Your Ultimate Guide (2024)Types of Companies in Turkey
One of the most important elements before doing business and opening a company in Turkey is make a decision from the types of companies in Turkey.
For such determination, formation process, the business objective of the investors, the amount of the capital, shareholder structure, the relationship between the shareholders, the volume of the future plans and the auditing preferences play a role.
The below are the types of companies in Turkey.
- Sole Proprietorship
- Limited Liability Company,
- Joint Stock Company
- Commandite Company
- Collective Company,
Also for foreigners can open “branch” and “representative office” in Turkey.
From those types of companies in Turkey most popular two alternatives are (i) Limited Liability Company and (ii) Joint Stock Company. In both company types, the shareholders are not liable to creditors with their personal assets. The liability is equal to the capital share the shareholders contribute.
However, in limited liability companies, for public debts, the shareholders are liable with their personal assets. Such responsibility is at the ratio of the capital share they initially contribute
The major differences between the joint stock company in Turkey and limited liability company in Turkey are; (i) the number of shareholders (ii) the liabilities of the shareholders and (iii) share transfer.
Number of Shareholders
There is no upper limit for the number of shareholders for the Joint Stock Company in Turkey. However the number of shareholders for Limited Liability Company in Turkey can be maximum 50.
Liability of the Shareholders
While the shareholders of the Joint Stock Companies in Turkey are not responsible for the public debts after paying the capital debts, the shareholders of the Limited Liability Companies are responsible for the public depts such as taxes with the ratios they are committed for the capital.
The transfer of shares is more complex in Limited Liability Companies in Turkey in comparison to Joint Stock Companies in Turkey. In order to transfer of the shares of an LLC Turkey the you should have an agreement at notary. However, in Join Stock Company in Turkey, the share transfer agreement is sufficient to complete the process.
In order to establish a joint stock company in Turkey, partners shall deposit the initial capital of at least 250.000 TL (as of 2024). In order to establish a limited liability company in Turkey, partners shall deposit the initial capital of at least 50.000 (as of 2024.) TL The shareholders shall deposit at least ¼ of the nominal value of the shares before registration . The rest must be payable within 24 months following the registration of the company in Turkey.
Taxes at the time of the sale of the Company
When you sell your stake in a limited liability company in Turkey taxes accrue. However, if you sell the shares of a joint stock company after 2 years, you do not pay taxes.
Hiring a Lawyer
It is not compulsory for Limited Liability Company in Turkey. However if the capital of Joint Stock Company in Turkey over 250.000 TL, you should hire a lawyer.
Capital companies such as Joint Stock Companies and LLC shall pay corporate income tax. As of November 2023 corporate tax in Turkey rate is 25%. However, sole propreitorships do not pay corporate tax, there is an incremental tax system for SPs