ESTABLISHING A BUSINESS

Türkiye’s FDI Law is based on the principle of equal treatment and allows international investors to have the same rights and liabilities as local investors.

The conditions for setting up a business and transfer of shares are the same as those applied to local investors. International investors may establish any form of company set out in the Turkish Commercial Code (TCC), which provides for a corporate governance approach that meets international standards, fosters private equity and public offering activities, creates transparency in managing operations and brings the Turkish business environment in compliance with EU legislation as well as with the EU accession process.

Türkiye has initiated reforms with a view to making it easier to do business in order to enhance the investment environment, eliminating red tape in setting up a business and minimizing costs and procedures. To this end, establishing a company is now only carried out at Trade Registry Directorates located in Chambers of Commerce and designed to be a ‘one-stop shop’. The process is completed within the same day.

Company Types under TCC and Alternative Forms

There are corporate and non-corporate forms of companies under the TCC, which states that companies may be established under the following types:

a. Corporate forms

• Joint Stock Company (JSC)

• Limited Liability Company (LLC)

Although some financial thresholds (i.e., minimum capital) and organs differ from each other, the procedures to be followed for establishing a JSC or an LLC are the same.

b. Non-corporate forms

• General Partnership

• Limited Partnership

• Partnership Limited by Shares

Although companies may be established according to these five different types, JSC and LLC are the most common types chosen both in the global economy and Türkiye.

Establishing a Company

In case of establishing of a company in Türkiye, related rules and regulations must be followed: ​

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Submit the memorandum and articles of association online to MERSIS

Pursuant to the Trade Registry Regulation, trade registration transactions must be fulfilled through MERSIS (Central Registry Record System).

MERSIS is a central registry system for carrying out commercial registry processes and storing commercial registry data electronically on a regular basis. A unique number is given to legal entities that are actively involved in business. Online establishment of new companies is possible on MERSIS, and already-established companies may operate through the system after the transfer of their records.

Execute and notarize company documents

The following documents are required for registration application at the relevant Trade Registry Directorate:

• Articles of incorporation signed by all the founders before Trade Registry Directorate authorized personnel or a Notary Public (four copies, one original)

• ​In case the foreign partner is a real person, the required documents are:

• • For each real person shareholder, two copies of their passports (translated notarized copy of passport; if residing in Turkey, notarized residence permit, tax identification number obtained from the tax office.)

• In case the foreign partner is a legal entity, the required documents are:

• • The Certificate of Activity of the legal entity designated as the shareholder issued by the relevant authority in the investor’s country. The certificate must bear information regarding the current status and signatories of the company.

• • Resolution(s) of the shareholders of the competent corporate organ of legal entity shareholder(s) authorizing the establishment; if there is any specific condition for the prospective company to be incorporated (name of the company, field of activity, etc.) it must be stated in the resolution for the sake of clarity.

• • In case a legal entity is going to be appointed as a member of the board of directors of the prospective company to be incorporated, the name of the real person who will act in the name of the legal entity and the legal entity’s board member’s appointment must be stated within the same or with a separate resolution for the sake of clarity. ​

• • If the process is going to be followed by proxy, a notarized copy of a power of attorney authorizing the attorneys who will follow up the application before the competent Trade Registry Directorate and other official authorities in order to proceed with the application (where applicable).

• Notarized signature declarations (two copies)

• Notarized identity cards of the company managers (one copy)

It should be noted that, except the first item above, all necessary documents that will be issued and executed outside of Turkey must be notarized and apostilled or alternatively ratified by the Turkish Consulate located in the country of transaction. The original executed, notarized, and apostilled documents must be officially translated and notarized by a Turkish notary.​

Obtain potential tax identity number

The company must obtain potential tax identity numbers for non-Turkish shareholders, and non-Turkish board members of the company from the relevant tax office. This potential tax identity number is necessary for opening a bank account in order to deposit the capital of the company to be incorporated.

The documents required by the tax office are as follows:

• Petition requesting registration

• Articles of association (one original)

• Copy of the tenancy contract showing the registered address for the company

• If the process is going to be followed by proxy, a power of attorney must be issued specifically showing the authority to act on behalf of the company before the tax authority in order to obtain a tax identity number or potential tax identity number.​​

Deposit a percentage of capital to the account of the Competition Authority

0.04 percent of the company’s capital must be paid to the account of the Competition Authority via Trade Registry Directorate pay office.

Deposit at least 25 percent of the startup capital in a bank and obtain proof thereof

25 percent of the subscribed share capital must be paid prior to the new company registration. The remaining 75 percent must be paid within two years. Alternatively, the capital may be fully paid prior to registration.

However, the requirement for paying 25 percent of the capital during establishment before the registration of the company is not applicable to limited companies. Subscribed capital for limited companies may be paid within the 24 months following the establishment of the company.

Apply for registration at the Trade Registry Directorate

The founders may apply for registration after gathering the following documents:

• Petition requesting registration

• Four copies of the incorporation notification form

• Articles of incorporation signed by all the founders before Trade Registry Directorate’s authorized personnel or a Notary Public (four copies, one original)

• Payment made to the bank account of the Competition Authority (0.04 percent of the company's capital)

• Two copies of the signature declarations for each person authorized to represent the founders of the limited liability company

• Founders' declaration (one original)

• Chamber of Commerce registration form (two different forms for two different shareholder types: real person shareholder or legal entity shareholder)

• The written statement of non-shareholder members of board of directors that states acknowledgement of this duty

• Bank certificate of the paid-in minimum capital deposit (at least 25 percent of subscribed capital). If there will be any capital contribution in kind:

• • The expert report regarding the capital in kind

• • The statement of the relevant registry office indicating there is no limitation on the capital in kind

• • The document indicating the annotations have been done to relevant registries regarding the capital in kind

• • The written agreements between founders, other persons, and the founding company regarding the foundation of the company

Following completion of the registration phase before the Trade Registry Directorate, the Trade Registry Directorate notifies the relevant tax office and the Social Security Institution ex-officio regarding the incorporation of the company. The Trade Registry Directorate arranges an announcement in the Commercial Registry Gazette within approximately 10 days after the company registration. A tax registration certificate must be obtained from the local tax office soon after the Trade Registry Directorate notifies the local tax office.

