Establishing a Liaison Office in Türkiye

Liaison offices provide companies with the opportunity to observe the Turkish market in a structured way, introduce their own products, maintain business contacts, and gain initial operational experience – without immediately establishing a subsidiary or branch. Despite their limited functions, liaison offices in Türkiye are a popular tool for foreign investors to establish presence and prepare business relations without the immediate incorporation of a legal entity. The establishment of a liaison office requires comparatively little effort, but careful application and strict compliance with legal requirements throughout the entire existence of the office are essential.

Contents

• What is a liaison office?
• Which activities may a liaison office carry out?
• How is a liaison office established?
• What must be done after receiving approval?
• How is a liaison office represented?
• What is the duration of a liaison office?
• What are the advantages and disadvantages of a liaison office?

What is a Liaison Office?

A liaison office is a legally non-independent representation of a foreign company in Türkiye that may only carry out non-commercial activities. Its purpose is to serve market research, representation, or communication functions locally. In other words: liaison offices are prohibited from engaging in commercial activity and may only perform functions such as market and industry analysis, public relations, technical support, and the collection of data and information for the parent company. For this reason, liaison offices must be fully financed by the foreign parent company.

Which activities may a liaison office carry out?

According to the Regulation on Foreign Direct Investment Law, liaison offices may engage in the following activities:

• Market research
• Promotion of products and services of the foreign parent company
• Representation and support (representation of the parent company before industry-specific institutions and organizations, coordination of business relations of the parent company’s managers in Türkiye, securing office space)
• Quality control and supplier audits in Türkiye, recruitment of Turkish suppliers
• Technical assistance (training and technical support for distributors, support for manufacturers to improve quality standards)
• Communication and data transfer (collecting data on market development, consumer behavior, sales of competitors and distributors, distributor performance, etc., and forwarding such data to the parent company)
• Regional headquarters activities (developing and planning investment and management strategies, coordinating marketing, sales and after-sales services, brand and financial management, technical assistance, R&D, procurement, testing new products, laboratory services, research and analysis, staff training, etc.)
• Other activities (if not listed above, to be specified in detail)

How is a Liaison Office established?

The establishment of a liaison office requires approval from the Ministry of Industry and Technology. The Ministry requires submission of the following documents and information:

• Letter of undertaking from the parent company confirming the planned activities of the liaison office and commitment not to engage in commercial activities
• Commercial registry extract of the parent company, notarized and apostilled
• Annual report or financial statements of the parent company (balance sheet and P&L for the previous year)
• Information on the planned number of employees and estimated annual expenses
• Notarized power of attorney for the director of the liaison office (apostilled if notarized abroad)
• Application form to the Ministry requesting approval for the establishment of the liaison office

All foreign-language documents must be translated into Turkish and notarized before submission. Once approval is granted by the Ministry, the liaison office may commence its activities.

What must be done after receiving approval?

• Lease office premises
• Register with the tax office
• Submit the lease agreement and tax registration to the Ministry within one month of approval
• Open a bank account (must be done personally by the director, not via proxy)
• Engage a tax advisor/accountant for tax filings and payroll
• Submit an annual activity report each May to the Ministry covering the previous year’s activities

How is a Liaison Office represented?

The liaison office is represented by its director under a power of attorney issued by the parent company.

What is the duration of a Liaison Office?

Approval for establishing a liaison office is initially granted for up to three years. Renewal by the Ministry depends on the activities performed. Liaison offices engaging only in market research or product/service promotion are not eligible for extension. Where the office engages in representation, quality control, technical assistance, or data transfer, the license may be extended for up to five years; if it serves as a regional headquarters, even for up to ten years. Renewal is subject to Ministry discretion.

What are the advantages and disadvantages of a Liaison Office?

Advantages:

• Fast and lean market entry: Liaison offices are ideal for analyzing the Turkish market, establishing contacts, and building business relations without having to immediately commit to a subsidiary or branch.No corporate income tax (since revenue generation is prohibited)
• No corporate income tax: Since generating revenue is prohibited, liaison offices are not subject to corporate tax.
• Income tax exemption: Under certain conditions, the salaries of liaison office employees are exempt from income tax.
• Simplified bookkeeping: As commercial activities are not permitted, simplified accounting is sufficient. There is no obligation to prepare comprehensive financial reports as required for companies, which minimizes administrative effort.
• Flexibility: Liaison offices serve as a testing phase for companies wishing to explore the Turkish market before investing. The closure of a liaison office is straightforward.e

Disadvantages:

• Strict prohibition of commercial activities: Liaison offices cannot engage in sales, provide services, or issue invoices.
• Dependence on the parent company: Liaison offices must be fully financed by the foreign parent company.
• Time-limited approval: The initial permit for a liaison office is granted for a maximum of three years and must then be renewed. Renewal is not guaranteed.

Legal support during the establishment of a Liaison Office in Türkiye

The points above provide only an overview of the establishment process. For individual advice on the establishment of a Turkish branch office, please contact our law firm directly. 

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