When foreign companies consider expanding their operations into new markets, the option of establishing a Branch Office in Turkey emerges as a significant consideration. This strategy offers several advantages and considerations, shaping the decision-making process for businesses exploring this avenue.
A branch office functions as an independent unit, allowed to carry out its business activities. It has its own management, accounting, and financial records. Interestingly, branches can choose to keep records with the parent company.
Step-by-Step Guide to Opening a Branch in Turkey for Foreign Companies
It is mandatory to register and declare branches in the commercial register where they are located, just like companies. This step ensures transparency and legal operation. Plus, branches need a unique trade name, making them easily identifiable.
In cases arising from the transactions made by the branch, a lawsuit can be filed at the location of the branch, and the branches have the authority to represent themselves in this case as plaintiff and defendant. But in terms of bankruptcy cases, branches do not have a capacity to sue. The bankruptcy case must be filed against the main office and at the place where the head office is located.
The initial step involves applying online through MERSIS, a user-friendly platform. This digital process sets the foundation for your branch. Remember, the registration process is similar to what companies follow, emphasizing compliance.A foreign company that wants to open a branch in Turkey must obtain permission from the Ministry of Industry and Technology.
The first branch to be opened must be registered as a main branch, branches that will be opened after the registration of the first branch are registered as branches of domestic commercial enterprises.Additionally, for tax offices to carry out branch opening procedures, the branch must be registered in the trade registry.
Deciding whether to establish a Branch Office in Turkey involves a careful evaluation of its advantages and disadvantages. While it provides immediate market presence and integration with global operations, the liabilities, limited autonomy, administrative burdens, and tax considerations need to be weighed against the potential benefits. Foreign companies must conduct a thorough assessment aligned with their business objectives and risk tolerance to make a well-informed decision regarding branching into the Turkish market.
