Foreign Direct Investment Law No. 4875
Türkiye's investment legislation is built around the Foreign Direct Investment Law No. 4875 and its implementing regulation, alongside multilateral and bilateral investment treaties and sector-specific legislation.
The FDI Law was written to:
- encourage foreign direct investment
- protect the rights of investors
- align the definitions of investor and investment with international standards
- establish a notification-based system rather than an approval-based one
- increase the volume of FDI through streamlined policies and procedures
It sets out the principles that matter most to an incoming investor: freedom to invest, national treatment, protection against expropriation and nationalisation other than for public benefit and against compensation, freedom of transfer of profits and proceeds, access to national and international arbitration and alternative dispute settlement, valuation of non-cash capital, employment of foreign personnel, and the liaison office regime.
In practice this means a foreign investor establishes a Turkish company the same way a Turkish investor does. There is no foreign investment approval to obtain and no local partner requirement for ordinary commercial activity.
What "notification-based" actually obliges you to do
The trade-off for not needing approval is that you must report. Foreign-capital companies, branches and liaison offices file with the Ministry of Industry and Technology through E-TUYS:
- Activity Information Form — annually, by the end of May, together with the financial statements
- Capital Information Form — within one month of a foreign shareholder's capital payment
- Share Transfer Form — within one month of any share transfer
Filings require a designated authorised user holding a Turkish electronic signature, and that authorisation takes time to obtain. This is a genuine and frequently missed obligation: companies discover it when a deadline has already passed.
Bilateral investment treaties
Bilateral Agreements for the Promotion and Protection of Investments have been signed since 1962 with countries showing potential to improve bilateral investment relations. They define standards of treatment for investors and their investments, aim to create a stable investment environment, and provide for international arbitration of investor–state disputes.
Türkiye has signed bilateral investment treaties with more than ninety countries. Türkiye is a dualist state: a treaty must be ratified and promulgated before it forms part of the national legal system, so the number in force is lower than the number signed.
If treaty protection matters to your structure — and for capital-intensive or long-horizon investments it should — check the position for your specific jurisdiction rather than relying on a published list.
Double taxation treaties
Türkiye has an extensive double taxation treaty network covering most of its major trading and investment partners. A treaty allows tax paid in one state to be relieved against tax payable in the other, and typically reduces Turkish withholding rates on dividends, interest and royalties below the domestic rates.
For a foreign-owned Turkish company this is not an abstraction. The domestic dividend withholding rate is 15%; under many treaties it falls to 5% or 10% where the parent holds a qualifying participation. Claiming the reduced rate requires a certificate of residence and correct procedure — it is not automatic.
The same applies to service and royalty payments abroad, where the domestic rate is 20% and treaty relief is often available but must be substantiated at the time of payment.
Social security agreements
Türkiye has bilateral social security (totalisation) agreements with a substantial number of countries. Where an agreement applies, an employee who remains covered by the compulsory social security system of their home country is not liable for Turkish social security contributions, on production of the relevant certificate of coverage to the local SGK office.
This is worth confirming before an assignment begins. Without a valid certificate on file, full Turkish contributions are generally imposed — and recovering them afterwards is difficult.
Customs Union and free trade agreements
A Customs Union between Türkiye and the European Union has been in effect since 1996, allowing trade in industrial goods between Türkiye and EU member states without customs duties.
Türkiye has additionally concluded free trade agreements with a range of countries, with further agreements finalised or under negotiation. Together with the Customs Union, this framework is a large part of why international manufacturers use Türkiye as a second supply source serving the EU, the Middle East, the Black Sea region and North Africa.