Company Setup in Turkey usually stalls on one question. Branch or subsidiary?
Most UAE owners treat it as paperwork. It isn’t. The structure you pick decides who answers for a bad contract, how much tax leaks out when profits go home, and how painful it is to change course later. Let’s sort through it properly.
What is the difference between a branch and a subsidiary in Turkey?
A branch is your UAE company, operating in Türkiye. No new legal person gets created. Whatever the branch does, your parent company does.
A subsidiary works differently. You incorporate a Turkish company, usually a limited company (Ltd. Şti.), or a joint-stock company (A.Ş.) if you’re building something bigger, and your UAE entity holds the shares. The new company signs its own contracts, keeps its own books and has its own managers.
People also ask about liaison offices. They can scout the market and promote your brand, but they can’t sell anything or issue invoices. They’re a way to test the water, not a business structure.
| Branch | Subsidiary | |
| Legal identity | Part of the UAE parent | Separate Turkish company |
| Liability | Sits with the parent | Generally stays in the subsidiary |
|
Minimum capital |
none set by statute for a branch | TRY 50,000 for a limited company (Ltd. Şti.), and TRY 250,000 for a joint-stock company (A.Ş.). |
| Corporate tax | 25% on Turkish profits, | for both structures. |
| Profit sent home | 15% withholding on remittance | 15% withholding on dividends |
| New investors | Not possible | Possible |
| Exit | Close, or transfer assets | Sell shares, or liquidate |
Note: These minimums took effect on 1 January 2024. Existing companies below the minimum must increase their capital by 31 December 2026.
Should a UAE company open a branch or a subsidiary?
It comes down to how seriously you plan to operate in Turkey.
Say a Dubai furniture trader wants to supply two Istanbul retailers. Same invoices, same management, one part-time rep on the ground. A branch fits that fine. Compare a logistics group that’s leasing a warehouse, hiring forty people and talking to a Turkish investor. That group should form a subsidiary, and the sooner the better.
Branches suit operations that stay small, stay close to Dubai and stay tied to the parent’s existing business. Subsidiaries suit anyone who wants a separate local entity, expects big contracts or may sell shares someday. The trade-off is simple. A branch costs less to start. A subsidiary gives you more room to grow.
Who carries the risk?
With a branch, the risk lands on you. A Turkish supplier with an unpaid invoice can pursue your UAE company directly, because the branch and the parent are the same legal person.
A subsidiary puts a wall between the two. Creditors generally pursue the Turkish company rather than you. That wall holds only if you respect it. A parent guarantee on the subsidiary’s bank loan gives lenders a route back to you, so think carefully before signing one. In practice, limited liability is the default position, not an absolute shield.
If your Turkish operation will carry staff, stock or big contracts, lean toward the subsidiary. Judge by what you’ll actually do there, not by what looks simplest on day one.
How are the two structures taxed?
Most owners ask this first, and the honest answer is “about the same.” Both structures pay Turkey’s general 25% corporate tax on Turkish profits. The gap shows up when the money leaves.
Take a simple example. The Turkish operation earns TRY 1,000,000 of taxable profit. At the 25% corporate tax rate, TRY 250,000 goes to tax, which leaves TRY 750,000. At the 15% withholding rate on remittances or dividends, TRY 112,500 is held back, so about TRY 637,500 reaches Dubai. The mechanism differs between a branch and a subsidiary, but the bill looks similar.
Treat this as an illustration, not a tax estimate. It leaves out other items that can change the result, such as Turkey’s minimum corporate tax and any treaty relief. Have a tax professional check your figures before you plan around any number.
The UAE–Türkiye double-taxation treaty may reduce the withholding rate if you meet its conditions. Whether you qualify depends on your ownership, your paperwork and your UAE corporate tax position.
One more thing people skip: related-party deals. Management fees, intercompany loans and services between your Dubai company and the Turkish operation fall under transfer pricing rules. Charge each other what strangers would charge, and keep the documents to prove it.
