- May 6, 2025
- Posted by: admin
- Category: Blog
Turkey is fast becoming a hub for tech startups, particularly Software-as-a-Service (SaaS) businesses. With its strategic location bridging Europe and Asia, a growing pool of tech talent, and a favorable cost structure, many foreign entrepreneurs are exploring options for company opening in Turkey. However, running a SaaS company comes with legal and financial intricacies that require a solid understanding of invoicing in Turkey, corporate tax in Turkey, and other fiscal obligations. This guide offers insights tailored for foreign founders in the SaaS industry, focusing on compliance, cost-efficiency, and scalability.
1. Choosing the Right Legal Structure for Your SaaS Company
When considering company formation in Turkey, most SaaS founders opt for a Limited Liability Company (LLC), known as “Limited Şirketi.” It requires a minimum capital of 50,000 TRY as of 2025 April and offers liability protection.
Foreign founders are required to obtain a potential tax number in Turkey before proceeding with registration. This number is essential for opening a bank account, signing contracts, and executing any tax-related procedures.
If you’re unsure about documentation or legal procedures, an English speaking lawyer in Turkey can assist with contract drafting, shareholder agreements, and regulatory compliance, ensuring you’re aligned with Turkish Commercial Law.
2. Tax Obligations for SaaS Companies
SaaS companies are considered service providers under Turkish tax law, and their income is subject to several tax types:
As of 2025, the corporate tax in Turkey stands at 25%, although the rate is subject to change based on fiscal policy decisions. This tax is applied on the net profits of the company after allowable deductions.
b) VAT in Turkey
Value-Added Tax (KDV) applies to most SaaS services at a standard rate of 20%. However, if your customers are outside Turkey, you may be eligible to zero-rate the VAT, which can significantly impact your pricing strategy.
To properly manage VAT in Turkey, SaaS companies must register with the tax office and file monthly VAT returns. Proper invoicing and documentation are key to claiming VAT deductions or exemptions.
3. Invoicing and Payment Collection
Invoicing in Turkey must comply with Turkish tax regulations. E-invoicing is mandatory for companies exceeding a specific annual turnover threshold, which applies to many SaaS businesses. The e-invoice (e-Fatura) system is integrated with the Turkish Revenue Administration (GİB) and requires registration through authorized service providers.
Invoices must include:
Seller and buyer tax numbers
Description of services
VAT breakdown
Invoice date and number
For cross-border SaaS services, a careful assessment is needed to determine the VAT applicability, depending on the customer location and legal status.
4. Key Considerations for Foreign Entrepreneurs
a) Language and Communication
Legal and accounting procedures in Turkey are often conducted in Turkish. Partnering with an English speaking lawyer in Turkey and a bilingual accountant ensures that you fully understand your rights and obligations. Also translation services in Turkey is quite high level.
Foreign entrepreneurs need a potential tax number in Turkey before opening a corporate bank account. The account is essential for injecting capital, paying taxes, and collecting payments from clients.
Ensure your bank supports international transactions and integrates with payment processors commonly used in SaaS (like Stripe or PayPal, though availability varies).
5. Employment and Payroll Taxes
If you’re hiring local developers or support staff, your SaaS company will also be subject to:
Income Tax Withholding
Social Security Contributions (SGK)
Unemployment Insurance
These are automatically deducted and paid monthly. Proper payroll accounting is critical to avoid penalties. For more information please read our article on Learn Before Employement; Labor Law in Turkey And Other Employment Regulations
6. Intellectual Property and Data Compliance
SaaS companies must comply with KVKK, Turkey’s data protection law similar to GDPR. If your software handles personal data, it’s vital to update your privacy policy and storage procedures accordingly.
Registering your software, trademarks, and any proprietary technology with the Turkish Patent and Trademark Office is recommended to safeguard intellectual property.
7. Tax Incentives and Tech Zones
Turkey offers incentives to SaaS companies operating in Technoparks or R&D centers. These include:
Corporate tax exemptions
VAT exemptions on R&D-related purchases
Reduced income tax for R&D employees
To benefit, your company must be registered within a recognized technology development zone.
8. Auditing and Financial Reporting
Companies meeting certain criteria (such as turnover, asset size, or number of employees) are subject to independent auditing under Turkish law. SaaS companies aiming to scale or attract foreign investment should adhere to International Financial Reporting Standards (IFRS) for transparency.
Working with certified accountants and tax consultants will ensure timely submissions of:
Annual corporate tax returns
Quarterly advance tax filings
Monthly VAT, payroll, and withholding tax returns
9. Exit Strategy and Company Liquidation
If you plan to exit your Turkish SaaS venture, either through sale or liquidation of company in Turkey, legal compliance is key. This includes:
Settling tax obligations
Deregistering with the tax office and trade registry
Submitting final financial statements
A seamless exit avoids future legal liabilities and supports personal or corporate reputation.
10. Do SaaS Companies Need a Physical Office?
For digital-first companies, a Virtual Office in Turkey is often sufficient. It provides a legal business address and access to professional services without the cost of renting physical space. This flexibility is especially valuable for SaaS startups focused on scalability and remote work.
Conclusion
Starting and running a SaaS company in Turkey is both promising and complex. The legal and fiscal landscape demands careful navigation—especially regarding invoicing in Turkey, corporate tax in Turkey, and VAT in Turkey. From acquiring a potential tax number in Turkey to engaging an English speaking lawyer in Turkey, the right partners will make your company opening in Turkey smooth and compliant. As SaaS continues to grow globally, Turkey offers a fertile ground for innovation—provided you operate within the regulatory framework.
