A Comprehensive Guide to Foreign Direct Investment (FDI) Regulations in Turkey

As Turkey continues to be a focal point for global investors due to its strategic geographical location and dynamic market, it steadily aligns its legislative infrastructure with international standards. Framed primarily by the Foreign Direct Investment Law №4875, the Turkish Commercial Code, and related secondary legislation, the current foreign investment regime is built upon the principles of transparency and the reduction of bureaucracy.

1. Core Approach: Equal Treatment and Open-Door Policy

The foundation of Turkey’s approach to foreign capital lies in the principle of “National Treatment”. Under this principle:

• International investors enjoy the exact same rights and obligations as domestic investors.
• As a rule, market entry for foreign investors is not subject to any pre-entry screening, prior approval, or vetting mechanisms.
• Investors can establish 100% foreign-owned companies (Joint-Stock or Limited Liability), open branches, or acquire shares in existing local companies across almost all sectors, provided there are no specific statutory restrictions.

2. Notification Basis Instead of Permission: The E-TUYS System

One of the most significant operational conveniences of the Turkish investment climate is that bureaucratic procedures are handled via “post-activity notification” rather than “prior approval.”

• Mandatory Electronic Notification: After completing incorporation or share transfer procedures, foreign-owned entities are legally required to register and submit disclosures through E-TUYS (Electronic Incentive Application and Foreign Capital System), a digital platform managed by the Ministry of Industry and Technology.
• What Must Be Reported?: Changes in the shareholding structure, capital increases or reductions, amendments to the articles of association, and the mandatory annual “Investment Information Form” must all be declared digitally through this system.

3. Shareholding Obligations Under the Turkish Commercial Code (TCC)

To ensure corporate transparency, international investors acquiring shares or incorporating entities in Turkey must pay close attention to specific statutory thresholds outlined in the TCC:

• Critical Shareholding Thresholds: If a real or legal person’s direct or indirect shareholding in a company reaches, exceeds, or falls below the thresholds of 5%, 10%, 20%, 25%, 33%, 50%, 67%, or 100%, notification is legally mandatory.
• Registration Timeline: Such changes in shareholding ratios must be registered with the relevant Trade Registry Directorate and published in the Trade Registry Gazette within 10 days of the occurrence.
• Single-Shareholder Disclosure: If all shares of a company become concentrated in the hands of a single foreign investor (real or legal person), this “Single-Shareholder” status must also be explicitly registered and announced.

4. Restricted and Strategic Sectors Subject to Oversight

Despite the overarching “open-door” policy, certain sectors are excluded from the general liberal regime and remain subject to strict regulations and prior approvals to protect national security, public order, and financial stability:

• Regulated Sectors (Regulatory Authority Approvals): Foreign actors planning to invest in strategic fields such as banking, insurance, financial leasing, energy, telecommunications, and media must obtain a prior license or approval from the relevant regulatory authorities (e.g., BRSA/BDDK, SEDDK, EMRA/EPDK, ICTA/BTK, RTÜK) or the Ministry of Trade before commencing operations.
• Industrialization Executive Committee (SAİK) Oversight: Major investments directly affecting national security, critical technologies, the defense industry, or domestic production capabilities fall under the screening and intervention mandate of SAİK.
• Real Estate Acquisition Restrictions: Real estate acquisition (land, buildings, etc.) by foreign-capital companies is subject to administrative and military security clearances at the Governorate level to ensure the property does not fall within military forbidden zones, security zones, or strategically sensitive border areas.

5. Foreign Personnel Employment and Work Permits

Turkey offers operational flexibility regarding work permit procedures to attract skilled foreign labor and global talent. Key regulations include:

• Foreign Direct Investments with Special Features: Companies exceeding certain thresholds in turnover, export volume, or capital size are granted the status of an “Investment with Special Features.” Work permit applications for the foreign “key personnel” (managers, experts, etc.) of these companies are processed under expedited and exceptional rules.
• Revaluation Rate Adjustments: The minimum turnover and capital thresholds required to qualify for this special status are updated annually based on the official “Revaluation Rate”.
• Liaison Office Exemptions: Liaison Offices (established strictly for market research and representation purposes, with no commercial activity) are granted a simplified work permit for a maximum of one foreign representative holding a power of attorney from the parent company, without being subject to standard local employment ratio requirements.

Conclusion: Turkey’s foreign investment framework offers global investors a modern, legally secure environment with high operational freedom. While standard commercial operations are smoothly facilitated via digital notifications (E-TUYS), the state carefully maintains its regulatory and approval mechanisms over strategic sectors like finance, energy, and defense.

This article is for informational purposes only and does not constitute formal legal advice. For specific legal assistance regarding property acquisition, you can contact our office.