Establishing a holding company in Turkey

In recent years, Turkey has shown sustainable economic growth paired with proactive attraction of foreign direct investment. This is attributable to the country's strategic geographical position as a conduit between Europe and Asia, liberalisation of economic policies, and streamlining of processes for undertaking business. Within this climate, instituting holding company structures presents an efficacious mechanism for multinational enterprises seeking to consolidate operations, minimise tax liabilities, and expand their footprint in emergent markets.

The holding company model ensures supple asset administration, optimal resource allocation, and risk mitigation via diversification. Moreover, in Turkey, holding companies not only facilitate efficient stewardship of subsidiaries, but also utilise the country as a launchpad for international expansion courtesy of favourable tax treaties and strategic location.

This article delineates the process of incorporating holdings in Turkey, encompassing legal considerations, tax planning, financial and managerial approaches. Emphasis is accorded to key stages spanning registration, optimisation of tax outlay, and effective governance of the holding structure pursuant to Turkish and international regulations.

Holding company management

The fundamental concepts underpinning holding company management commence with a lucid comprehension of the very definition of a holding company and its cardinal characteristics.

A holding company constitutes an organisation whose primary objective is share ownership of other companies. The holding company does not engage in goods production or service provision; its principal activity relates to administration of corporate assets encompassing shares, interests in authorised capital, and other securities.

Often, a holding company represents a legal entity instituted for the purpose of exercising control over one or more subsidiary companies by possessing a majority shareholding. Control is secured through ownership of over 50% of voting shares, despite smaller percentages potentially allowing noteworthy influence on managerial decisions in certain cases. Holding companies play a pivotal role in shaping corporate strategy and governance structures within subsidiaries, ensuring adherence to corporate governance and ethical principles.


Holding company structures enable centralisation of management functions including finance, human resources, information technology and strategic planning – providing economies of scale and optimising management efficiency.

Holding companies can employ various strategies to optimise tax outflows at the group level, including harnessing fiscal advantages and double tax treaties. They may also furnish subsidiaries with access to financing on more favourable terms by consolidating credit and investment capital.

Possessing shares of multiple companies across different industries and geographical areas facilitates holding companies to mitigate risk through diversification.

Evaluating the investment landscape in Turkey

Appraising the investment climate in Turkey and prospects for commercial expansion for a Turkish holding company necessitates analysis of several pivotal factors, including economic steadiness, legal framework, tax policy, and access to capital and markets. With its strategic crossroads locality between Europe and Asia, Turkey presents unique opportunities for international business, especially regarding incorporation and maturation of Turkish holding structures.

Economic stability
Turkey demonstrates ongoing economic advancement, reinforced by vibrant industrial, agriculture, and service sectors. The government is instituting initiatives to stimulate investment, including trade liberalisation and privatisation of state-owned enterprises. These dynamics establish favourable conditions for commercial growth within Turkish holdings.
Legal framework
Turkey possesses a sophisticated legal system, safeguarding property rights and investments. The country has implemented legislation aimed at optimising the investment backdrop, such as the Law on Support of Foreign Direct Investment.
Tax policy
Turkey provides various tax reductions and incentives for investors, consisting of decreased income tax rates for certain investments and harnessing international double tax accords. Turkish holdings can optimise their tax burden through efficacious structuring and utilising available incentives.
Access to finance and markets
The Republic of Turkey has a developed financial system with an active capital market, easing access to funding for enterprises. Turkish holdings can leverage a multitude of financing vehicles including bank lending, bond issuances and direct investment. As a vital export hub and gateway to the Middle East, Central Asia and Europe, Turkey amplifies opportunities for international trade and investment.
Innovation and technology
The Turkish government actively champions innovation and technology development, including via technology parks and R&D investment. This engenders opportunities for Turkish holdings focused on tech-based enterprises to expand within the high technology arena.

The establishing process

The process of incorporating a holding company in Turkey encompasses several key stages, spanning initial planning to formal registration and commencement of operations. It is imperative that each step entails meticulous adherence to local legislation and regulations.

