, bank-related challenges, or unfamiliarity with Turkish regulatory formalities.

How to Open a Subsidiary in Turkey

Establishing a subsidiary in Turkey is a structured legal process governed by the Turkish Commercial Code and implemented through the online MERSİS system and local Trade Registry Directorates. While the overall procedure is straightforward for experienced practitioners, foreign investors often face delays due to documentation issues, apostille requirements, bank-related challenges, or unfamiliarity with Turkish regulatory formalities. Below is a clear, practical, and legally accurate overview of each stage of the subsidiary creation process.

For investors who want to understand the full landscape of company types, tax considerations, licensing obligations, minimum capital rules, and the complete step-by-step process of starting a business in Turkey, our main article offers a broader, structured overview.

For a complete explanation of company formation rules in Turkey, you may refer to our main guide: How to Set Up Business in Turkey.

Step 1 — Determining the Legal Structure (LLC or JSC)

The first step is selecting whether the subsidiary will operate as a Limited Liability Company (LLC) or a Joint Stock Company (JSC). For most foreign parent companies, an LLC offers the ideal balance of cost-efficiency, manageable governance, and operational flexibility. JSCs are preferred for large-scale operations, businesses planning to raise capital, or companies operating in regulated sectors requiring minimum capital thresholds. Choosing the right structure at this stage prevents future restructuring costs or compliance burdens.

Step 2 — Drafting the Articles of Association

Once the legal structure is selected, the next step is preparing the Articles of Association, which serve as the company's foundational document. The Articles must clearly state the subsidiary's trade name, registered address, business scope, capital structure, share distribution, and representation authority. For subsidiaries established by foreign parent companies, it is essential to tailor certain provisions to reflect the parent company's control mechanisms and internal governance preferences. The Articles are drafted through the MERSİS system and must comply with the mandatory provisions of the Turkish Commercial Code before being submitted to the Trade Registry for approval.

Step 3 — Preparing Corporate Documents of the Foreign Parent Company

Foreign parent companies are required to submit several corporate documents as part of the incorporation file, such as the certificate of incorporation, articles of association, list of authorized representatives, and a board resolution approving the establishment of the Turkish subsidiary. These documents must be properly apostilled, translated into Turkish by a sworn translator, and notarized. Any deficiencies—such as outdated corporate records or improper legalization—can delay or invalidate the application. Therefore, accurate preparation of the parent company's documents is crucial.

Step 4 — Issuing a Power of Attorney (PoA)

If the shareholder or representatives of the foreign parent company must issue a power of attorney authorizing their legal counsel to complete the establishment steps on their behalf. The PoA must include explicit authority to sign incorporation documents, submit applications through MERSİS, handle notary procedures, and perform necessary filings before the Trade Registry and tax office. As with other foreign documents, the PoA must be apostilled or consular legalized and translated into Turkish before use.

Step 5 — Completing MERSİS Registration and Submitting the Application

Once all documents are prepared, the incorporation file is created in the MERSİS system, where the company's details—such as shareholders, capital, directors, and business activities—are entered. The completed file is then submitted to the competent Trade Registry Directorate together with all notarized and apostilled documents. The Registry reviews the file and schedules an appointment if necessary. Provided that all documents comply with legal requirements, the incorporation is typically approved within 3 to 5 business days, after which the company is officially established.

Step 6 — Capital Deposit and Bank Account Opening

For subsidiaries established as LLCs, capital does not need to be deposited before registration and may be paid within 24 months after incorporation. For JSCs, however, 25% of the capital must be deposited prior to registration, and the bank issues a blocked capital letter for submission to the Trade Registry. Banks conduct due diligence checks and often require notarized translations of shareholder passports and corporate documents. Once the company is registered, the capital becomes available for operational use and the corporate bank account is activated, allowing the subsidiary to conduct financial transactions.

Related article: How to open a bank account in Turkey

Step 7 — Final Registration and Post-Incorporation Formalities

Once the Trade Registry completes the incorporation, the subsidiary becomes a fully recognized legal entity and the appointed managers obtain their signature circular for representation. After registration, several formalities must be completed, including activating the company's tax records, completing the address inspection, registering with the Social Security Institution, certifying commercial books, and setting up e-ledger or e-invoicing systems if necessary. Companies must also work with a certified accountant for ongoing tax and payroll compliance, and in certain cases, they are legally required to retain a contracted attorney. Even when not mandatory for LLCs, engaging a lawyer during the early operational period is highly advisable, as newly established subsidiaries frequently encounter licensing, compliance, and contract-related matters. Once these steps are finalized, the company is fully ready to operate and conduct business in Turkey.

Related article: Obligation to hire a lawyer in Turkey

Mandatory Documents for Creating a Subsidiary in Turkey

Establishing a subsidiary in Turkey requires the preparation and submission of several documents, both from the foreign parent company and the individuals who will represent the new entity. Although the overall process is straightforward, delays commonly occur when documents are not properly apostilled, translated, or aligned with Turkish corporate requirements. For this reason, careful preparation is essential.

For the foreign parent company, the core documents typically include a certificate of incorporation, articles of association, a list of authorized signatories, and a board resolution approving the establishment of the Turkish subsidiary and appointing the person who will act on its behalf. These documents must be legalized (either by apostille or consular certification, depending on the country) and then translated into Turkish by a sworn translator before notarization. If the parent company has undergone recent structural changes, updated corporate documents may also be required.

