Guide to Turkey's Commercial Code: What Foreign Investors Need to Know in 2026

Overview of Turkey's Commercial Code

Turkey's Commercial Code (Türk Ticaret Kanunu, TCC) entered into force in July 2012, replacing the 1956 code and aligning Turkish commercial law more closely with EU standards. The TCC governs:

• Company types and formation — including joint-stock companies (A.Ş.), limited liability companies (Ltd. Şti.), and partnerships
• Corporate governance — board structures, shareholder rights, general assembly rules
• Accounting and auditing — mandatory independent audits for qualifying companies
• Mergers, acquisitions, and restructuring — detailed rules on corporate transactions
• E-commerce and digital records — provisions for electronic signatures and digital bookkeeping

For foreign investors, the TCC works alongside the Foreign Direct Investment Law (No. 4875), which guarantees equal treatment for foreign and domestic investors and allows 100% foreign ownership in most sectors.

Company Types Available to Foreign Investors

Joint-Stock Company (Anonim Şirket — A.Ş.)

The A.Ş. is the preferred structure for larger investments and is required for certain regulated industries (banking, insurance, capital markets).

• Minimum capital: TRY 250,000 (approximately €7,500), with at least 25% paid at incorporation
• Shareholders: Minimum 1 (single-shareholder A.Ş. permitted since 2012)
• Board of directors: Minimum 1 member; no Turkish residency requirement for board members
• Liability: Limited to capital contribution
• Audit requirement: Mandatory independent audit if the company exceeds size thresholds (assets, revenue, employee count)

Limited Liability Company (Limited Şirket — Ltd. Şti.)

The Ltd. Şti. is the most common structure for SMEs and smaller foreign investments.

• Minimum capital: TRY 50,000 (approximately €1,500), with at least 25% paid at incorporation
• Partners: Minimum 1, maximum 50
• Management: One or more managers; at least one manager must be a Turkish resident or citizen
• Liability: Limited to capital contribution
• Simpler governance: No board of directors required; decisions made by partners' assembly

Branch Office

Foreign companies can open a branch in Turkey without forming a separate legal entity.

• No separate capital requirement (parent company's capital applies)
• Must appoint a Turkey-resident representative
• Subject to Turkish tax on Turkey-sourced income
• Cannot engage in activities outside the parent company's scope

Incorporation Process and Timeline

Setting up a company in Turkey has been streamlined through the MERSİS (Central Registration System) platform. The typical process:

1. MERSİS application — register the company online, obtain a unique system number
2. Trade registry approval — submit articles of association, shareholder documents, and capital deposit receipts
3. Tax registration — obtain a tax identification number from the local tax office
4. Social security registration — register with SGK (Social Security Institution) for employee coverage
5. Chamber of commerce membership — mandatory for all commercial entities

Timeline: The entire process takes approximately 5-10 business days when documents are prepared. Foreign documents require apostille or consular legalization and sworn Turkish translation.

Key costs include:

• Trade registry fees (varies by capital)
• Notary fees for articles of association
• Capital deposit (minimum 25% of stated capital)
• Potential legal counsel fees (€2,000-€5,000 for a straightforward setup)

Corporate Governance and Compliance

Annual Requirements

• General assembly meeting — must be held within 3 months of the fiscal year-end
• Financial statements — prepared according to Turkish Financial Reporting Standards (TFRS), which are aligned with IFRS
• Independent audit — mandatory for companies exceeding specific thresholds (approximately TRY 150 million in assets or TRY 300 million in revenue)
• Tax filings — corporate tax returns due by the 25th day of the 4th month after fiscal year-end
• Transfer pricing documentation — required for related-party transactions

Corporate Tax Overview (2026)

• Standard corporate tax rate: 25% (increased from 20% in recent years)
• Withholding tax on dividends: 10% (may be reduced under double tax treaties)
• VAT: Standard rate 20%, reduced rates of 10% and 1% for certain goods
• Turkey has 80+ double tax treaties, including with the US, UK, Germany, and most EU countries

Restrictions and Regulated Sectors

While most sectors are open to 100% foreign ownership, some have restrictions:

• Broadcasting: Maximum 50% foreign ownership
• Aviation: Requires Turkish majority ownership for domestic carriers
• Real estate: Foreign individuals face reciprocity requirements and area limitations
• Education and healthcare: Subject to special licensing
• Defense: Restricted or prohibited for foreign investors

FAQ

Q: Can a foreigner be the sole owner of a Turkish company? A: Yes. Both A.Ş. and Ltd. Şti. allow single-shareholder structures. There is no requirement for a Turkish partner in most sectors.

Q: Do I need to live in Turkey to set up a company? A: No, but for a Ltd. Şti., at least one manager must be a Turkish resident or citizen. For an A.Ş., there is no residency requirement for board members. You can appoint a local manager or use power of attorney for the incorporation process.

Q: What are the ongoing costs of maintaining a Turkish company? A: Annual costs include accounting/bookkeeping (TRY 30,000-100,000+ depending on size), independent audit fees if applicable, chamber of commerce dues, and tax compliance costs. Budget approximately €5,000-€15,000 per year for a small to mid-size operation.

Q: How long does it take to repatriate profits from Turkey? A: Dividend distributions can be made after the annual general assembly approves the financial statements. There are no restrictions on transferring profits abroad, but 10% withholding tax applies (potentially reduced by tax treaties). The actual bank transfer typically takes 1-3 business days.

Q: Is Turkey a good jurisdiction for a holding company structure? A: Turkey offers a participation exemption — dividends received from qualifying subsidiaries and capital gains from the sale of qualifying participations can be 100% exempt from corporate tax under certain conditions. This makes Turkey attractive for regional holding structures, particularly for Middle East and Central Asian operations.