Legal consultancy for European investors in Turkey covers the points where Turkish law resembles EU law closely enough to be trusted, and the points where that resemblance stops.
An EU-headquartered group entering Turkey arrives with an advantage that investors from most other jurisdictions do not have. Turkish commercial law was rebuilt on continental European foundations. Competition law follows the EU model. Consumer legislation tracks EU directives. Data protection was restructured in 2024 along the architecture of the General Data Protection Regulation. A German, Dutch or French legal department reading Turkish legislation recognises almost everything on the page.
That recognition is the reason the first question is worth asking carefully. What is the legal position of an EU company investing in Turkey? Harmonised but not interchangeable. Turkey sits inside a customs union with the European Union for industrial goods, its statutes follow EU models across most commercial fields, and its courts apply concepts an EU lawyer would recognise. None of that makes an EU compliance position portable. The frameworks were built to look alike; they were not built to substitute for one another, and the difference surfaces at the point of documentation rather than the point of principle.
Which produces the second question, and an answer that runs against instinct. Who gets caught by the differences? Usually the group with the strongest compliance function. A company with a mature GDPR programme, a documented competition policy and a group-wide contract suite tends to deploy it in Turkey and assume the work is done. A company with no such programme builds from zero and asks what Turkish law requires. The second group asks the question the first group never reaches, and the gap opens quietly, in files that look complete.
Market access is usually the commercial reason for the investment, and it deserves a precise answer rather than an encouraging one. Which goods move freely between Turkey and the European Union? Industrial products, under the customs union established in 1995, subject to origin rules. Agricultural products, coal and steel sit outside that framework or under separate arrangements. Goods produced in Turkey qualify for free circulation only where the processing carried out in Turkey satisfies the applicable origin rule, which is a manufacturing question rather than a corporate one.
The last question concerns what happens when the relationship fails. How are EU court judgments enforced in Turkey? Individually, and not automatically. The instruments that make judgments travel within the European Union do not extend to Turkey. An EU judgment requires a recognition action before a Turkish court, and the conditions, including reciprocity, are assessed against the specific member state, not against the European Union as a whole.
Öznur & Partners advises European corporates, mid-market groups and institutional investors on establishing and operating in Turkey. This page addresses what is specific to EU-based capital. The framework applying to all foreign investors, covering entity types, property eligibility, tax and employment, is set out on our page on Turkish law for foreign investors.
⚖️ Which Legal Issues Are Specific to EU Investment in Turkey?
Four issues arise for EU-based investors in a form that does not arise, or does not arise the same way, for investors from elsewhere.
Two data protection regimes that mirror each other without connecting. Personal data moving between an EU parent and its Turkish subsidiary crosses two separate transfer regimes in opposite directions, each with its own instrument, its own template and its own filing obligation. Neither recognises the other’s paperwork. This is treated at length below because it is the most common and the most expensive oversight.
Customs union benefits that depend on manufacturing rather than incorporation. The commercial case for a Turkish plant frequently rests on duty-free access to the EU market. That access is conditional on origin, and origin is determined by what happens on the production line.
A treaty position that varies by member state. Turkey’s bilateral investment treaties and double taxation agreements were concluded with individual member states, not with the European Union. Protection and withholding rates therefore differ depending on which member state the investing entity is established in, and the choice of holding jurisdiction inside the EU has consequences in Turkey.
EU regulatory reach that follows the parent into Turkey. Sanctions regimes, and increasingly supply chain and sustainability obligations, apply to EU undertakings by reference to their establishment in the Union. A Turkish subsidiary does not sit outside the group’s obligations simply because it operates outside the Union.
None of these is an obstacle to investment. Each is a place where an assumption imported from the EU produces a defect that surfaces later.
⚖️ When Should a European Company Engage Turkish Counsel?
Turkish counsel should be engaged when the group’s existing documentation is about to be extended to Turkey, because that is the moment the assumption of portability is acted on.
Four moments matter more than the rest.
Before the group contract suite is rolled out. Intra-group services agreements, data processing agreements, employment templates and distribution terms drafted for EU operations require adaptation rather than translation. Translation of a defective clause produces a defective clause in Turkish (and a court that reads it as written, not as intended).
