Country guide · Foreign companies
Turkey Tax Guide for Foreign Companies
A decision-led guide to choosing an entry model, identifying Turkish tax exposure and building a defensible first-year file.
Direct answer
A foreign company is not taxed in Turkey merely because it sells to a Turkish customer.
Turkish exposure depends on what the company does in Turkey: its people, premises, contracting authority, inventory, service delivery and local payment flows. A subsidiary, branch, liaison office and direct cross-border model create different legal and compliance outcomes. Map the operating facts first, test permanent establishment and VAT second, and select the entity only after that analysis.
The costliest Turkey tax mistakes usually happen before the first tax return. A salesperson negotiates from Istanbul. A manager signs contracts while visiting. A warehouse starts holding stock. A foreign company pays a local individual as an “independent contractor” although the facts resemble employment. Each step may be commercially sensible; together, they can create an unplanned Turkish footprint.
This guide turns that ambiguity into a sequence of decisions. It does not assume that incorporation is always necessary, or that avoiding incorporation means avoiding tax. It asks the more useful question: what presence is the business actually creating?
Decision map
Choose the operating model before choosing the tax answer
Direct cross-border trade
The foreign company contracts and invoices from abroad, with no intended fixed business presence in Turkey.
- Best fit
- Limited market testing or remote supply
- Core test
- PE, VAT and withholding analysis
- Watch
- Local agents, staff, stock and premises
Turkish subsidiary
A locally incorporated company contracts, invoices and carries its own Turkish compliance obligations.
- Best fit
- Durable operations and local contracting
- Core test
- Capital, governance and transfer pricing
- Watch
- Related-party charges and profit extraction
Turkish branch
The foreign legal entity registers a Turkish branch rather than creating a separate local company.
- Best fit
- Direct parent control and defined activity
- Core test
- Branch attribution and remittance
- Watch
- Parent liability and local representation
Liaison office
A permitted non-commercial presence used for functions such as representation, coordination or market research.
- Best fit
- Genuine non-revenue activity
- Core test
- Permitted scope versus real conduct
- Watch
- Selling, contracting or service delivery
Quote-ready summary
Foreign ownership does not change the basic entry rule in Turkey: international investors may establish the company forms available under the Turkish Commercial Code, while a foreign-company branch remains part of its overseas head office. A liaison office is different because it must remain non-commercial.Primary source: Investment Office of the Presidency of Türkiye
Tax snapshot
The numbers to know—and the facts that change them
Rate snapshot reviewed 29 September 2026. Special sectors, reduced VAT categories, incentives and treaty relief can change the result. Confirm the applicable period before relying on a rate. 2026 corporate tax source.
| Tax area | When it enters the analysis | What must be documented |
|---|---|---|
| Corporate income tax | Turkish subsidiary or profits attributable to a Turkish branch / PE | Revenue attribution, deductible costs, related-party charges and incentives |
| VAT | Local supplies, imports and certain services received from abroad | Supply flow, customer status, place of use, invoices and customs evidence |
| Withholding tax | Specified payments such as dividends, royalties and certain services | Legal payee, beneficial owner, contract, treaty article and residence certificate |
| Payroll and social security | People work in Turkey under employment-like conditions | Role, work location, employer, payroll, work permit and social-security coverage |
| Stamp duty | Specified signed documents with a determinable monetary value | Execution place, copies, signature date, amount and any exemption basis |
Official overview: Türkiye Investment Office tax guide. Treaty texts: Turkish Revenue Administration.
Permanent establishment
Five questions that reveal more than the company chart
Place
Does the business repeatedly use an office, desk, store, workshop, site or other fixed location in Turkey?
People
Do staff, founders, secondees or contractors habitually work in Turkey for the foreign company?
Authority
Can anyone in Turkey negotiate, conclude or effectively secure contracts for the company?
Delivery
Are core revenue-producing services, installation, construction or after-sales work performed in Turkey?
Treaty
Does an applicable treaty narrow the domestic rule, and are its factual and documentary conditions satisfied?
