Company Formation in Turkey: LLC vs JSC for Foreign Investors

Setting up a company in Türkiye is usually presented to foreign investors as a quick formality. What cannot be undone quickly is the decision taken before the filing: whether your Turkish entity is a Limited Liability Company (limited şirket) or a Joint-Stock Company (anonim şirket). That single choice fixes how much capital you must produce and when, whether your own assets can be reached for the company's unpaid taxes, how easily you can later sell shares, and how much of your exit the tax authority keeps.

Türkiye does not restrict foreign ownership the way many emerging markets do. Under the Law on Direct Foreign Investments (No. 4875), foreign investors are treated identically to Turkish ones: no local partner, no resident director, no prior permission for ordinary commercial activity. Both vehicles can be formed by a single shareholder, held 100% by a foreigner, and incorporated without anyone flying to Istanbul. The complexity sits elsewhere — capital timing, personal exposure for public debts, withholding on money you take out, sector licences — and our corporate and commercial law practice in Türkiye works through it before anything is filed.

Key Takeaways

• Minimum capital since 1 January 2024 (Presidential Decision No. 7887): TRY 50,000 for an LLC, TRY 250,000 for a JSC, TRY 500,000 for a JSC using the registered-capital system.

• An LLC needs no deposit before registration; a JSC must first pay at least 25% of its cash-subscribed capital into a bank account opened in the company's name, which the bank releases only once the company is registered. Both allow the balance within 24 months (TCC arts. 344, 345 and 585).

• LLC shareholders are personally liable, pro rata to their shareholding, for taxes and social-security premiums that cannot be collected from the company itself (Law No. 6183, art. 35). JSC shareholders are not; JSC board members, as legal representatives, are.

• Corporate income tax in 2026 is 25% (30% for financial institutions), with a domestic minimum tax of 10% of pre-incentive corporate income since the 2025 tax period, which does not apply to a company commencing activity for the first time for three accounting periods, starting with the one in which it begins.

• For an individual, the Income Tax Law excludes gains on share certificates of fully taxable companies held for more than two years; gains on partnership shares, the category an LLC share falls into, get no equivalent relief.

• The whole incorporation runs under a notarised, apostilled power of attorney. Legalising and translating documents abroad is usually the slow leg.

  
  

The Limited Liability Company (Limited Şirket)

The LLC, governed by the Turkish Commercial Code (TCC No. 6102), is the vehicle behind most foreign-owned entities in Türkiye: operating subsidiaries, distribution arms, consulting and software companies, holding vehicles. Its appeal is low entry cost and light governance. Its price is illiquidity and personal exposure.

Shareholders, Managers and the Shareholder-Manager Rule

An LLC may have between one and 50 shareholders, individuals or companies, of any nationality, and is run by one or more managers (müdür). The rule commonly misstated in English-language guides is this: not every manager must be a shareholder, but at least one shareholder must hold both the right to manage the company and the power to represent it (TCC art. 623). A wholly foreign-owned LLC can meet that rule by appointing the foreign shareholder as manager; the Code requires no resident or Turkish manager, although a company may also appoint a locally based manager or authorised signatory for day-to-day dealings with banks and the tax office.

Capital: TRY 50,000 and the 24-Month Clock

Minimum registered capital is TRY 50,000, five times the old TRY 10,000 threshold. Nothing need be deposited before registration; the full amount may be paid within 24 months of entry on the Trade Registry. Contributions in kind — machinery, receivables, intellectual property — are permitted only where the asset carries no limited right in rem, attachment or injunction, can be valued in money, is transferable, and has been valued by an expert (for a JSC, one appointed by the commercial court). Receivables qualify only once they have matured: undue receivables cannot be contributed as capital, and neither can service undertakings, personal labour or commercial goodwill (TCC arts. 128, 342, 343 and 581).

The Public-Debt Exposure That Decides Most Structures

Under article 35 of the Law on the Procedure for the Collection of Public Receivables (No. 6183), LLC shareholders are directly liable, in proportion to their capital shareholding, for taxes and social-security premiums — the latter through article 88 of Law No. 5510 — that cannot be collected from the company in whole or in part, or that are established as uncollectible from it. The exposure is secondary rather than parallel: enforcement must be directed at the company first. Once it fails there, however, the limited-liability label does not hold against the state. A 40% shareholder in an LLC whose TRY 2 million unpaid VAT assessment cannot be collected from the company is exposed for TRY 800,000 of it personally, whether or not that shareholder ever managed the company.

