A company whose head office is located abroad does not necessarily have to establish a new legal entity in order to carry on commercial activity in Türkiye. Branch registration allows it to do business in the Turkish market without altering its existing structure or its head office. The process rests on two pillars: the electronic application made through the Central Registry System (MERSİS) and the trade registry registration that follows it.
The incentives and facilities Türkiye offers foreign investors also play a part in the appeal of this model. That said, establishing a branch involves more procedure than it appears to and consists of successive stages; a deficiency at the application or the registration stage may result in the branch being treated as not validly established.
Below we examine how branch registration operates, the conditions sought, the documents that must be submitted under the Trade Registry Regulation, the expected timeframe and cost, the steps to be completed after establishment, and how the model relates to alternative structures such as a liaison office or the incorporation of a company.
How Does the Branch Opening Process Work?
A foreign company opens a branch in Türkiye in three steps: making an application through MERSİS, applying to the regional directorate of the chamber of commerce with the necessary documents, and completing the registration procedures at the trade registry.
At the first step, the online application created in MERSİS produces a request number relating to the opening of the branch. Once this number has been obtained, an application is made to the regional directorate of the relevant chamber of commerce together with the documents prepared.
If the application is assessed favourably, the next stage is registration at the trade registry directorate. For the registration stage it is compulsory to appoint a fully authorised representative. That person is not required to be a Turkish citizen; their place of residence, however, must be in Türkiye.
The law to be applied at registration varies according to which branch is being opened. For the registration of the first branch, the registration conditions under both the foreign law to which the company is subject and Turkish law must be satisfied together. For branches opened after the first, only compliance with Turkish law is sought.
The information to be entered in the trade registry is likewise determined by legislation. The matters to be recorded include the trade name of the head office, its business name if any and the head office of the commercial enterprise; the capital of the head enterprise and the amount of capital allocated to the branch; the trade name of the branch, its business name if any and its address; the field of activity of the branch; the decision of the competent organ concerning the commercial representative; and the name and surname, nationality, identity number and place of residence of the person or persons who will represent the branch with full authority.
Once the registration procedures have been completed, the Turkish branch of the company whose head office is abroad is deemed to have been opened.
Conditions Required for Registration
Whether the branch can be lawfully established and commence activity depends on three conditions being met together: satisfaction of the conditions for opening a branch under the law of the country to which the company head office is subject, the appointment of a fully authorised representative, and registration of the branch with the trade registry.
Compliance with foreign law. Satisfying the conditions of the country in which the company head office is located concerning the opening of a branch is compulsory only in respect of the first branch. The Turkish Commercial Code No. 6102 and other relevant legislation regulate this point separately. For subsequent branch openings, only the criteria under Turkish law are assessed.
Appointment of a representative. All procedures relating to the opening of the branch are carried out through the appointed representative. Although the representative need not be a Turkish citizen, a place of residence in Türkiye is required. The information, the addresses and the signature declarations relating to the appointed representative or representatives must be notified.
Registration with the trade registry. The final condition is registration, and with registration the conditions of establishment are deemed to have been completed. The information to be registered consists of the following items:
- The trade name of the head office, its business name if any and the head office of the commercial enterprise
- The capital of the head enterprise
- The capital allocated to the branch
- The trade name of the branch, its business name if any and its address
- The field of activity of the branch
- The decision of the competent organ in respect of the commercial representative
- The name and surname and the nationality of the person or persons who will represent the branch with full authority
- The identity number and place of residence of those persons
- The business subject, date of establishment, registry number and governing law of the head office opening the branch
The documents requested in the registration application must be submitted in full; an incomplete file is a factor that obstructs the process from the outset.
Please note: The trade name of the Turkish branch of an enterprise whose head office is in a foreign country must show the places where the head office and the branch are located and must expressly state that it is a branch.
Documents to Be Submitted with the Application
The documents to be requested for branch registration are listed in Art. 122 of the Trade Registry Regulation. On that basis, the file must contain the following:
- A petition clearly showing the trade name, the capital, the head office, the date of opening and the actual field of activity of the branch on that date, together with its NACE code. The petition must be signed by an authorised person, must state the tax office to which the branch will be attached and must contain a schedule of the documents submitted with the establishment application. If it is signed by proxy, the original power of attorney or a notarised copy is attached.
- The establishment notification form signed by an authorised person
- The chamber registration declaration signed by the authorised persons and bearing their photographs
- The decision to open a branch taken by the competent organ of the head office of the company
- Where the persons who will represent the branch and the power of representation are not shown in the decision to open a branch, the power of attorney drawn up on this matter
- The decision of the competent authority establishing that the registration conditions for the branch to be opened have been satisfied under the laws of the country to which the head office of the company is subject
- The documents that must be submitted for branch registration under the laws of the foreign country to which the head office of the company is subject
- A document showing the current registry record of the head office, together with one certified copy each of the articles of association
- The branch establishment declaration signed by the authorised persons. The declaration must set out the trade name, the type, the business subject, the type and amount of the capital, the date of establishment, the registry number, the governing law, whether it is a member of the European Union and the website of the head office; the trade name of the branch and the amount of capital allocated to the branch; and the name, surname, identity number and place of residence of the person or persons who will represent the branch with full authority before private organisations and public institutions and bodies, including the courts, as well as the address of the branch.
