Turkey's Commercial Code offers two capital companies: the limited company (Limited Şirket, Ltd. Şti.) and the joint-stock company (Anonim Şirket, A.Ş.). Both give 100% foreign ownership, both pay 25% corporate tax, and both can be set up in about a week. The differences are in liability, capital, how shares move and how you eventually get your money out. Those differences decide which one you should choose — not the incorporation cost, which is similar.
| Feature | Limited Company (Ltd. Şti.) | Joint-Stock Company (A.Ş.) |
|---|---|---|
| Minimum capital | TRY 50,000; may be paid within 24 months | TRY 250,000 (TRY 500,000 under the registered-capital system); 25% paid before registration, balance within 24 months |
| Number of shareholders | 1 to 50 | 1 or more, unlimited |
| Management body | Managing director(s); at least one must be a shareholder | Board of directors; a single member is enough and need not be a shareholder |
| Shareholder liability — commercial debts | Limited to capital | Limited to capital |
| Shareholder liability — tax & SGK debts | Personal, in proportion to shares, if not collectable from the company | None for shareholders; board members are liable |
| Share transfer | Notarised share transfer agreement, general assembly approval, registration and gazette announcement | Endorsement and delivery of share certificates; no notary, no registration (bearer/registered rules apply) |
| Sale of shares by an individual — income tax | Gain always taxable (progressive rates) | Gain exempt after 2 years of holding, if share certificates were printed |
| Sale of shares by a corporate shareholder | 75% of gain exempt after 2 years | 75% of gain exempt after 2 years |
| Transfer costs | Notary and registry fees on every transfer | None beyond the share ledger entry |
| Different share classes / privileges | Limited | Yes — voting privileges, preferred dividends, board nomination rights |
| Corporate tax | 25% | 25% |
| Dividend withholding | 15% (treaty-reduced) | 15% (treaty-reduced) |
| Independent audit | Only above statutory thresholds | Only above statutory thresholds; a lawyer on retainer is mandatory above TRY 1,250,000 capital |
| Annual formalities | General assembly of shareholders (can be by circulation) | General assembly with a ministry representative in some cases; board resolutions in a notarised book |
| Typical use | Trading, services, small subsidiaries, owner-managed businesses | Investment vehicles, holding structures, businesses planning to raise capital or exit |
Foreign investors are often told that both types offer "limited liability" and stop there. The Turkish Law on the Collection of Public Receivables (Art. 35) makes a critical distinction. If a limited company cannot pay its taxes, penalties or social security contributions, the tax office and the SGK may collect the shortfall from the shareholders personally, in proportion to their shares — including from shareholders who were never involved in management, and including for periods before they bought the shares. A joint-stock company's shareholders carry no such exposure; the public creditor turns instead to the board members who were in office when the debt arose.
For a passive investor, or for a parent company that does not want a Turkish tax problem to travel up the group, this is decisive. For an owner-manager who is going to be the director anyway, it matters less — the director is exposed in both structures.
Identical in both: 15% withholding on distribution, reduced under most treaties to 5–10% for corporate shareholders holding a qualifying stake. A resident individual shareholder includes half the dividend in their annual return and credits the withholding.
Here the A.Ş. wins clearly for individual shareholders. Gains on A.Ş. share certificates held for more than two years are exempt from income tax; gains on limited-company shares are taxable at up to 40% however long they were held. For corporate sellers both types offer a 75% participation exemption after two years. If a sale is part of your plan, incorporate as an A.Ş. — or convert well before the sale so the two-year clock has run.
Returning capital is not taxed as a dividend to the extent it is genuine paid-in capital; retained earnings distributed on liquidation are. Both types follow the same rules, but liquidation of an A.Ş. involves more formal steps.
For a one-person service business the sole proprietorship is the cheapest structure: no capital, no registry formalities, simpler books, and profits taxed on the personal scale with the 80% export-service deduction available. The obstacles for foreigners are the independent work permit, which is issued restrictively, and unlimited personal liability. See our freelancer guide.
A branch avoids the Turkish capital requirement and lets the parent contract directly, but the parent bears full liability and profits repatriated to head office suffer 15% withholding on top of 25% corporate tax — the same overall burden as a subsidiary, with less protection. Branches are common in construction, energy and regulated sectors where the tender requires the parent itself to be the contractor.
For market research, representation or coordinating a regional team without invoicing in Turkey, a liaison office permit from the Ministry of Industry and Technology is the lightest option. It may not earn income; once you need to sign contracts or invoice, you need a company.
For a small operating business with one or two owners, a limited company (Ltd. Şti.) is cheaper and simpler. For a business that expects outside investors, plans an exit, or whose owners want to avoid personal liability for the company's tax and social security debts, a joint-stock company (A.Ş.) is the better structure despite the higher minimum capital.
For ordinary commercial debts, no — liability is limited to the capital. For public debts (unpaid taxes, tax penalties and social security contributions) that cannot be collected from the company, shareholders of a limited company are personally liable in proportion to their shareholding. Shareholders of a joint-stock company are not.
Yes. Turkish law allows a type change (tür değişikliği) from Ltd. Şti. to A.Ş. without liquidation, and it is tax-neutral if done under the Corporate Tax Law's conversion rules. It does, however, cost time, notary and registry fees and a new set of articles — which is why it is cheaper to choose correctly at the start.
Yes. A branch is not a separate legal entity; the parent is fully liable, and branch profits are taxed at 25% with an additional 15% withholding on profits transferred to the head office. Branches are used mostly for regulated sectors and project work; most investors prefer a subsidiary.
A liaison office (irtibat bürosu) is a permit-based presence that may only carry out non-commercial activities such as market research and representation. It cannot invoice or earn income in Turkey. Its expenses must be funded from abroad and its staff salaries are exempt from Turkish income tax if paid in foreign currency.
Thirty minutes with us before incorporation saves the cost of converting the company later. We will tell you which structure fits your plans and why.
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