Turkey Liaison Office

Turkey Liaison Office Formation: A Comprehensive Guide 2024

A liaison office in Turkey is a type of representative office that allows foreign companies to establish a presence in the country without engaging in direct commercial activities.

This office acts as a communication and coordination hub between the parent company and Turkey, focusing on activities such as market research, networking, promotional efforts, and business liaison services.

However, it is not permitted to generate revenue or engage in sales within Turkey.

This article will provide you a step-by-step guidance on how to establish a Liaison Office in Turkey, covering legal requirements,benefits, incentives and more.

Table of Contents

What is Turkey Liaison Office?

A liaison office is a type of legal entity that allows a company, usually a foreign entity, to establish a presence in a specific country – in Turkey-without engaging in direct commercial activities or generating revenue there. The primary function of a liaison office is to act as a communication and coordination hub between the parent company and the local market.

Key Functions of a Liaison Office in Turkey

Communication Hub: It serves as a point of contact between the parent company and local clients, partners, or regulatory authorities.
Market Research: The office can conduct market analysis, gather local business intelligence, and assess market conditions.
Networking: It helps in building and maintaining relationships with local businesses, government bodies, and other stakeholders.
Promotional Activities: The office may promote the parent company's products or services, although it cannot engage in sales.
Business Liaison: It facilitates coordination and cooperation between the parent company and local entities, ensuring smooth operations.

Turkey Liaison Office

Key Features of a Liaison Office in Turkey

Non-Commercial Activities: The office can perform tasks such as market research, networking, and managing communications, but it cannot participate in any income-generating activities.
Capital Requirement: The Liaison offices do not have capital requirements like LLC & JSC companies.
Taxation: Since the liaison office does not engage in commercial activities, it is generally not subject to Corporate Income Tax in Turkey. However, it must still comply with other regulatory requirements, such as filing annual reports.When the liaison office purchases goods or services in Turkey, it must pay VAT. It is not possible to get refund it.
Staffing: The office can hire local or foreign staff, but their salaries are typically paid as FX from the parent company outside of Turkey. These salaries are exempt from income and stamp duty within the scope of state incentives. However, there is no social security exemption, they must pay SGK premiums.
Approval and Registration: Establishing a liaison office requires approval from the Turkish Ministry of Industry and Technology. The process includes submitting necessary documents, such as the parent company's financial statements, a board resolution to establish the office, and a lease agreement for the office space.
Duration: The initial approval is usually granted for three years, with the possibility of extension upon application.

Restrictions For Turkey Liaison Office

No Commercial Activities: The liaison office cannot engage in any revenue-generating activities, such as selling products or services.
Non-Taxable: Since it does not generate revenue, it is generally not subject to corporate taxes in the host country, though it must comply with local regulatory requirements.
No Local Sales: The liaison office is strictly prohibited from engaging in any business activities that result in revenue within Turkey. This includes selling products or services.
No Money Transfer Outside of Turkey: Liaison offices cannot transfer money abroad except for closing and liquidation. In other words, money coming from abroad is used for salaries and mandatory expenses.
No Insvet: It is not possible for Liaison Offices to have real estate in Turkey.

Benefits of a Liaison Office in Turkey

Market Presence Without Full Commitment: A liaison office allows a foreign company to establish a presence in Turkey without the need for a full-fledged subsidiary or branch, providing a low-risk entry into the market.
Cost-Effective Operations: Since the office is not involved in revenue-generating activities, it typically incurs lower operational costs compared to a full commercial entity.
Brand and Relationship Building: It enables the parent company to build and maintain relationships with local stakeholders, enhancing brand visibility and reputation in Turkey.
Market Research and Insight: The liaison office can gather valuable market intelligence, helping the parent company understand local market dynamics, customer preferences, and potential business opportunities.
Simplified Regulatory Requirements: Liaison offices face fewer regulatory requirements and tax obligations since they are not engaged in commercial activities, simplifying compliance.
Facilitation of Communication: The office acts as a communication hub, ensuring efficient coordination and collaboration between the parent company and its Turkish contacts.
Flexibility for Future Expansion: A liaison office provides a foundation for potential future expansion into the Turkish market, allowing the parent company to evaluate opportunities before making larger investments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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