Why European Startups Are Eyeing Turkey Next

Jan de Vries · 2026-09-21

Turkey has long been a commercial bridge between Europe, Asia, and the Middle East. For European companies looking beyond their home markets, it offers a large domestic economy, strong manufacturing, international trade routes, and a strategically positioned business environment. But expanding into Turkey takes more than spotting a market opportunity. You also need to think through legal structure, taxation, accounting, employment, banking, and ongoing compliance before you start operations. Get these right early, and the whole process becomes more structured and predictable. ### Why European Companies Are Expanding into Turkey Turkey's location makes it relevant for companies operating across Europe, the Middle East, and surrounding markets. European businesses consider it for many reasons: - Establishing 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 has different requirements than one setting up employees, warehouses, manufacturing facilities, or a fully operational subsidiary. That's why market-entry planning should start with a clear understanding of what you actually intend to do in Turkey. ### Establishing a Legal Presence in Turkey One of the first decisions is whether you need a Turkish legal entity. Depending on your business model, you might consider a subsidiary, a branch, or, in limited circumstances, a liaison office. A Turkish subsidiary gives you a separate legal structure through which the foreign parent company conducts local business activities. The most common corporate structures are the Limited Liability Company and the Joint Stock Company. The right structure depends on factors like: - Number of shareholders - Investment size - Planned activities - Financing requirements - Future expansion - Management structure - Employment plans If you're planning to establish a local entity, review a reliable guide to company registration in Turkey for an overview of the 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 work 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 be a better fit for companies planning long-term commercial operations. Base the decision on your intended activities, not just on which structure seems simpler. Weigh the legal, tax, accounting, and operational consequences of each option before you commit. ### Taxation for European Companies Operating in Turkey Tax is a big 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 Your company's tax position will depend on the nature of your business and the transactions you carry out. European parent companies should also consider how Turkish domestic tax rules interact with international tax arrangements, especially where double taxation treaties apply. A little planning here can save a lot of money later. > "Expanding into a new country isn't about finding the cheapest option. It's about finding the structure that fits what you actually want to build." ### The Bottom Line Turkey can be a smart next step for European companies, but it rewards preparation. Understand your business model, choose the right legal structure, and get tax and compliance right from the start. Do that, and you'll turn a complicated expansion into a manageable one.