Branch Office vs Liaison Office in Turkey: Complete Guide for Foreign Investors

When expanding into Turkey, foreign companies don’t always need to establish a fully incorporated subsidiary. Depending on your business objectives, opening a branch office or a liaison office can be a strategic first step. This guide explains the key differences, legal requirements, and practical considerations for each option.

Understanding Your Options

Turkey offers three main structures for foreign companies:

Subsidiary Company - A separate legal entity (LLC or Joint Stock Company)
Branch Office (Şube) - An extension of the parent company with full commercial activities
Liaison Office (İrtibat Bürosu) - A representative office for non-commercial activities

While subsidiaries offer the most flexibility, branch and liaison offices provide lighter entry points with distinct advantages.

Branch Office (Şube)

A branch office is a direct extension of the foreign parent company. It can conduct all commercial activities the parent company is authorized to perform, making it ideal for companies ready to do business in Turkey.

Key Characteristics

Legal Status: Not a separate legal entity - operates as part of the parent company
Commercial Activities: Can engage in full commercial operations, sign contracts, and generate revenue
Liability: Parent company is fully liable for all branch obligations
Capital Requirement: No minimum capital, but must have adequate funds for operations
Taxation: Subject to Turkish corporate tax on Turkey-sourced income

Permitted Activities

Buying and selling goods and services
Invoicing customers directly
Hiring local employees
Entering into commercial contracts
Participating in public tenders
Opening bank accounts for commercial transactions

Establishment Process

Step 1: Prepare Required Documents

Certified copy of parent company’s articles of association
Board resolution authorizing branch establishment
Power of attorney for the branch representative
Apostille and notarized Turkish translations

Step 2: Trade Registry Application

Apply to the local Trade Registry Office
Submit all documentation with petition
Pay registration fees

Step 3: Post-Registration Requirements

Tax registration with local tax office
Social security registration (SGK)
Chamber of Commerce membership
Obtain activity permits if required for your sector

Timeline: Approximately 2-4 weeks for standard cases.

Taxation

Branch offices are taxed similarly to Turkish companies:

Corporate Tax: 25% on Turkey-sourced profits (2026 rate)
Withholding Tax: 10% on profit remittances to parent company
VAT: Standard rates apply (1%, 10%, or 20% depending on goods/services)

Liaison Office (İrtibat Bürosu)

A liaison office serves as a representative presence in Turkey. It’s designed for market research, promotional activities, and coordination - but cannot engage in commercial activities.

Key Characteristics

Legal Status: Representative office, not a commercial entity
Commercial Activities: Strictly prohibited - no buying, selling, or invoicing
Permit Requirement: Must obtain permit from Ministry of Industry and Technology
Duration: Initial permit for 3 years, renewable indefinitely
Funding: All expenses must be covered by transfers from the parent company

Permitted Activities

Market research and feasibility studies
Promoting parent company’s products and services
Establishing business connections
Coordinating between parent company and Turkish partners
Quality control and technical support
Collecting market intelligence

Prohibited Activities

Generating revenue or issuing invoices
Signing commercial contracts
Importing or exporting goods
Participating in tenders
Acting as a distributor or agent

Establishment Process

Step 1: Application to Ministry

Submit to the Ministry of Industry and Technology (General Directorate of Incentive Implementation and Foreign Investment):

Application form
Parent company’s certificate of incorporation
Activity report describing planned operations
Financial statements of parent company
Board resolution and power of attorney
Passport copy of authorized representative

Step 2: Obtain Permit

Ministry reviews application (typically 1-2 weeks)
Permit issued for 3-year period
Renewable before expiration

Step 3: Post-Permit Requirements

Register with local tax office (for employee withholdings)
Register with Social Security Institution (SGK)
Open a foreign currency bank account

Timeline: Approximately 2-3 weeks.

Financial Obligations

While liaison offices don’t pay corporate tax (no commercial income), they have other obligations:

Employee income tax withholding
Social security contributions
Annual activity reports to the Ministry
Expense documentation for transfers from abroad

Comparison Table

Feature	Branch Office	Liaison Office
Legal Entity	No (part of parent)	No (representative only)
Commercial Activities	Yes	No
Revenue Generation	Yes	No
Corporate Tax	Yes (25%)	No
Minimum Capital	No	No
Permit Required	No	Yes (Ministry)
Duration	Unlimited	3 years (renewable)
Liability	Parent company	Parent company
Establishment Time	2-4 weeks	2-3 weeks

Which Option Should You Choose?

Choose a Branch Office if:

You’re ready to conduct commercial operations immediately
You want to test the market before incorporating a subsidiary
Your sector requires local presence for contracts or tenders
You need flexibility without creating a separate legal entity

Choose a Liaison Office if:

You’re in the early research phase
You want to establish contacts before committing to full operations
You need local presence for coordination without commercial activity
You want minimal regulatory burden and costs

Consider a Subsidiary if:

You need complete operational independence
You want to limit parent company liability
Long-term strategic investment is planned
Local partnerships or joint ventures are anticipated

Converting to a Different Structure

Liaison Office to Branch Office

Not directly possible. You must:

Close the liaison office
Establish a branch office separately
Transfer employees and assets as applicable

Branch Office to Subsidiary

Possible through asset transfer:

Incorporate a new Turkish company
Transfer branch assets and liabilities
Close the branch office
Notify Trade Registry of changes

Practical Considerations

Banking

Branch offices: Full commercial banking, local currency accounts
Liaison offices: Foreign currency accounts only, limited to expense coverage

Employment

Both structures can hire local employees under Turkish labor law. All standard employment protections apply, including:

Minimum wage requirements
Social security contributions
Severance pay obligations
Work permit requirements for foreign employees

Real Estate

Both can lease office space. For property purchase:

Branch offices face restrictions similar to foreign companies
Liaison offices generally cannot own real estate

Recent Updates (2026)

Digital Applications: Ministry now accepts online applications for liaison office permits
Reporting Requirements: Annual activity reports can be submitted electronically
Tax Coordination: Enhanced information sharing between Ministry and Revenue Administration

How FDI Consultancy Can Help

Navigating the choice between branch and liaison offices requires understanding both legal requirements and business strategy. Our team provides:

Structure Analysis: Evaluate the best option for your specific objectives
Document Preparation: Handle all apostille, translation, and certification requirements
Registration Support: Manage Trade Registry and Ministry applications
Ongoing Compliance: Annual reporting, permit renewals, and regulatory updates
Transition Planning: Guidance on converting between structures as your business evolves

Conclusion

Both branch and liaison offices offer valuable pathways into the Turkish market without the commitment of full incorporation. Branch offices suit companies ready for commercial operations, while liaison offices provide a low-risk option for market exploration. Understanding the distinctions helps you choose the right structure for your investment timeline and business goals.

Ready to establish your presence in Turkey? Contact FDI Consultancy for personalized guidance on the optimal market entry strategy for your company.

Disclaimer: This article provides general information and should not be considered legal advice. Regulations may change, and specific situations require professional consultation.