Expanding into Turkey: What European Companies Need to Know Before They Leap

Jan de Vries · 2026-09-21

Turkey sits at the crossroads of Europe, Asia, and the Middle East. For European companies looking to grow beyond their home markets, it offers a large domestic economy, solid manufacturing capabilities, key trade routes, and a strategic location. But expanding there takes more than spotting a market opportunity. You also need to think through legal structures, taxes, accounting, hiring, banking, and ongoing compliance before you start operating. Getting a handle on these practical issues early can make the whole process smoother and more predictable. ### Why European Companies Are Eyeing Turkey Turkey's location makes it a natural fit for companies with operations across Europe, the Middle East, and nearby regions. European businesses consider Turkey for many reasons, like: - Setting up a local sales operation - Manufacturing and production - Import and export activities - E-commerce - Technology and software services - Regional headquarters - Logistics and distribution - Professional and business services The right approach depends heavily on your business model. A company that only sells products to Turkish customers may have different needs than one setting up employees, warehouses, manufacturing facilities, or a full subsidiary. That's why market-entry planning should start with a clear picture of what you actually want to do in Turkey. ### Establishing a Legal Presence One of the first decisions is whether you need a Turkish legal entity. Depending on your model, you might consider a subsidiary, a branch, or in limited cases, a liaison office. A Turkish subsidiary gives you a separate legal structure to conduct local business. The most common corporate forms are the Limited Liability Company and the Joint Stock Company. Which one fits depends on factors like: - Number of shareholders - Investment size - Planned activities - Financing requirements - Future expansion - Management structure - Employment plans If you're planning to set up a local entity, it's worth reviewing a detailed guide to company registration in Turkey to understand the process and main requirements for foreign investors. ### Subsidiary or Branch: Which One? You don't always need a Turkish subsidiary. A branch can work when the parent company wants to do business in Turkey as an extension of the foreign entity. A subsidiary, on the other hand, is a separate Turkish legal entity and may be better for long-term commercial operations. The decision should be based on what you plan to do, not just on which structure seems simpler. Consider the legal, tax, accounting, and operational consequences of each option before you decide. ### Taxation: What to Expect Tax is a big consideration when expanding into any new country. A Turkish company can face several taxes depending on its activities and transactions. These may include: - Corporate income tax - Value Added Tax (VAT) - Withholding tax - Payroll-related taxes - Social security contributions - Customs duties - Other transaction-specific taxes Your tax position will depend on the nature of your business and the transactions you carry out. European parent companies should also think about how Turkish domestic tax rules interact with international tax arrangements, especially where double taxation treaties apply. It's not just about paying the right amount; it's about structuring your operations efficiently from the start. > "Expanding into Turkey is a marathon, not a sprint. The companies that succeed are the ones that plan for the long haul and get the details right early on." ### Practical Steps for a Smooth Entry Before you jump in, here are a few practical things to keep in mind: - **Do your homework**: Understand the market, your competitors, and your target customers. - **Get local advice**: Work with local lawyers, accountants, and consultants who know the terrain. - **Think about banking**: Opening a bank account in Turkey can take time, so plan ahead. - **Hire wisely**: Employment laws and social security contributions can be complex, so get expert help. - **Stay compliant**: Ongoing compliance is not a one-time thing; it's an ongoing commitment. Turkey can be a rewarding market for European companies, but it's not a place for a half-hearted approach. With the right preparation, you can navigate the challenges and set yourself up for success. Remember, it's about building a sustainable presence, not just planting a flag.