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

Jan de Vries · 2026-09-21

Turkey has long been a commercial bridge between Europe, Asia, and the Middle East. For European companies looking to expand beyond their home markets, it offers a large domestic economy, established manufacturing, key trade routes, and a strategic business environment. But expanding into Turkey is more than spotting an opportunity. You also need to sort out the right legal structure, taxes, accounting, hiring, banking, and ongoing compliance before you start operations. For European businesses considering Turkey as their next market, understanding these practical issues early can make the expansion process more structured and predictable. ### Why European Companies Are Looking at Turkey Turkey's location makes it relevant for companies with operations across Europe, the Middle East, and nearby markets. European businesses may consider Turkey for different reasons, including: - 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 requirements from a business establishing employees, warehouses, manufacturing facilities, or a fully operational subsidiary. That's why market-entry planning should begin with a clear understanding of what you actually intend to do in Turkey. ### Establishing a Legal Presence in Turkey One of the first decisions for a European company is whether it needs a Turkish legal entity. Depending on the business model, companies may consider a subsidiary, branch, or, in limited circumstances, a liaison office. A Turkish subsidiary can provide a separate legal structure through which the foreign parent company conducts local business activities. The most common corporate structures include the Limited Liability Company and Joint Stock Company. The appropriate structure depends on factors such as: - Number of shareholders - Investment size - Planned activities - Financing requirements - Future expansion - Management structure - Employment plans European companies planning to establish a local entity can review this guide to Company Registration in Turkey for an overview of the registration process and the main requirements for foreign investors. ### Choosing Between a Subsidiary and a Branch A foreign company doesn't necessarily have to establish a Turkish subsidiary in every situation. A branch can be considered when the parent company wants to conduct business in Turkey as an extension of the foreign entity. A subsidiary, on the other hand, is a separate Turkish legal entity and may provide a more appropriate structure for companies planning long-term commercial operations. The decision should be based on the intended activities rather than simply on the perceived simplicity of one structure. Companies should consider the legal, tax, accounting, and operational consequences of each option before making the decision. ### Taxation for European Companies Operating in Turkey Tax is an important consideration when expanding into a new jurisdiction. A Turkish company can be subject to several different 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 The company's tax position will depend on the nature of its business and the transactions it carries out. European parent companies should also consider the interaction between Turkish domestic tax rules and international tax arrangements, particularly where double taxation treaties apply. It's always wise to get local tax advice before making any commitments. ### Other Practical Considerations Beyond legal and tax matters, you'll need to think about accounting and reporting requirements, employment law and payroll, banking and currency issues, and ongoing compliance. Each of these areas can be complex, and getting them right from the start can save you time and money later. Expanding into Turkey can be a rewarding move for European companies, but it requires careful planning and local expertise. By understanding the key issues early, you can make informed decisions and set your business up for success.