How To Become A Sole Proprietor In Turkey
October 2022: A detailed guide on how an IT specialist with Turkish citizenship can register as a business entity
The market for IT recruitment is changing all the time. In our experience, many European employers have shifted their attention to Asia, especially to Turkey. Companies are hungry for high-quality developers and other professionals to cover their needs and drive their projects forward. This country has many such talents to offer!
However, it’s necessary to be a business entity to work with foreign companies and receive income from abroad legally. The easiest one to register for a programmer or similar profession is a sole proprietorship. We’ll describe how to get such a status step by step and what to do with your health insurance being a self-employed person.
However, it’s necessary to be a business entity to work with foreign companies and receive income from abroad legally. The easiest one to register for a programmer or similar profession is a sole proprietorship. We’ll describe how to get such a status step by step and what to do with your health insurance being a self-employed person.
The Most Optimal Choice
There are several reasons why this business form is convenient for individual self-contractors from Turkey:
There are several reasons why this business form is convenient for individual self-contractors from Turkey:
- Low one-time setup fees (about ₺2500 - 3000)
- Status of a personal income taxpayer (not a corporate one, which is a fixed 23% for 2022). The rate depends on the amount you earn. For example, if your income is up to ₺32,000 per month, you pay 15%. Read about other tax brackets in detail here
- Simple registration process (you can do it online on your own or through a financial consultant/accountant)
- No need to have a minimum share capital (if you decide to open an LLC, there should be at least ₺10,000 in your bank account)
- Simple closing procedure (you can do it at any time, while for LLC the liquidation process usually takes about a year)
Setting Up A Sole Proprietorship
If you delegate this task to a financial consultant or accountant, they’ll do everything for you. But the process is not complicated: you can do it yourself through e-Devlet.
Step 1: Preparing Documents
Step 2: Filling Out the Online Application
Go to e-Devlet and find the section called Interactive Tax Office (İnteraktif Vergi Dairesine). Type in all the required information (you’ll find it in the documents you’ve prepared) and attach files if necessary. The procedure is user-friendly, with clear instructions and stages.
A tip: don’t use consultant, consulting, or similar vague words when drafting a contract with a foreign company. Instead, target professions like software developers (or any other IT-related). You’ll get a 50% percent exemption from the income tax rate if you provide software services to employers from abroad.
If you delegate this task to a financial consultant or accountant, they’ll do everything for you. But the process is not complicated: you can do it yourself through e-Devlet.
Step 1: Preparing Documents
- Identity card
- Lease contract of your office (it can be a flat/house you rent, but you’ll have to pay 20% of withholding tax. If the place belongs to you or your family member, the tax is not levied. You’ll need to prepare a title deed in this case)
- The photo that meets specific requirements (try this website to get a suitable image using your phone)
- Notarized declaration of signature (performed by notaries public)
- Tax certificate (get one online through the website of the Turkish Revenue Administration)
Step 2: Filling Out the Online Application
Go to e-Devlet and find the section called Interactive Tax Office (İnteraktif Vergi Dairesine). Type in all the required information (you’ll find it in the documents you’ve prepared) and attach files if necessary. The procedure is user-friendly, with clear instructions and stages.
A tip: don’t use consultant, consulting, or similar vague words when drafting a contract with a foreign company. Instead, target professions like software developers (or any other IT-related). You’ll get a 50% percent exemption from the income tax rate if you provide software services to employers from abroad.
Health Insurance
As you know, there is an obligatory healthcare system in Turkey. It can be roughly divided into 2 categories: public (subsidized by the government) and private (paid by individuals).
If you are hired as a private person, everything is paid for by your employer (SGK). Since it’s not your case, you’ll have to choose something else. The options are as follows:
Popular private health insurance providers:
- Axa
- Mapfre
- Allianz
- Ankara Sigorta
- AKSigorta
Summing Up
All in all, there are 2 ways to work and receive income in Turkey without breaking any laws. You either get hired in-house or register as a business entity and sign a contract with the company you like.
The first scenario is less likely to happen due to some legal implications of hiring local employees by foreign companies (especially those that do not have a branch in Turkey). The second one is the most common way of cooperating with employers from other countries.
A tip: discuss the amount of taxes and health insurance contributions during the interview with the company. Many of them are ready to increase your monthly payments to cover these expenses.
We hope our article will help you get the necessary status of a sole proprietor to work internationally!
As you know, there is an obligatory healthcare system in Turkey. It can be roughly divided into 2 categories: public (subsidized by the government) and private (paid by individuals).
If you are hired as a private person, everything is paid for by your employer (SGK). Since it’s not your case, you’ll have to choose something else. The options are as follows:
- Bag-Kur. This system is designed for self-employed people. There are many contribution levels: the more you pay, the more services you can use for free. The disadvantage of Bag-Kur is that when you retire, you get a lower pension. The minimum price for this option is about ₺2000 a year. Find all the necessary information on how to get it on the e-Devlet website
- Private. There are lots of hospitals and clinics that provide high-quality treatment to their patients. This type is preferable because you skip long queues and have access to a wider range of services. Besides, it can also cover your family's needs. The price depends on the health insurance providers, but it’s usually about ₺3600 per year (there can be cheaper and more expensive packages).
Popular private health insurance providers:
- Axa
- Mapfre
- Allianz
- Ankara Sigorta
- AKSigorta
Summing Up
All in all, there are 2 ways to work and receive income in Turkey without breaking any laws. You either get hired in-house or register as a business entity and sign a contract with the company you like.
The first scenario is less likely to happen due to some legal implications of hiring local employees by foreign companies (especially those that do not have a branch in Turkey). The second one is the most common way of cooperating with employers from other countries.
A tip: discuss the amount of taxes and health insurance contributions during the interview with the company. Many of them are ready to increase your monthly payments to cover these expenses.
We hope our article will help you get the necessary status of a sole proprietor to work internationally!
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October 2022: A detailed guide on how an IT specialist with Turkish citizenship can register as a business entity.