A social security number for the company must be obtained from the relevant Social Security Institution. For the employees, a separate application has to be made following the registration of the company with the Social Security Institution.​

Certify the legal books

The Trade Registry Directorate’s authorized personnel will certify the following books during the establishment process.

• Journal

• Ledger

• Inventory book

• Share ledger

• Manager's meeting minutes book

• General assembly meeting minutes book​

Follow up with the tax office on the Trade Registry Directorate’s company establishment notification

The Trade Registry Directorate notifies the tax office and the Social Security Institution of the company’s incorporation. A tax officer comes to the company headquarters to prepare a determination report. There must be at least one authorized signature in the determination report. The Trade Registry Directorate sends the company establishment form, which includes the tax number notification, to the tax office.​

Issuance of signature circular

On the day the company is registered at the Trade Registry Directorate, the signatories of the company shall issue a signature circular before authorized Trade Registry Directorate personnel.​

Move certain documents to electronic format / E-TUYS system

The following documents that were previously submitted in printed form to the General Directorate of Incentive Implementation and Foreign Investment (GDIIFI) by companies and branches established in Turkey by foreign investors may now be received electronically.​

• Activity Information Form for FDI

• FDI Capital Data Form

• FDI Share Transfer Data Form

The information in these forms will only be received electronically via a web-based application called E-TUYS that was developed to expand the data system about FDI and help obtain up-to-date information faster, and is managed by the GDIIFI. Therefore, these forms will no longer be received in printed format.​

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Joint Ventures

• A joint venture is generally considered an ordinary partnership (Adi Ortaklık), which is not a legal entity under the Turkish law but shareholders usually choose to establish a commercial company.

• The preferred option is joint stock companies due to the ability to establish groups of shares and the limited aspect of shareholder liability in comparison to those of limited liability companies.

• There is no specific legislation governing joint ventures in Türkiye which are governed by the laws applicable to the type of company established. It is a common practice to enter into a shareholders’ agreement to govern the relationship between the joint venture parties and the maintenance of the joint venture.

• There are no restrictions on the nationality of shareholders and those holding management rights except for specific sectors such as TV broadcasting, maritime and civil aviation.​

Branch Office

• No shareholder.

• Not an independent legal entity. Its duration is limited to the duration of the parent company.

• No capital requirement, however, it would be wise to allocate a budget for the operations of a branch office.

• A branch office may be incorporated only for the same purposes as those of the parent company.

• Repatriation of branch profit is allowed. The branch profit transferred to the headquarters is subject to dividend withholding tax at a rate of 15 percent, which may be reduced by Double Taxation Prevention Treaties.

An application with the following documents must be submitted to the relevant Trade Registry Directorate for the registration of a branch:

• Petition (must be signed either by an authorized signatory under the company seal or by proxy; if signed by the latter, then the original or the notarized copy of the power of attorney must be attached to the petition)

• The resolution of the competent organ of the parent company to open a branch

• A certified original copy of the parent company’s articles of association

• Certificate of Activity of the parent company or any equivalent documentation that sets forth registration and current status of the parent company

• A power of attorney granted by the parent company in favor of its resident representative, assigning full representation and accountability

• Five copies of the Establishment Declaration Form (the related fields must be filled and signed by the authorized person)

• Two copies of the power of attorney stating the representative in Türkiye

• If the branch representative is a Turkish national, a notarized copy of his/her ID card. If not, a notarized copy of the authorized representative’s passport translated into Turkish

• Two copies of the signature declarations of the branch representative under the branch title

• A letter of commitment (must be signed by authorized person)

• A Chamber Registry Declaration Form Statement to be obtained from the Trade Registry Directorate (including photographs of the branch representatives)

It should be noted that all the necessary documents that will be issued and executed outside Türkiye must be notarized and apostilled or alternatively ratified by the Turkish consulate where they are issued. The original executed, notarized, and apostilled documents must be officially translated and notarized by a Turkish notary.

Liaison Offices

Any company incorporated under the laws of a foreign country may establish a liaison office (aka representative office) in Türkiye upon obtaining a license from the Ministry of Industry and Technology, provided that the company does not engage in any commercial activities in Türkiye. To establish a liaison office, the following documents should be submitted to the Ministry of Industry and Technology​​​​, General Directorate of Incentive Implementation and Foreign Investment (GDIIFI).

• Application form*

• Statement outlining the works to be conducted by the liaison office, an undertaking that the office shall not engage in any commercial activities*, and proof that the signatory to the statement is fully authorized by the company

• ​A certificate of activity issued by the foreign country and verified by the relevant Turkish Consulate or in accordance with the provisions of the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (the Apostille Convention)

• A certificate of activity issued to foreign companies or balance sheet and income statement

• A certificate of authorization issued to the individual(s) appointed to conduct the activities of the liaison office

• A power of attorney in the event that the procedures for establishing the liaison office are carried out by another representative

*May be obtained from the Ministry of Industry and Technology​

In the event of the original documents are submitted to GDIIFI, copies of these documents shall be approved by GDIIFI. The originals shall be returned to the applicant.

During the initial application for liaison offices, licenses are granted for a maximum of three years within the scope of the declared activities. Liaison offices willing to extend their term of operation shall apply to GDIIFI before the expiration of their terms of operation. GDIIFI may conclude applications for the extension of their tenure based on the nature of activities of the office over the previous year, business plan, the company's future objectives in Türkiye, existing and anticipated amount of expenditure and the number of employees. The tenure of operation of offices licensed to conduct market research or promotion of foreign company products or services shall not be extended.

Applications for establishment and tenure extension shall be concluded in fifteen working days from the date of application provided that the requested information/documents is/are complete and accurate.

