Establishing Liaison Offices in Turkey

Foreign companies may establish liaison offices in Turkey by obtaining a permit from the Ministry of Industry and Technology (the “Ministry”). Liaison offices are also known as representative offices and comprise relatively the easiest way to corner the Turkish market.

A liaison office can conduct activities such as representing the parent company in Turkey and its organizations, coordinating of business contacts, office use of company officials, auditing of the suppliers in Turkey, conducting market research, creating strategies within the region, promoting products and services of the parent company.

However, liaison offices are usually established for purposes of conducting market research before a company expands its operations in Turkey or being a medium in the representation of the company to Turkish clients. In other words, liaison offices serve as the representatives (office) and act as a communication medium between the parent company and subjects in Turkey.

A liaison office cannot be a permanent establishment. Because the establishment permits are granted for three years. At the end of this period, an extension of the permit may be requested. The extension period cannot exceed three years.

Even though liaison offices cannot engage in commercial activities that generate income, it is still necessary to register with Turkish authorities. The following documents must be submitted to the Ministry in order to receive the permit:

1.Application form

2.Letter of commitment

Should outline the activities to be carried out by the liaison office and an undertaking that the office shall not engage in any commercial activities, and be signed by the authorized signatory.

3.Good Standing certificate and trade registry documents of the parent company

Should be issued by the authorities of the parent company’s country and verified by the relevant Turkish Consulate or in accordance with the provisions of the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (the Apostille Convention)

4.Annual report, income statement and the balance sheet of the parent company

5.A certificate of authorization

In favor of the authorized signatory, who will be in charge of the liaison office.

6.Power of attorney

Granted to the person who will follow the establishment procedures before the Ministry.

After the examination of the documents, the establishment process gets completed. Liaison offices are required to regularly notify the Ministry about their activities. Every year until the end of May, it is required to fill out an information form regarding its activities and submit it to the Ministry via E-TUYS (Electronic Incentive Application and Foreign Capital Information System).

Last but not least, liaison offices should open an employee file at the Social Security Institution for hiring, employees. On the other hand, employee salaries are exempt from income tax if they are paid in foreign currency and come from a foreign country.

In our next information note on the initiatives of foreign investors in Turkey, you may examine the equity company types in Turkey.

Att. Eda Idil Tokdemir

Att. Merih Okuyaz

This information note has been prepared for informational purposes only and does not constitute advertising, offer or legal advice in anyway. We recommend that you consult your legal advisor for your questions and problems on the subject. All rights of this article belong to its author, it cannot be used without permission, even partially.