Branch, Subsidiary or Liaison Office in Turkey

Direct answer: In a branch vs subsidiary Turkey analysis, a subsidiary is a separate Turkish legal entity, a branch is a registered extension of the foreign parent without separate legal personality, and a liaison office is a Ministry-permitted presence that cannot conduct commercial activity. The right choice depends on whether the Turkish operation will sign revenue contracts, employ staff, hold licences and assets, ring-fence operating liability, receive investment or only research and coordinate the market.

Tax registration, permanent-establishment exposure, repatriation, work permits and closure also differ. A label chosen by headquarters does not control the result: actual functions, contracts and decision-making must match the registered form. Before establishment, map the first two years of Turkish activity and test that plan with corporate, tax, employment and regulatory advisers.

Turkey Business Setup: 2026 legal check

2026 legal check: A Turkish subsidiary has separate legal personality, while a branch generally remains part of the foreign company. A liaison office requires ministry permission and may not conduct revenue-generating commercial activity. Registration, tax, accounting, work-permit and beneficial-ownership duties depend on the chosen structure and actual operations. Current capital requirements, permit conditions and sector approvals should be confirmed immediately before filing. The Turkey Business Setup assessment must use the current official text and the documents in the individual file.

Branch vs subsidiary Turkey: the three structures

Feature	Turkish subsidiary	Turkish branch	Liaison office
Legal identity	Separate Turkish company	Part of the foreign parent	Permitted non-commercial presence of parent
Commercial activity	Yes, within objects and licences	Yes, within parent activity and licences	No commercial activity
Operating liability	Generally sits with company, subject to exceptions and guarantees	Ultimately parent exposure because branch is not separate	Parent funds and controls permitted functions
Governance	Shareholders and managers or board under company law	Parent appoints branch representative	Parent appoints liaison representative
Establishment	Trade-registry incorporation	Trade-registry registration and parent documents	Ministry permission before operation
Typical use	Long-term operating, hiring, investment and local contracts	Direct parent operation in a defined Turkish market	Research, representation and other permitted support functions

This is a legal comparison, not a tax-rate quotation. The tax outcome depends on current law, treaties, activity, funding and transactions with the parent.

When a Turkish subsidiary fits

A subsidiary is usually formed as a limited or joint-stock company. It can contract in its own name, hold local assets, employ staff, invoice customers and apply for licences, subject to the applicable rules. Ownership can generally be foreign, though regulated sectors may impose special approvals or limits.

Separate personality can support liability allocation and future investment, but it is not an absolute shield. Directors, managers, shareholders or guarantors may have exposure under specific corporate, tax, social-security or contractual rules. The existing guide on limited-company owner and manager liability illustrates why “limited” should not be presented as risk-free.

When a Turkish branch fits

A branch allows the foreign entity to operate in Turkey through a registered place of business. It has no legal personality independent of the head office. Its activity must remain connected to the parent’s field, and the parent appoints a fully authorised representative for branch affairs. Contracts are therefore, in substance, contracts of the foreign entity acting through its Turkish branch.

A branch may suit a group that wants direct parent contracting, does not plan outside equity in the Turkish operation and accepts parent-level exposure. It can still require trade registration, tax, accounting, employment and sector permits. A branch should not be used simply because it sounds temporary; closure, employee termination, tax clearance and records still need planning.

What a liaison office may and may not do

A liaison office requires permission from the Ministry of Industry and Technology under the foreign-direct-investment framework and may not engage in commercial activity. Permitted functions depend on the licence and can include representative, coordination, market research or similar non-revenue work. The application must truthfully describe the function and the foreign parent’s activity.

The prohibition is substantive. Calling invoices “cost sharing,” allowing local staff to conclude sales, collecting customer payments or routinely delivering the paid service can contradict liaison status. The parent generally funds the office from abroad. Before every new function, ask whether it supports the foreign business or constitutes Turkish commercial activity. If the model evolves, convert or establish an operating vehicle rather than stretching the permit.

