Liaison Office in Turkey: FDI Law Article 3(h), 3-Year Permit and No Commercial Activity

1. Foreign Direct Investment Law Article 3(h) authorises liaison offices on one express condition

Foreign Direct Investment Law No. 4875 Article 3(h) is the statutory foundation for liaison offices opened by companies incorporated under foreign law. The provision authorises the competent investment authority to permit foreign companies to open liaison offices in Turkey provided that they do not engage in commercial activities in Turkey.

This condition defines the legal nature of the office. The Turkish presence exists to perform permitted non-commercial representative functions for the foreign parent; it is not a revenue-producing Turkish business vehicle. A foreign company that needs to sell, invoice, sign commercial contracts in its own operating capacity or earn income through a Turkish establishment should analyse a branch or Turkish subsidiary instead.

The FDI Law should also be read with the Regulation for Implementation of the Foreign Direct Investment Law and the current Ministry/Investment Office application guidance. Those rules govern licensing, reporting, duration, extension, changes and closure.

2. A liaison office is designed for non-commercial representation and preparatory functions

A liaison office may be appropriate where the foreign parent wants a controlled presence in Turkey before creating a revenue-generating operation. Common authorised purposes include market research, promotion of the foreign company’s products or services, representation and hosting, control and inspection of suppliers in Turkey, technical support, communication and information transfer, and regional management functions where the Ministry approves that activity category.

The permitted purpose is not self-selected after establishment. The foreign company describes the work to be conducted in the application and undertakes that the office will not engage in commercial activity. The licence therefore matters both as an authorisation and as a boundary for the office’s Turkish operations.

The office should keep its actual activities aligned with the licensed purpose. Internal job descriptions, website descriptions, business cards, lease use, expense records and correspondence should not portray the office as a seller or contracting commercial establishment if it is licensed only as a liaison office.

A company that already knows it needs full commercial operations should compare the non-commercial liaison office with our Foreign Company Branch in Turkey guide and Branch or Subsidiary in Turkey?.

3. The prohibition on commercial activity is not optional

The Article 3(h) condition is categorical: a liaison office cannot be used to conduct commercial activity in Turkey. It should not issue sales invoices for Turkish business, collect customer revenue as an operating office, sell goods or services in its own Turkish presence, or function as a hidden branch while relying on a liaison-office licence.

The legal analysis should focus on substance, not only labels. Calling a document “coordination,” “consulting support” or “marketing assistance” does not make the underlying activity non-commercial if the Turkish office is in fact performing revenue-generating business for consideration.

The foreign parent may of course conduct lawful cross-border business with Turkish customers from abroad under the rules applicable to that business. The liaison-office question is narrower: the licensed Turkish liaison office itself cannot become the vehicle through which commercial activity is carried out in Turkey.

If the business model changes after establishment, the solution is not to stretch the liaison-office licence. The group should move the commercial functions to a legally appropriate vehicle and complete the corporate, tax, employment and licensing steps required for that vehicle.

4. A Ministry licence is required; the initial operating period is currently a maximum of three years

Current official Investment Office guidance states that a foreign company may establish a liaison office after obtaining a licence from the Ministry of Industry and Technology, General Directorate of Incentive Implementation and Foreign Investment. The company applies directly or through an authorised representative.

The official guidance states that the Ministry may grant an initial operating licence for a maximum of three years. The approved period should be read from the actual licence; the fact that three years is the maximum does not convert every application into an automatic three-year entitlement.

Complete and accurate establishment applications are stated to be concluded within fifteen working days from submission. That administrative processing target assumes the requested information and documents are complete and correct. Deficiencies must therefore be eliminated before filing, especially in foreign corporate documents and authority evidence.

Financial activities subject to special legislation—such as money and capital markets or insurance—are evaluated by the competent specialised authorities under their own legislation. The ordinary liaison-office route cannot be used to bypass sector licensing.

