Liaison Office of a Foreign Company in Turkey

A liaison office in Turkey is the lightest way for a company established under foreign law to be present in the country, and its defining feature is a prohibition rather than a permission. The Ministry is empowered to grant companies established under the laws of foreign countries permission to open a liaison office on condition that they do not carry out commercial activity in Turkey (4875 sayılı Doğrudan Yabancı Yatırımlar Kanunu m.3-h).

Everything else follows from that condition. The office needs a permit rather than a trade registry entry, it runs for a term rather than indefinitely, its permitted activities are listed and its extension depends on which of them it actually performs, and a finding that it has traded ends the permit. The operating detail sits in the Doğrudan Yabancı Yatırımlar Kanunu Uygulama Yönetmeliği, which is where the periods, documents and inspection consequences are fixed.

This guide keeps three market-entry routes apart that are often compared loosely: the liaison office, the branch and the subsidiary company. They differ in what they may do, who authorises them and what they produce.

1. Liaison Office in Turkey: What It Is and What It May Not Do

The statutory basis is a single sentence. The Ministry is authorised to grant companies established under the laws of foreign countries permission to open a liaison office, on condition that they do not carry out commercial activity in Turkey (m.3-h). The Regulation repeats that authority and adds the power to extend the permits it grants (Doğrudan Yabancı Yatırımlar Kanunu Uygulama Yönetmeliği m.6).

Two features of the wording decide how the rest of the regime works.

First, the applicant is a company established under foreign law. A foreign individual is not within the provision, and neither is a Turkish company seeking a representative presence.

Second, the absence of commercial activity is a condition of the permit, not a restriction imposed afterwards. That is why the application must contain a declaration setting out the scope of the work to be carried out by the office together with an undertaking that the office will not carry out commercial activity (Yönetmelik m.7-b), and why a finding to the contrary removes the permit rather than attracting a separate sanction.

2. Liaison Office in Turkey: Which Authority Grants the Permit

The Regulation names both bodies in its definitions: the Ministry is the Ministry of Industry and Technology, and the Directorate General is the General Directorate of Incentive Implementation and Foreign Investment (Doğrudan Yabancı Yatırımlar Kanunu Uygulama Yönetmeliği m.3). The Ministry grants the permit and extends it (m.6); extension applications are made to the Directorate General (m.8-a), and the annual activity form is sent to the Ministry (m.8-ç).

The statute itself still reads differently. Article 3(h) of the Foreign Direct Investment Law gives the authority to the Müsteşarlık (4875 sayılı Kanun m.3-h), which the Law defines as the Undersecretariat of the Treasury (4875 sayılı Kanun m.2-c). That wording has not been updated in the text of the Law. The Regulation’s current definitions, amended in 2020, name the Ministry of Industry and Technology (Yönetmelik m.3), and that is the Ministry to which the application under Article 7 is made.

The Ministry decides ordinary applications, and complete applications for establishment and for extension are concluded within fifteen working days of the application date, provided the requested information and documents are complete and without deficiency (Yönetmelik m.6).

Two categories are routed elsewhere, and a buyer of advice on timing should establish which category applies before relying on the fifteen-day figure:

• Regulated financial fields. Requests by foreign companies to open a liaison office in order to operate in financial areas with their own special legislation, such as the money and capital markets or insurance, are assessed by the institutions or organisations authorised under that special legislation (Yönetmelik m.6).
• Other licensed sectors. Where the Ministry considers it necessary, it may conclude requests in other sectors requiring a permit, licence or similar authorisation by obtaining the opinion of the institution or organisation that grants that permit or licence (Yönetmelik m.6).

There is also a threshold that catches new groups. For newly established companies, the Ministry may, assessing the request against elements such as the company’s field of activity, its capital and the number of staff it employs, require that at least one year has passed since the company’s incorporation before granting an operating permit (Yönetmelik m.6).

3. Liaison Office in Turkey: the Application Documents

An application to establish a liaison office is made to the Ministry with the following documents (Yönetmelik m.7):

• the application form (m.7-a);
• a declaration containing the scope of the work to be carried out by the liaison office and the undertaking that the office will not carry out commercial activity, together with a document showing the signing authority of the foreign company officer who signs it (m.7-b);
• the foreign company’s certificate of activity, certified by the relevant Turkish consulate or in accordance with the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents prepared within the framework of the Hague Conference on Private International Law (m.7-c);
• an activity report or a balance sheet and income statement prepared for the foreign company (m.7-ç);
• the authority document to be given to the person or persons appointed to carry out the office’s activities (m.7-d);
• a power of attorney where the establishment formalities are conducted through another person (m.7-e).