Applications submitted by foreign companies to set up a liaison office to conduct financial activities subject to special legislation such as money and capital markets or insurance shall be evaluated by competent agencies such as the Capital Markets Board of Türkiye and the Banking Regulation and Supervision Agency – both being the duly authorized bodies pursuant to special legislations. The ministry may conclude foreign companies’ applications to set up liaison offices in other industries that require licenses for operations or similar authorizations, if necessary, upon consulting competent bodies that are duly authorized to issue such permits or licenses.

Copies of tax registration and tenancy agreement for the liaison office shall be submitted to GDIIFI within a maximum of one month. Liaison offices shall notify GDIIFI of any changes with regard to the office representative(s) or foreign company title within a maximum of one month following the change. Liaison offices shall produce a new tenancy agreement comprising the new address, the certificate of authorization of the newly appointed representative or the document(s) related with the change of title of the foreign company.

In the event that a liaison office terminates its operations, it shall furnish GDIIFI with a statement of termination obtained from the relevant tax office. Offices may not claim transfers of funds except for balances that remain outstanding upon termination and liquidation thereof.

OBTAINING A WORK PERMIT

1. Initial Application

One can file an application to obtain a work permit in Türkiye either while located in Türkiye or abroad.

In the case of applications filed abroad, foreigners are required to file an application at a consulate of the Republic of Türkiye in the country of which they are a citizen or a permanent resident. The application should be accompanied by a labor contract, letter of assignment, or a document stating company partnership. The employer in Türkiye is required to file an online application and submit the required information and documents to the Ministry of Family, Labour and Social Services, either in person or via mail, within ten business days following the date of the candidate’s application to a consulate. The consulates of the Republic of Türkiye and the ministry will execute online the procedures for the work permit applications filed abroad.

Foreigners whose applications are approved by the Ministry of Family, Labour and Social Services must enter Türkiye within a maximum of hundred and eighty days after the date the work permit is issued. In the case of applications filed in Türkiye, with the exception of residence permits issued for education in Türkiye, foreigners who hold residence permits with a remaining term of at least six months, or employers thereof, may file work permit applications. Such foreigners are not required to submit an application to the consulates of the Republic of Türkiye. The documents required for the application must be submitted to the Ministry of Family, Labour and Social Services, either in person or via mail, within a maximum of six business days after the online application.

The Ministry of Family, Labour and Social Services concludes the procedures regarding work permit applications in consultation, where necessary, with relevant ministries and authorities. The procedures regarding duly submitted work permit applications are concluded by the ministry within a maximum of thirty days provided all required documents are submitted in full. If the ministry determines that required documents are missing, the applicant is notified to submit the documents in question. In such cases, the thirty-day period commences on the date on which the missing documents are submitted to the ministry. In the case of applications filed abroad, the ministry forwards the affirmative or negative decision regarding the work permit application to the relevant consulate of the Republic of Türkiye (via the Ministry of Foreign Affairs), which notifies the applicant. In the case of applications filed in Türkiye, the ministry notifies the foreigner or the employer. Foreigners who are granted residence and work permits from consulates and enter the country are required to register to the Address Registry System in Türkiye within a maximum of twenty business days following the date of entrance.

The methods and principles concerning work permits to be issued to foreigners to be employed in Türkiye vary by the relevant sector, such as education, housekeeping services, health services, tourism, aviation, entertainment, and others, as well as with respect to foreign direct investments, special foreign direct investments, professional services, and liaison offices. The following information covers the methods and principles regarding work permit applications concerning foreign direct investments.​

1.1. Documents required from the employer at the time of the initial application

• Work permit application letter (The letter must be scanned and submitted as part of the online application; it must also be submitted in hardcopy, signed by the employer).
  

• Foreign personnel application form (The form filled online must be printed, and a hardcopy signed by the employer and the foreigner must be submitted to the ministry. If the signed form is unavailable, the employment agreement executed by and between the parties must be submitted. The application will not be processed in the absence of a signed form or a labor contract.)
  

• The Trade Registry Gazette of Turkey, detailing the current shareholding and capital structure of the entity (The document must be scanned and submitted during the online application).
  

• A balance sheet and a profit/loss statement for the most recent year, certified by the tax office or certified public accountant (The document must be scanned and submitted during the online application).
  

• Information and documents stating that the entity is subject to Special Foreign Direct Investments* (These documents must be scanned and submitted during the online application).
  

• A document stating that entities (including consortiums) awarded international tenders by government agencies or organizations have been contracted for the awarded job from the relevant agency or organization (The document must be scanned and submitted during the online application).
  

• In the case of legal entities that are to employ foreign specialists in the field of engineering, architecture, contracting, and consulting services, a payroll document stating that Turkish engineers/architects/city planners are employed for the same occupation (The document must be scanned and submitted during the online application).
  

• Notarized power of attorney for the person authorized to file the online application as a user on behalf of the entity or organization to employ the foreigner, or a document attesting to the employment of the user at the applicant entity or organization (The document must be scanned and submitted during the online application).

1.2. Documents required from the foreigner at the time of the initial application

• In the case of applications filed in Turkey, a copy of the residence permit issued for other than education purposes with a term of at least six months remaining as of the date of application (The document must be scanned and submitted during the online application).

• If a foreigner who files a work permit application does not hold a valid residence permit, the foreigner is required to file an application to the consulates of the Republic of Turkey in the country of which he/she is a citizen or a permanent resident, submitting his/her labor contract or a document attesting to company partnership. However, if the company meets at least one of the criteria required for Special Foreign Direct Investments*, the work permit application can be filed directly with the Ministry of Family, Labour and Social Services provided that the foreigner to be employed with key personnel status is currently staying in Turkey on a legitimate basis (by submitting a copy of the passport showing the visa and entrance date, or a letter obtained from the Police Department). Other key personnel who are granted work permits in this context are required to obtain work visas from consulates of the Republic of Turkey, and enter the country with that visa.

