UNDERSTANDING TURKISH COMMERCIAL LAWS AS A FOREIGNER

Introduction

Navigating the intricacies of Turkish commercial law is essential for any foreigner looking to conduct business in Turkey. The country’s legal framework offers a robust environment for business operations, but understanding the specific requirements, rights, and obligations under Turkish law is crucial for success. At Altun Legal, our English-speaking lawyers in Istanbul specialize in guiding foreign businesses through the complexities of Turkish commercial law, ensuring compliance and facilitating smooth business operations.

Overview of Turkish Commercial Law

Turkish commercial law is primarily governed by the Turkish Commercial Code (TCC), which regulates various aspects of business activities, including company formation, contracts, trade, bankruptcy, and competition. The TCC is complemented by other legislation, such as the Obligations Code, Labor Law, and Tax Laws, each playing a vital role in the legal landscape.

Company Formation and Business Structures

One of the first steps in understanding Turkish commercial law is to be familiar with the different types of business entities that can be established in Turkey:

  1. Limited Liability Company (LLC):
    • The most common form of business structure.
    • Requires a minimum of one shareholder and TRY 10,000 in capital.
    • Liability of shareholders is limited to their capital contribution.
  2. Joint Stock Company (JSC):
    • Suitable for larger enterprises, especially those considering public offerings.
    • Requires a minimum capital of TRY 50,000.
    • Shareholders' liability is limited to their share capital.
  3. Branch Offices:
    • A foreign company can establish a branch in Turkey.
    • Operates under the same legal entity as the parent company.
    • Must appoint a legal representative in Turkey.
  4. Liaison Offices:
    • Used for non-commercial activities such as market research.
    • Cannot engage in revenue-generating activities.
    • Requires approval from the Ministry of Industry and Technology.

Contract Law

Contracts are a cornerstone of commercial transactions. Turkish contract law is based on the Turkish Code of Obligations, which outlines the general principles governing contracts, such as mutual consent, lawful purpose, and clarity of terms. Foreign businesses should be aware that:

  • Written Contracts: While oral contracts are valid under Turkish law, written contracts are strongly recommended for clarity and enforceability.
  • Governing Law: Parties can agree on the applicable law for their contracts. However, certain mandatory provisions of Turkish law may still apply.
  • Dispute Resolution: Contracts can include arbitration clauses, allowing disputes to be resolved through arbitration rather than in Turkish courts.

Intellectual Property Rights

Protecting intellectual property (IP) is crucial for businesses operating in Turkey. The country has a comprehensive legal framework for IP protection, including:

  • Trademarks: Must be registered with the Turkish Patent and Trademark Office to be protected.
  • Patents: Also registered with the Turkish Patent and Trademark Office, patents provide protection for new inventions.
  • Copyrights: Automatic protection for original works, but registration is recommended for enforcement purposes.

Turkey is a signatory to international treaties like the Paris Convention and the Berne Convention, which further strengthens IP protection for foreign businesses.

Competition Law

Turkey has strict competition laws designed to promote fair competition and prevent monopolistic practices. The Turkish Competition Authority oversees these laws and has the power to impose fines and other sanctions on companies that violate them. Key areas of focus include:

  • Anti-Competitive Agreements: Agreements that restrict competition, such as price-fixing or market-sharing, are prohibited.
  • Abuse of Dominant Position: Companies with a dominant market position must not abuse their power to stifle competition.
  • Merger Control: Certain mergers and acquisitions must be notified to the Competition Authority for approval.

Labor Law

Understanding Turkish labor laws is essential for foreign businesses employing staff in Turkey. The Turkish Labor Law governs various aspects of employment, including:

  • Employment Contracts: Must be in writing if the duration exceeds one year.
  • Working Hours and Overtime: Standard working hours are 45 hours per week. Overtime is compensated with additional pay or time off.
  • Termination: Employers must have just cause for termination and may be required to pay severance and notice compensation.
  • Employee Rights: Employees are entitled to various rights, including annual leave, maternity leave, and social security benefits.

Taxation

Taxation is a critical area for foreign businesses in Turkey. The country has a comprehensive tax system that includes:

  • Corporate Income Tax: Levied at a flat rate of 25% on corporate profits.
  • Value Added Tax (VAT): Applied at rates ranging from 1% to 18% on goods and services.
  • Withholding Tax: Applied to certain types of income, such as dividends and royalties, with rates varying based on the income type and the applicable double taxation agreement.

Foreign investors should also be aware of Turkey’s extensive network of double taxation treaties, which can help avoid the double taxation of income earned in Turkey.

Dispute Resolution

In the event of a legal dispute, businesses can resolve issues through Turkish courts or alternative dispute resolution methods such as arbitration. Turkey is a signatory to the New York Convention, making the enforcement of foreign arbitration awards relatively straightforward. Additionally, mediation is increasingly encouraged in commercial disputes, offering a less adversarial approach to conflict resolution.

How Altun Legal Can Assist

Navigating Turkish commercial laws as a foreigner can be challenging, but with the right legal support, it becomes manageable. At Altun Legal, our English-speaking lawyers in Istanbul offer comprehensive services to help you comply with Turkish laws and achieve your business goals. Our services include:

  • Company Formation and Registration: We assist in choosing the appropriate business structure, drafting the Articles of Association, and completing all necessary registration processes with the Turkish Trade Registry.
  • Contract Drafting and Review: Our team ensures that your contracts comply with Turkish law while protecting your interests. We help draft, review, and negotiate contracts, including those related to partnerships, employment, and supply agreements.
  • Intellectual Property Protection: We offer services for registering and enforcing your trademarks, patents, and copyrights in Turkey. We also handle disputes related to intellectual property infringement.
  • Labor Law Compliance: We provide guidance on Turkish labor laws, helping you draft employment contracts, establish workplace policies, and handle employee disputes. We also assist with compliance matters related to social security and employee rights.
  • Tax Advisory: Our tax experts help you understand your tax obligations, optimize your tax structure, and ensure compliance with Turkish tax laws. We also provide advice on utilizing double taxation treaties to minimize tax liabilities.
  • Dispute Resolution: Whether through litigation, arbitration, or mediation, we represent your interests in any legal disputes. Our lawyers are experienced in handling complex commercial litigation in Turkish courts and international arbitration forums.
  • Competition Law Compliance: We advise on competition law matters, helping you avoid anti-competitive practices and navigate merger control regulations. We also represent clients in investigations and proceedings before the Turkish Competition Authority.
  • Regulatory Compliance: We help ensure that your business operations comply with all relevant Turkish laws and regulations, including those related to environmental, consumer protection, and industry-specific requirements.

Conclusion

Starting and running a business in Turkey as a foreigner involves navigating a complex legal landscape, but with the right guidance, it can be a rewarding experience. Understanding Turkish commercial laws is essential to ensuring compliance, protecting your business interests, and achieving long-term success.

At Altun Legal, our English-speaking lawyers in Istanbul are dedicated to helping foreign entrepreneurs and businesses thrive in Turkey. From company formation and contract management to dispute resolution and regulatory compliance, we offer a full range of legal services tailored to your needs.

Contact Us

If you are considering starting a business in Turkey or need assistance with any aspect of Turkish commercial law, don’t hesitate to reach out to us. Our team is here to provide expert legal support every step of the way.

This article is intended for general informational purposes only and not intended as a substitute for the advice and counsel of an attorney. If you want to contact an English-speaking lawyer in Istanbul for more information, you can contact our office.

aysegul

Posted by aysegul