What does each structure cost?
Cheap registration can turn into expensive ownership. Look past the filing fee.
Setup costs include professional fees, any required capital, authenticated and translated UAE documents, and a registered office. Running costs include accounting, tax returns, payroll, social security, banking and legal support.
A branch skips the capital minimum and the separate board. It still needs proper Turkish bookkeeping, though, and that surprises some owners. Small, steady operations often cost less as branches. Growing ones outgrow them quickly.
What documents do you need?
Start with who’s signing. A branch runs on your UAE company’s own paperwork: its incorporation papers, a board resolution agreeing to open in Türkiye, and the name of whoever will manage the branch day to day. If that person acts for you, add a power of attorney.
A subsidiary asks for more, because you’re building a company from scratch. The registry wants to know who the shareholders are, who will manage, and what the articles of association say. Resolutions come next, and a power of attorney if anyone signs on your behalf.
Then comes the part that trips people up. Picture a Dubai owner who gets a full set of documents stamped, only to learn the Turkish registry wanted a different attestation route. That’s weeks gone. UAE documents usually need a notary and an apostille, or ratification by a Turkish consulate, followed by a sworn translation into Turkish. Ask the receiving authority which route applies before you print a single page.
Can you do it from Dubai? Mostly. An authorised representative can handle a lot of the work. Some steps still call for originals or a personal appearance, and banks run their own checks. A registered company still has to earn its bank account.
What can each structure do, and what if plans change?
Both can sell to Turkish customers and hire staff within the activities you register, and neither one excuses you from payroll and social security. A branch’s contracts bind your UAE company. A subsidiary binds only itself.
Plans change, so think ahead. Only a subsidiary has shares, so only a subsidiary can take in investors. Turning a branch into a subsidiary isn’t a rename. You form a new company and move contracts, staff and assets across, after legal and tax review. And if your UAE parent closes or changes hands, a branch feels it immediately. A subsidiary carries on as its own entity, though a new owner can still stir up issues.
A quick checklist before you decide
Run through these and read the answers together:
- Will you sign contracts or invoice locally?
- Will you hire staff, hold stock or lease an office?
- Do you need a separate legal entity?
- How much liability can the parent absorb?
- What will setup and yearly compliance cost?
- How will profits get back to the UAE?
- Might outside investors join later?
- What would closing the operation involve?
One “yes” rarely settles it. The pattern across your answers usually does.
Frequently asked questions
What is the main difference between a branch and a subsidiary in Turkey?
Think of a branch as your UAE company with a Turkish address. A subsidiary is a different company altogether, one that happens to be owned by yours. That’s why liability, contracts and investors all work differently.
Can a UAE company own 100% of a Turkish subsidiary?
Yes, in most sectors. Turkey doesn’t require a local partner for most business activities, but some regulated sectors have limits, so check your activity before you plan the shareholding.
Is a Turkish branch or subsidiary better for tax purposes?
Neither one wins on rate alone. Both pay 25% corporate tax, and both face withholding when profit goes home. Where they differ is in cost, paperwork and how your income is structured, so the answer is specific to you.
Is the UAE parent company liable for a Turkish branch’s debts?
It is. A branch isn’t a separate company, so a Turkish creditor can come after the parent directly. Have a professional read your contracts and guarantees before you sign anything.
Can profits from a Turkish branch or subsidiary be transferred to the UAE?
Yes, but expect withholding. Turkey currently applies 15% to branch remittances and dividends, and the UAE–Türkiye treaty may lower that if you qualify. Build the withholding into your payout plans.
Conclusion
A branch extends your UAE company. A subsidiary gives you a separate Turkish one. Liability, tax, cost and future plans should drive the choice, and none of them should decide it alone.
Rules and rates move, so check them before you commit. If you’d like a second opinion on your Company Setup in Turkey, Dubai Business & Tax Advisors (DBTA) can talk through your options and help you pick the structure that suits your business.