Liability and parent-company exposure

With a subsidiary, the Turkish company bears its own contractual obligations unless the parent gives a guarantee, assumes an obligation, acts as the real counterparty or another legal basis applies. Proper corporate separation, capitalisation, approvals and contracting help preserve the intended allocation. A parent-branded email or group policy alone does not automatically make the parent every contract’s debtor, but ambiguous documents create disputes.

A branch is the parent, not a liability-isolated company. Claims linked to branch operations can therefore expose the foreign legal person. A liaison office also belongs to the parent, though its lawful activities should not include revenue contracts. Insurance, dispute clauses and authority controls must reflect the chosen allocation.

Governance and signing authority

A subsidiary follows the Turkish Commercial Code rules for its form. Shareholders appoint managers or directors, and representation is registered. A branch’s head office adopts establishment and representative resolutions supported by authenticated foreign corporate documents. A liaison office’s representative acts within the parent’s power and Ministry permission.

Prepare a signing matrix for customer contracts, bank transactions, hiring, tax filings, litigation and related-party dealings. Do not assume an internal headquarters limit protects against third parties if the registered or apparent authority says otherwise. Management status can also affect employment classification; see employee status of a company shareholder or director for the distinct labour-law analysis.

Tax and permanent-establishment questions

A Turkish subsidiary is ordinarily a Turkish corporate taxpayer on the basis defined by current tax law. A branch may constitute a Turkish permanent establishment or place of business of the foreign enterprise and is taxed under rules applicable to its Turkish operations, subject to any relevant treaty. A liaison office licence does not by itself guarantee that tax authorities will ignore actual commercial or management activity.

Obtain written tax advice on profit attribution, withholding, VAT, payroll, transfer pricing, financing and repatriation. Review the applicable treaty rather than relying on a group chart. Intercompany service, licence and loan agreements should correspond to real functions and records. This article intentionally gives no rate because rates and incentives change and because form alone does not determine the tax base.

Employment and immigration

Each structure may hire staff only within its lawful setup and must address payroll, social security and employment rules. For a liaison office, job descriptions should support the permitted non-commercial function. For a branch, the employing party and authorised signatory must be clear. A subsidiary signs through its own registered representation.

Foreign managers and employees need an immigration and work-authorisation review. Corporate registration or liaison permission does not automatically authorise an individual to work. The page on foreign workers in Turkey provides the employment context, while foreign shareholder work permits addresses owners who will take an active role.

Licences, premises and contracts

List every regulated approval before selecting the vehicle. Some licences may be available only to a Turkish company or may require a particular capital, ownership or governance structure. A branch’s parent objects and a subsidiary’s articles must cover the intended field. A liaison office cannot use a general research description as authority to sell.

Review the proposed lease for permitted use, registration needs, tax treatment, alterations and exit. A change from branch to subsidiary is not necessarily a simple name change; contracts, employees, assets and leases may require transfers or consent. Our related article on business transfer and Turkish commercial leases explains one part of that transition risk.

Establishment-document checklist

• Current foreign parent registry extract and constitutional documents;
• ownership and beneficial-owner chart;
• competent parent resolution selecting structure and representative;
• apostille or legalisation and reliable Turkish translations;
• two-year function, contract, staffing, premises and revenue map;
• tax and treaty memorandum covering funding and repatriation;
• licence matrix and regulator pre-application questions;
• articles or branch documents, representative power and signature policy;
• liaison application and non-commercial controls, if that route is selected;
• post-establishment calendar for reporting, books, payroll and renewals.

Check the current registry or Ministry document list before documents are issued abroad. Expired extracts, missing corporate authority and inconsistent names are avoidable causes of delay.

How to choose without overbuilding

Write three scenarios: expected activity, conservative activity and expansion. If all involve Turkish customer contracts and local revenue, a liaison office is unlikely to fit. If outside investors or a sale of the Turkish business are realistic, a subsidiary often offers a clearer investment perimeter. If the parent must remain the direct regulated counterparty, a branch may deserve closer analysis.