5. The application requires a defined foreign-parent and activity file

The current official document list begins with the prescribed liaison-office application form. The foreign company must also submit a statement explaining the activities to be carried out by the Turkish liaison office, an undertaking that the office will not conduct commercial activity, and evidence that the person signing that undertaking is fully authorised by the foreign company.

A certificate of activity for the foreign parent must be provided. Current guidance also requires financial information in the form of the relevant company activity report or balance sheet and income statement. These documents allow the authority to identify an operating foreign company behind the proposed Turkish representative office.

The file must include an authorisation certificate for the individual or individuals appointed to conduct liaison-office activities. If establishment procedures are handled by another representative, a power of attorney is required for that procedural representative.

The authority documents should be drafted consistently. The person signing the non-commercial undertaking, the person authorised to establish the office, and the person appointed to conduct office activities may have different roles; the documents should identify each role clearly instead of relying on a broad corporate letter whose Turkish legal effect is uncertain.

6. Foreign documents must follow the applicable authentication and translation route

The certificate of activity and other foreign public/corporate documents must satisfy the authentication route applicable between the issuing state and Turkey. The official guidance expressly recognises verification by the relevant Turkish Consulate or the Hague Apostille Convention route where applicable.

An apostille does not translate a document. After authentication, documents submitted in a foreign language must be presented with the Turkish translation and notarial formalities required by the Turkish authority. Names, company numbers, registered office information and signatory titles should remain consistent across the original and translation.

The parent should obtain sufficiently current corporate evidence. An old corporate extract can create practical filing problems even where it was valid when originally issued. The document package should be planned backwards from the Turkish filing date to avoid repeating foreign notarisation, apostille and translation work.

If Turkish counsel will complete the filing, the power of attorney should contain the authority needed for the Ministry, tax, notification and related establishment steps. For the general foreign-document structure used in corporate matters, see our foreign branch registration guide.

7. Extension is not automatic; market-research and promotion-only offices are not extended

Before the operating licence expires, the foreign company can apply for an extension where the licensed activity is eligible. Current official guidance states that the Ministry evaluates the liaison office’s previous-year activities, business plan, future objectives in Turkey, expenditure and number of employees when considering an extension.

A specific current rule is especially important: the tenure of liaison offices licensed to conduct market research or promotion of the foreign company’s products or services is not extended. A company that establishes an office only for those purposes should therefore build the limited operating horizon into its Turkish market-entry plan from the beginning.

For other eligible activity categories, the extension period depends on the licensed function and the Ministry’s evaluation under the current Regulation/guidance. The correct expiry date is the date written in the Ministry licence or extension decision, not an assumed evergreen status.

Extension applications should be filed before expiry. The current guidance states that complete and accurate extension applications are also concluded within fifteen working days. Waiting until after expiry creates an avoidable compliance problem because the office’s authority is time-limited.

8. Tax registration, lease and later changes trigger one-month notification rules

After establishment, current official guidance requires copies of the liaison office’s tax registration and tenancy agreement to be submitted to the General Directorate within a maximum of one month. This is a direct post-establishment compliance obligation and should be scheduled at the same time as premises and tax steps.

Changes in liaison-office representative or the foreign company’s title must also be notified within a maximum of one month following the change. For an address change, the office should prepare the new tenancy documentation; for a representative change, the new authorisation certificate is required; and for a foreign-parent name change, the relevant corporate evidence must be supplied.

These notification duties are particularly important for international groups because changes may originate abroad. A foreign merger, rebranding, officer change or group restructuring should therefore trigger a Turkish liaison-office compliance check rather than being treated as a foreign-only corporate event.

The office should keep a compliance calendar recording licence expiry, reporting deadlines, tax/lease submissions and corporate changes. The non-commercial nature of the office does not remove administrative reporting duties.

9. A liaison office has Turkish tax-registration obligations even though it cannot conduct commercial activity

The prohibition on commercial activity does not mean the office is invisible to Turkish tax administration. The current official establishment framework requires tax registration and requires evidence of that registration to be sent to the investment authority within one month.

