Foreign Direct Investment

Also known as: FDI, Foreign Investment, Foreign Capital, Foreign Investor, Doğrudan Yabancı Yatırım

In short

A foreign investor establishing a new company or branch in Turkey or acquiring shares in an existing company; governed by Foreign Direct Investment Law No. 4875.

Foreign direct investment is a foreign individual or legal entity establishing a new company or branch in Turkey or acquiring shares in an existing company. Portfolio investments, such as acquiring less than 10% of shares on the stock exchange, fall outside its scope.

Key Principles

The key principles of Foreign Direct Investment Law No. 4875 are:

Equal treatment: Foreign investors are treated equally with domestic investors.
Freedom to invest: As a rule, no prior permission is needed to set up a company or become a shareholder in an existing one.
Protection against expropriation: Foreign investments cannot be expropriated unless required by the public interest and against compensation.
Free transfer: Dividends, sale and liquidation proceeds may be freely transferred abroad.
Dispute resolution: International arbitration may be available where its conditions are met.

Investment Structure

Foreign investors set up their companies under Turkish Commercial Code No. 6102 by the same procedure as companies with domestic shareholders. In practice, joint stock companies and limited liability companies are most often chosen. For the choice of structure, incorporation documents and steps, see our guide Setting Up a Company in Turkey.

Points to Watch

Sector-specific approvals: Banking, insurance, energy, media, civil aviation and similar sectors require licences and approvals from the relevant regulator; some sectors have limits on foreign ownership.
Reporting: Companies with foreign capital regularly report their capital and activity information to the Ministry of Industry and Technology.
Real estate acquisition: Real estate acquisitions by companies with foreign capital are subject to separate approval and notification rules.
Competition law: Acquisitions that confer control of an existing company require Competition Board approval if the turnover thresholds are met; see Acquisition.
Shareholder relations: In investments with a local partner, management, share transfers and exit should be governed by a shareholders’ agreement.

Frequently Asked Questions

Does a foreign investor need permission to set up a company in Turkey?

As a rule, no. Foreign investors are treated equally with domestic investors and are free to establish a company or become a shareholder in an existing one. In regulated sectors such as banking, insurance, energy and media, a licence or permit from the relevant authority is required.

Can a foreign investor transfer profits abroad?

Yes. Law No. 4875 guarantees that foreign investors may freely transfer net profits, dividends, sale and liquidation proceeds and compensation abroad through banks. Tax obligations are assessed separately.

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