Choosing between a branch, a subsidiary and a liaison office in Turkey comes down to what you actually plan to do here. A subsidiary is a separate Turkish company that can trade freely and limits your liability. A branch is an extension of your foreign parent that can also trade, but it shares the parent’s liability, while a liaison office cannot trade at all and only handles non-commercial tasks. This guide on branch vs subsidiary in Turkey explains each structure, compares them side by side, and helps you pick the one that fits your plan.
The figures and rules below are current as of the time this article is written. Because commercial and tax rules change, confirm the exact details with a lawyer before you commit.
Branch vs Subsidiary in Turkey: The Short Answer
For most foreign businesses that want to sell and invoice in Turkey, a subsidiary is the standard choice, and a branch is the main alternative when the parent prefers a direct extension. The branch vs subsidiary in Turkey decision usually turns on liability and independence. A subsidiary, most often a limited liability company, is a Turkish legal entity in its own right, so the parent’s risk is generally limited to the capital it puts in. A branch office is legally part of the foreign parent, which means the parent stands behind the branch’s debts and obligations. A liaison office sits apart from both, because it earns no commercial income and exists only to support the parent. Three structures, three levels of commitment. Pick the subsidiary for a clean, independent presence. A branch suits a parent that wants to trade directly under its own name. The liaison office fits while you are still testing the market.
What Is a Subsidiary in Turkey?
A subsidiary in Turkey is a separate Turkish company owned, in whole or in part, by a foreign parent. In practice this is almost always a limited liability company (limited sirket) or a joint-stock company (anonim sirket), registered with the local Trade Registry Directorate under the Turkish Commercial Code. Because it has its own legal personality, the subsidiary signs its own contracts, holds its own bank account, employs its own staff, and files its own tax returns. It stands on its own feet.
The main attraction is limited liability. If the business runs into trouble, creditors generally look to the subsidiary’s assets rather than the foreign parent’s balance sheet. A subsidiary can also sponsor work permits, apply for investment incentives, and build a local credit and tax history that a branch or liaison office cannot match. For foreign company registration in Turkey, the subsidiary is the route most investors take.
What Is a Branch Office in Turkey?
A branch office in Turkey is an extension of a foreign company that can carry out the same commercial activity as its parent, but it has no separate legal personality. The branch trades under the parent’s name, and the parent remains legally responsible for what the branch does. Registration runs through the Trade Registry Directorate, and the branch must appoint a fully authorised representative who is resident in Turkey.
A branch can invoice, earn income and pay tax in Turkey, so it is a genuine trading option and not just a placeholder. It suits parents that want a direct presence without forming a new company, for example in construction, banking or specialised services where the parent’s name and track record carry weight. The trade-off is exposure. Because there is no corporate shield, a claim against the branch is, in effect, a claim against the parent.
What Is a Liaison Office in Turkey?
A liaison office in Turkey, also called a representative office, is a non-trading presence that cannot sell, invoice or earn commercial income. Its permitted work is limited to tasks such as market research, promotion of the parent, supplier coordination, quality control and gathering information. Permission comes from the Ministry of Industry and Technology, through its foreign investment directorate, usually for a fixed initial period that can be extended.
Because it generates no income, a liaison office in Turkey is generally outside corporate tax, and its local staff can be paid from funds transferred from abroad under the payroll exemption that applies to these offices. It is a low-commitment way to study the market before you invest. The catch is simple. The moment you want to trade, the liaison office in Turkey is no longer enough, and you will need a branch or a subsidiary.
Branch vs Subsidiary in Turkey: Key Differences
The clearest way to see the difference between branch and subsidiary in Turkey is to line the three structures up against the factors that affect your business: legal identity, liability, what each may do, tax, and setup. The table below summarises the main points.
| Factor | Subsidiary | Branch office | Liaison office |
|---|---|---|---|
| Legal identity | Separate Turkish company | Part of the foreign parent | Part of the foreign parent |
| Liability | Limited to the subsidiary | Parent is fully liable | Parent is fully liable |
| Can it trade and invoice | Yes | Yes | No |
| Corporate tax | Yes, on its profits | Yes, on Turkish profits | Generally exempt |
| Share capital | Statutory minimum applies | None of its own | None |
| Registered with | Trade Registry Directorate | Trade Registry Directorate | Ministry of Industry and Technology |
Beyond the table, the difference between branch and subsidiary in Turkey shows up in day-to-day flexibility. A subsidiary can change its activities, bring in new shareholders, distribute profits as dividends and be sold as a company. A branch is tied to the scope and the decisions of its parent. This is why, in our practice at Karanfiloglu Law Firm, most trading clients end up with a subsidiary even when they first ask about a branch.