Before data begins to flow. The transfer position is established before the first HR record reaches the group system, not after an audit. Retrospective compliance does not cure transfers already made, and the Turkish framework attaches a filing deadline measured in business days.
Before the holding jurisdiction is fixed. Whether the Turkish subsidiary is held from Germany, the Netherlands, Luxembourg or Ireland changes the applicable investment treaty and the applicable tax treaty. This is decided for EU-internal reasons and has Turkish consequences that are rarely part of the discussion.
Before the production process is specified. Where EU market access is the commercial rationale, the origin rule for the specific product determines the equipment, the process and the input sourcing. Designing the plant first and checking origin afterwards inverts the dependency.
Groups already operating in Turkey are rarely too late. The typical finding is not a structural error but an accumulation of documentation that was extended rather than adapted, which is remediable, and cheaper to remediate before it is examined.
⚖️ How We Advise European Clients on Turkish Matters
Our work with EU-based groups is organised around adaptation rather than around a service list, because the client usually arrives with documentation rather than with a blank page.
Gap analysis against existing group documentation. We review the group’s contract suite, privacy documentation, competition policy and compliance framework against Turkish requirements, and identify what transfers unchanged, what requires adaptation and what has no Turkish equivalent. The output is a marked-up position rather than a new set of documents, which is faster for the client’s legal department to absorb and easier to defend internally.
Structuring and establishment. Entity selection, articles of association, permit and licensing analysis, incentive certificate applications, and the interaction between the Turkish structure and the group’s EU holding arrangement.
Regulatory and disputes. Competition filings and clearance analysis, data protection compliance and filings, commercial litigation and arbitration, and enforcement of EU judgments and awards in Turkey.
Execution is remote by default. Incorporation, corporate bank account opening, permits and contract execution can be completed under a power of attorney executed before a notary in the member state and legalised by Apostille, as all EU member states and Turkey are parties to the Apostille Convention. Documents require sworn translation into Turkish for official use, and we prepare translations rather than receiving them, because a term rendered imprecisely in a power of attorney can narrow an authority that the group believed it had granted.
Extending your group’s EU documentation to a Turkish entity?
A gap analysis establishes what transfers and what does not, before the documents are signed and the data starts moving.
⚖️ Does GDPR Compliance Cover a Turkish Subsidiary?
No. A group that is fully compliant under the General Data Protection Regulation is not thereby compliant under Turkish data protection law, and the two transfer regimes require separate instruments in each direction.
Turkish data protection is governed by Personal Data Protection Law No. 6698, known by its Turkish abbreviation KVKK. Law No. 7499 amended Article 9 in 2024, and the implementing regulation on transfers abroad has been in force since 10 July 2024. The reform replaced a consent-based transfer model with a three-tier structure closely modelled on the equivalent chapter of the General Data Protection Regulation: adequacy decisions, appropriate safeguards, and limited derogations.
The resemblance is real and it is where the difficulty begins.
Explicit consent no longer supports ongoing transfers. From 1 September 2024, routine transfers abroad must rest on an adequacy decision or an appropriate safeguard. Groups that built their Turkish position on consent before the reform are operating on a basis that no longer carries the traffic (and consent was always fragile in the employment context, where it is rarely freely given).
Turkey has issued no adequacy decisions. No country, sector or international organisation has yet been recognised as providing adequate protection, which includes every EU member state. Transfers from Turkey to an EU parent therefore proceed on appropriate safeguards, in practice standard contractual clauses.
European standard contractual clauses do not satisfy Turkish law. The Turkish clauses are published by the Personal Data Protection Board and must be adopted exactly as published, without modification. A group that executes the European clauses between its Turkish subsidiary and its parent has documented the transfer under one regime and left it undocumented under the other.
There is a filing obligation with a short deadline. Executed standard contracts are notified to the Turkish authority within five business days of signature. The obligation has no direct equivalent under the General Data Protection Regulation, so it is not on the checklist a group brings with it.
The Turkish text governs and the signature is formal. The Turkish language version prevails, and execution requires wet ink or a qualified electronic signature.
The clauses appear to contemplate bilateral arrangements. A single exporter and a single importer per instrument does not map cleanly onto a group that moves data among several affiliates, which means a multinational may need several instruments where it expected one.