Individual shareholders or representatives must provide valid identification—usually a passport—along with notarized and translated copies where necessary. In addition, the incorporation file must include the subsidiary's Articles of Association, proof of its registered office address, and declarations required by the Trade Registry. The completeness and accuracy of these documents play a critical role in ensuring that the registration proceeds smoothly and without unnecessary delay.

How Long Does Subsidiary Creation Take in Turkey?

The process of establishing a subsidiary in Turkey is generally efficient, provided that all corporate documents from the foreign parent company are prepared correctly and submitted in the proper format. In straightforward cases where apostilled documents, translations, and power of attorney arrangements are already in place, incorporation can be completed within a relatively short period. Most of the timeline is influenced not by Turkish authorities, but by the speed at which the foreign parent company gathers and legalizes its documentation.

Once the file is complete, the MERSİS application, Trade Registry review, and final registration usually proceed smoothly. Occasional delays may occur due to additional verification requests, incomplete documentation, or challenges in opening a corporate bank account—especially when directors reside abroad. Post-registration steps, such as tax office inspections and social security activation, typically follow shortly after incorporation. Overall, with proper planning and legal guidance, foreign investors can expect a predictable and well-structured formation timeline when opening a subsidiary in Turkey.

Cost of Establishing a Subsidiary Company in Turkey

The overall cost of establishing a subsidiary in Turkey depends on several factors, including the chosen company type, the complexity of the corporate structure, and the scope of professional services required during incorporation. Mandatory government expenses—such as notary fees, translation costs, and Trade Registry charges—apply to all companies and may vary slightly depending on the city of registration and the size of the incorporation file. Subsidiaries established by foreign parent companies often incur additional translation and legalization costs due to the need for apostilled or consular-certified corporate documents.

Beyond these compulsory expenses, foreign investors typically engage legal professionals to ensure a smooth and compliant establishment process. Legal support is particularly important for subsidiaries, since parent-company documents must be accurately prepared and aligned with Turkish corporate law. Depending on the company's size and activity, some subsidiaries are also legally required to work with a contracted attorney. When these considerations are planned in advance, investors can manage incorporation expenses efficiently and avoid unexpected delays or additional costs.

Taxation of Subsidiaries in Turkey

Subsidiaries incorporated in Turkey are treated as fully resident companies for tax purposes, meaning they are subject to the Turkish corporate tax regime on their worldwide income. This provides clarity and predictability for foreign investors, as subsidiaries follow the same rules and filing obligations as locally owned entities. In practice, subsidiaries must register with the tax office immediately after incorporation, maintain statutory books, and file monthly and annual tax returns. Key tax components include corporate income tax, value added tax (VAT), withholding tax on certain payments, and social security contributions for employees.

Common Mistakes Foreign Businesses Make When Creating a Subsidiary in Turkey

Foreign investors often underestimate the complexity of incorporating a subsidiary, assuming the process is identical to setting up a simple local company. In practice, establishing a subsidiary involves additional steps, stricter documentation requirements, and more sensitive compliance considerations—especially when the shareholder is a foreign legal entity. One of the most common mistakes is preparing incomplete or improperly legalized corporate documents. Missing apostilles, outdated certificates, or incorrect translations are frequent causes of delays at the Trade Registry, and even small inconsistencies between documents can lead to rejection of the application.

Another frequent issue is choosing the wrong legal structure. Many investors default to an LLC without evaluating whether a JSC would be more suitable for their long-term plans, governance model, or industry requirements. Similarly, some parent companies proceed without adapting their internal resolutions and representation rules to Turkish legal standards, which creates complications during registration or future transactions. Investors also tend to underestimate post-incorporation obligations, such as tax registrations, regulatory filings, and employment-related requirements, which may vary depending on the subsidiary's planned activities.

Finally, many foreign companies attempt to complete the process without legal assistance, relying instead on ad hoc guidance or service providers unfamiliar with corporate law. This often results in structural mistakes that become costly to correct later—particularly in cross-border setups where representation, intercompany arrangements, and compliance frameworks must be aligned with Turkish legislation. Working with a qualified lawyer in Turkey from the outset ensures that the subsidiary is properly structured, legally compliant, and fully prepared to operate in Turkey without unnecessary risk or delay.

Why Work With a Turkish Lawyer When Establishing a Subsidiary?

Setting up a subsidiary in Turkey involves a series of legal, procedural, and cross-border documentation steps that require precision and full compliance with Turkish corporate law. While the incorporation framework may appear straightforward at first glance, the process becomes significantly more complex when a foreign parent company is involved—mainly due to apostilled documents, representation requirements, internal resolutions, and the need to structure the subsidiary in a way that aligns with both local law and the parent company's corporate governance.

A Turkish lawyer ensures that every stage of the incorporation is carried out correctly, from drafting the Articles of Association to preparing board resolutions, verifying the legal validity of foreign documents, ensuring proper authorization of representatives, and handling all filings before the Trade Registry. Legal support is also critical during the early months of operation, when the subsidiary faces licensing questions, contractual arrangements, regulatory notifications, and compliance obligations that cannot be handled by non-lawyers.

Moreover, certain companies are legally required to retain an attorney once they reach specific thresholds or operate in regulated sectors. Even when not mandatory, having continuous legal oversight prevents costly mistakes, protects the parent company's interests, and ensures the subsidiary operates smoothly from day one. For international investors, working with a qualified lawyer is not merely an added convenience—it is an essential safeguard that supports long-term stability, compliance, and risk management in the Turkish market.

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