Other Company & Business Types
COMMANDITE COMPANIES
A Commandite Company is a type of company established to carry out a business under a trade name. Whereas the liability of some shareholders is limited to the capital subscribed and paid by the shareholder (commanditer), for some shareholders there is no limitation of liability. The liability of legal entities will be in proportion to their shares. There is no minimum capital requirement. The rights and obligations of the shareholders are determined by the Articles of Association.
COLLECTIVE COMPANIES
A Collective Company is similar to a Commandite Company, except only real persons can be shareholders of a Collective Company and the liability of the shareholders is limited to the capital subscribed and paid by the shareholder. Like a Commandite Company, a Collective Company is set op carry out a business under a trade name without a requirement of minimum capital, where the rights and obligations of the shareholders are also set out in the Articles of Association.
JOINT VENTURES
In Turkish tax and legal system, there are three types of joint ventures which are JV with corporate tax liability, consortiums and ordinary partnerships. The JV type formed for this project is consortium and thus consortiums are summarized below.
If the duties of each partner are defined clearly in a partnership agreement signed between the partners and the employer accepts this, this deal will be classified as “consortium.” In this case, each member of consortium will be responsible for their own revenues and expenditures individually which means that every partner should bear the consequences of its performances and the generated profit or loss for all partners shared separately. Accordingly, under the Turkish tax law, every member of the consortium will be liable to local corporation tax, VAT and withholding tax according to their own tax status so far as their commercial or professional service incomes are concerned.
Please note that it is also possible to create another type of presence in Turkey, called “project office”, without being subject to the requirements of the Foreign Investment Legislation as far as a specific project is concerned ( no minimum capital and no trade registry requirement). Although the Turkish legislation does not contain clear and adequate provisions, in practice for specific projects, foreign companies establish project offices during the period of project. These project offices liquidate when the projects are completed. Since the project offices are not registered to Trade Registry Office, they could be confronted with some difficulties in business life in comparison with a branch, however it is easier to establish and liquidate project offices then branches.
According to the Turkish Income Tax Law Article 37, the content of should considered as a commercial activity and the income obtained from such an activity is considered as commercial income. Foreign entities’ commercial income obtained in Turkey through their fixed place of business or permanent representative will be subject to the Turkish income tax.
PROJECT OFFICE
Project offices are formed by foreign legal entities to complete a certain project in a specified time according to the written agreement. Written agreement is mandatory to form a project office. Project offices have not a legal entity and it is not registered into Trade Registry.
Project offices are treated as nonresident limited liability companies for tax purposes and only profits generated in Turkey shall be subject to corporation tax. Project offices are subject to corporation tax, VAT and withholding tax. Project offices shall be subject to same corporation tax and withholding income tax rates with companies.
Upon completion of the project, project office shall be liquidated and closed.
This publication has been prepared for informational purposes only. None of information contained in this publication shall constitute legal, tax, accounting advice.