Branch Office and Liaison Office in Turkey: A Foreign Company's Guide (2026)

1. Three Ways Into the Turkish Market

A foreign company's Turkish presence can take one of three legal forms. A subsidiary is a Turkish company — usually a limited şirket or anonim şirket — with its own legal personality: the parent's risk is confined to the capital it subscribes, and the company is taxed in Turkey as a full resident taxpayer. A branch has no separate legal personality; it is the foreign company itself, operating in Turkey through a registered establishment, which means it can trade, invoice and contract, but every obligation it incurs is directly an obligation of the parent. A liaison office sits at the other end of the spectrum: it is not a trading presence at all, and its defining legal feature is a strict prohibition on commercial activity. Under Article 2 of the Foreign Direct Investment Law No. 4875, both establishing a company and opening a branch qualify as foreign direct investment and benefit from the law's national-treatment guarantee; the liaison office is regulated separately under Article 3(h) of the same law and its Implementation Regulation. The decision between the three is not a formality — it fixes the tax base, the liability exposure and the ceiling on what the Turkish operation may lawfully do.

2. The Branch Office: A Trading Presence Without a Separate Company

The branch of a foreign company is governed by Article 40(4) of the Turkish Commercial Code No. 6102, which requires companies headquartered abroad to register their Turkish branches and to appoint for each branch a fully authorised commercial representative resident in Turkey. The branch has no articles of association of its own; it operates under the parent's constitutive documents, and its trade name must reflect the parent's name together with its Turkish branch designation. The practical consequences follow from the absence of legal personality. The branch can carry on the parent's business in Turkey — sell, invoice, employ, lease — but it cannot own a legal sphere separate from the parent: debts of the branch are debts of the foreign company, enforceable against the parent's assets, and there is no liability shield of the kind a subsidiary provides. For some groups this is acceptable or even desirable, since it keeps the Turkish operation under direct head-office control and avoids a second corporate governance layer; for groups sensitive to risk separation, it is the decisive argument for a subsidiary instead.

3. Registering a Branch: Procedure and Documents

Branch registration runs through the Trade Registry Directorate, and the required file is set out in Article 122 of the Trade Registry Regulation. At its core the file contains the parent company's decision to open the branch, its registry extract or certificate of good standing, its constitutive documents, and the appointment and specimen signature of the Turkey-resident representative — each foreign-issued document notarised, apostilled (or consular-legalised) and sworn-translated into Turkish. There is no statutory minimum capital for a branch, although an allocated branch capital is customarily declared and, in practice, a credible allocation matters when the branch later faces bank compliance reviews. After registration and announcement in the Trade Registry Gazette, the branch obtains its tax registration and, when it employs staff, its Social Security Institution employer file — from that point onwards its bookkeeping, invoicing and filing obligations track those of a Turkish company. In our practice, the timeline of a branch registration is governed almost entirely by the document chain: the registry step itself is quick, but assembling a correctly legalised and correctly translated parent-company file across two jurisdictions is where the weeks are spent. This is also where the combination of legal and sworn-translation work in one hand pays off, because registry practice is unforgiving of translations that drift from the source document's legal meaning.

4. How a Branch Is Taxed

A branch is a limited (non-resident) taxpayer under the Corporate Tax Law No. 5520: it pays Turkish corporate tax — at the general rate of twenty-five percent in 2026 — but only on the income attributable to its Turkish operations, not on the parent's worldwide income. Its supplies are subject to VAT under the ordinary rules. When the branch's after-tax profit is transferred to the foreign head office, that remittance is subject to a withholding tax, currently applied at fifteen percent, which Turkey's double taxation treaties frequently reduce; the treaty between Turkey and the parent's home state should therefore be read before the structure is chosen, because the combined tax cost of a branch versus a dividend-paying subsidiary is rarely identical and occasionally decisive. The branch files corporate tax and VAT returns on the same calendar as resident companies and must maintain Turkish statutory books through a certified public accountant; the full corporate tax, VAT and withholding picture that applies to a resident subsidiary is set out in our guide to taxes for foreign-owned companies in Turkey.

5. The Liaison Office: Presence Without Commerce

The liaison office is the structure Turkish law offers a foreign company that wants to study the market before committing to it. Its legal basis is Article 3(h) of Law No. 4875 and the Implementation Regulation of the Foreign Direct Investment Law, and its defining rule is categorical: a liaison office may not engage in commercial activity. It cannot sell, invoice, sign commercial contracts or generate revenue in Turkey, and a breach of that prohibition is grounds for cancellation of its permit. What it may do is defined by the activity categories in the Regulation: market research, promotion of the parent's products and services, representation and hosting, quality control and supervision of suppliers, technical support, communication and information transfer, and — for larger groups — service as a regional management centre. Because it does not trade, the liaison office is not registered at the Trade Registry as a commercial entity; it exists under a Ministry permit, with a tax office registration for administrative purposes only.

6. The Liaison Office Permit: Application, Duration and Extension

Liaison office permits are issued and supervised by the General Directorate of Incentive Implementation and Foreign Investment within the Ministry of Industry and Technology. The application file consists of the application form and letter of commitment, the parent company's certificate of good standing (apostilled and sworn-translated), its most recent annual report or financial statements, the authorisation of the person appointed to run the office, and a power of attorney where the application is filed by a representative. With a complete file, permits are typically issued within a matter of weeks. The initial permit is granted for up to three years. Extensions are governed by Article 8 of the Implementation Regulation and are assessed against the office's past activity and future plans: offices operating as regional management centres may be extended for up to ten years and other activity categories for up to five — but offices licensed for market research or for the promotion of the parent's products and services are not extended at all. That last rule surprises many parent companies and belongs in the planning from day one: an office established purely to research the market has a built-in expiry date, after which the company must either convert its presence into a branch or subsidiary or wind the office up.