- If the branch establishment declaration has been drawn up in a foreign language, its Turkish translation and a notarised copy
- For branches whose opening is subject to the permission or favourable opinion of the Ministry or of other official institutions, that permission or letter of favourable opinion
- If the person or persons who will represent the branch are foreign nationals, copies of their passports with notarised Turkish translations
- The signature declarations of the person or persons who will represent the branch, drawn up in accordance with Art. 40 of the Turkish Commercial Code No. 6102
Some of the documents listed may have to be obtained from foreign authorities. Documents obtained abroad must be submitted with an apostille and a notarised Turkish translation. Where an apostille cannot be issued, the document must be certified by the Turkish consulate or by other competent authorities in the country in which it was obtained.
Timeframe and Cost
In practice the branch opening process takes approximately two weeks.
On the cost side, the type of the company to which the branch belongs is decisive. For joint stock companies the total expense is approximately TRY 20,000, whereas for partnerships it is in the region of TRY 4,000.
The principal items making up this amount are the branch opening fee, the registry certificate fee, the announcement fees of the Turkish Trade Registry Gazette and other announcement expenses. As the type of company changes, both the fees and the total cost differ.
Can a Branch Be Opened Without Coming to Türkiye?
A foreign investor is not obliged to come to Türkiye in person in order to open a branch. The way to achieve this is to appoint a fully authorised attorney.
The process may be conducted upon the application made to the Ministry by a representative authorised through a special power of attorney. The representative may carry out any legal transaction within the limits drawn for them in the power of attorney.
What Must Be Done After the Branch Is Established
Registration is not the end of the process but its beginning. The principal steps to be completed after the branch has been opened are as follows: appointing a manager to the branch, fulfilling the employment law procedures in respect of foreign employees, and completing the tax, contractual and regulatory compliance processes.
Appointing a Manager to the Branch
The appointment of a manager is effected by an application to the regional representative office of the chamber of commerce to which the branch is attached. Before applying in person, an online application must be made through MERSİS and a request number obtained. The documents to be submitted to the regional representative office are as follows:
- A petition requesting the appointment of a manager
- The manager appointment decision taken by the head office of the company, together with a notarised copy of that decision
- The signature declaration of the branch manager, drawn up in accordance with Art. 40 of the Turkish Commercial Code No. 6102
- If the branch manager is a foreign national, a notarised copy of their passport and a printout of their tax number
- A document showing that the branch manager has accepted the office
The petition must be signed by the authorised persons; if it is signed by proxy, the original power of attorney or a notarised copy is added to the file. In addition, documents to be obtained from abroad must be submitted with an apostille and a notarised Turkish translation.
Employment Law Procedures Concerning Employees
If foreign employees are to be engaged after the branch has been established, work permits must be obtained for those persons. Alongside this, Social Security Institution (SGK) procedures must be carried out in respect of both foreign and Turkish employees. Both headings constitute preconditions for employing staff under Turkish law; the complete fulfilment of the employment law procedures is therefore decisive for the sound operation of the branch.
No separate procedure specific to branch employees is provided for in respect of work permits; the procedure that applies to other foreigners in Türkiye applies here as well.
Tax, Contractual and Regulatory Compliance
A series of obligations arises before the Turkish legal order once the branch has been established. The first of these is fiscal: the branch becomes a taxpayer both by reason of the formal establishment procedures and by reason of the commercial activity it will carry on.
The second heading is compliance. Compliance with Turkish legislation on commercial communication and commercial electronic messages must be ensured. In connection with this, compliance work must also be carried out under the personal data protection legislation in respect of the data that will be recorded during commercial transactions.
As will be seen, the untroubled commencement of the branch depends not only on the establishment procedures but also on the correct management of a large number of procedural processes.
Opening a Secondary Branch Attached to the Branch
Turkish law allows new branches to be established as attachments to a branch already opened in Türkiye. In this structure the branch opened first is termed the head branch and the one opened subsequently the secondary branch. An application is made to the Ministry of Industry and Trade in order to open a secondary branch.
The documents that must be collected before the application are as follows:
- The power of attorney to be drawn up by the head office of the company or by its attorney in Türkiye, in two copies comprising the original and the translated version (they must be notarised)
- Where the attorney is a foreign national, a residence document (one notarised copy of each)
Capital Increase at the Branch
Capital increase procedures for the branch of a foreign firm are conducted through MERSİS. The application created in the system produces a request number relating to the increase; an application is then made to one of the regional representative offices of the chamber of commerce with that number and the necessary documents.
The file to be submitted to the regional representative office contains the notarised copy of the capital increase decision taken by the head office of the company and a petition relating to the request. The petition must be signed by an authorised officer of the company; if it is signed by proxy, the original power of attorney or a notarised copy is also attached.
Change of the Branch Address
Address change procedures are carried out through the regional representative offices of the chamber of commerce to which the company is attached. An online application must be created through MERSİS before going to the regional representative office. The procedure is deemed complete once the request number obtained in that application and the necessary documents have been presented to the representative office.