Share Transfers and Decision-Making

LLC transfers are cumbersome by design: a written transfer agreement with notarised signatures, general assembly approval unless the articles provide otherwise, then Trade Registry registration (TCC arts. 595 and 598). Every change of ownership is public. Amending the articles needs, unless they provide otherwise, a resolution of shareholders representing two-thirds of the capital (TCC art. 589), and a capital increase or a change of the business purpose needs two-thirds of the votes represented plus an absolute majority of all voting capital (TCC art. 621). Workable for a wholly owned subsidiary, awkward in a joint venture, which is why LLC joint ventures belong under a shareholders' agreement.

The Joint-Stock Company (Anonim Şirket)

The JSC is built for scale, outside capital and a clean exit. It costs more to start and demands real governance, but for any structure that may one day attract a private-equity investor, a strategic buyer or a Borsa Istanbul listing, it is almost always the correct starting point.

Board Structure and Who May Sit on It

A JSC can be formed by a single shareholder, individual or corporate, with no ceiling on shareholder numbers. It must have a board of at least one member. Directors need not be shareholders or Turkish, and a legal entity may sit on the board through a designated natural person, which gives a multinational parent board-level control with local management underneath. One caveat: the shield is partial. JSC shareholders do not answer for the company's unpaid public debts, but board members do, as legal representatives: public receivables that cannot be collected from the company are collected from their personal assets (Law No. 6183, art. 35 bis), and for unpaid social-security premiums board members are jointly and severally liable with the company (Law No. 5510, art. 88). Putting a parent-company executive on a Turkish board is not a neutral act.

Capital: TRY 250,000 and the 25% Blocked Deposit

Minimum registered capital is TRY 250,000, or TRY 500,000 under the registered-capital system. Unlike the LLC, a JSC must pay at least 25% of its cash-subscribed capital before registration into a Turkish bank account opened in the company's name, which is paid out to the company only after registration, with the balance due within 24 months (TCC arts. 344–345). The registered-capital system earns its higher threshold in growth-stage businesses: the board can issue shares up to an authorised ceiling without a general assembly and an amendment to the articles each time.

Share Transfers, Bearer Shares and the Two-Year Rule

Registered JSC shares represented by printed certificates transfer by endorsement and delivery with an entry in the share ledger (TCC arts. 490 and 499) — no notary, no registry filing, no publication, unless the articles make transfers subject to company approval (art. 492) or the transfer leaves a single shareholder, which must be registered and announced (art. 338). Bearer shares exist but since 2021 must be notified to the Central Securities Depository, so anonymity is no longer part of the proposition. The tax consequence matters more than the mechanics: for an individual, the Income Tax Law excludes gains on disposing of share certificates (hisse senetleri) of fully taxable companies held for more than two years, while gains on disposing of partnership shares, which is where an LLC share falls, are taxable however long they were held (Income Tax Law, additional art. 80(1) and (4)). Where a JSC has never issued share certificates, confirm the position with the tax administration before relying on the exclusion.

Incorporation in Practice: Documents, Timeline and Cost

What a Foreign Shareholder Must Produce

An individual shareholder needs a notarised, apostilled passport copy with a certified Turkish translation and a Turkish tax identification number, obtainable without residence. A corporate shareholder needs an apostilled certificate of incorporation or activity, a board resolution authorising the investment and subscription, and signature circulars, all apostilled and translated by a sworn translator. States outside the Hague Apostille Convention require consular legalisation instead, which adds time. Articles of association are then filed through the MERSİS system.

Incorporating Without Travelling

Every step above can be executed by a Turkish lawyer under a power of attorney notarised and apostilled at home, or signed at a Turkish consulate. Bank account opening is the practical exception: many Turkish banks want to see the beneficial owner in person, or apply enhanced due diligence to remote onboarding. Plan the account, not only the registration.

Timeline and Cost Items

The timetable depends mainly on how quickly foreign documents can be legalised and translated. Beyond professional fees, budget for notary and sworn translation charges, Trade Registry and Chamber of Commerce fees, the Gazette announcement, a Competition Authority contribution of 0.04% of the capital at incorporation and of the increased amount on every capital increase (Law No. 4054, art. 39), and a monthly accountant's fee.

