Employer of Record vs Your Own Entity in Turkey: Cost, Risk and When to Switch (2026)
Should a foreign company hire in Turkey through Deel, Remote or another employer of record, or set up its own Turkish company and run payroll locally? The answer depends on headcount, time horizon and what the Turkish team actually does.
- EOR is fastest for one to a few hires and a trial period. List prices in 2026 are typically about USD 400–700 per employee per month on top of salary and statutory costs.
- Your own entity costs more up front (formation, monthly accounting, payroll) but the per-employee cost drops as headcount grows, and you control contracts, IP and incentives.
- Turkish labour law restricts “lending” employees to another business (Labour Law No. 4857, Art. 7), and staff who negotiate or sign contracts can create a taxable presence for the foreign company. Both points matter more the longer an EOR arrangement runs.
- In our experience the break-even usually sits somewhere around 5–10 employees or a 12-month+ commitment — then an own entity normally wins.
Key facts
| Question | Employer of record (EOR) | Own Turkish entity |
|---|---|---|
| Time to first hire | Days to a few weeks | Company formation + SGK workplace registration first |
| Provider fee (2026 list prices) | c. USD 400–700 per employee / month | Monthly accounting + payroll fee, mostly fixed plus per-employee element |
| Statutory employer cost | Same SGK 21.75% + 2% unemployment, passed through | Same; you can claim the 2-point (5 in manufacturing) Treasury incentive directly |
| Legal employer | EOR’s local entity or partner | Your Turkish company |
| IP and confidentiality | Flows through EOR contract chain | Direct employment contract with your company |
| Tax presence risk for the parent | Remains if employees act for the parent (Corporate Tax Law Art. 3; Tax Procedure Law Art. 156; Income Tax Law Art. 8) | Activity sits in a Turkish taxpayer; intercompany pricing instead |
| Local incentives (technopark, R&D, service export deductions) | Generally not available to you | Available if you qualify |
EOR prices from published 2026 list prices of major providers (for example Deel, Remote, Oyster, Multiplier); actual quotes vary with volume and country.
Is employer of record legal in Turkey?
Employer of record vs own entity: cost comparison
| Headcount | EOR provider fees per year (at USD 600 / employee / month) | What that budget buys with an own entity |
|---|---|---|
| 1 | c. USD 7,200 | Usually not enough to justify formation — EOR is often right |
| 3 | c. USD 21,600 | Borderline — depends on time horizon |
| 5 | c. USD 36,000 | Typically covers formation plus a full year of accounting and payroll |
| 10 | c. USD 72,000 | Own entity usually clearly cheaper |
| 20 | c. USD 144,000 | Own entity almost always cheaper, plus incentives and control |
Statutory costs (salary, SGK, income tax withholding) are the same in both models. Use our Turkey salary and employer cost calculator for those.
When an employer of record is the right answer
- You are testing the Turkish market with one or two people.
- You need someone on payroll within days.
- You are not sure you will still be in Turkey in 12 months.
- The employees do not negotiate or sign contracts for the parent.
We tell prospective clients this plainly: for a single test hire, forming a company too early is a common and avoidable cost.
When to switch from EOR to your own entity
- Headcount reaches roughly five or more, or you plan to hire steadily.
- The Turkish team sells, negotiates or represents the company — the tax-presence risk grows.
- You want technopark, R&D or service-export tax benefits, which need a Turkish taxpayer.
- You need to issue Turkish invoices, hold local bank accounts or sign local leases.
- Employees want the security of a direct contract with the company they actually work for.
Turkey vs other countries for EOR
| Country | EOR / staff leasing position |
|---|---|
| Turkey | No specific EOR law; temporary employment limited to licensed agencies and listed cases (Labour Law Art. 7) |
| Germany | Staff leasing needs a licence (AÜG) with an 18-month cap on assignments |
| Poland | Temporary work agencies regulated; 18-month limit in a 36-month period |
| UK | EOR widely used; umbrella and IR35 rules shape the model |
| UAE | EOR common through licensed free-zone or mainland sponsors |
Indicative overview only; check local counsel for each jurisdiction.
Case study: from EOR to a Turkish subsidiary at eight engineers
Illustrative scenario (composite of typical cases): A US SaaS company hired its first Istanbul engineer through an EOR and grew to eight engineers in 18 months.
The obvious answer: Stay with the EOR — it works and nobody wants a migration.
Why it failed: EOR fees had become the second-largest line in the Turkish budget, one engineer had started leading client calls for the parent, and the company could not use Turkish R&D and technopark incentives without its own taxpayer entity.
The structure adopted: A Turkish limited company was formed, SGK workplace registration completed, employees moved to direct contracts with continuity of service recognised, and an intercompany service agreement was put in place so the subsidiary bills the parent on a cost-plus basis.
What happens if…
What happens if we pay a Turkish employee directly from abroad without EOR or entity?
The person is working in Turkey without SGK registration. That creates unregistered-employment penalties, back contributions and a potential tax presence for the foreign company. It is the riskiest option.
What happens if we hire contractors instead?
Genuine independent contractors can invoice from their own Turkish business. If they work like employees — fixed hours, one client, integrated in your team — the relationship can be reclassified as employment.
What happens to severance when we switch from EOR?
Service time generally continues to count. Agree with the EOR and the employees how accrued severance is recognised before the switch.
Frequently asked questions
How much does an employer of record cost in Turkey?
Published 2026 list prices of major EOR providers are typically about USD 400–700 per employee per month, in addition to the salary and statutory employer contributions.
How many employees before setting up a company in Turkey makes sense?
In our experience the break-even usually sits around five to ten employees or a commitment of 12 months or more, earlier if the team sells for the parent or you want local incentives.
Can a foreign company employ people in Turkey without a Turkish entity?
It can register with SGK in limited cases, but most foreign companies use either an EOR or their own subsidiary, branch or liaison office, because payroll withholding, SGK and tax presence all need a local anchor.
Talk to us about your hiring plan
Tell us your headcount plan and timeline. We will tell you honestly whether EOR or an own entity fits better.
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