The documents to be submitted consist of the request petition and the notarised copy of the address change decision taken by the head office or the Turkish branch. The petition must be signed by an authorised officer of the company; if it is signed by proxy, the original power of attorney or a notarised copy must be added to the file.
Two points call for particular attention in practice. Before the MERSİS application is sent for approval, the “Değişiklik Ön İzleme” (change preview) button should be clicked and it should be verified that the address information appearing in the system matches the address written in the decision. In addition, where the documents submitted to the regional representative office have been obtained from abroad, it should be checked whether they have been presented together with an apostille and a notarised Turkish translation.
Advantages of the Branch Model
Opening a branch in Türkiye offers the investor more than one advantage. As a developing economy, Türkiye affords foreign investors a broad field of opportunity. Besides the fact that every type of company may be established, the removal of the very high initial capital requirement sought in the past is also a development that facilitates the opening of a branch.
A further strength of the branch model is that the foreign company is able to conduct its commercial business and transactions in Türkiye under a single legal entity. In addition, as we noted above, foreign investors are protected in fiscal terms by a large number of international agreements. This protection considerably facilitates the activities of the branch.
In the result, foreign-origin firms that open a branch in Türkiye in most cases enjoy the same opportunities as Turkish citizens; in some cases they enjoy wider ones.
An Alternative Structure: The Liaison Office
For foreign companies and investors wishing to become acquainted with the Turkish market before opening a branch, a liaison office is a convenient option. The most critical feature of this structure is that no commercial activity may be carried on through a liaison office.
An application is made to the Ministry of Industry and Technology in order to open a liaison office. Whether the application can be regarded as valid depends both on the conditions being satisfied and on the documents being submitted in full; a deficiency in the information or the documents may lead to the rejection of the application. The documents to be presented with the application are as follows:
- The application form
- The declaration setting out the scope of the work the office will carry on and the undertaking that no commercial activity will be pursued, together with the document showing the signing authority of the officer of the foreign company who signs that declaration
- The Certificate of Activity belonging to the foreign company, certified by the relevant Turkish Consulate or in accordance with the provisions of the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents drawn up within the framework of the Hague Conference on Private International Law
- The Activity Report prepared in respect of the foreign company, or its balance sheet and income statement
- The authorisation document to be given to the person or persons appointed to carry on the activities of the office
- Where the establishment procedures are being conducted through another person, a power of attorney
Once the documents have been submitted, the Ministry assesses the application. In this assessment, elements such as the field of activity of the company, its capital and the number of personnel it employs are taken into account. Furthermore, for a liaison office to be established, at least one year must have elapsed since the incorporation of the company.
Incorporation of Companies in Türkiye by Foreigners and Foreign Companies
For foreign natural persons, incorporating a company in Türkiye is possible where the conditions sought are satisfied and the company is registered with the trade registry. All of the company types provided for in the legislation may also be established by foreigners. By virtue of the principle of equality contained in the Turkish Commercial Code No. 6102 and the Foreign Direct Investment Act, as a rule the same procedure applies to foreigners as to Turkish citizens.
That said, the establishment of certain company types has been made subject to the prior permission of the Ministry. Which types are subject to prior permission, and the steps to be followed in the incorporation process, are the subject of a separate analysis.
The picture is no different for foreign legal persons, that is to say foreign companies. Under the relevant statutory provisions, foreign companies are made subject to the same procedure as domestic companies. Within this framework, the incorporation of the company is concluded with the preparation of the articles of association, the payment of the necessary fees and the completion of the registration procedures with the trade registry.
The Independent Legal Assessment
Branch registration is the most direct way of commencing commercial activity in Türkiye without establishing a new legal entity; because of its staged structure, however, the margin for error is also high. The problems most frequently encountered in practice arise from documents obtained abroad being deficient in terms of apostille or consular certification, and from the information required in the branch establishment declaration not being supplied in full. Deficiencies of this kind may lead not only to delay but also to the refusal of registration.
Making the right choice of structure at the outset is at least as important as the registration itself. Where no commercial activity is envisaged and the priority is market research, a liaison office should be considered; where income is to be earned directly, a branch or a separate company incorporation should be assessed. The fiscal consequences and the liability regime differ markedly according to this choice.
In a specific establishment, the headings to be given priority are as follows:
- Documenting from the outset, against the possibility that it is the first branch, that the conditions for opening a branch under the law of the country to which the head office is subject have been satisfied
- Determining the fully authorised representative resident in Türkiye, with the limits of authority in the power of attorney clarified
- Framing the trade name of the branch so as to show the places of the head office and the branch and its character as a branch
- Checking all documents originating abroad in advance in terms of apostille and notarised translation
- Setting a timetable for the post-registration manager appointment, work permit and SGK processes
- Completing compliance with the commercial electronic message and personal data protection legislation before activity commences
Independent Legal provides advisory services throughout the entire process, from determining the structuring preference of foreign investors in Türkiye to the completion of branch registration and the monitoring of post-establishment compliance obligations.