Practical rule
“No Turkish company” is not the same as “no Turkish taxable presence.” Test the people and operating facts before relying on the legal-entity chart.Implementation
A controlled first 90 days
Map the facts
- Customer and supplier flows
- People, locations and authority
- Contract and invoice chain
- Projected revenue and cash movement
Select the model
- Direct trade, branch or subsidiary
- Corporate, VAT and treaty position
- Licensing and work-permit needs
- Banking and capital plan
Build compliance
- Registration and accounting records
- Invoice and e-document settings
- Payroll and expense policy
- Related-party agreements
Test the file
- First close and tax reconciliation
- Withholding and VAT sample check
- PE and transfer-pricing evidence
- Board reporting and annual calendar
Risk flags
Eight facts that should stop an automatic rollout
Local deal-making
A person in Turkey regularly negotiates or closes contracts for the foreign company.
Contractor in name only
A Turkish individual works under company control, on a continuing and integrated basis.
Inventory in Turkey
Stock is stored, fulfilled, installed or made available through a local location or partner.
Unpriced group services
Management, software, royalty, financing or support charges lack a written basis and evidence.
Invoice mismatch
The invoice, contract, delivery flow and bank payment describe different parties or services.
Treaty by assumption
A reduced withholding rate is used without testing eligibility, beneficial ownership and documents.
Liaison-office drift
The office begins selling, contracting or delivering services despite its non-commercial scope.
Regulated activity
The business enters a licensed sector before coordinating tax, company and regulatory approvals.
Evidence pack
Documents to prepare before asking for an opinion
Turkey market-entry review
Get the structure right before the first invoice.
Send the facts once. Receive a scoped review covering entry model, permanent-establishment risk, VAT, payroll, withholding, profit extraction and the compliance roadmap.
Request a scoped reviewRead the company formation guideFrequently asked questions
Short answers to common entry questions
Can a foreign company do business in Turkey without a Turkish company?
Sometimes. Cross-border sales may be possible without a local entity, but repeated local contracting, a fixed place, a dependent agent, local inventory, employees or management activity can create permanent-establishment, VAT, payroll or registration exposure. The operating facts matter more than the invoice address.
Is a Turkish subsidiary always better than a branch?
No. A subsidiary creates a separate Turkish legal entity, while a branch remains part of the foreign company. Liability, governance, banking, tender requirements, profit repatriation and treaty access should be compared together.
Does a liaison office pay corporate income tax?
A properly authorised liaison office is intended for non-commercial activities and may not generate Turkish commercial revenue. If its real activities cross into sales, contracting or delivery, the label does not protect the foreign company from tax and regulatory consequences.
What is Turkey’s standard VAT rate?
The standard VAT rate is currently 20%, with reduced rates for specified supplies. The correct result may instead be exemption, reverse charge or another treatment depending on the transaction.
Can a tax treaty remove Turkish tax?
A treaty can allocate taxing rights, narrow permanent-establishment exposure or reduce certain withholding rates, but it does not replace Turkish registration, documentation or filing rules.
When should a foreign company obtain Turkish tax advice?
Before signing a Turkish customer contract, sending staff, appointing a local agent, storing inventory, renting space, incorporating, paying a Turkish resident or issuing the first invoice.
Primary sources and maintenance note
Use the guide as a map, then verify the live rule.
Turkish tax rates, thresholds, filing mechanics and incentives can change. This page separates durable decision rules from a dated rate snapshot and links to primary public sources. It was last substantively reviewed on 29 September 2026.
- Investment Office of the Presidency of Türkiye — Tax Guide
- Turkish Revenue Administration — 2026 Corporate Tax Guide
- Investment Office — Establishing a Business
- Turkish Revenue Administration — Double Tax Treaties
- Investment Office — Obtaining a Work Permit
General information only. It is not a legal or tax opinion and should not be applied without reviewing the facts, the relevant tax period and any applicable treaty.
Turn Turkey compliance into certainty
SYSTEMS CPA supports foreign-owned companies with company formation, accounting, tax compliance and payroll in Turkey — one accountable local partner. Reviewed by Evren Özmen, SMMM (Certified Public Accountant), TÜRMOB Reg. No. 35675.