How to Choose a Business Structure in Turkey
Knowing how to choose a business structure in Turkey starts with one question: will you sell and invoice here, or only support the parent from a distance? If you will trade, the choice narrows to a branch or a subsidiary. If you will not trade yet, a liaison office fits. From there, weigh liability, tax and how independent you want the operation to be.
- Choose a subsidiary if you want limited liability, a clean local identity, the ability to take on Turkish partners or investors, and the option to sell the business later.
- Choose a branch if the parent wants to trade directly under its own name and is comfortable carrying the branch’s liability, often for reputation or licensing reasons.
- Choose a liaison office if you are researching the market, building supplier relationships or promoting the parent, with no sales in Turkey.
Whether a branch or a subsidiary fits your situation depends on your liability appetite, your tax position at home and your plans for growth; a lawyer can assess it in a short consultation. Working out how to choose a business structure in Turkey is rarely a one-size answer, and the wrong pick can be costly to unwind.
Foreign Company Registration in Turkey, Step by Step
Foreign company registration in Turkey follows a broadly similar path for each structure, with the subsidiary and branch running through the Trade Registry Directorate and the liaison office running through the Ministry of Industry and Technology. The usual steps for a subsidiary or a branch are as follows.
- Prepare and legalise documents. Gather the parent’s incorporation papers and a board resolution, and for individual shareholders their passports, then have them apostilled and translated by a sworn translator.
- Obtain Turkish tax numbers. Each foreign shareholder, director or branch representative needs a Turkish tax identification number.
- Draft the constitutional documents. For a subsidiary, prepare the articles of association in MERSIS; for a branch, prepare the branch resolution and appoint the resident representative.
- Register at the Trade Registry. File the application with the Trade Registry Directorate, which registers the entity and publishes it in the Turkish Trade Registry Gazette.
- Complete post-registration steps. Open a bank account, certify the legal books, obtain an e-signature and e-notification address, and register with the tax office and, if you hire, the Social Security Institution.
A liaison office skips the trade registry and instead applies to the Ministry of Industry and Technology, submitting the parent’s documents and a statement of the non-commercial activities it will carry out. Most foreign investors complete foreign company registration in Turkey through a lawyer acting under a power of attorney, so they do not have to attend in person for every signature.
Timeline and Costs
Setting up any of the three structures is usually faster than people expect once the paperwork is ready. A subsidiary or a branch can often be registered within about one to two weeks after clean, apostilled documents arrive, while a liaison office permit tends to take longer because it depends on ministry review, often around one to two months. The slow part is almost always collecting and legalising documents from abroad, not the Turkish filing itself.
Costs vary by structure, but they generally include:
- notary fees for signatures and certification;
- trade registry and Trade Registry Gazette fees, for a subsidiary or a branch;
- translation and apostille costs for foreign documents;
- share capital, for a subsidiary, at the statutory minimum for the company type;
- professional fees if you use a lawyer or an accountant.
Treat any single number you read online as indicative only, because official charges and the statutory minimum capital are revised periodically. As of the time this article is written, a limited liability company carries a lower minimum capital than a joint-stock company, and a branch has no share capital of its own because it draws on the parent. Confirm the current figures before you budget.
Common Mistakes When Choosing a Structure
A few avoidable errors cause most of the delay and regret we see. Each has a simple fix.
- Picking a branch to save tax, then facing the liability. The branch’s Turkish profits are still taxed, and the parent carries full liability, so the saving is often smaller than expected.
- Using a liaison office to trade. A liaison office in Turkey cannot invoice or sell, and doing so puts the permit and your tax position at risk.