• In the case of foreigners who are key personnel, the documents and information specified in article 10/b of the Regulation on the Employment of Foreign Nationals with Foreign Direct Investments (The documents must be scanned and submitted during the online application).

• Copy of the passport (where the passport is not printed in the Latin alphabet, a sworn translation or an official certified translation must be attached. The document must be scanned and submitted during the online application).

• Sworn translation or an official certified translation of the diploma or provisional graduation certificate (The document must be scanned and submitted during the online application, as well as submitted in hardcopy).

• In addition to the abovementioned documents, foreigners who file an application for work permits within the framework of professional services and who hold a degree from abroad must file a "Diploma or Provisional Graduation Equivalency Certificate" obtained in accordance with the "Regulation on the Equivalency of Diplomas from Foreign Higher Education Institutions" (The document must be scanned and submitted during the online application).​

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​2. Application for Extension

Applications for extension of the work permit must be filed by the foreigner or the employer directly with the Ministry of Family, Labour and Social Services, by submitting the original copy of the previous work permit, along with the application form and the documents specified in the appendix of the implementation regulation.

The work permit and term extension applications must be first submitted online. In order for the work permit or term extension applications filed online and pre-approved by the system to be valid, the application form print-out with barcode, generated online, must be signed by the foreigner and the employer, and submitted, along with the other documents specified in the appendix to the regulation, to the Ministry of Family, Labour and Social Services within a maximum of six business days following the pre-approval of the online application, either in person or via mail.

Term extension applications should be filed at most two months in advance of the expiration date of the permit. Extension applications filed within a maximum of fifteen days following the expiration of the work permit will also be processed. The term extension applications filed thereafter are subject to the principles applicable to foreigners who file an application for the first time. In the case of work permit term extension applications filed with a valid residence permit (as with first-time applications filed while in Türkiye), the required documents must be submitted to the Ministry of Family, Labour and Social Services within six business days following the online application.

Term extensions for a period of two years may be filed for an existing work permit following the statutory one-year work permit term provided they are for employment with the same entity or enterprise and for the same profession. At the end of the statutory three-year work permit term, the existing work permit may be extended for a further three years, for employment with any employer, for the same profession. Foreigners who have resided in Türkiye for at least eight uninterrupted years on a legal basis, or foreigners who have a total of eight years of employment with a work permit, may file applications for indefinite work permits.

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2.1. Documents required from the employer at the time of extension applications

• Work permit term extension application letter (The letter must be scanned and submitted as part of the online application; it must also be submitted in hardcopy, signed by the employer).

• 
  Foreign personnel application form (The form filled out online must be printed, and a hardcopy signed by the employer and the foreigner must be submitted to the ministry. The labor contract executed by and between the parties must be submitted where the signed form is unavailable. The application cannot be processed in the absence of a signed form or labor contract.)

• 
  The Trade Registry Gazette of Turkey detailing the current shareholding and capital structure of the entity, if modified since the initial submission (The document must be scanned and submitted during the online application).

• 
  Document attesting that the employer has no outstanding tax obligations (This information must be accessed by the Ministry of Family, Labour and Social Services through the records of the Ministry of Treasury and Finance).

• 
  The Social Security Institution registration number of the insured foreigner named in the application form, and information regarding whether or not the employer has fulfilled its social security obligations regarding the foreigner (This information must be accessed by the Ministry of Family, Labour and Social Services through the records of the Social Security Institution).

• 
  Notarized power of attorney for the person authorized to file the online application as a user on behalf of the entity or organization to employ the foreigner, or a document attesting the employment of the user at the applicant entity or organization (The document must be scanned and submitted during the online application).​

2.2. Documents required from the foreigner at the time of extension applications

• Copy of the passport (where the passport is not printed in the Latin alphabet, a sworn translation or an official certified translation must be attached. The document must be scanned and submitted during the online application).

• 
  Previous work permit and cover letter (The documents must be scanned and submitted during the online application).

• 
  Residence permit for work, covering the term of the work permit issued by the Ministry of Family, Labour and Social Services (The document must be scanned and submitted during the online application).

• 
  Provisional membership certificate required from foreigners who are granted work permits for work as an engineer, architect, or city planner, as per article 36 of Law no. 6235 on Turkish Association of Chambers of Engineers and Architects (The document must be scanned and submitted during the online application).​​​​​

*Special Foreign Direct Investments

The "Regulation on the Employment of Foreign Nationals Within the Framework of Foreign Direct Investments" introduced special provisions regarding work permits in order to facilitate work permits. Work permit applications required for personnel to be employed within the framework of foreign direct investments to which these provisions are not applicable are subject to the abovementioned general provisions.

The scope of the Regulation on the Employment of Foreign Nationals Within the Framework of Foreign Direct Investments is defined on the basis of two fundamental criteria:

• Special Foreign Direct Investments (including liaison offices)

• Foreign national key personnel

The term “Special Foreign Direct Investment” refers to a company or branch subject to Foreign Direct Investments Law no. 4875, and meeting at least one of the following criteria (figures applicable for year 2019):

• Provided that the foreign shareholders hold at least TRY 1.888.190 of the capital, the company or branch registered a turnover of at least TRY 141.9 million in the most recent year.

• Provided that the foreign shareholders hold at least TRY 1.888.190 of the capital, the company or branch posted an export figure of at least USD 1 million in the most recent year.

• Provided that the foreign shareholders hold at least TRY 1.888.190 of the capital, the company or branch employs in the most recent year, at least 250 personnel registered before the Social Security Institution.

• Provided that, in cases where the company or the branch is to make investments, the planned minimum investment figure is at least TRY 47.1 million.

• Provided that the company has a foreign direct investment in at least one more country other than the country where its headquarters is located.

