Branch vs Subsidiary vs Liaison Office in Turkey (2026): Which Structure Should a Foreign Company Choose?
Entering Turkey? The three main structures compared on tax, liability, what you are allowed to do, set-up and running costs — by a licensed Turkish CPA who sets them up and keeps their books.
- Liaison office: no commercial activity allowed — market research, representation and coordination only; expenses funded from abroad; not subject to corporate tax; requires a permit from the Ministry of Industry and Technology under the FDI framework.
- Branch: can trade, but is not a separate legal entity — the parent is liable; taxed at 25% on Turkish income with 15% branch-profit withholding.
- Subsidiary (Ltd. or A.Ş.): separate Turkish company with limited liability; 25% corporate tax, 15% dividend withholding when profits are paid out (treaty-reduced); access to all Turkish incentives.
- Most foreign companies that plan to sell, hire or claim incentives choose a subsidiary; a liaison office suits pure market testing.
Choosing your Turkish structure? Tell us what you plan to do in Turkey in the first two years. A licensed CPA replies personally with the structure that fits and a Market Entry plan.
WhatsApp a CPARequest a structure recommendationKey facts: branch vs subsidiary vs liaison office (2026)
| Criterion | Liaison office | Branch | Subsidiary (Ltd. / A.Ş.) |
|---|---|---|---|
| Commercial activity | Not allowed | Allowed | Allowed |
| Legal entity | No | No — part of the parent | Yes |
| Parent liability | — | Unlimited for branch debts | Limited to capital |
| Corporate tax | None (no income) | 25% on Turkish income | 25% on worldwide income |
| Profit repatriation | — | 15% branch-profit withholding | 15% dividend withholding (treaty-reduced) |
| Approval | Ministry of Industry and Technology permit | Trade registry registration | Trade registry registration |
| Minimum capital | — | Allocated capital | TRY 50,000 (Ltd.) / TRY 250,000 (A.Ş.) |
| Employees | Yes (payroll and withholding) | Yes | Yes |
| Incentives (technopark, 10/1-ğ, investment) | No | Limited | Full access |
Should a foreign company open a branch or a subsidiary in Turkey?
Answer: Most foreign companies should open a subsidiary in Turkey. A subsidiary limits the parent’s liability, can access all Turkish incentives and gives flexibility on when to pay dividends. A branch can trade but exposes the parent to unlimited liability and 15% branch-profit withholding. A liaison office is only for market research and representation — it cannot invoice or sell.
SYSTEMS CPA — the right structure, set up once
We choose the structure with you, register it and run its accounting, payroll and tax from day one.
- Structure decision based on your two-year plan, not a template.
- Liaison office permit or company registration handled end to end.
- Tax registration, e-invoice, payroll and SGK from the first month.
- Conversion path from liaison office to subsidiary when you are ready to trade.
- A licensed CPA keeps the books. Evren Özmen, CPA, TÜRMOB Reg. No. 35675.
Liaison office vs subsidiary in Turkey
A liaison office is cheap to run and not taxed, but it cannot sign sales contracts, issue invoices or earn income. If it starts doing commercial work, it risks being treated as a taxable presence. Companies usually move from a liaison office to a subsidiary once Turkey generates revenue.
What drives the cost of each structure?
| Driver | Liaison office | Branch | Subsidiary |
|---|---|---|---|
| Set-up | Permit application and documents | Registration of parent documents | Incorporation and capital |
| Monthly compliance | Payroll and withholding | Full accounting and tax | Full accounting and tax |
| Annual reporting | Activity reporting to the Ministry | Parent and branch statements | Statutory financial statements |
| Exit | Permit closure | Branch deregistration | Liquidation |
Case analysis: the liaison office that started selling
Facts (anonymised, illustrative of a typical engagement): A foreign equipment maker opened a liaison office in Istanbul. Over time, local staff negotiated prices and signed customer orders.
The obvious answer: keep the low-cost liaison office as long as possible.
Why it failed: commercial activity breached the liaison office permit and raised taxable-presence questions for the parent.
Structure adopted: a Turkish subsidiary took over sales, staff were transferred, and the liaison office was closed.
What happens if…
What happens if a liaison office carries out commercial activity?
It breaches the permit conditions and can create a taxable presence for the parent; the permit may be cancelled.
What happens if a branch has debts it cannot pay?
The foreign parent is liable, because a branch is not a separate legal entity.
What happens to branch profits?
After corporate tax, branch profits are treated as distributed and face 15% branch-profit withholding, subject to treaties.
What happens if I want to convert a liaison office into a company?
A new subsidiary is formed, staff and assets are transferred, and the liaison office permit is closed.
Entry structures: Turkey vs other countries
| Country | Representative office option |
|---|---|
| Turkey | Liaison office with ministry permit; no commercial activity |
| Poland | Representative office registered; limited to promotion |
| UAE | Representative office licences available; limited activities |
| United Kingdom | UK establishment (branch) registration with Companies House |
Frequently asked questions
Can a foreign company open a branch in Turkey?
Yes. A branch of a foreign company is registered with the trade registry and can trade, but the parent is liable for its debts.
Is a liaison office taxed in Turkey?
A liaison office earns no income and is not subject to corporate tax, but it must run payroll and withholding for its staff.
Which is cheaper: branch or subsidiary in Turkey?
Running costs are similar; the subsidiary needs minimum capital but limits liability and gives better access to incentives.
Can a liaison office hire employees in Turkey?
Yes, within its permitted activities, with Turkish payroll and SGK registration.
Evren Özmen’s view from practice
I see liaison offices that quietly became sales offices and branches that exposed the parent to liabilities it never priced in. For most foreign companies that plan to earn money in Turkey, a subsidiary is the cleanest answer — and it is the only structure that can use Turkey’s export and technopark incentives in full.
Primary sources
- Foreign Direct Investment Law No. 4875 — mevzuat.gov.tr
- Turkish Commercial Code No. 6102 — mevzuat.gov.tr
- Corporate Tax Law No. 5520 (Arts. 3, 30) — mevzuat.gov.tr
- Revenue Administration (GİB) — gib.gov.tr
- Official Gazette — resmigazete.gov.tr
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