7. Running a Liaison Office: Funding, Reporting and Staff

The liaison office's economics are as tightly regulated as its activities. All of its expenditure — rent, salaries, administrative costs — must be financed by foreign-currency transfers from the parent company abroad; the office may not fund itself from any Turkish source, and the Ministry reviews the transfer records. Each year, by the end of May, the office submits an activity report to the Ministry documenting its work and its funding for the previous year, and this reporting history is precisely what the Ministry weighs when an extension is requested. In return for its non-commercial status, the liaison office enjoys meaningful exemptions: it pays no corporate tax on trading income because it has none, and the salaries it pays to employees in foreign currency out of funds transferred from abroad are exempt from income tax under Article 23/14 of the Income Tax Law No. 193. Staff may be employed locally in the ordinary way; for foreign staff, administrative practice is restrictive — the work permit evaluation criteria as applied generally allow one foreign key person per office, conditioned on a substantial documented transfer from the parent in the preceding year — so a liaison office is not a vehicle for relocating a foreign team to Turkey. The work permit framework that applies is examined in our Turkish work permit guide.

8. Choosing Between Subsidiary, Branch and Liaison Office

The choice usually resolves along three questions. First, will the Turkish presence trade? If not — if the mission is research, sourcing supervision or representation — the liaison office is the purpose-built answer, with the caveat of its non-extendable categories. If the presence will trade, the choice narrows to branch or subsidiary. Second, how much liability separation does the group need? A branch exposes the parent directly; a subsidiary contains the risk within its own capital. Third, what does the tax comparison say? A branch is taxed only on Turkish-source income and pays remittance withholding on repatriated profit; a subsidiary is a resident taxpayer whose dividends bear their own withholding — and the applicable double taxation treaty can tilt the comparison either way. There is also a sequencing logic we frequently see work well in practice: a liaison office first, to learn the market on a small budget; then, when real trading begins, a subsidiary — with the liaison office's local knowledge, staff and premises folding into the new company. The subsidiary route, including the incorporation procedure and the bank account stage, is covered in our pillar guide, and the Istanbul-specific formation procedure in our company formation in Istanbul guide.

9. Common Pitfalls

The recurring errors in this area are consistent. Liaison offices drift into commercial activity — a "sample sale" here, an invoice issued "just once" there — and discover that the Ministry treats the prohibition as absolute, with permit cancellation and retroactive tax exposure as the consequence. Parent companies establish a market-research liaison office without noticing that its permit cannot be extended, and face an unplanned restructuring three years later. Branch files arrive at the registry with parent-company documents legalised in the wrong sequence or translated outside the notary-registered sworn-translation chain, and are returned weeks into the process. Branch profits are remitted without reading the applicable treaty, at a withholding cost that a different structure would have reduced. And in both structures, the Turkey-resident representative is appointed as an afterthought, without attention to the scope of their authority — even though every Turkish authority, bank and counterparty will deal with the operation through precisely that person. Each of these is avoidable at the design stage, which is where the structure decision belongs: made once, on advice, with the tax treaty and the exit path on the table.

10. Frequently Asked Questions

Can a foreign company operate in Turkey without founding a Turkish company? Yes — through a branch, which can trade as an extension of the parent, or a liaison office, which cannot trade but may conduct market research, representation and similar non-commercial activities under a Ministry permit.

What is the legal difference between a branch and a subsidiary? A subsidiary is a separate Turkish company whose liabilities are its own; a branch has no separate legal personality, so its debts are directly the foreign parent's debts. The trade-off is liability separation versus direct head-office control.

Does a branch need minimum capital? No statutory minimum applies. An allocated branch capital is customarily declared, and a credible allocation helps in bank compliance reviews.

How is a branch taxed in Turkey? As a limited taxpayer: corporate tax at 25% on Turkish-source income, VAT on its supplies, and a withholding tax — currently 15% — on profits remitted to the head office, subject to reduction under double taxation treaties.

What can a liaison office legally do? The activities permitted by the Implementation Regulation: market research, promotion of the parent's products and services, representation and hosting, supplier control, technical support, communication and information transfer, and regional management functions. It may not sell, invoice or generate revenue.

What happens if a liaison office engages in commercial activity? Its permit can be cancelled and tax exposure can arise retroactively. The prohibition is treated as absolute in supervision practice.

How long is a liaison office permit valid? The initial permit is granted for up to three years. Extensions depend on the activity category — up to ten years for regional management centres and up to five for most others — but offices licensed for market research or promotion are not extended.

How is a liaison office funded? Entirely by foreign-currency transfers from the parent company abroad. The office may not finance itself from Turkish sources, and the funding records are reviewed by the Ministry, including at extension stage.

Are liaison office salaries really tax-exempt? Salaries paid in foreign currency out of funds transferred from abroad are exempt from income tax under Article 23/14 of the Income Tax Law No. 193, provided the office maintains its non-commercial status.

Can a liaison office employ foreign staff? Only in a very limited way. In administrative practice, one foreign key person per office may receive a work permit, conditioned on substantial documented funding transfers from the parent. Larger foreign teams require a branch or subsidiary.

Which authority handles each structure? The branch is registered at the Trade Registry Directorate under the Commercial Code and the Trade Registry Regulation; the liaison office is licensed and supervised by the General Directorate of Incentive Implementation and Foreign Investment within the Ministry of Industry and Technology.

Can a liaison office later become a branch or company? There is no automatic conversion — the branch or company is established in its own right — but in practice the office's premises, staff and market knowledge transfer into the new structure, and planning that transition before the permit expires avoids a gap in presence.