No Commercial Activity — Tax-Free Operation
Law No. 4875
Liaison Office does not pay CIT or VAT in Turkey due to no commercial activity. No Turkish income tax on personnel as costs are funded from abroad.
Liaison Office Formation
Non-commercial representation office — for market testing, customer relations, coordination. 6-10 weeks permit process.
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Key facts
- Permit process
- 6-10 weeks
- Capital
- Not required
- Est. cost
- ~30,000 TRY + translation/apostille
- Permit term
- 3 years (renewable)
- Tax
- None (no commercial activity)
- Personnel SGK
- Foreign payroll (no Turkish registration)
Overview
A Liaison Office is a non-commercial office opened by a foreign company in Turkey for representation, market research, customer relations and coordination. NO COMMERCIAL ACTIVITY ALLOWED — no invoicing, no sales, no income generation. Subject to permit from the Foreign Investment General Directorate (Ministry of Industry and Technology). Permit valid for 3 years, renewable.
Personnel costs are funded FROM ABROAD — no Turkish income tax. Hence low operational cost. No Bağ-Kur or SGK registration (foreign payroll). If transitioning to active business after market test, convert to A.Ş./Ltd. or Foreign Branch.
Audit is strict — scope is narrowly interpreted. If sales meetings, price quotes, or invoicing are detected, the office is closed + tax penalty imposed on parent. For Turkish commercial intent, choose Foreign Branch or subsidiary A.Ş.
Suitable for
- Foreign companies researching the Turkish market
- Customer relations + after-sales support representation
- Regional coordination center (main ops abroad)
- Brand promotion + local event presence
- Startups doing market test
NOT suitable for
- Companies wanting to invoice in Turkey
- Sales-oriented operations
- Income-generating activities in Turkey
- Commercial activity planners (use Foreign Branch or A.Ş.)
Advantages
- NO COMMERCIAL ACTIVITY OBLIGATION — low operational risk
- Personnel cost funded from abroad → no Turkish tax
- Low setup and maintenance cost
- Sufficient for market research + customer relations
- Brand promotion + local coordination
- Demonstrates parent's Turkey presence (trust signal for corporate clients)
- 3-year permit (renewable)
Watch out
- NO COMMERCIAL ACTIVITY ALLOWED (no invoicing, no sales)
- Activity scope NARROWLY interpreted
- Strict audit — violation closes office + tax penalty
- Conversion required after market test (A.Ş./Ltd./Branch)
- Some banks do not open accounts for Liaison Offices
- Long permit process (6-10 weeks)
Process
- 01
Document prep
Parent AoA, certificate, financials — apostilled + translated (2-3 weeks).
- 02
Activity declaration
Liaison Office activities (and non-activities) detailed in writing.
- 03
Ministry application
Foreign Investment GD permit application (4-6 weeks).
- 04
Permit issuance
Liaison Office activity permit (3-year).
- 05
Tax number
Tax office assigns number under office name (for personnel expenses only).
- 06
Bank
Office-name bank account (for operational expenses).
Deliverables
- Liaison Office activity permit (3-year)
- Tax number
- Authorised representative signature circular
- Foreign payroll routing guidance
- Annual activity report template (submitted to Ministry)
Required documents
- Parent AoA (apostilled + translated)
- Parent certificate of incumbency (apostilled)
- Last 3-year financials (apostilled)
- Authorised representative ID + residence
- POA (apostilled)
- Activity plan + budget
- Personnel list + foreign payroll info
Cost
~30,000 TRY + translation/apostille (10,000-15,000 TRY)
Timeline
6-10 weeks (depends on Ministry permit process)
Tax benefits and exemptions
Legal references
- Direct Foreign Investment Law No. 4875
- Direct Foreign Investment Regulation
- Ministry of Industry and Technology — Foreign Investment GD
Frequently asked
What happens to Liaison Office after market test transitions to active business?
The Liaison Office is CLOSED, replaced by Foreign Branch or subsidiary A.Ş./Ltd. Two processes can run in parallel — closing the old office while registering the new structure.
Do Liaison Office personnel pay tax?
No — foreign payroll means no Turkish income tax or social security. Payroll runs in the parent's country, payment originates from there.
What counts as "commercial" activity?
Invoicing, sales, price quoting, contract signing (even on behalf of parent), income generation. These are FORBIDDEN in Liaison Office. Permitted: market research, customer relations, after-sales support, coordination, brand promotion.