If your company is planning to enter the Turkish market but is not yet ready for full-scale commercial operations, establishing a liaison office (also known as a rep office) in Turkey could be the ideal solution. Liaison offices provide a legal, flexible, and tax-efficient way to understand local dynamics, connect with key players, and build a foundation for future investments.
In this guide, we’ll explore everything you need to know about liaison offices in Turkey: legal requirements, operational limits, tax benefits, and key advantages. Whether you’re a multinational exploring the region or a niche player conducting market research, this article will show you how to approach the process strategically.
What Is a Liaison Office in Turkey?
A liaison office is a non-commercial representation established by a foreign company in another country to carry out specific non-trading activities such as market research, communication, quality control, and technical support. In Turkey, liaison offices are strictly prohibited from engaging in commercial operations like sales, invoicing, or profit generation.
The key objective of a liaison office is to act as a bridge between the parent company abroad and local stakeholders in Turkey. It enables the company to gain local insight, assess market opportunities, and prepare for potential long-term investment — all while benefiting from certain regulatory exemptions.
Legal Framework for Liaison Office in Turkey
The establishment and operation of liaison offices in Turkey are governed by the following legislation:
- Foreign Direct Investment Law (Law No. 4875)
- Implementation Regulation for the Foreign Direct Investment Law (Official Gazette No. 25205)
- Private International Law and Procedural Law (Law No. 5718)
- Administrative Jurisdiction Procedure Law (Law No. 2577)
The primary authority overseeing liaison offices is the General Directorate of Incentive Implementation and Foreign Investment (GDIFI) under the Ministry of Industry and Technology.
Permitted Activities for Liaison Offices in Turkey
Liaison offices in Turkey can only engage in non-commercial activities approved by the Ministry. These include:
| Activity | Purpose | Initial Permit | Extension |
|---|---|---|---|
| Representation & Hosting | Meeting stakeholders, attending trade events, local coordination | 3 years | +5 years |
| Supplier Auditing | Monitoring quality standards, finding local suppliers | 3 years | +5 years |
| Technical Support | Offering training or troubleshooting to partners | 3 years | +5 years |
| Information Gathering | Market insights, competitor analysis, customer trends | 3 years | +5 years |
| Regional Management | Overseeing operations across nearby countries | 3 years | +10 years |
| Market Research | Pre-investment market analysis | 3 years | No extension |
| Promotion | Promoting products/services (without sales) | 3 years | No extension |
Any activity beyond the approved scope can result in license revocation. Therefore, regular compliance reviews are essential.
Key Advantages of Setting Up a Liaison Office in Turkey
Liaison offices offer a range of strategic benefits for foreign companies in Turkey:
✅ Tax Advantages
- Exempt from income tax, VAT, and corporate tax (as long as no commercial activity is conducted).
- No withholding tax on employee salaries paid in foreign currency.
- No capital investment required for establishment.
✅ Legal Simplicity
- Simplified structure with no obligation to register as a commercial entity.
- No need to submit VAT returns or corporate tax declarations.
- Limited reporting duties (mainly the annual activity report submitted by May 31st).
✅ Strategic Market Insight
- Evaluate Turkey’s dynamic market before committing major resources.
- Build business relationships and observe industry trends firsthand.
- Establish an official presence to support future expansion plans.
Establishment Requirements for a Liaison Office in Turkey
To open a liaison office in Turkey, the foreign parent company must:
- Be legally established in its home country (at least 1 year prior in most cases).
- Not engage in commercial activity through the liaison office.
- Apply to the Ministry of Industry and Technology with all required documents.
Required Documents:
- Application form
- Non-commercial activity declaration
- Power of attorney and signature circulars
- Activity certificate (notarized/apostilled)
- Financials (balance sheet or annual report)
- Office lease agreement (if available)
- Authorized person’s identification documents
- Tax office registration and social security registration (post-approval)
The Ministry typically processes applications within 15 business days.
Operational Considerations for Liaison Office in Turkey
Staff and Payroll
- Liaison offices can employ both local and foreign employees.
- Salaries paid in foreign currency are exempt from income tax.
- Social security contributions (SGK) are still mandatory.
- For foreign employees, work permits are required unless they qualify as key personnel.
Financial Management
- All expenditures must be covered by foreign currency transfers from the parent company.
- Liaison offices cannot generate income or transfer profits.
- A local bank account in foreign currency is necessary to manage inflows.
Reporting Duties
- Annual report submission is required by May 31st each year.
- Include banking statements and activity summaries.
Liaison Office vs. Branch: What’s the Difference?
| Feature | Liaison Office | Branch |
|---|---|---|
| Legal Status | Non-commercial presence | Commercial extension |
| Taxation | Income tax exempt | Subject to all taxes |
| Revenue Generation | Not allowed | Allowed |
| Capital Requirement | Not required | Required |
| Legal Obligations | Minimal | Extensive |
Challenges and Common Pitfalls
While liaison offices are relatively simple to manage, common challenges include:
- Misinterpreting the scope of permitted activities
- Failure to meet annual reporting obligations
- Improper payroll setup, especially with foreign staff
- Attempting unauthorized commercial operations, leading to penalties or license cancellation
Working with a local advisor ensures compliance with regulations and minimizes operational risks.
How We Can Help
At Metropol CPA, we support international businesses in Turkey by offering:
- Liaison office registration and legal setup
- Payroll and SGK compliance for Turkish and foreign staff
- Accounting and annual reporting support
- Work permit applications and ongoing consultancy
We act as your trusted partner on the ground, helping you navigate the legal, tax, and administrative landscape of Turkey.
For companies that want to enter the Turkish market without establishing a legal entity and avoid the complexity of paperwork, we also offer Employer of Record (EOR) services in Turkey— a practical solution to operate legally and compliantly in Turkey with local employees.
👉 Learn more about our EOR services in Turkey.
Final Thoughts
Opening a liaison office in Turkey is a cost-effective and strategic move for companies looking to explore the Turkish market without immediate commercial risks. It offers a unique opportunity to build relationships, understand market dynamics, and lay the groundwork for a full commercial launch in the future.
Ready to take the next step? Contact us today to discuss how we can support your market entry in Turkey.