Score each structure for permitted activity, liability, tax, capital, governance, licences, banking, hiring, conversion and closure. Record the assumptions. A decision memo helps explain later why the group selected the vehicle and alerts management when changed facts require reassessment.

Closure and conversion should be planned at entry

A subsidiary may require liquidation or another corporate transaction; a branch needs deregistration, creditor, tax and employee steps; a liaison office must comply with permit and closure procedures. None should be treated as deleting a registration online. Preserve books, notices and authority after commercial activity stops.

If the group intends to test the market with a liaison office and later sell, define the conversion trigger now. Customer negotiation, local revenue, inventory, warranties or binding orders can be warning signs that non-commercial limits are being approached. Do not wait for an inspection to redesign the model.

What to send for an initial structure review

Provide the parent’s country, ownership, business, Turkish customer plan, expected contracts, staff, premises, assets, licences, annual funding and exit horizon. Identify who will sign, where management decisions will be made and whether third-party investment is expected. Include any Turkish negotiations already started.

A useful opinion should compare all viable structures against the same fact pattern and state tax assumptions requiring specialist confirmation. Share corporate documents securely and initially redact unnecessary personal identifiers. Establishment can be coordinated nationwide, while the chosen registry, Ministry and sector processes determine where specific steps occur.

Official sources reviewed

• Turkish Commercial Code No. 6102;
• Foreign Direct Investment Law No. 4875;
• Presidency Investment Office establishment and structure guide;
• Revenue Administration corporate tax legislation page;
• MERSİS official registry portal and Turkish Trade Registry Gazette.

Law and official guidance were checked on 20 September 2026. Ministry permissions, tax provisions, capital rules and sector requirements should be reverified when the application is prepared.

Frequently asked questions

Is a branch a separate Turkish company?

No. It is a registered part of the foreign parent. That distinction affects liability, contracting, accounts, governance and closure.

Can a liaison office issue invoices?

A liaison office may not conduct commercial activity. Invoicing customers or earning local commercial revenue is inconsistent with that core limit and requires immediate structural advice.

Can a subsidiary be fully foreign-owned?

Often yes, under the general foreign-investment principle, but regulated sectors and particular assets may require approvals or ownership conditions.

Which structure best protects the foreign parent?

A properly operated subsidiary generally provides a separate liability perimeter, but guarantees, statutory liability and actual conduct can still expose the parent or officers. Risk must be designed, not assumed.

Is a liaison office tax-free?

Do not use that label as a conclusion. Permission, lawful non-commercial functions, funding and actual activity must be reviewed under Turkish tax law and any applicable treaty.

Can a branch receive outside investment?

A branch has no independent shares to issue. An investor normally invests in the foreign parent or a separate company, which is one reason a subsidiary may fit future equity funding better.

Do foreign representatives need work permits?

Corporate authority and permission to work are separate. The person’s activities, status and current work-permit rules must be assessed before work begins.

Can we convert a liaison office into a branch?

A transition may be organised, but permissions, contracts, staff, assets, tax and registrations require coordinated steps. It should not be treated as an automatic portal conversion.

Which form closes most easily?

Closure burden depends on debts, staff, tax, contracts, licences and records. Compare the legal exit at the start rather than choosing solely by incorporation speed.

Does a foreign company need a Turkish address?

Each Turkish establishment form requires a lawful local setup appropriate to its registration or permission. The premises and actual use should match the declared function.

Publication and legal-information notice

Publisher: Attorney Emirhan Keskin, Mersin Bar Association registration no. 5507.

Legal information updated: 21 September 2026.

This comparison provides general legal information. It is not a substitute for corporate or tax advice for a specific foreign business, does not create an attorney–client relationship, and guarantees no registration, permission or tax treatment.