Where the original of an application document, or of a document submitted to the Directorate General during the office’s operating period, is produced, a copy is certified by the Directorate General and the original is returned to the applicant (Yönetmelik m.7).

The certification limb is the one that takes the longest to arrange from abroad, because the route depends on whether the issuing state is within the apostille convention or whether consular certification is needed instead.

4. Liaison Office in Turkey: Term and Extension by Activity Type

First applications are granted permission for a maximum of three years within the declared scope of activity, and offices wishing to extend their operating period apply to the Directorate General before that period ends (Yönetmelik m.8-a).

Extension is not automatic. The Directorate General assesses extension requests against the office’s past-year activities, the foreign company’s forward business plan and targets for Turkey, the existing and projected expenditure and the number of staff employed, and may conclude them for the periods set out for each activity, in a manner appropriate to the nature of the activity to be carried out (Yönetmelik m.8-b).

Permitted activity	Extension period
Representation and hospitality	5 years
Control and inspection of suppliers in Turkey for quality and standards, and supplier sourcing	5 years
Technical support	5 years
Communication and information transfer	5 years
Regional management centre	10 years
Market research, or promotion of the foreign company’s products or services	not extended

4.1. Liaison Office in Turkey: the Two Activities That Cannot Be Extended

The last row is the provision that most often surprises a group planning a phased entry. The operating periods of offices that obtained permission to carry out market research, or to promote the foreign company’s products or services, are not extended (Yönetmelik m.8-b).

An office opened on that basis therefore has the initial permit period and no more. Where the intention is a longer presence, the question to settle at the application stage is which activity is being declared, because the declared scope is what the permit is granted within (Yönetmelik m.8-a) and it determines whether an extension exists at all.

The Regulation also describes each activity, and the descriptions are narrower than their labels suggest. A regional management centre, which carries the longest period, is defined as providing coordination and management services for the foreign company’s units in other countries, covering activities such as forming investment and management strategies, planning, promotion, sales, after-sales services, brand management, financial management, technical support, research and development, external sourcing, testing newly developed products, laboratory services, research and analysis, and staff training (Yönetmelik m.8-b). The four five-year activities are defined as follows (Yönetmelik m.8-b):

• Representation and hospitality: representing the foreign company before sectoral bodies and at related events, coordinating and organising the Turkish business contacts of the foreign company’s officers, and meeting their office-use needs.
• Control and inspection of suppliers, and supplier sourcing: inspecting firms that manufacture on the foreign company’s behalf against the foreign company’s quality standards, and meeting the foreign company’s product and manufacturer requests.
• Technical support: providing training or technical support to distributors, and supporting supplier manufacturers to raise their quality standards.

Communication and information transfer is defined as collecting and transmitting information on market developments, consumer trends, competitors’ and distributors’ sales positions and distributor performance to the foreign company in a business relationship with Turkey (Yönetmelik m.8-b).

Those definitions matter because the activity determines both what the office may lawfully do and how long it may do it.

5. Liaison Office in Turkey: Obligations After the Permit

Three sets of obligation run through the office’s life, and the third carries the sharpest consequence (Yönetmelik m.8):

• Within one month of the establishment permit. Offices send the Directorate General a copy of the tax office registration document and of the lease relating to the office (m.8-c).
• Within one month of a change. Changes of address, of the office representative or representatives, or of the foreign company’s title are notified to the Directorate General together with the new lease showing the address, the authority document for the newly appointed person, or the documents evidencing the title change (m.8-c).
• By the end of May each year. Offices send the Ministry the annual information form on the office’s past-year activities together with its annexed documents (m.8-ç).

The annual form is not a formality. Offices that do not send it have their extension requests left out of consideration, and their operating permits may also be cancelled of the Ministry’s own motion (m.8-ç). Both consequences follow from a missed filing rather than from any substantive failing.

6. Liaison Office in Turkey: What Happens If Commercial Activity Is Found

Whether offices conduct their activities in accordance with the legislation and with the activity subject stated in their permits may be inspected by the Ministry, either of its own motion or on the written notification of relevant institutions and organisations (Yönetmelik m.8-d).

The Regulation then separates two findings, and they carry different consequences:

Finding	Consequence
Operating outside the scope of the permit	thirty days to apply for permission for the activity actually carried out, extendable by up to thirty further days on justified grounds; the permit is cancelled if no application is made within the period given (m.8-d)
Carrying out commercial activity	the operating permit is cancelled and the matter is reported to the relevant authorities (m.8-d)

The distinction is worth holding onto, because the first is curable and the second is not. An office permitted for technical support that has started doing supplier sourcing is in the first row and has a window to regularise. An office that has been invoicing, selling or following up sales is in the second, and the Regulation provides no equivalent correction period.

