Young Entrepreneur Income Exemption
Legal basis: ITA repeated Art. 20
Decision matrix
Which structure fits you?
Compare five formation paths side by side — setup time, capital, cost, advantages and cautions. The right structure at incorporation prevents costly restructuring later.
Take the quiz → Quick start
Sole Proprietorship
Freelancer, self-employed, side income
For whom
Software developers, freelancers, consultants, side-income earners
Advantages
- Fastest setup
- Minimum cost, easy closure
- Low accounting overhead
- Young Entrepreneur Exemption — up to 230,000 TRY annual income tax exemption (ITA repeated Art. 20)
Watch out
- Unlimited personal liability
- Weak corporate image
- No partnership structure
- Not suitable for funding
Limited Company
SME, trade, software, e-commerce
For whom
SME founders, trade and software companies, e-commerce operators
Advantages
- Limited liability (up to capital)
- Prestigious corporate structure
- Flexible partnership and share structure
- Eligible for technopark and R&D incentives
- Software/design export — 80% deduction under CIT Art. 10/1-ğ
Watch out
- Notary required for share transfer
- Not suitable for funding rounds (no share certificates)
- No IPO path
Joint-Stock Company (A.Ş.)
Startup, funding round, exit plan
For whom
Startups seeking funding, growth-oriented ventures, IPO-bound founders
Advantages
- Zero capital gains tax at exit if registered share certificates are issued (ITA repeated Art. 80, 2-year holding)
- ESOP plans available (ITA Art. 17)
- Fast share transfer (not registry-bound)
- IPO path (Borsa Istanbul)
- Investor-friendly structure (VC, angel, corporate)
- Can convert into Regional HQ (RHQ) status
Watch out
- AGM required every 3 years
- Board of directors mandatory
- High minimum capital (250,000 TRY)
Foreign Branch
Foreign HQ retained, Turkey operation
For whom
Foreign companies operating in Turkey while keeping parent legal personality
Advantages
- Parent legal personality retained
- No share transfer (branch, not shareholder)
- Permission to conduct commercial activity in Turkey
- Treaty benefits via Double Taxation Agreements
Watch out
- Long apostille + translation process
- Turkish earnings consolidated into parent
- Parent bears Turkey liability
Liaison Office
Foreign company's Turkey representation
For whom
Foreign companies researching the Turkish market without commercial activity
Advantages
- No commercial activity required
- Personnel cost funded from abroad → no tax
- Low operational cost
- Sufficient for market research + customer relations
Watch out
- No commercial activity (no sales, no invoicing)
- Foreign Investment GD permit limited to 3-5 years
- Scope narrowly interpreted — strict audit
Tax incentives and exemptions
Which incentives might apply to you?
Turkey offers significant tax incentives for entrepreneurs, software exporters, R&D-intensive firms and foreign investors. Structure choice at incorporation determines which exemptions you can claim.
Software/Design Export Service Exemption
Legal basis: CIT Art. 10/1-ğ
Technopark Earnings Exemption
Legal basis: Law No. 4691 Art. 8
Technopark Personnel Withholding Incentive
Legal basis: Law No. 4691 Art. 8
R&D and Design Activity Incentive
Legal basis: Law No. 5746
Registered Share Certificate Capital Gains Exemption
Legal basis: ITA repeated Art. 80/1
ESOP — Employee Share Options
Legal basis: ITA Art. 17
Regional Headquarters (RHQ) Exemption
Legal basis: Law No. 7256 + Presidential Decree
KOSGEB Supports
Legal basis: KOSGEB Regulation — Entrepreneur Support, SME Development Programs
Commitment timeline
From decision to operations — in 14 days
A single point of accountability. Every milestone, every document, every institution — laid out. The "written response within one business day" promise, made tangible.
Day 0
Structure decision + name check
60-minute complimentary intro call. Structure type (Sole / Ltd. / A.Ş. / Foreign Branch / Liaison), activity, capital, partnership clarified. Name pre-checked on MERSİS.
Day 1
Articles of association + shareholders' agreement
AoA draft prepared — capital, shares, activity, governing bodies. For A.Ş., on request, SHA draft (vesting, ROFR, drag/tag-along) attached.
Day 2
MERSİS filing + Trade Registry
Online MERSİS application — name approval, capital commitment, partner info, activity code (NACE) entered. Trade Registry dossier filed same day.
Day 3
Registration + Trade Registry Gazette
Trade Registry filing complete, Gazette publication issued. Company gains legal personality. Registry certificate + Gazette copy delivered.
Day 4
Tax number + e-signature + e-invoice
Tax Office issues tax number and certificate. Qualified Electronic Signature obtained. E-invoice, e-archive, e-ledger activations initiated.