Step 1:


  • Defining the business model and strategy. Prior to initiation of a holding company, clear definition of the business model, objectives of incorporation, structural overview, and strategic developmental directions is necessitated.
  • Market research and regulatory analysis. Comprehensive market analysis paired with examination of all pertinent regulatory requirements related to the formation and operation of holdings in Turkey is advisable.
  • Financial planning. Development of a financial plan including initial capital outlays, future income and expenditure projections, and a financing blueprint.
Step 2:

Selecting a legal form and name

  • Determining the organisational and legal form. A holding in Turkey can be registered as a JSC (A.Ş.) or an LLC (Ltd. Şti.).
  • Selecting the holding name. A unique name should be chosen for the holding, devoid of coincidence with pre-existing entities and compliant with legislative requirements of Turkey.
Step 3:

Preparation and submission of documentation

  • Charter of the holding and constitutional agreement. Drafting of statutory documentation pursuant to the Turkish Commercial Code.
  • Registration in the Trade Register. Filing of statutory paperwork and supplementary materials to the local Trade Register for formal incorporation of the holding under Turkish jurisdiction.
  • Obtaining a tax number and tax authority registration. Upon Trade Registry registration, the holding must attain a tax code and register with the tax body.
Step 4:

Holding company registration

Turkey holding registration constitutes the final stage of the entity's official accession into the Turkish legal domain. Herein, the company receives all requisite permits and licences to initiate operations. This encompasses completion of all formalities across state and municipal bodies, including acquisition of special permits dependent on industry.

Investors must guarantee full compliance with local laws and regulations spanning tax, employment, and environmental standards at all steps. Post successful registration, the holding can proceed to trade activities and undertake business in Turkey.

Banking services

Registering a corporate bank account for a holding company in Turkey constitutes a mandatory requirement for depositing authorised capital and undertaking subsequent financial transactions.

This process can be categorised into several key steps:

Bank selection
Research and compare services offered by various banks in Turkey, including account fees, availability of online banking, international payment terms and quality of customer service. It is advisable to consider banks possessing extensive experience engaging with corporate clientele, particularly those operating within the holdings sector.
Preparation of documentation
Compiling necessary paperwork to institute an account, typically encompassing the company's foundational documents (charter, resolution of establishment, commercial register certification), documents affirming managerial authority, alongside authorised signatories' passports and supplementary identification. Contingent on the bank, additional documentation such as company financial statements or a business plan may be necessitated.
Account opening application
An authorised company representative visiting the selected bank in person to submit an application for a corporate account. In certain cases, banks may furnish the option of applying online, which is especially advantageous for overseas investors.
Verification and analysis
The bank will evaluate the furnished documentation and may request supplemental information to conduct KYC processes for anti-money laundering and counter-terrorism financing purposes. This stage can extend from several days to several weeks, subject to the bank's protocols and complexity of verification.
Authorised capital contribution
Upon application approval and account opening, it is imperative to inject the holding's authorised capital into the newly opened corporate account. Authorised capital extent and contribution prerequisites are delineated under Turkish legislation.
Obtaining banking instruments and online access
The bank will furnish requisite banking tools including bank cards, alongside access to an online banking platform for corporate account administration.

Requirements for incorporating a holding company in Turkey

Incorporating a holding company in Turkey necessitates preparing and furnishing requisite documents to pertinent government bodies. It is prudent to note that specific documentation can vary subject to the legal entity type and particulars of operations.

Constitutional documentation
  • Primary document defining the company name, objectives, activities, authorised capital amount, founder details, governance framework and decision-making procedures.
  • A founder-signed document articulating shareholder particulars.
  • Bank documentation verifying deposit of authorised capital into a dedicated corporate account opened during the registration process.
Identification documents of founders and directors
  • Copies of passports (foreign nationals) or national identity cards (Turkish citizens) mandatory for all founders and board members.
  • Residence permits for foreign nationals.
Agreements and declarations
  • Formal application to register a holding company in Turkey.
  • Written agreements of individuals appointed to managerial positions or the board, consenting to respective appointments and duties.
Additional documentation
  • Chamber of Commerce and Industry document verifying proposed company name uniqueness and eligibility for registration.
  • Official document validating the entity's registered office address, e.g. lease agreement or ownership certificate.
  • Specific submissions require pre-filing notarisation.
Registration fees
  • Evidence of settling requisite state fees and company registration expenses.