“Key personnel” refers to personnel who meet at least one of the following criteria, at the legal entity located in Türkiye:

a) Persons serving as a company shareholder, chairman of the board of directors, member of the board of directors, chief executive, vice president, executive, assistant executive or similar positions, with authority or a role in at least one of the following:

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• A senior management or executive position in the company

• Managing the whole or a part of the company

• Auditing or controlling the work of the company auditors, or administrative or technical personnel

• Hiring new personnel or terminating the employment of existing personnel, or making proposals concerning these issues

b) Holding key knowledge regarding the services, research devices, techniques, or management of the company

c) At liaison offices, a maximum of one person in whose name the authorization certificate is issued by the overseas parent company

Charges Applicable to Work Permits for Foreigners: According to the Act of Fees no. 492, work permits to be issued to foreigners are subject to charges. In cases where the work permit application is approved by the Ministry of Family, Labor and Social Services, the applicable charge must be deposited with reference to the term of the permit.

Valuable papers fee is collected for work permits issued for foreigners further to the provisions of Valuable Papers Law No. 210. The applicable charge figures and valuable papers fee are set each year on the basis of the revaluation rate, and announced in the Official Gazette.

For detailed information on work permits:​

www.csgb.gov.tr/uigm​

OBTAINING A RESIDENCE PERMIT

Foreigners who intend to extend their stay in Türkiye beyond the time limit specified in their visa, those who require a visa exemption or intend to stay for more than ninety days must obtain a residence permit.

1. Short-Term Residence Permit for Foreigners

For short-term residence permits, foreigners who own real estate in Türkiye or intend to establish a business or make business connections in Türkiye must submit the following documents to the relevant Provincial Directorate of Migration Management (İl Göç İdaresi Müdürlüğü) once an application is submitted through the e-residence system. (e-ikamet.goc.gov.tr)

Short-term residence permits are issued for a maximum of two years as a principle. However, foreigners who intend to invest in Türkiye in amounts and scopes attested by the Council of Ministers, along with their spouse and children, may be granted a five-year short-term residence permit. Furthermore, these investors may apply for acquisition of Turkish citizenship or a long-term residence permit.

1.1. Initial Application

• Residence permit application form

• Copy of passport or equivalent travel document

• Four biometric photographs

• Proof of financial sufficiency and regular means of subsistence for the duration of the stay

• Documents/receipts for the payment of residence permit fee and card fee

• Title deed proving the applicant's ownership (required for foreigners who own immovable property in Turkey)​

• Valid health insurance

Foreigners who intend to apply for a short residence permit by establishing a business or making business connections in Turkey must submit the following additional documents:

• Letter of invitation from the person or company(ies) to be contacted

• Notarized company activity certificate

• Notarized tax registration certificate

• Notarized trade registry gazette

• Notarized signature circular

Foreigners who intend to apply for a short residence permit by investing in amounts and scopes attested by the Council of Ministers must meet any of the following criteria:

• Making a minimum fixed capital investment of USD 500,000 or equivalent foreign currency, as attested by the Ministry of Industry and Technology

• Acquiring a property worth a minimum of USD 400,000 or equivalent foreign currency with a title deed restriction on its resale for at least three years, as attested by the Ministry of Environment, Urbanization and Climate Change

• Creating jobs for at least 50 people, as attested by the Ministry of Labor and Social Security

• Depositing a minimum of USD 500,000 or equivalent foreign currency in banks operating in Türkiye with the condition that it is not withdrawn for at least three years, as attested by the Banking Regulation and Supervision Agency

• Buying government bonds worth a minimum of USD 500,000 or equivalent foreign currency with the condition that they are not sold for at least three years, as attested by the Ministry of Treasury and Finance

• Buying real estate investment fund shares or venture capital investment fund shares worth a minimum of USD 500,000 or equivalent foreign currency with the condition that they are not sold for at least three years, as attested by the Capital Markets Board of Türkiye

• Depositing a minimum contribution of USD 500,000 or equivalent foreign currency in funds determined by the Insurance and Private Pension Regulation and Supervision Agency with the condition that it remains in the private pension system for at least three years, as attested by the Insurance and Private Pension Regulation and Supervision Agency

1.2. Application for Extension

For obtaining extensions, foreigners must submit the following documents to the relevant Provincial Directorate of Migration Management (İl Göç İdaresi Müdürlüğü) by mail within five business days once an application is submitted through the e-residence system. (e-ikamet.goc.gov.tr). Applications for extension of the residence permit may be made sixty days prior to its expiration, but under no circumstances should this be done after the expiry date.

• Residence permit application form

• Notarized copy of passport or equivalent travel document

• Four biometric photographs

• Submission of the previous residence permit document

• Proof of financial sufficiency and regular means of subsistence for the duration of the stay

• Title deed proving the applicant's ownership (required for foreigners who own immovable property in Turkey)

• Letter of invitation from the person or company(ies) to be contacted (required for foreigners who intend to establish business or make business connections in Turkey)

• Valid medical insurance

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2. Long-Term Residence Permit for Foreigners

For long-term residence permits, foreigners who have continuously resided in Türkiye for at least eight years must submit the following documents to the relevant Provincial Directorate of Migration Management (İl Göç İdaresi Müdürlüğü). Long-term residence permits are issued indefinitely; therefore, no extension application is required.

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2.1. Application

• Residence permit application form

• Original and copy of passport or equivalent travel document

• Copy of the previous residence permit document

• Four biometric photographs

• Proof that the applicant has not received any social aid from governmental institutions and organizations in the last three years

• Proof of financial sufficiency and regular means of subsistence for the duration of the stay

• Police record document

• Valid medical insurance

ACQUIRING PROPERTY AND CITIZENSHIP

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​What Foreigners Looking to Acquire Real Estate in Türkiye Need to Know

• In Türkiye, acquisition of property ownership titles may only be approved upon registration at the land registry directorates.​
  

• Preliminary real estate contracts, issued by notaries or entered into by natural persons in writing, do not confer transfer of property per se. They only serve as a commitment for the transfer of ownership; the property in question does not change hands by means of such instruments.
  

