Setting up a subsidiary in Turkiye: the main steps for foreign groups
A practical, step-by-step overview for CFOs and finance teams establishing a subsidiary in Turkiye, covering structure selection, registration, tax and social security set-up, banking, and ongoing compliance responsibilities.
Why structure decisions come first
Before any filing is made, the parent group should confirm that a subsidiary is the right vehicle for its operations in Turkiye. A subsidiary is a separate legal entity, incorporated under Turkish law, with its own management, accounts and tax position. Alternatives such as a branch or a liaison office exist, and each carries different implications for governance, liability, staffing and reporting. Because the choice affects everything downstream, it should be documented at group level with clear ownership: typically the CFO or group treasurer sponsors the decision, supported by external corporate service providers and internal legal and tax functions.
Information in this guide is provided for general orientation only. It does not constitute tax, legal or investment advice, and specific rates, thresholds, amounts and deadlines are set by the relevant authorities and change over time. Always verify current requirements with the official sources named below.
Step 1: Define the scope and prepare the groundwork
The first practical phase is internal rather than regulatory. Key items to settle before incorporation include:
- The intended activity of the subsidiary and whether any regulated sectors apply to it.
- The share structure, shareholders and initial capital, decided by the parent board.
- The legal representatives and authorised signatories, and whether they will be resident in Turkiye.
- The registered office address, which must be secured before registration.
- The company name, which must comply with naming rules and be reserved through the registration system.
Documents originating abroad, such as parent company resolutions, powers of attorney and articles of association, generally need to be translated, notarised and legalised or apostilled before they can be used in Turkiye. Building lead time for this document chain into the project plan is one of the most effective ways to avoid delays.
Step 2: Incorporation and registration
Company formation in Turkiye is administered through the Ministry of Trade and the local Trade Registry. The process is digitalised through the Central Registration System (MERSIS), where the application is prepared and tracked. In broad terms, the sequence is:
- Reserve the company name and complete the online application in MERSIS.
- Execute the articles of association, typically before a notary, and arrange signature authorisations.
- Deposit the initial capital as required and obtain the relevant bank confirmation.
- File with the Trade Registry, which issues the registration and the tax number as part of the incorporation flow.
- Complete follow-on registrations, including the chamber of commerce record and the signature declaration of authorised signatories.
Ownership of this step should be clearly assigned: usually a local corporate services provider or law firm executes the filings, while the parent's finance team controls the underlying decisions and the flow of signed documents.
Step 3: Tax registration and fiscal set-up
Once the entity exists, it must be registered with the Revenue Administration (GIB). This covers corporate taxpayer registration and, where relevant, registration for value added tax and other applicable taxes. The finance team should also plan for:
- Activation of electronic invoicing and electronic ledger obligations, which are administered through GIB systems and are a standard part of doing business in Turkiye.
- Appointment of a responsible finance manager or outsourced accounting provider, and registration of that person's authority with the authorities.
- Agreement on the accounting framework, chart of accounts and statutory book-keeping arrangements.
- Calendar management for filings and payments, recognising that rates, thresholds and deadlines are set by GIB and change over time; current information is published on the GIB website.
Transfer pricing documentation and related-party transaction rules should be considered from day one if the subsidiary will trade with group companies. Intercompany agreements, pricing policies and documentation responsibilities should be defined before the first transactions occur, not after.
Step 4: Employment and social security registration
Hiring employees triggers registration with the Social Security Institution (SGK) and a set of employer obligations covering declarations, contributions and workplace notifications. Payroll in Turkiye has its own compliance rhythm, so the finance team should decide early whether payroll will be run in-house or outsourced, and who owns the SGK filings. Employment contracts, workplace registration and any sector-specific permits should be sequenced with the first hiring plan.
Step 5: Banking and treasury
Opening a corporate bank account is a practical milestone that often takes longer than expected, as banks apply their own customer due diligence procedures. The treasury function should plan for:
- Selecting a bank and preparing the documentation pack early, since account opening depends on the completed registration set.
- Deciding the currency mix of accounts and how the subsidiary will be funded, whether by capital, shareholder loans or intercompany balances.
- Understanding that cross-border payment and foreign exchange matters fall within the remit of the Central Bank (CBRT/TCMB), whose regulations evolve; current rules are published on the CBRT website.
- Establishing cash management, signatory limits and reporting lines between the subsidiary and group treasury.
Step 6: Ongoing compliance and reporting
After incorporation, the subsidiary becomes a recurring compliance entity. The finance team should stand up a compliance calendar covering statutory book-keeping, periodic tax filings, social security declarations, annual financial statements and the general assembly and registry renewals required of Turkish companies. Where the parent consolidates the subsidiary, group reporting requirements should be mapped against local statutory outputs so that one set of processes serves both. Internal controls, delegation of authority and audit arrangements should be documented in the first months of operation, while the team is small and processes are still fluid.
Common pitfalls for foreign groups
- Underestimating the document legalisation chain for parent company papers, which is a frequent source of incorporation delay.
- Treating electronic invoicing and electronic ledgers as optional add-ons rather than core infrastructure.
- Leaving transfer pricing and intercompany agreements until after trading has started.
- Assuming bank account opening will be immediate once registration is complete.
- Missing SGK registration steps when the first employees are onboarded.
- Not assigning a single owner for the compliance calendar, so that filings depend on individual memory rather than process.
Key official sources
Requirements, rates, thresholds and deadlines are set by the competent authorities and change over time. The primary official references are the Ministry of Trade for incorporation, the Revenue Administration (GIB) for tax and electronic fiscal obligations, the Social Security Institution (SGK) for employment-related registrations, and the Central Bank (CBRT/TCMB) for payment and foreign exchange matters. Finance teams should consult these institutions' official publications directly when planning each step, and seek professional advice for the group's specific circumstances.
For information only; not tax, legal or investment advice. Rules change, so check the official source before acting.