Tax on the Company and on the Money You Take Out

Corporate Income Tax and the Minimum Tax Floor

Both vehicles are taxed identically; there is no separate regime for foreign-owned entities. The standard corporate income tax rate is 25%, rising to 30% for banks and financial institutions (Corporate Tax Law art. 32(1)). Since the 2025 fiscal year a domestic minimum corporate tax applies: liability cannot fall below 10% of corporate income calculated before exemptions and incentives (Corporate Tax Law art. 32/C). A company commencing activity for the first time is outside that floor for three accounting periods, starting with the one in which it begins (art. 32/C(5)), while groups within scope of the global minimum tax rules face a separate 15% effective-rate floor. Incentive-driven structures that once produced a near-zero Turkish bill no longer do.

Dividends, Withholding and Treaty Relief

Distributions to non-resident shareholders attract dividend withholding tax on top of corporate tax. The domestic rate was raised from 10% to 15% by Presidential Decision No. 9286, in force since 22 December 2024, so profit that has already borne 25% corporate tax carries a further 15% on the way out. An applicable double taxation treaty may reduce that rate. Relief is not automatic, so establish before the distribution which treaty rate applies and what proof of the parent's residence the Turkish company will need to hold.

Branch and Liaison Office: When a Subsidiary Is Not the Answer

A branch (şube) has no separate legal personality. It needs no Ministry permission, but it must be registered with the trade registry and a fully authorised commercial representative resident in Turkey must be appointed for it (TCC art. 40(4)); it is taxed on Turkish-source income, and leaves the foreign parent directly liable for everything the branch does. Profit remitted by a branch to its head office also carries 15% withholding, the same rate as a dividend since December 2024 (Corporate Tax Law art. 30/6, rate set by Presidential Decision No. 9286), so it rarely wins on tax alone. A liaison office (irtibat bürosu) is a different instrument: licensed by the Ministry of Industry and Technology, initially for up to three years and extendable except where it was set up only for market research or promotion, and limited to non-commercial work such as market research, representation, technical support and sourcing — no commercial activity, no invoicing. An office found to be carrying on commercial activity has its permit cancelled and is reported to the relevant authorities (FDI Implementing Regulation arts. 6 and 8). Where cost drives the question, compare a free zone entity.

Two Things That Catch Investors Late

Sector Restrictions and Merger Control

Full foreign ownership is the rule, but a short list of sectors carries caps or licensing conditions — broadcasting (direct foreign capital in a media service provider may not exceed 50% of paid-in capital, Law No. 6112, art. 19), civil aviation (Law No. 2920, arts. 31 and 49) and maritime cabotage (reserved to Turkish-flag vessels, Law No. 815, art. 1) — and in banking, acquiring 10% or more of a bank, or crossing 20%, 33% or 50%, needs regulator approval (Banking Law No. 5411, art. 18). If you are entering by acquisition rather than greenfield formation, Turkish merger control thresholds may require Competition Authority clearance before closing.

Owning a Company Is Not a Right to Work in It

Incorporating gives you no immigration status. A foreign shareholder who intends to manage the company on the ground needs a work permit, and a valid work permit counts as a residence permit (Law No. 6458, art. 27(1)). The Ministry refuses applications that do not meet the assessment criteria it sets (Law No. 6735, art. 9(1)(e)), so check the current criteria before fixing the capital figure and the share split at incorporation.

After Registration: What Starts Immediately

Registration opens the compliance calendar rather than closing the project. After registration the company must register with the tax office, activate an electronic notification address, certify its statutory books and engage an accountant for monthly and quarterly filings. Hiring anyone triggers social-security registration and the full set of Turkish employer obligations. Companies with foreign capital also report share transfers, capital changes and annual activity data through the Ministry of Industry and Technology's E-TUYS system. KVKK duties apply from the first customer whose data you hold, and because trademark protection in Türkiye is obtained by registration (Industrial Property Law No. 6769, art. 7), trademark registration belongs at incorporation, not after the first infringement.

Few foreign investors regret their entity choice because of what incorporation cost. They regret it when a tax assessment reaches a shareholder personally, when a buyer discounts the price because share transfers are notarial and public, or when the two-year exclusion, which the Income Tax Law words for share certificates, turns out not to fit their shares. Choose the vehicle against your exit and your risk exposure, not against the registration invoice — and choose it before the articles of association are drafted, while changing it still costs nothing.

