With its geopolitical position, advanced logistics infrastructure and dynamic domestic market, Türkiye is consistently on the radar of global firms and foreign investors. For foreign companies considering entering the Turkish market but wishing to analyze the market, conduct feasibility studies or manage regional business connections before starting direct commercial/production activity, one of the most ideal legal structures is opening a Liaison Office.

So, which legal procedures should be observed when establishing a liaison office in Türkiye?

1. Prohibition of Commercial Activity and Purpose

The most fundamental legal rule for liaison offices is the prohibition of commercial activity. These offices serve as the “representative and eyes” of the parent company abroad in Türkiye.

  • What They Can Do: Conduct market research, carry out the parent company’s promotion and advertising, audit suppliers in Türkiye, provide technical support and operate as a regional management center.
  • What They Cannot Do: They cannot issue invoices, make direct sales or engage in any income-generating commercial activity. All office expenses (rent, staff salaries, etc.) must be covered by capital sent in foreign currency by the parent company abroad.

2. Ministry of Industry and Technology Permit Processes

To open a liaison office, one does not go directly to the Trade Registry. The first step is to apply to the General Directorate of Incentive Implementation and Foreign Investment of the Ministry of Industry and Technology. The application requires a comprehensive file including the foreign parent company’s activity certificate, balance sheet reports and the representative’s authorization documents.

If the Ministry approves the application, it generally grants an initial operating permit of up to 3 years. Near the end of this period, the office’s prior-year activities are reviewed and the term may be extended in successive 5-year periods.

3. Tax Advantages and Employment Dynamics

Since liaison offices have no commercial income, no Corporate Tax liability arises. However, one of the greatest advantages lies in employment: under the Income Tax Law, the salaries of personnel working in liaison offices opened by foreign companies whose legal and business headquarters are not in Türkiye are exempt from Income Tax, provided they are paid in foreign currency from abroad.

This allows foreign companies to employ qualified labor at far more advantageous costs. However, it is a legal obligation for the office to register as a workplace with the Social Security Institution (SGK) and to pay employees’ insurance premiums regularly.

Conclusion: Liaison offices offer foreign investors a risk-free and prestigious “soft-landing” into the Turkish market. Managing the process flawlessly also creates a strong legal foundation for joint-stock or limited companies to be established later. Preparing a complete application file and ensuring full regulatory compliance through professional legal counsel is critically important.