At a glance
| Subsidiary (Ltd. Şti. or A.Ş.) | Branch | |
|---|---|---|
| Legal status | Separate Turkish company | Part of the foreign parent |
| Parent's liability | Limited to capital (subject to rules on public debts) | Unlimited: the parent answers for the branch's debts |
| Minimum capital | TRY 50,000 (LLC) or TRY 250,000 (JSC) | None |
| Management | Managers or board; no residence requirement | Branch manager resident in Türkiye with full authority |
| Scope of business | Any lawful activity in its articles | Only the parent's own business scope |
| Corporate tax | 25% on worldwide income | 25% on Turkish-source income |
| Profits to the parent | Dividend: 15% withholding (treaty may reduce) | Profit remittance: 15% withholding (treaty may reduce) |
| Incentives | Available | Available |
| Exit | Sell the shares or liquidate | Close the branch through liquidation |
Liability: the main difference
A subsidiary's creditors can generally claim only against the subsidiary's assets. A branch's creditors, including the Turkish tax office, can pursue the foreign parent. For businesses with contract, employment or product risk, this is usually the deciding factor.
Tax: closer than people think
Rate: both pay 25% corporate tax (30% for financial companies) and the 10% domestic minimum tax.
Scope: a subsidiary is taxed on worldwide income; a branch only on income from Türkiye.
Repatriation: dividends from a subsidiary and profits transferred by a branch both attract 15% withholding, reduced by many treaties.
Transfer pricing: both must price transactions with the parent at arm's length.
Losses: a branch's losses may be usable by the parent in its home country, depending on local rules; a subsidiary's losses stay in Türkiye.
Practical differences
Set-up documents: a branch needs more parent company documents, apostilled and translated, and the parent's financial statements.
Banking: banks often treat a subsidiary as a local customer and a branch as an extension of a foreign company.
Selling the business: a subsidiary can be sold by transferring shares; a branch cannot be sold in the same way.
When a branch makes sense
A defined construction or engineering project.
A regulated business that the parent's licence must cover.
A group that wants the Turkish results consolidated into the parent's own tax return.
Frequently asked questions
Can I convert a branch into a subsidiary later?
Not directly. Usually the assets and business are transferred to a new Turkish company and the branch is closed, which has tax consequences to plan for.
Is a liaison office an alternative?
Only if you will not trade. A liaison office cannot earn income; it is limited to market research and promotion.
Does a branch need an auditor?
Audit obligations depend on the applicable legal thresholds, the sector and the legal structure. They should be assessed for the specific branch and its parent company.
Choosing a structure?
Our Legal and Tax teams compare the branch and subsidiary options for your group and home country.
This page provides general information and is not legal or tax advice. Every situation is different; talk to us before you act.