What the Regulation does not do is state the tax consequences of such a finding. Those follow from the tax legislation applying to the activity actually carried out, and they are assessed under that legislation rather than under the permit regime described here.

7. Liaison Office, Branch or Subsidiary in Turkey

The three routes are routinely presented as points on a single scale of commitment. They are better understood as three different legal positions.

	Liaison office	Branch	Subsidiary company
Authorising act	Ministry permit (4875 sayılı Kanun m.3-h)	registration in the trade registry (6102 sayılı Türk Ticaret Kanunu m.40/4)	incorporation and registration
May trade in Turkey	no, by the terms of the permit	yes	yes
Status as a direct foreign investment	not listed in the definition	listed: opening a branch is a form of direct foreign investment (4875 sayılı Kanun m.2-b)	listed: establishing a new company is a form of direct foreign investment (m.2-b)
Duration	permit term, extendable by activity type (Yönetmelik m.8)	no permit term	no permit term
Annual reporting	activity information form to the Ministry by the end of May (Yönetmelik m.8-ç)	E-TUYS activity form by the end of May, and shareholder and capital changes within one month (Yönetmelik m.5)	same as branch (m.5)
Transfers out of Turkey	only the balance on closure and liquidation (Yönetmelik m.8-e)	net profit, dividends, sale, liquidation and compensation amounts may be transferred freely through banks (4875 sayılı Kanun m.3-c)	same as branch (m.3-c)

The reporting row separates two filings that are easy to merge. The electronic reporting duties in the Regulation, carried out through the E-TUYS system by an authorised user, are imposed on companies and branches within the scope of the Law (Yönetmelik m.5). The liaison office has its own annual obligation: the information form on its past-year activities, sent to the Ministry by the end of May (m.8-ç). A group that holds both a subsidiary and a liaison office therefore files twice, under two different provisions.

The transfer row is the one that decides most structuring questions. A liaison office is funded from abroad and may not request transfers out of Turkey apart from the balance arising on closure and liquidation (Yönetmelik m.8-e), because it has no income to repatriate. A branch and a subsidiary sit inside the transfer guarantee: the net profit, dividends, sale, liquidation and compensation amounts, the sums payable under licence, management and similar agreements, and the principal and interest on foreign loans arising from a foreign investor’s activities and transactions in Turkey may be freely transferred abroad through banks or special financial institutions (m.3-c).

Both a branch and a new company also bring the investor inside the general principles of the Foreign Direct Investment Law: direct foreign investment is free unless international agreements and special statutes provide otherwise, and foreign investors are subject to equal treatment with domestic investors (m.3-a). Direct foreign investments may not be expropriated or nationalised except where the public interest requires it and their value is paid (m.3-b).

Setting up a company is covered separately in the guide to setting up a company in Turkey as a foreigner, and the tax position of a foreign company operating in Turkey is addressed in the guide to the taxation of foreign companies in Turkey.

8. Liaison Office in Turkey: Closing the Office

Where a liaison office ends its activities, the closure procedure requires the cessation-of-business inspection slip obtained from the relevant tax office to be sent to the Directorate General (Yönetmelik m.8-e).

The same provision contains the restriction noted above: apart from the balance arising as a result of closure and liquidation, offices may not request transfers (m.8-e). That is a limit on the office throughout its life, not only at the end of it, and it is the financial expression of the prohibition on commercial activity.

9. What the Legislation Does Not Fix

• A staff ceiling. No maximum number of employees is stated. Staff numbers appear as a factor the Ministry weighs when assessing a newly established company’s request and when deciding an extension (Yönetmelik m.6, m.8-b). Whether a particular foreign employee may work is a separate question: work permits for foreign staff in companies, branches and establishments set up under the Foreign Direct Investment Law are granted by the Ministry of Labour and Social Security (4875 sayılı Kanun m.3-g), and that route is covered in the guide to the Turkey work permit.
• The tax treatment of the office. The permit regime states the condition and the consequence of breaching it. What tax obligations attach to a particular office, and what follows for tax purposes from a finding of commercial activity, are matters for the tax legislation and are assessed there.
• Set-up costs and office requirements. The Regulation requires a lease to be filed (Yönetmelik m.8-c) but states no cost, minimum floor area or location requirement.
• A guaranteed extension. The periods in the table are the maximum periods for which an extension may be concluded, assessed against the listed factors (Yönetmelik m.8-b). They are not entitlements, and for two activity types no extension exists at all.