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Company Formation Abroad for Turkish Investors: A Secure Transition to Global Markets
For entrepreneurs who want to expand their business operations beyond local borders, generate foreign currency-based revenue and integrate into international supply chains Company formation abroad for Turkish investors, is the most critical step in their growth strategy. In today's global economy, establishing a commercial presence in strategic hubs such as the United Kingdom, the United States, the Netherlands or the United Arab Emirates (Dubai) offers companies unique tax advantages and global prestige. At Akal CPA, with our Ankara-based international advisory vision, while you move your capital abroad safely, we manage the alignment of Turkey’s tax legislation with global law on a zero-error principle and with a holistic strategy.
Strategic and Financial Advantages of Globalization
Setting up a company abroad is not only a search for a new market, but also a risk management move that safeguards the financial structure of your business. A successful international expansion strategy provides investors with the following key advantages:
- Foreign Currency Income and Currency Protection: By protecting your company balance sheet against sharp currency fluctuations, you create a sustainable cash flow in Euros or Dollars.
- International Credibility: Companies established in global financial centers gain much faster and more reliable access to the international banking system, investment funds and low-interest loan facilities.
- Customs and Logistics Advantages: Companies established in regions such as the European Union or the United States benefit from free trade agreements in that region, gaining customs duty advantages and logistics speed.
Double Taxation and International Tax Planning
A Turkish investor’s biggest risk when establishing a company abroad is the possibility that the profits earned will be taxed both in the country of investment and in Turkey (double taxation). At this point, the Republic of Turkey’s Double Taxation Avoidance Agreements (DTAAs) with more than 80 countries come into play. The exemptions applicable when your foreign subsidiary’s profit share (dividend) is transferred to the parent company’s or personal accounts in Turkey are meticulously structured by our tax consulting and planning department. Regarding your global earnings, our goal is to minimize the legal tax burden.
Your Strategic Business Partner for Your Processes in the Turkish Market
For flawless compliance with foreign investor legislation and IFRS reporting processes, turn to Akal CPA's Ankara-based operational powerhouse.
Commercial Relations between the Parent Company and the Foreign Company
Transfers of goods, services or capital between your company’s headquarters in Turkey and the company you establish abroad must comply with OECD standards and local corporate income tax legislation. The pricing policies you apply between your own companies may be examined by the Ministry of Finance for the risk of disguised profit distribution. To eliminate such tax penalty risks, inter-company invoicing and contracting processes are structured by our experts in full compliance with transfer pricing legislation.
Comparison of Subsidiary and Branch
When expanding abroad, should you open a “Branch” attached to your parent company in Turkey, or establish a “Subsidiary” (new company) with separate legal personality under that country’s laws? Before making this strategic decision, reviewing the table below for the future of your company is vital:
| Criteria / Feature | Subsidiary (Separate New Company) | Foreign Branch |
|---|---|---|
| Legal Liability and Risk | The debts and risks of the company abroad are limited to its own legal personality. It does not bind the parent company in Turkey. | For all legal and commercial debts of the branch, The parent company in Turkey is directly responsible. |
| Corporate Image and Perception | As it has the status of a local company (e.g. UK Ltd, US LLC), it creates high trust among local customers. | Since it is seen as an extension of a foreign company, it can create a disadvantage in tenders or local contracts. |
| Taxation (Corporate Income Tax) | It is subject only to the tax laws and corporate income tax rates of the country in which it is located. | It is taxed in the country where it is located and its earnings are directly reflected on the balance sheet of the parent company in Turkey. |
| Profit Transfer (Dividend) | Withholding tax may be applied according to double taxation treaties when distributing profits to Turkey as dividends. | Transfer of branch earnings to the head office (Turkey) is generally not subject to any additional withholding tax. |
IFRS Reporting and Global Consolidation
For Turkish investors establishing companies abroad, the ability to view their financial data from different countries on a single screen and in a single standard is the most basic need of the management. The local accounting standards of the country you are in differ from the standards of Turkey. Akal CPA combines the financial statements of your parent company and foreign subsidiaries under International Financial Reporting Standards (IFRS) (consolidation). In this way, general accounting services your operations gain transparency on a global scale, while your periodic independent audit services reports, to be presented to global investors or banks when needed, are prepared in full.
Secure Expansion from Ankara to the World with Akal CPA
Setting up a company abroad is not simply a matter of finding an agent in that country and signing documents. The real challenge is complying with Turkey’s Law on the Protection of the Value of Turkish Currency, capital export notifications and Ministry of Finance regulations. With its Ankara-based corporate structure, Akal CPA manages every step, from the legal transfer of your capital abroad, to the incorporation of your global company and its integration with your company’s corporate income tax returns in Turkey, with a strategic partnership mindset.
Frequently Asked Questions
Yes, today in many popular jurisdictions such as the United Kingdom, the United States (Delaware, Wyoming, etc.), the Netherlands and Dubai, company formation can be completed 100% remotely through digital approvals or powers of attorney, without the investor needing to travel to that country.
When you establish a separate legal entity (Limited Liability Company, LLC, Corporation, etc.) abroad, that company is only subject to the corporate income tax of the country where it is located. However, when you transfer the profits as "dividends" to your personal account in Turkey or to your parent company in Turkey, income or corporate income tax may arise in Turkey. At this point, the tax burden is minimized by applying Double Taxation Avoidance Agreements (DTA) and exemption clauses.
Yes, it is completely legal. Under Decree No. 32 on the Protection of the Value of the Turkish Currency, persons resident in Turkey are free to export capital abroad through banks for the purpose of establishing a company or becoming a partner abroad. The only requirement is that the capital export notification form be submitted to the Ministry of Treasury and Finance (or the relevant institutions) within the statutory deadlines following the transfer.
Absolutely not. While your company in Turkey will continue its business operations, the company you establish abroad can operate as a subsidiary of the parent company or as an independent sister company that you personally own. Most investors prefer to keep production or operations in Turkey, while global sales and marketing are handled through the overseas company.
If you have established the foreign company as a subsidiary of your company in Turkey, at the end of the year, the financial statements of your foreign company may need to be combined with the financial statements of the parent company in Turkey (Consolidation). For this process, there is a legal obligation to translate the foreign financial data in accordance with International Financial Reporting Standards (IFRS) or Turkish Accounting Standards (TAS).
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