Common questions about forming a company in Turkey

Can a foreign investor own 100% of a Turkish company?

Yes. Turkey imposes no restrictions on foreign equity ownership for most sectors. Both LLCs and JSCs can be fully owned by foreign individuals or legal entities. Certain regulated sectors such as broadcasting, aviation, and maritime may have specific foreign ownership caps, but the vast majority of commercial activities permit full foreign control.

What is the minimum capital required to form an LLC in Turkey in 2026?

The minimum registered capital for a Limited Liability Company in Turkey is TRY 50,000, effective since January 1, 2024, under Presidential Decision No. 7887. This capital may be paid in full within 24 months of the company's registration at the Trade Registry.

Is a JSC required to have a board of directors?

Yes. Every Joint-Stock Company in Turkey must have a board of directors of at least one member (TCC art. 359). Board members need not be shareholders, and a legal entity may sit on the board through a registered natural person. An LLC is different: its managers need not all be shareholders, but at least one shareholder must have the right to manage and represent it (TCC art. 623), which is why a JSC fits professional management structures and MNC governance standards more easily.

How long does it take to register a company in Turkey?

The timetable depends mainly on how quickly the foreign documents can be apostilled and translated. For a JSC, at least 25% of the cash-subscribed capital must be paid into a bank account opened in the company's name before registration (TCC arts. 344–345), while an LLC may register first and pay its capital within 24 months (TCC art. 585). In both cases the company acquires legal personality on registration with the Trade Registry (TCC arts. 355 and 588).

What is the corporate tax rate for foreign-owned companies in Turkey?

Foreign-owned companies in Turkey are subject to the standard corporate income tax rate of 25%. There is no distinction between domestic and foreign-owned entities for CIT purposes. Turkey's double taxation treaties may reduce withholding tax rates on dividends, interest, and royalties remitted to the parent company's jurisdiction.

Should I open a branch office or a subsidiary in Turkey?

The choice depends on your strategic objectives. A branch office has no separate legal personality and exposes the parent company to direct liability in Turkey. A subsidiary (LLC or JSC) provides limited liability protection and is treated as an independent Turkish taxpayer. For most foreign investors seeking asset protection and operational independence, a subsidiary structure is the recommended approach.

Do I need to be physically present in Turkey to form a company?

No. The entire incorporation can be completed by a Turkish attorney acting under a power of attorney notarised and apostilled in your own country, or signed at a Turkish consulate, without the shareholder or director travelling to Turkey. Foreign corporate shareholders must supply apostilled and sworn-translated certificates of incorporation, a board resolution authorising the investment, and signature circulars. The one step that is not always remote is banking: several Turkish banks now ask to see the beneficial owner in person, or apply enhanced due diligence before opening an account remotely, so the account should be planned separately from the registration.

Should I choose an LLC or a JSC?

An LLC suits smaller operations, holding vehicles and wholly owned subsidiaries that prioritise low entry cost and simple governance. A JSC is preferable where you expect to bring in outside investors, transfer shares efficiently, access capital markets, or sell the business, because for an individual the Income Tax Law excludes gains on share certificates of fully taxable companies held for more than two years, a relief LLC shares do not have. The decisive factor for many principals is not cost but exposure: LLC shareholders answer personally, pro rata to their shareholding, for the company's unpaid taxes and social-security premiums once those cannot be collected from the company itself, while JSC shareholders do not.

What taxes will my Turkish company pay?

Resident companies pay corporate income tax at the 2026 standard rate of 25%, or 30% for banks and financial institutions, with no distinction between domestic and foreign-owned entities. Since the 2025 fiscal year a domestic minimum corporate tax also applies, so liability cannot fall below 10% of corporate income calculated before exemptions and incentives, although a company commencing activity for the first time is outside that floor for three accounting periods, starting with the one in which it begins; multinational groups within scope of the global minimum tax rules face a separate 15% effective-rate floor. Dividends distributed to non-resident shareholders attract withholding tax on top, at a domestic rate raised from 10% to 15% with effect from 22 December 2024, which a double taxation treaty may reduce.

This guide is general information on Turkish law, not legal advice on your own matter. Rules and practice change; check the position before you act.