On average, expecting 1 to 3 months for the incorporation process remains reasonable, accounting for planning through licensing and commencing operations. Nonetheless, expediting document preparation and approval can fast track establishment.

Tax & financial considerations for holdings in Turkey

Advantages for holding companies in Turkey constitute a vital component of financial planning and strategic management for organisations seeking tax optimisation. Numerous tax reductions apply to Turkish holdings, rendering them an appealing vehicle for domestic and international enterprises.

Tax policy governing holdings

  • In Turkey, holdings are classified as CIT payers. Hence, they undergo obligation to remit 20% tax on generated profits, with all Corporation Tax Law provisions, including benefits, extending to Turkish holdings.
  • Tax exemption privileges apply to dividend proceeds from subsidiaries avoids corporate taxation at the holding company level.
  • Income from sale of shareholdings held over two years benefits from 75% corporate tax exemption on total proceeds.
  • Expenses associated with holding company services furnished to subsidiaries can be allocated across units as expenditures in subsidiary accounts, reducing consolidated tax burden.
  • Equity shares held for over two years in the holding company portfolio obtain exemption from VAT on sale.
  • Lending from Turkish holdings to divisions falls outside hidden capitalization rules, thus averting additional taxation risks.

In addition, Turkey has executed various double tax accords with multiple states. Consequently, Turkish holdings receiving foreign-sourced income can reduce or eliminate dual imposts, improving locational appeal for global investors. Benefits include lowered dividend, interest, and royalty withholding taxes alongside credits for overseas remittances.

Financial considerations

Various financial aspects accompany registering and administering a holding company in Turkey, spanning financing and capitalisation through to exchange controls, fund movements and reporting obligations. These elements are indispensable for operational efficiency and regulatory compliance.

Holdings can mobilize capital through internal sources (e.g. subsidiaries) supplemented by external mechanisms including bank finance, share/bond issuances and foreign direct investment. The optimal financing avenue depends on the holding’s financial objectives, credit profile and prevailing market conditions.

Effective capital management necessitates instituting investment strategies, optimizing capital structure and governing risk. Turkish holdings must maintain adequate liquidity for pursuing operations and investment programmes, in tandem with rationalizing tax exposure.

Exchange controls and fund movements
Turkey implements particular exchange controls regulating the cross-border movement of capital. Foreign investors should appraise prevailing requirements for profit repatriation, currency conversion and overseas remittances.
Financing and capital management
Turkish holdings must adhere to pertinent regulations when conducting international payments such as dividend distributions abroad, loan repayments or investment retractions. Potential limitations and transaction documentation warrant evaluation.
Reporting and audit requirements
Holding companies in Turkey undergo mandatory financial reporting obligations per local standards and International standards where applicable. This necessitates preparing annual financial statements covering the balance sheet, income statement, cash flows and capital.

Additionally, holdings meeting specific criteria in terms of size and foreign shareholding must conduct independent audits of financial statements. Audits promote transparency, stakeholder confidence and adherence to pertinent regulations.

YB Case provides expert guidance and assistance in the process of registering holdings in Turkey. The company's specialists have extensive experience and profound knowledge in the field of corporate legislation, tax planning and strategic management. These allow us to provide clients an integrated approach to solving problems related to the formation and functioning of holding structures.

Services include preparation of the necessary documentation, advice on taxation and corporate governance, as well as support in obtaining all necessary licences and permits.

YB Case guarantees a high level of professionalism and a personalized approach to each project, aiming to maximize efficiency and streamline processes to achieve the strategic business objectives of our clients.

Tags: Turkey holding
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