The office’s operating expenses are funded by the foreign parent rather than by Turkish commercial revenue generated by the liaison office. Transfers should be documented so that the funding source and non-commercial use are clear. Payroll, rent, professional fees and operating costs require proper Turkish accounting and employment compliance even where the office does not earn business income.

A liaison office should not convert parent funding into a mechanism for collecting customer payments or booking revenue. If Turkish revenue activity is required, a branch or company structure should be evaluated with the corresponding corporate and tax consequences.

For foreign groups moving from representative presence to a Turkish company, our 100% Foreign Ownership of a Turkish Company guide explains the general investment-law framework.

10. A liaison-office licence and a foreign employee’s work permit are separate authorisations

Opening the office does not itself grant a foreign national a right to work in Turkey. Work authorisation is governed separately by International Labour Force Law No. 6735 and the regulations administered by the Ministry of Labour and Social Security.

Current official Investment Office work-permit guidance contains a specific rule for liaison offices of enterprises that fall within the scope of Qualified Foreign Direct Investment. In that framework, the Ministry of Labour and Social Security may grant a work permit to a maximum of one foreigner holding an authorisation certificate, provided the liaison office has the required operating licence and the permit remains limited to the office’s activity period.

That rule should not be misstated as a universal automatic right for every liaison office. The enterprise must fall within the qualified-FDI framework and the separate work-permit conditions must be met. A foreign parent should therefore coordinate liaison-office licensing with the intended employee’s immigration/work status before relocation.

Turkish employees of the liaison office remain subject to Turkish employment and social-security rules. The office’s non-commercial status does not remove employer obligations merely because the foreign parent funds the payroll.

11. Liaison office, branch and subsidiary serve different legal functions

A liaison office is the narrowest vehicle: it represents the foreign company but cannot conduct commercial activity in Turkey. A branch can conduct commercial activity and is registered under TCC Article 40(4), but it remains an establishment of the foreign parent rather than a separate legal person. A Turkish LLC or JSC is a separate Turkish legal entity with its own share capital and corporate organs.

The choice should follow the actual Turkish activity. If the goal is market observation, non-commercial promotion, supplier coordination or similar licensed representative activity, the liaison office may fit. If the Turkish operation must sign and perform commercial contracts, issue invoices or earn local revenue, the branch or subsidiary route is the legally appropriate analysis.

For the branch route, see Foreign Company Branch in Turkey: TCC Article 40. For structural comparison, see Branch or Subsidiary in Turkey for a Foreign Company?.

A liaison office should therefore not be chosen merely because it appears administratively lighter. The business model must remain within the no-commercial-activity condition for the entire licensed period.

12. Closure requires a tax-office termination statement and final notification

When a liaison office terminates operations, current official guidance requires the office to furnish the General Directorate with a statement of termination obtained from the relevant tax office. Closure should therefore be coordinated with premises termination, employment/social-security steps, tax closure and the Ministry file.

The official guidance states that liaison offices may not claim transfers of funds except for balances remaining upon termination and liquidation. Final bank movements should therefore correspond to the closure process and documented residual balance rather than new commercial activity.

Records should be retained in accordance with applicable Turkish tax, employment and document-retention rules. Closing the Ministry licence does not erase liabilities created during the office’s operation.

Conclusion

A liaison office in Turkey is a licensed, non-commercial representative presence of a foreign company. Foreign Direct Investment Law No. 4875 Article 3(h) makes the prohibition on commercial activity an express legal condition. Current official guidance provides a maximum three-year initial licence, a fifteen-working-day processing target for complete applications, one-month post-establishment and change notifications, and a specific no-extension rule for market-research or promotion-only offices.

The decisive question is therefore functional: if the Turkish presence must earn revenue or perform commercial activity, a liaison office is the wrong vehicle. The foreign company should select the corporate structure that matches its actual operations before staff, premises and contracts are committed.