Choosing the Business Structure

When establishing a free zone company in Turkey, it is essential to consider the different types of companies you can create. Here is an overview of the available company types:
  1. Limited Liability Company (LLC): This is the most common type of company established in Turkish free zones. An LLC requires at least one shareholder and one director, and the liability of the shareholders is limited to their respective shares in the company's capital.
  2. Joint-Stock Company (JSC): A JSC is another popular choice for foreign investors in Turkey. It requires a minimum of one shareholder and one director, with the liability of the shareholders limited to their respective shares in the company's capital. JSCs are suitable for larger investments and can issue various types of shares.
  3. Branch Office: Foreign companies can establish a branch office in a Turkish free zone. The branch office operates as an extension of the parent company and is subject to the same regulations as the parent company.
  4. Liaison Office: A liaison office is an option for foreign companies looking to explore business opportunities in Turkey without engaging in commercial activities. Liaison offices cannot generate income and only conduct market research and promotional activities.
  5. Sole Proprietorship: Sole proprietorships are businesses owned and operated by a single individual. This type of company is rare in Turkish free zones due to the higher risk involved, as the owner has unlimited liability for the company's debts.

Key Considerations

  1. Ownership:
    • Foreign investors can establish companies with 100% foreign ownership, engage in joint ventures, or set up wholly Turkish-owned companies within the free zones.
  2. Tax Structure:
    • Corporate Tax Exemption: Manufacturing companies operating in free zones are exempt from corporate income tax.
    • Value-Added Tax (VAT) and Special Consumption Tax Exemption: Companies are exempt from VAT and special consumption tax within the free zones.
    • Customs Duties: Goods can be imported into and exported from the free zones without customs duties.
  3. Legal Liabilities:
    • LLC and JSC: Shareholders' liabilities are limited to their capital contributions.
    • Branch of a Foreign Company: The parent company holds full liability for the branch's operations.