FAQs

If the paperwork is complete, the processing times are 15-20 days for Liaison Office applications and 20-30 days for Branch applications.

No. However, if the Liaison Office is established for the purpose of representation, it can refer all potential business contacts to the foreign company abroad.

In Turkey, employing foreign staff is subject to a few restrictions. In general, the foreign labor quota system - the rule of five Turkish employees for every foreign worker employed - is sought in work permit applications. One of the exceptions to this rule is the key personnel, as described in the Foreign Direct Investment Law.

The Regulation concerning foreign work permits within the scope of the Foreign Direct Investment Law defines key personnel as meeting at least one of the below-mentioned criteria.

• Being involved in senior management or executive positions
• Playing an active role in the management of the organization
• Supervising and checking the company's auditors, administrative or technical personnel
• Employing and/or dismissing personnel; or playing a role in the decision-making process
• Carrying a title such as company shareholder, chairman or member of the board of directors, general manager, associate general manager, company manager and similar positions
• Having the necessary knowledge on company products, services, technical know-how or management
• For Liaison Offices: one person who has been issued a letter of authorization by the principal company abroad, provided that USD 200,000 (or equivalence of foreign currency) has been brought from abroad within the last year of its activities.

Therefore, the maximum number of foreign personnel that may be employed by a Liaison Office under the regulation is 1.

Liaison Offices are not required to keep fiscal and legal books such as balance sheets or company books. For the same reason, trade registry is not necessary. Instead, Liaison Offices need to declare their activities to the Ministry of Industry and Technology once a year, until the end of May.

Although liaison offices do not engage in commercial activities, the expenses they make in order to continue their presence in Turkey are subject to certain rules. The funds transferred from abroad and used to meet the expenses of the liaison office in Turkey must be recorded regularly. The amount regarding the Turkish Lira payments that are required to be made from the funds brought in foreign currency as per the Law must be converted to Turkish Lira in the relevant bank. Foreign Exchange Purchase Documents (DAB) regarding the Turkish Lira purchase through the sale of foreign currency must be recorded regularly and declared as an activity report. Additionally, there might be incomes generated such as through the sale of an inventory, and in such cases, there are certain declaration activities necessary. Lastly, these must be declared to the Social Security Institution through a Certified Public Accountant authorized in the Social Security Premium Declaration. In short, liaison offices must have an accounting system, and their records must be kept and declared regularly. This function differs from the capital stock company processes such as company tax declaration and VAT declaration or the accounts chart. However, it still requires processes for accounting records and declarations that must be operated within a certain discipline.

No. The initial permit is always issued for 3 years. Liaison Offices who would like to extend their permit must apply for extension, in which case, their extension will be determined in accordance with their activities.

No. The application for the extension and the relevant paperwork must be signed by the principal company abroad and supporting documents must be up to date.

As Liaison Offices must entirely be financed from abroad, the Ministry requires bank documents that show proof of transaction. In this context, the Ministry accepts 'DAB' (currency exchange receipts) and a letter which indicates:

• The cumulative funds sent from abroad
• The name and the country of incorporation of the principal company
• Transaction dates

We would be delighted to help your bank prepare this document in the required format.

Please click here to read the Whitepaper on the financial operations of liaison offices.

Liaison Offices are not exempt from VAT. They have to pay VAT in their B2B (business to business) transactions. However, unlike other company types, they do not have to declare VAT transactions to the Tax Office.

As Liaison Offices cannot conduct commercial activities, they are not considered 'taxpayers' - hence, by default, they do not have stamp taxpayer status. However, if they conclude a contract in Turkey that is subject to stamp tax liabilities, they are required to pay for the stamp tax at the relevant tax office. One solution may be to include a provision in the contract whereby the other party pays for the stamp tax.

Liaison Office employees are exempt from income tax. Income tax is not deducted from their salaries.

Social security premiums must be paid. Exemption is not applicable to SSI premiums and contributions.

The funds for Liaison Office operations must be transferred from abroad and must be in foreign currency. The parent company is not allowed to send TRY currency to its Liaison Office in Turkey. However, certain local expenses (such as food, gas, and rent) and the SSI premiums of employees must be paid in TRY currency. Therefore, in practice, Liaison Offices should have two separate bank accounts in Turkey: One for foreign currency and must be used for receiving fund transfers from abroad - and the other one should be in TRY currency which should be reserved for converting funds to TRY and making local payments. On the other hand, due to the law amended on 26/11/2019, Liaison Offices must have a public bank account for social security premiums and other tax payments if needed.

Please click here for the details of the relevant decision.

Please click here to read the Whitepaper on the financial operations of liaison offices.