Limited Liability Company (Ltd.)

Limited Liability Company (Ltd.)

A Turkish Limited Liability Company (Ltd.) is the go‑to vehicle for small and mid‑sized businesses. It combines limited shareholder liability with a simple governance structure and a moderate capital requirement, making it equally attractive to local entrepreneurs and foreign investors.

Key Features at a Glance

  • Governing Law: Turkish Commercial Code (TCC) No. 6102, Arts. 124 & 573‑644
  • Shareholders: 1 – 50 natural or legal persons
  • Minimum Capital: TRY 50,000 (effective 1 Jan 2024)
  • Limited Liability: Each shareholder is liable only up to the amount of capital subscribed
  • Management: At least one manager (may be a shareholder or a third party)
  • Complete Foreign Ownership: 100 % allowed in most sectors

Capital & Shares

  • Capital can be contributed in cash or in‑kind (assets valued by a court‑appointed expert).
  • Payment schedule: the subscribed capital must be paid within 24 months after registration.
  • Share transfers require a notarised agreement and Trade Registry registration; existing shareholders enjoy pre‑emption rights unless waived in the Articles of Association (AoA).

Management & Representation

  •  Board of Managers: One or more managers represent the company; their powers and limitations are set out in the AoA.
  •  Foreign Managers: May reside abroad but need a Turkish tax ID. Signing in Turkey usually triggers work/residence‑permit requirements.
  •  Liability: Managers are personally and severally liable for public debts (e.g., unpaid taxes & social‑security premiums).

Incorporation Process (3 – 5 working days)

  1. Name reservation & AoA draft via the MERSİS online portal.
  2. Notarise signatures of founders and managers.
  3. Pay Competition Authority fee (0.04 % of capital).
  4. File incorporation package with the Trade Registry (AoA, IDs, address proof, capital payment plan, etc.).
  5. Receive registration certificate; tax and social‑security numbers are issued automatically.
  6. Open the bank account; deposit capital within 24 months.

Tax Snapshot (July 2025)

  • Corporate Income Tax (CIT): 25 % (30 % for financial institutions). A 5‑point reduction applies to income derived exclusively from exports.
  • Dividend Withholding Tax: 15 % (treaty reductions possible; 0 % to Turkish corporate shareholders).
  • VAT: Standard 20 %; reduced 10 % and 1 % rates for specific goods & services.
  • Stamp Tax: 0.948 % on most documents (e‑invoices/e‑ledgers exempt).

Compliance Obligations

  • Maintain statutory books in Turkish Lira (Turkish or bilingual).
  • E‑ledger, e‑invoice, and e‑archive systems become mandatory once turnover or sector thresholds are reached.
  • Independent audit is required if, in two consecutive years, at least two of the following are exceeded: assets ≥ TRY 75 million, turnover ≥ TRY 150 million, employees ≥ 150.
  • Hold an annual general assembly and file an annual activity report.

Why Choose an Ltd.?

  • Limited liability and asset protection for shareholders.
  • Simple, low‑cost set‑up and administration.
  • Flexible profit‑distribution rules.
  • No local‑partner requirement for foreign investors.

Potential Drawbacks

  • Share transfers require notary & registry formalities (slower than a Joint‑Stock Company).
  • Capital cannot be refunded without a formal capital‑reduction process.
  • Managers’ personal liability for unpaid public debts.

Practical Tips for Foreign Founders

  • Obtain Turkish tax IDs for all foreign shareholders/managers early.
  • Expect detailed KYC checks when opening the bank account; allow extra time.
  • If managers will sign in Turkey, budget for residence/work‑permit processing.
  • Plan dividend repatriation using double‑tax treaties to reduce withholding.

Disclaimer — This information is provided for general guidance as of 17 July 2025 and does not constitute legal or tax advice. Always consult professional advisers for your specific project.

Sources

  • Ministry of Trade press release “Anonim ve Limited Şirketlerde Asgari Sermaye Tutarları Artırılmıştır” (effective 1 Jan 2024). :contentReference[oaicite:0]{index=0}
  • Pilc Law Insight — “Asgari Sermaye Tutarı 2024 Değişikliği”. :contentReference[oaicite:1]{index=1}
  • PWC Tax Summaries — “Turkey: Taxes on Corporate Income”, last reviewed 09 Apr 2025. :contentReference[oaicite:2]{index=2}
  • EY Global Tax Alert — “Increase of Turkish Corporation Tax Rates”, 2023. :contentReference[oaicite:3]{index=3}

Frequently Asked Questions (FAQ)

1. What is the minimum capital for a Turkish Ltd.?
TRY 50,000 for companies incorporated on or after 1 Jan 2024.
2. How many shareholders are required?
An Ltd. may be formed by a single shareholder and can have up to 50.
3. Do managers need to live in Turkey?
No, but non‑resident managers must obtain a Turkish tax ID and may need a work/residence permit if they will sign documents within Turkey.
4. How long does incorporation take?
Typically 3‑5 working days once all documents are ready.
5. Is an independent audit mandatory?
Only if at least two of the statutory size thresholds are exceeded for two consecutive years (assets ≥ TRY 75 m, turnover ≥ TRY 150 m, employees ≥ 150).
6. Can profits be distributed freely?
Yes, subject to shareholder resolution, after reserving the statutory general legal reserve (5 % of net profit until it reaches 20 % of capital).
7. What taxes apply to an Ltd.?
The standard corporate income tax rate is 25 %; dividends to non‑resident shareholders are generally subject to a 15 % withholding tax, which may be reduced by a tax treaty.
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