When a foreign company is evaluating expanding into the growing Turkish market, one of the most critical early decisions is choosing the right legal structure. Whether you’re looking to test the market with minimal commitment, conducting commercial operations or establishing a fully independent entity, it’s crucial to choose the correct structure.

While Turkey is offering three main options which are branch office, liaison office and subsidiary, each structure has distinct advantages, limitations, costs and compliance requirements.

Branch Office vs Liaison Office vs Subsidiary – Side-by-Side Comparison

Choosing between these structures requires a clear understanding of how they differ across key areas.

Legal Status and Liability

A subsidiary, typically a limited liability company, known as Ltd. Şti. in Turkey, is a separate legal entity under Turkish law. This provides limited liability protection in which the parent company’s risk is generally limited to its investment in the subsidiary.

In contrast, both a branch office and a liaison office are not independent legal entities, but extensions of the foreign parent company, which means they bear full legal and financial liability for all activities and obligations in Turkey.

Permitted Activities and Operational Scope

The liaison office has the most restricted scope. It may only engage in non-commercial activities such as market research, representation, coordination or technical support and can’t issue invoices or conduct sales. Unlike the liaison office, the branch office can perform full commercial activities, but must align with the parent company’s field of business.

A subsidiary offers the best flexibility, allowing any lawful commercial activity and business development without being tied to the parent company’s exact scope.

Taxation and Compliance Obligations

Since they don’t generate any income, liaison offices generally face minimal tax exposure. They’re not subject to corporate tax but must still handle payroll taxes and social security if employing staff.

Branch offices are taxed as limited taxpayers on Turkish source income at the standard 25% corporate tax rate. Profit repatriation to the parent is subject to 15% withholding tax, often reducible under double tax treaties.

Subsidiaries are full tax residents in Turkey. These companies pay 25% corporate tax and 15% withholding tax on dividend distributions to the foreign parent company.

Setup Timeline and Minimum Capital Requirements (2026)

Setup timelines and minimum capital requirements for these company structures are as follows:

• Liaison Office: There’s no minimum capital requirement. Setup is handled through the Ministry of Trade and typically takes four to eight weeks. The initial permit is usually granted for up to three years and is renewable.
• Branch Office: There is no minimum capital requirement for the branch office. Registration is handled through the Ministry of Trade, like the liaison office, and typically takes four to six weeks.
• Subsidiary (LLC / Ltd. Şti.) : For establishing a subsidiary (LLC – Ltd. Şti.) in Turkey, you need a minimum capital of 50,000 TRY, usually can be paid over 24 months. Setup is generally the fastest and is usually completed within two to four weeks.
• Subsidiary (JSC / A.Ş.) For establishing a JSC – A.Ş. in Turkey, you need a minimum capital of 250,000 TRY, usually 25% paid upfront.

Which Structure is Right for Your Turkish Expansion?

The best structure of company in Turkey depends entirely on your goals.

• If you are in early market research or representation phase, and want minimal commitment and cost, it’s recommended to choose liaison office.
• If you need to conduct commercial operations quickly while keeping things closely tied to your overseas headquarters, it’s recommended to choose branch office.
• If you want full operational independence, limited liability and long-term growth potential in Turkey, it’s recommended to go with a subsidiary, especially an LLC.

At 3ASMMM, we specialize in helping foreign companies, whether operating through a branch, liaison office or subsidiary, implementing seamless, fully compliant digital tax automation and correct company formation. If you are planning to expand into Turkey’s growing market, you can contact our experts for guidance on both company setup and long-term tax compliance strategy!