Day 5
Bank account + capital deposit
Corporate bank account opening — bank selection, document submission. At least 1/4 of capital deposited (Ltd. min. 12,500 TRY, A.Ş. min. 62,500 TRY). AML interview for foreign-capital structures.
Day 7
Registered share certificate printing (A.Ş. only)
CRITICAL: For A.Ş., registered share certificates submitted to printer. ITA repeated Art. 80/1 exemption REQUIRES this step — issued at incorporation or immediately after, then 2-year holding period grants 0% capital gains tax at exit.
Day 14
Operations ready — rhythm in place
First-month operational rhythm established: document flow, e-invoice channel, reporting format defined. CPA engagement letter signed, monthly package begins. First monthly P&L + cash summary delivered at month-end.
Scope
Structure choice (A.Ş. / Ltd. / branch / liaison office) is not a technical decision alone; it is a combined call on funding rounds, exit, retention instruments and tax position. We run the process end-to-end.
- — Formation packages —
- Sole proprietorship — low capital, fast formation, but unlimited liability
- Limited Company (Ltd. Şti.) — SME standard; min. TRY 50,000 capital, 1-50 shareholders
- Joint-Stock Company (A.Ş.) — investor-friendly structure; min. TRY 250,000 capital, easy share transfer, IPO path open
- A.Ş. / Ltd. with foreign-entity shareholder — foreign corporate as Turkish sole/joint shareholder; apostilled POA required
- Foreign-capital company formation — Turkish A.Ş. or Ltd. with foreign individual shareholder
- Turkish branch of a foreign company — operates under foreign HQ's legal personality (Trade Registry Regulation Art. 121-128)
- Liaison Office (Foreign Investment GD approval) — no commercial activity; representation / research / coordination only; 3-5 year permit
- Holding A.Ş. formation — for investors holding multiple participations; tax optimisation and management layer
- Regional Headquarters (RHQ) — personnel income tax + stamp duty exemption under Law No. 7256 + Presidential Decree
- Free Zone company — export-focused operation, 100% tax exemption (location-specific)
- Cooperative — under Law No. 1163 for private-sector ventures
- — Process and operations —
- Structure analysis: A.Ş. vs Ltd. vs branch vs liaison-office decision matrix
- Pre-funding structuring — A.Ş. + registered share certificates (Income Tax Act repeated Art. 80 exemption, 2-year holding rule)
- Shareholders' agreement design — drag-along, tag-along, ROFR, anti-dilution clauses
- Holding / RHQ structure — placement of the Turkish leg within an international group
- Pillar Two impact assessment — side effects for foreign-capital groups with €750M+ consolidated revenue
- Tax number, MERSİS, Trade Registry filing
- Foreign-shareholder workflow: apostille, POA, KYC, KEP, e-signature
- Bank account opening — bank selection and document prep (incl. AML interview for foreign capital)
- e-Signature, e-Invoice, e-Ledger activation
- Registry changes: capital increase, share transfer, name change, type conversion
Process
- 01
Structure call
A.Ş. vs Ltd. vs branch decision tree — capital, exit, retention dimensions.
- 02
Documentation
POA, apostille, ID, address, articles of association.
- 03
Registration
Tax number → MERSİS → Trade Registry → Tax Office.
- 04
Operational setup
Bank account, e-signature, e-Invoice integration.
Frequently asked
Can I incorporate without coming to Turkey?
Yes. With a notarised + apostilled power of attorney issued at the Turkish consulate in your country, your representative runs the full process.
A.Ş. or Ltd. — which one should I pick?
Three dimensions: (1) funding-round likelihood, (2) employee share options (GVK Art. 17 — A.Ş. only), (3) exit / sale position. If a funding plan is on the table, A.Ş. is the dominant choice.
Can capital gains tax be zeroed on exit? When should registered share certificates be issued?
For A.Ş. companies, holders of registered share certificates qualify for the capital gains exemption under Income Tax Act repeated Art. 80/1 after a 2-year holding period. Share certificates MUST be issued at incorporation or immediately after — late issuance forfeits the exemption. Critical step for any startup planning future funding.
How does a foreign investor benefit from Turkey's RHQ regime?
Turkey's Regional Headquarters regime is governed by Law No. 7256 and a Presidential Decree, granting personnel income tax and stamp duty exemptions. Structure must be designed at incorporation — retrofitting is lengthy and costly.
How does Pillar Two affect my company structure?
If the foreign parent group has €750M+ consolidated revenue, OECD Pillar Two (Turkish Local Minimum Top-up Tax — CIT Art. 32/D) imposes a 15% effective tax floor. The Turkish entity's tax position feeds into the group-level QDMTT calculation. Companies under this threshold are unaffected.