• Burdens such as mortgages, liens, and similar types of restrictions that may exist with regard to the said property that would prevent the sale thereof should be checked prior to the initiation of procedures at the respective land registry directorate.
  

• Inquiries about properties may be made online at parselsorgu.tkgm.gov.tr, where specific details of the city, district, quarter/village, map section, and plot may be used to look up the property. Basic information on the real estate property, including its current status, is thus accessible online from anywhere in the world. Personal information of the owner remains inaccessible, however.
  

• Foreign nationals do not need to h​ave a residence permit as a pre-condition to acquire real estate in Türkiye. In addition, foreigners who acquire property in Türkiye are granted renewable short-term residence permits under Law No. 6458 on Foreigners and International Protection.
  

• A natural or legal person intending to acquire real estate in Türkiye is required to apply to the General Directorate of Land Registry and Cadastre together with the owner of the property. In addition, they may call the Alo 181 Call Center, offering service around the clock, or visit randevu.tkgm.gov.tr to make an appointment without having to visit the directorates’ offices in person.
  

• Turkish companies with foreign capital, on the other hand, should first file an application at the Provincial Directorate of Planning and Coordination (PDPC) at the local governor’s office where the real estate is located. Once granted a positive response from PDPC, they should then apply to the Land Registry Directorate. These companies may apply in person, via post, or e-mail.

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General Information

In Türkiye, the term “foreigner” is defined under three categories with respect to the acquisition of real estate:

• Foreign natural persons

• Foreign legal persons​

• Turkish companies with foreign capital​

Article 35 of Law No. 2644 on Land Registry sets out provisions on the acquisition of real estate by foreign natural and legal persons. Article 36 sets out provisions on companies with foreign capital.

Countries whose nationals are eligible to acquire real estate in Türkiye are determined by the Cabinet of Ministers, who may also stipulate special conditions for acquisitions if deemed necessary.

​

Legal Restrictions on Acquisition of Real Estate by Foreign Natural Persons

If granted permission, natural persons of foreign origin may acquire any real estate in areas where private property is allowed (residential, commercial, land lot, agricultural etc.).

• If the real estate acquired does not include any previously built construction, the owner of the foreign origin is to apply to the relevant public administration within two years in order to develop a p​roject.
  

• A natural person of foreign origin may acquire real estate and limited rights in rem anywhere in Turkey of up to 30 hectares. The Cabinet of Ministers may grant larger areas if deemed appropriate.
  

• Natural persons of foreign origin may not acquire and lease real estate within prohibited military zones or military security zones. However, they may acquire and lease real estate within special security zones upon permission of the governor’s office.
  

• Total acquisition by natural persons of foreign origin may not exceed ten percent of the total district area where private property is allowed. Foreigners' request for acquisition shall not be permitted in case the ten percent limit is exceeded.​​

Acquisition of Real Estate and Limited Rights in Rem by Legal Persons

In Turkey, only trading companies established according to the laws of their respective countries and having legal personality may acquire real estate and limited rights in rem as foreign legal persons. Legal persons other than such trading companies (foundations, associations etc.), on the other hand, may not acquire real estate and may not have rights in rem.

Acquisition of real estate by trading companies established in foreign countries according to the laws of their respective countries and having legal personality, on the other hand, may be granted in exceptional cases and is deemed possible only when stipulated under the provisions of international conventions or special laws. Among the specific codes inclusive of provisions on this matter are Law No. 6491 on Turkish Oil, Law No. 2634 on Tourism Incentive, and Law No. 4737 on Industrial Zones.

NOTE: With respect to mortgages, an exception is stipulated whereby there is no limitation as to the mortgages to be created over the property in favor of foreign natural and legal persons.

Acquisition of Real Estate and Limited Rights in Rem by Companies with Foreign Capital Established in Turkey

Companies established in Turkey as a legal entity are considered under the category of foreign-owned companies in accordance with the following conditions:

• Foreign investors hold fifty percent or more of the shares, or
  

• Foreign investors are entitled to appoint and dismiss the majority of the board of directors

These companies may acquire property and limited rights in rem in order to engage in activities set forth in their articles of association.

For this purpose, companies are required to apply first to the governor’s office where the property is located.

On the other hand, if the real estate intended for acquisition is located in a prohibited military zone or a military security zone, the real estate acquisition shall be subject to the permission of the General Staff; and if the property is situated in the private security zone, it shall be subject to the permission of the governor’s office of the respective region.

In the event of positive settlement of the application to acquire real estate, the governor’s office shall inform the company/enterprise and the Land Registry Office in writing so that the registration may be fulfilled.

The following procedures do not require permission from the governor’s office, therefore the application to the Land Registry Office may be directly made without seeking permission.

• Creation of mortgage
  

• Acquisition of real estate within the scope of cashing out a mortgage by the beneficiary of a mortgage
  

• Transfer of real estate ownership and limited rights in rem arising out of company mergers and demergers
  

• Acquisitions in organized industrial zones, industrial zones, technology development zones, and free zones
  

• Acquisitions realized due to the transactions considered as loan within the framework of the relevant banking legislation or for the purpose of collection of receivables

Inheritance

Companies established in Turkey as a legal entity are considered under the category of foreign-owned companies in accordance with the following conditions:

• Foreign investors hold fifty percent or more of the shares, or
  

• Foreign investors are entitled to appoint and dismiss the majority of the board of directors

These companies may acquire property and limited rights in rem in order to engage in activities set forth in their articles of association.

For this purpose, companies are required to apply first to the governor’s office where the property is located.

On the other hand, if the real estate intended for acquisition is located in a prohibited military zone or a military security zone, the real estate acquisition shall be subject to the permission of the General Staff; and if the property is situated in the private security zone, it shall be subject to the permission of the governor’s office of the respective region.

In the event of positive settlement of the application to acquire real estate, the governor’s office shall inform the company/enterprise and the Land Registry Office in writing so that the registration may be fulfilled.

The following procedures do not require permission from the governor’s office, therefore the application to the Land Registry Office may be directly made without seeking permission.