- Underestimating document legalisation. Missing apostilles or weak sworn translations are the most common cause of a rejected filing.
- Forgetting ongoing compliance. Every structure that trades must keep books and file monthly and annual returns, and skipping this triggers penalties.
- Choosing before checking sector rules. Banking, insurance and a handful of other sectors carry special conditions that can change the answer.
In our practice at Karanfiloglu Law Firm, switching from a branch to a subsidiary after the fact is one of the more expensive corrections a foreign business can make, which is why the branch vs subsidiary in Turkey question is worth getting right at the start.
Summary
The branch vs subsidiary in Turkey choice, with the liaison office as a third option, turns on three things: whether you will trade, how much liability you are willing to carry, and how independent you want the operation to be. A subsidiary gives you a separate Turkish company with limited liability. A branch gives the parent a direct trading presence with full liability. A liaison office gives you a legal foothold with no sales. Because capital thresholds, official fees and tax rules change, a short consultation before you register can save weeks of delay and prevent an expensive restructuring later.
Talk to a Lawyer in Istanbul
If you would like advice on your own situation, Karanfiloglu Law Firm is a registered law office in Istanbul serving foreigners and Turkish clients across Turkey. You can reach us by phone or WhatsApp at +90 532 659 35 11, by email at [email protected], or visit us at Mecidiyeköy Mah. Büyükdere Cad. No:67-71, Alba İş Merkezi, Kat:8, Şişli, İstanbul. Contact us to discuss your situation.
Frequently Asked Questions
What is the main difference between a branch and a subsidiary in Turkey?
The main difference between branch and subsidiary in Turkey is legal identity and liability. A subsidiary is a separate Turkish company, so the parent’s risk is generally limited to the capital invested, while a branch is part of the foreign parent, which stays fully liable for the branch’s obligations.
Is a branch vs subsidiary in Turkey better for tax?
Neither structure is automatically better for tax, because both a branch and a subsidiary pay Turkish corporate tax on their Turkish profits. The choice usually turns on liability, dividend treatment and your position in the parent’s home country, so it is worth reviewing both with a lawyer or accountant.
Can a liaison office in Turkey sell products or services?
No. A liaison office in Turkey cannot sell, invoice or earn any commercial income, and it is limited to non-trading tasks such as market research, promotion and coordination. If you want to trade, you need a branch or a subsidiary instead.
How long does foreign company registration in Turkey take?
A subsidiary or a branch can often be registered within about one to two weeks once apostilled and translated documents are ready, while a liaison office permit usually takes around one to two months. The slowest step is normally legalising documents abroad rather than the Turkish filing itself.
Do I need to live in Turkey to open a branch or subsidiary?
No, you do not need to be resident to own a subsidiary or set up a branch, and both can be registered through a lawyer acting under a notarised power of attorney. You will, however, need a Turkish tax number, and a branch must appoint a representative who is resident in Turkey.
How do I choose a business structure in Turkey if I am only testing the market?
If you are only testing the market and not yet selling, a liaison office is usually the right fit. It lets you research, promote the parent and build supplier relationships without trading, and you can convert to a branch or a subsidiary once you are ready to earn income.
Which is cheaper to set up, a branch or a subsidiary in Turkey?
Setup costs are broadly comparable, though a subsidiary requires statutory share capital that a branch does not. When you weigh the two structures on cost alone, remember that the branch’s full parent liability can prove far more expensive than the subsidiary’s capital if a claim arises.
About the Author
Kaan Karanfiloğlu is the founder of Karanfiloglu Law Firm, an Istanbul-based registered law office serving Turkish and international clients across Turkey. He is a lawyer registered with the Istanbul Bar Association (Reg. No. 58270) and the Union of Turkish Bar Associations (No. 133074), and has practised law in Turkey since 2017. He holds an LL.B. from Galatasaray University Faculty of Law (2016) and advises clients in Turkish, English and French; the firm also serves clients in Russian and Chinese with experienced in-office translators.
Disclaimer: This article provides general information about Turkish law and is not legal advice. Laws, regulations, official fees and procedures change over time and every situation is different. For advice on your specific circumstances, please consult a qualified lawyer. No liability is accepted for any loss arising from reliance on the information in this article.
