Opening a Branch Abroad for a Turkish Company

The Process of Opening a Branch Abroad

1. 01

   Assessing the Country and Structure

   We assess the nature of the activity, the country’s rules on branch registration and its tax rates, and whether a double taxation avoidance agreement is in place between Türkiye and that country. At this stage we also compare whether setting up a company or opening a liaison office would be more suitable than a branch.

2. 02

   Resolution of the Company in Türkiye

   The authorised body of the company resolves to open a branch abroad and decides on the branch’s address, the persons who will represent the branch and, if any, the capital to be allocated to the branch. For the resolution and the company’s registry documents to be used abroad, the certification and translation formalities required by the country concerned are completed.

3. 03

   Local Registration

   The branch is registered by local advisers authorised in the country concerned, under that country’s legislation. Requirements such as a local representative, an address, tax registration and other conditions vary by country.

4. 04

   Capital Export and Notification

   Cash capital for the branch is sent abroad through banks, and capital in kind is sent abroad under the provisions of the customs legislation. (Decree No. 32 on the Protection of the Value of the Turkish Currency, Art. 13/1)

   • Notification by the investor: Within three months following the first export of capital in cash or in kind made to open the branch, the company in Türkiye completes the information form on capital exports abroad on the Ministry of Trade website and sends it to the Ministry of Treasury and Finance and the Ministry of Trade. The form is on the Ministry of Trade’s Overseas Investment Notification page. (Communiqué No. 2008-32/34 on Decree No. 32, Art. 10/1)
   • Annual update: A company that has exported capital updates the information form and sends it to the Ministry of Trade within three months following each calendar year. If the branch is closed or transferred, both Ministries are also informed no later than three months after the end of that process. (Communiqué No. 2008-32/34, Art. 10/2-3)
   • Notification by banks and customs administrations: Banks and customs administrations also notify the Ministry of Treasury and Finance and the Ministry of Trade of residents of Türkiye who export capital, within 30 days from the date of each transaction. This notification does not remove the investor’s own notification obligation. (Decree No. 32, Art. 13/3)
5. 05

   Taxation of Branch Profit

   • General rule: Profit earned through a place of business or permanent representative abroad is exempt from corporate tax, provided that it bears a total tax burden similar to income and corporate tax of at least 15 per cent under the tax laws of the country where it arises and is transferred to Türkiye by the date on which the annual corporate tax return for the accounting period in which it was earned must be filed. For entities whose main activity is financing, including financial leasing, the provision of insurance services or investment in securities, this profit must bear a total tax burden of at least the corporate tax rate applied in Türkiye. (Corporate Tax Law No. 5520, Art. 5/1-g)
   • Tax credit: Corporate tax and similar taxes paid locally on foreign profits that fall outside the exemption and are taxed in Türkiye may be deducted from the corporate tax assessed in Türkiye on those profits. The amount deducted may not exceed the amount found by applying the Turkish corporate tax rate to those profits earned abroad. Tax paid in a foreign country cannot be deducted unless it is evidenced by documents obtained from the competent authorities and certified by the Turkish embassy or consulate in that country. (Law No. 5520, Art. 33)
6. 06

   Profit from Construction, Repair, Installation and Technical Services

   Profit derived from construction, repair and installation works and technical services carried out abroad and recorded in the general results accounts (genel sonuç hesapları) in Türkiye is exempt from corporate tax. (Law No. 5520, Art. 5/1-h) For this exemption, the 15 per cent tax burden and actual transfer to Türkiye conditions do not apply; it is sufficient for the profit to be recorded in the general results accounts in Türkiye.

   Technical services cover planning, project design, engineering, surveys, feasibility, supervision and similar services relating to construction, repair and installation works. Where there is a construction, repair or installation work abroad, the related technical services may benefit from the exemption whether they are performed in Türkiye or abroad. Where there is no such work, only profit from technical services performed through a place of business or permanent representative abroad benefits from the exemption; technical services performed without a place of business or permanent representative abroad are treated as an export of services. (Corporate Tax General Communiqué (Serial No. 1), section 5.9)

7. 07

   Accounting Set-Up

   The branch’s transactions are tracked both under the rules of the country where it is opened and so that they are reflected in the records of the company in Türkiye. To check the exemption conditions, the branch’s tax payments and profit transfers are documented. For details, see our International Tax and Accounting and Bookkeeping pages.