Setting Up a Company in Northern Cyprus and Turkey

Establishing a business in either the Turkish Republic of Northern Cyprus (TRNC) or Turkey can be rewarding for foreign investors. Here’s a comprehensive guide to help you navigate the company types, associated costs, procedural steps, timelines, and tax obligations in both regions.

Setting Up a Company in Northern Cyprus

Company Types Available to Foreigners:

• Local Limited Company (LTD): Allows local and foreign investors; foreigners can hold up to 100% ownership, except in restricted sectors like real estate, which requires a 51% local partner. Minimum capital requirement: €25,000.
• Foreign Company Branch: Full ownership by the parent company; no specific capital requirement.
• Free Trade Zone (FTZ) Company: Operates within free trade zones with tax exemptions. Minimum capital requirement: €50,000.
• International Business Company (IBC): Exclusively for activities outside TRNC, requiring non-resident ownership. Minimum capital requirement: €20,000.

Associated Costs:

• Registration Fees: Around €5,000 for FTZ companies.
• Bank Guarantee: Approximately 140,000 TL for LTDs (subject to change).
• Professional Fees: Monthly fees range from 50 to 250 GBP for legal and accounting services.

Procedural Steps:

1. Name Reservation: Submit proposed names for approval.
2. Preparation of Foundational Documents: Draft and notarize Memorandum and Articles of Association.
3. Document Submission: Submit required forms (MŞ1, MŞ2, MŞ3).
4. Capital Deposit: Deposit required capital in a TRNC bank account.
5. Completion of Registration: Obtain official Certificate of Incorporation.

Timelines: LTD and Branch: 4-6 weeks; FTZ and IBC: 3-4 weeks.

Tax Obligations: Corporate Tax at 10%, with FTZ exemptions. Income Tax adds 15% on profits. VAT at 16%, with FTZ and IBC exemptions.

Setting Up a Company in Turkey

Company Types Available to Foreigners:

• Limited Liability Company (LLC): Suitable for SMEs, allowing 1-50 shareholders and 100% foreign ownership. Minimum capital requirement: 10,000 TRY.
• Joint Stock Company (JSC): Ideal for larger businesses, requires at least one shareholder with a minimum capital of 50,000 TRY.
• Branch Office: Enables foreign company operations without a separate legal entity; no specific capital requirement.
• Liaison Office: For research and feasibility, but restricted from commercial activities.

Associated Costs:

• Registration Fees: Between 1,000 to 2,000 TRY.
• Notary and Translation Fees: Estimated 500 to 1,000 TRY.
• Bank Deposit: Required by some banks.

Procedural Steps:

1. Name Verification: Check availability via Central Trade Registry System (MERSIS).
2. Articles of Association: Draft and notarize.
3. Obtain Tax IDs: For the company and shareholders.
4. Capital Deposit: LLCs and JSCs require a 25% initial capital deposit.
5. Registry and Notarization: Register with the Trade Registry Office and notarize legal books.

Timelines: LLC: 1-2 weeks; JSC: 2-3 weeks; Branch Office: 2-4 weeks; Liaison Office: 2-3 weeks.

Tax Obligations: Corporate Tax at 25%. VAT standard rate of 18%, with some items at 1% or 8%. Social security contributions for employers are approximately 22.5% of employee gross salary.