• Creation of mortgage
  

• Acquisition of real estate within the scope of cashing out a mortgage by the beneficiary of a mortgage
  

• Transfer of real estate ownership and limited rights in rem arising out of company mergers and demergers
  

• Acquisitions in organized industrial zones, industrial zones, technology development zones, and free zones
  

• Acquisitions realized due to the transactions considered as loan within the framework of the relevant banking legislation or for the purpose of collection of receivables

Right to Acquire Turkish Citizenship Through Real Estate Purchase

Natural persons of foreign origin are granted the right to acquire Turkish citizenship by means of exceptional procedures upon purchase of real estate worth USD 250,000 and more.

For this purpose, foreigners:

• Shall purchase real estate worth at least USD 250,000
  

• Shall state, in the application for acquisition, that they purchased the real estate for this purpose, the title deed should state this purpose, and the foreigner shall declare that they shall not sell the real estate for three years in the section of the form where declarations are made.
  

Once the land registry procedures are complete, the foreign national may apply to the relevant administrations to claim the right of residence or citizenship by submitting the certificate of eligibility to be issued for the owner.

​ Requirements for Land Registry Procedures

​​

• ​Land registry of the real estate or information on the village/quarter, map section, plot, building, and independent section
  

• Photo ID or passport issued by the country of which the foreigner is a citizen (notarized and certified translations should be submitted for ID cards and passports issued in alphabets other than the Latin alphabet)
  

• If the procedure involves representation, document regarding representation (order regarding guardianship, letter of authorization, power of attorney etc.)
  

• Document on the current market value of the real estate issued by the relevant municipality
  

• Mandatory earthquake insurance policy for the buildings
  

• A photo of the seller and two photos of the purchaser (taken within the last six months, size 6x4 cm)
  

• Certified interpreter if a party does not speak Turkish

Power of Attorneys Issued Abroad

If the procedure is to be conducted by a third person authorized by means of a power of attorney issued abroad, the power of attorney must include the authorization relating to the procedure to take place. Besides, the power of attorney shall meet the following conditions:

• Issued by Turkish consulates at their discretion over real estate
  

• Issued by competent authorities entitled to issue power of attorneys abroad
  

• Issued in the language of the country where it is issued
  

• Includes photo (with a clear seal and signature over the photo)
  ​

• Includes the apostil, if issued in a country that is a party to the Hague Convention
  

• Should have certification of the signature of the official signing the power of attorney by the relevant authority and the signature and seal of such authority should be certified by the Turkish Consulate if the power of attorney is issued in a country that is not a party to the Hague Convention

The application should also provide notarized and certified Turkish translation of the power of attorney that meets the required criteria.

​​​

Exceptional Acquisition of Citizenship

​

With (b) prepended to the first paragraph of Article 12 of the Law No. 5901 promulgated on July 28, 2016;

• Those who obtain a residence permit further to (j) of the first paragraph of Article 31 of the Law No. 6458, by investing within the scope and amount determined by the President
  

• Foreigners holding the Turquoise Card

may acquire Turkish citizenship based on the resolution of the President of the Republic of Türkiye.

Scope and amounts determined as per the new regulations published in the Official Gazette on September 18, 2018 are defined below. Foreigners who meet any of the following criteria may be eligible for Turkish citizenship, subject to the decision of the President of the Republic of Türkiye:

• Making a minimum fixed capital investment of USD 500,000 or equivalent foreign currency, as attested by the Ministry of Industry and Technology

• Acquiring a property worth a minimum of USD 400,000 or equivalent foreign currency with a title deed restriction on its resale for at least three years, as attested by the Ministry of Environment, Urbanization and Climate Change

• Creating jobs for at least 50 people, as attested by the Ministry of Labor and Social Security

• Depositing a minimum of USD 500,000 or equivalent foreign currency in banks operating in Türkiye with the condition that it is not withdrawn for at least three years, as attested by the Banking Regulation and Supervision Agency

• Buying government bonds worth a minimum of USD 500,000 or equivalent foreign currency with the condition that they are not sold for at least three years, as attested by the Ministry of Treasury and Finance

• Buying real estate investment fund shares or venture capital investment fund shares worth a minimum of USD 500,000 or equivalent foreign currency with the condition that they are not sold for at least three years, as attested by the Capital Markets Board of Türkiye

• Depositing a minimum contribution of USD 500,000 or equivalent foreign currency in funds determined by the Insurance and Private Pension Regulation and Supervision Agency with the condition that it remains in the private pension system for at least three years, as attested by the Insurance and Private Pension Regulation and Supervision Agency​.

Minimum Monthly Wage (gross and net)

TRY

Net Minimum Wage

5,500.35

Gross Minimum Wage

6,471.00

• Social security premium payment (14%)

905.94

• Payment for unemployment insurance fund (1%)​

64.71

Total Deduction

970.65

Employer Cost

• Gross minimum wage​

6,471.00

• Employer’s share of social security premium (15.5%)*

1,003.01

• Employer's payment for unemployment insurance fund (2%)

129.42

Total Employer Cost

7,603.43

* For premiums that are paid in due time, as an incentive, a five-point reduction is applied (down from 20.5% to 15.5%).

Source: Ministry of Labor and Social Security

Valid for July 01, 2022 – December 31, 2022​

​

Multiple tariff application for November-March period: 07.00-18.00 daytime; 18.00-22.00 peak; 22.00-07.00 nighttime.

Multiple Tariff application for April-October period: 06.00-17.00 daytime, 17.00-22.00 peak; 22.00-06.00 nighttime.

Capacity Charge: Monthly fixed-fee calculated per kW based on the “contract power” specified in connection contract and charged to double-term consumers connected to distribution system.

Over-Capacity Charge: monthly fee calculated per kW for amount of power exceeding the “contracted power” specified in the connection contract and charged to double-term consumers connected to distribution system.

