Liaison Office vs Subsidiary vs Branch in Turkey: Which to Choose

When a foreign company decides to enter Turkey, the single most consequential early decision is which legal vehicle to use. Choose a liaison office, a branch or a subsidiary, and you set your tax exposure, your liability, your ability to sign enforceable contracts and even how easily you can repatriate profit. This guide compares the three so international decision-makers can match the structure to the strategy rather than the other way around.

Start with the strategy, not the form

Before comparing structures, be honest about what you actually intend to do in Turkey over the next 12 to 24 months. Are you testing demand, or are you ready to sell and invoice? Do you need a warehouse and staff, or just a market presence? The right answer to “which entity” flows directly from these commercial goals.

• Exploring the market with no revenue yet points toward a liaison office.
• Trading under the parent’s identity points toward a branch.
• Building a standalone, long-term local business points toward a subsidiary.

The liaison (representation) office

A liaison office is the lightest footprint available. It may conduct market research, promotion, supplier coordination and communication between the parent and local players, but it may not trade, sell or issue invoices.

Advantages

• Generally exempt from corporate income tax and VAT on activities funded from abroad.
• Staff salaries are typically exempt from income tax when paid from foreign funds.
• No share capital requirement and a comparatively simple setup.

Limitations

• Strictly non-commercial; it cannot generate local revenue.
• Permits are time-limited and must be renewed.

For many foreign firms, pairing a liaison office with an experienced local partner is the fastest way to build relationships before committing capital. Our commercial representation service effectively performs this liaison role on your behalf, often without you needing to register an office at all.

The branch office

A branch is a commercial extension of the foreign parent. It can trade, invoice and generate revenue in Turkey, but it is not a separate legal person, so the parent company remains directly liable for its obligations.

When a branch makes sense

• You want revenue-generating operations without forming a new legal entity.
• Your activities are closely tied to the parent’s own business.
• You accept parent-level liability in exchange for simpler ownership.

Branches are taxed on their Turkey-sourced income and must keep local accounts, so the administrative load sits between a liaison office and a subsidiary.

The subsidiary (LLC or JSC)

A subsidiary, usually a limited liability company, is a Turkish legal person owned by the foreign parent. It is the go-to structure for companies planning a substantial, long-term presence.

Advantages

• Clear separation of liability between the Turkish business and the parent.
• Full ability to trade, sign enforceable contracts and bid for many tenders.
• Eligibility for a wider range of incentives and financing.
• Cleaner profit-repatriation mechanics via dividends.

Trade-offs

• Full corporate tax, VAT and payroll obligations apply.
• More governance, accounting and reporting responsibility.

A side-by-side view

• Can it trade and invoice? Liaison: no. Branch: yes. Subsidiary: yes.
• Separate legal person? Liaison: no. Branch: no. Subsidiary: yes.
• Parent liability? Liaison: limited scope. Branch: full. Subsidiary: limited.
• Typical tax exposure? Liaison: largely exempt. Branch: on local income. Subsidiary: full corporate tax.
• Best for? Liaison: market testing. Branch: extension of parent. Subsidiary: long-term local business.

A common progression path

Many successful foreign entrants do not pick one structure forever. They begin with a liaison presence or an outsourced representative to understand demand, pricing and regulation, then incorporate a subsidiary once the business case is proven. This staged approach limits early risk while keeping the door open to full commercial operations. To design that roadmap and manage the trade relationships along the way, our international trade consulting team supports you at each stage.

How to decide

• Map your 24-month commercial plan and revenue intentions.
• Weigh liability tolerance against tax efficiency.
• Consider whether local contracts and tenders require a Turkish entity.
• Factor in the administrative capacity you can realistically maintain.

Frequently asked questions

Can a liaison office later become a subsidiary?

You cannot simply convert one into the other, but it is common to run a liaison office first and then incorporate a separate subsidiary once you are ready to trade, winding down the liaison presence as needed.

Which structure is most tax-efficient?

A liaison office carries the lightest tax burden because it cannot generate revenue. Among revenue-generating options, the best choice depends on your margins, repatriation plans and liability preferences, which is exactly where professional structuring pays off.

Do I need a local partner for any of these?

No. Foreign investors can fully own a subsidiary or branch and establish a liaison office without a Turkish partner, although a trusted local representative dramatically speeds up every option.

Not sure which vehicle fits your Turkey strategy? MOPCONS helps foreign firms choose, establish and operate the right structure. Speak with our team.