Double-Term tariff: Tariff class charged for “distribution fee over the amount of active energy flow (kWh) received from the distribution system or given to the distribution system”, plus capacity-charge calculated per kW specified in the connection contract, plus over-capacity charge for the power (in kW) exceeding the “contract power.”

Single-term Tariff: The tariff class charged for distribution fee only through the amount of active energy flow (kWh) received from the distribution system or given to the distribution system.

*The active energy price is not reflected in the table, as the price is determined bilaterally between the consumer and the supplier.

Electricity Bill Calculation:

[(Consumption (kWh) x Active Energy Price* (TRYcent/kWh) x 1,02**) + (Consumption (kWh) x Distribution Tariff (TRYcent/kWh))] x 1.18***

Active Energy Price*: the consumers can either purchase electricity from the commissioned supply companies at the prices indicated in the table or at the prices determined bilaterally with the private electricity suppliers.

**Funds (electricity fund 1%, electricity consumption tax 1%)

***VAT 0.18%​

Source: Energy Market Regulatory Authority (EMRA)

INVESTMENT ZONES

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​There are three different special investment zones in Türkiye:

1. Technology Development Zones - Technoparks

Technology Development Zones (TDZ) are areas designed to support R&D activities and attract investments in high-technology fields. There are 84 TDZs, of which 63 are operational and 21 have been approved and are currently under construction. ​

Advantages of TDZs

​​

2. Organized Industrial Zones

Organized Industrial Zones (OIZ) are designed to allow companies to operate within an investor-friendly environment with ready-to-use infrastructure and social facilities. The existing infrastructure provided in OIZs includes roads, water, natural gas, electricity, communications, waste treatment and other services.

There are 353 OIZs in 81 provinces, 258 of which are currently operational, while the remaining 95 OIZs are being constructed throughout Türkiye. In addition, more than 67,000 companies produce in over 32,000 parcels while more than 2 million people are employed through the OIZs.

Advantages of OIZs

​​

3. Free Zones

Free zones (FZ) are special sites deemed outside the customs area, although they are physically located within the political borders of the country. FZs are designed to boost the number of export-focused investments. Legal and administrative regulations in the commercial, financial and economic domains that are applicable within the customs area are either not implemented or partially implemented in FZs.

There are a total of 19 Free Zones in Türkiye located close to the EU and Middle Eastern markets, 18 of which are active and 1 is at the stage of establishment. FZs are strategically located at points that grant easy access to international trade routes via ports on the Mediterranean, Aegean Sea, and the Black Sea.

Advantages of FZs

• 100% exemption from customs duties and other assorted duties.
  

• 100% exemption from corporate income tax for manufacturing companies.
  

• 100% exemption from value-added tax (VAT) and special consumption tax.
  

• 100% exemption from stamp duty for applicable documents.
  

• 100% exemption from the real estate tax.
  

• 100% income and corporate tax exemption for certain logistics services to be offered at the FZs, provided that they are export-oriented.
  

• 100% exemption from income tax on employees’ wages (for companies that export at least 85% of the FOB value of the goods they produce in the FZs.
  

• Goods may remain in FZs for an unlimited period.
  

• Companies are free to transfer profits from FZs to abroad as well as to Turkey, without restrictions.
  

• Exemption from title deed fees when acquiring and selling a property.
  

• VAT exemption during construction, design, settlement, and approval processes.
  

• Ready infrastructure exempt from VAT and other taxes.
  

• Import permit for second-hand, used machinery.​

In Türkiye, the corporate income tax rate levied on business profits is 25% for 2021,​ and 23% for 2022.​

2. Taxes on Expenditure

2.1. Value Added Tax (VAT)

The generally applied VAT rates are set at 1%, 8%, and 18%. Commercial, industrial, agricultural, and independent professional goods and services, goods and services imported into the country, and deliveries of goods and services as a result of other activities are all subject to VAT.

2.2. Special Consumption Tax (SCT)

There are four main product groups that are subject to SCT at different tax rates:

• ​Petroleum products, natural gas, lubricating oil, solvents, and derivatives of solvents

• Automobiles and other vehicles, motorcycles, planes, helicopters, yachts

• Tobacco and tobacco products, alcoholic beverages

• Luxury products

Unlike VAT, which is applied on each delivery, SCT is charged only once.

2.3. Banking and Insurance Transaction Tax

Banking and insurance company transactions remain exempt from VAT but are subject to a Banking and Insurance Transaction Tax. This tax applies to income earned by banks, such as loan interest. Although the general rate is 5%, some transactions, such as interest on deposit transactions between banks, are taxed at 1%. No tax has been levied on sales from foreign exchange transactions since 2008.

2.4. Stamp Duty

Stamp duty applies to a wide range of documents, including contracts, notes payable, capital contributions, letters of credit, letters of guarantee, financial statements, and payrolls. Stamp duty is levied as a percentage of the value of the document at rates ranging from 0.189% to 0.948% or is collected as a fixed price (a pre-determined price) for some documents.

3. Taxes on Wealth

There are three kinds of taxes on wealth:

• ​Property taxes

• Motor vehicle tax

• Inheritance and gift tax

Buildings, apartments, and land owned in Türkiye are subject to real estate tax ranging at a rate between 0.1% and 0.6%, while Contribution to the Conservation of Immovable Cultural Property is levied at a rate of 10% of this real estate tax. Motor vehicle taxes are collected on the basis of fixed amounts that vary according to the age and engine capacity of the vehicles each year. Meanwhile, inheritance and gift taxes are levied at a rate of 1% to 30%.​​

LEGAL GUIDE

​​​​​​​​​​​​​​​​​​​​​​​​​The Legal Guide to Investing in Türkiye aims to assist individuals and organizations wishing to invest in Türkiye by providing information on the legal environment in the country.

This guide consists of information on a variety of legal topics that investors take into consideration during the investment process, such as;

• protection of foreign investment

• business structures under Turkish law

• labor law

• property rights

• access to finance and insurance

• environmental law

• competition law

• public procurement regime

• protection of personal data.​​