The reverse direction carries its own requirement. Turkey has not been the subject of an adequacy decision by the European Commission, so transfers from an EU controller to a Turkish entity require appropriate safeguards under the European framework, together with the transfer impact assessment that practice now expects. The result is two sets of documentation, in two directions, neither of which discharges the other.
Practical consequences follow for the arrangements groups treat as routine: centralised human resources systems holding Turkish employee records, group customer relationship platforms hosted in the Union, shared analytics environments, and cloud services procured centrally. Each of these is a transfer, and each requires a Turkish instrument alongside the European one.
Turkish administrative fines are recalculated annually by reference to the statutory revaluation rate, so figures quoted in earlier guidance understate the current position (a point worth checking before a board paper cites a number from a two-year-old memorandum). Data protection work is handled through our information technology law practice, and the wider compliance framework through our corporate compliance practice.
⚖️ Turkish Competition Law and the EU Model
Turkish competition law follows the European model in substance. The prohibitions on anti-competitive agreements and abuse of dominance track the familiar structure, and the Turkish Competition Authority applies concepts an EU practitioner recognises without translation.
Three differences change what an EU group must actually do.
Merger control thresholds are Turkish and are met more often than expected. Turnover thresholds are calculated on Turkish turnover and on the parties’ combined turnover, which captures transactions with modest Turkish revenue where the acquiring group is large. A transaction cleared or exempt in the European Union may still require a Turkish filing, and Turkish clearance is suspensory (closing before clearance where it was required exposes the parties to administrative fines and, in principle, leaves the transfer unenforceable against third parties).
The filing is separate and not derived from the European one. A European Commission notification does not produce a Turkish notification. The Turkish filing has its own form, its own information requirements and its own timetable (and the Turkish Competition Authority is not obliged to find a European decision persuasive on its own thresholds).
Vertical arrangements are assessed under Turkish block exemption rules. Distribution, agency and franchise arrangements common in EU practice must be checked against the Turkish exemption framework rather than assumed to be covered by their European equivalent.
The same pattern repeats across other harmonised fields. Consumer protection legislation follows EU directives but imposes Turkish-specific documentation and warranty obligations. Product safety and conformity requirements are aligned but administered separately, and CE marking does not by itself discharge Turkish market surveillance obligations for every product category.
Transaction analysis and clearance work is handled through our mergers and acquisitions practice, with pre-transaction review through our investment due diligence process.
⚖️ Does the Customs Union Make Turkish Production Duty Free in the EU?
For industrial goods, yes, provided the goods are in free circulation and the origin position holds. The customs union between Turkey and the European Union has applied to industrial products since 1995. Agricultural products, coal and steel fall outside it or under separate arrangements.
Free circulation and origin are different concepts and the distinction decides cases.
Goods in free circulation move between Turkey and the Union without customs duty, evidenced by the movement certificate used for that purpose. Preferential origin, evidenced by a different certificate, matters where the goods are destined for third countries under the Union’s preferential agreements, or where origin itself is in question.
The operative point for an EU manufacturer relocating or extending production into Turkey is that the corporate structure is irrelevant to origin. Goods do not become Turkish because a Turkish company owns, invoices or ships them. They become Turkish when the processing carried out in Turkey satisfies the product-specific rule, typically expressed as a change in tariff classification, a value threshold, or a defined manufacturing operation. Simple assembly, repackaging, labelling and sorting are generally insufficient however much they cost (expenditure is not the test, transformation is).
Two consequences follow that are easy to miss at the planning stage.
Where inputs are sourced from third countries subject to European or Turkish trade measures, the measure may attach to those inputs on import into Turkey, which changes the cost base of the Turkish operation after it is built.
Where the Turkish operation performs limited processing on inputs from a country subject to measures, circumvention proceedings can extend the measure to the output. The existence of the Turkish company is not the test; the substance of the operation is.
Turkish incentive policy supports genuine manufacturing through customs duty exemption on imported machinery, value added tax exemption, corporate tax reduction, social security premium support and, in some regions, land allocation. The framework is set out on our manufacturing incentives page and the machinery exemption in our note on VAT exemption for foreign investors. Certificates apply to expenditure incurred after application, not before.
Origin analysis and classification work sits with our international trade and customs practice, and current developments in our trade law analysis.
⚖️ Treaty Position: Why the Member State Matters
Turkey concluded its investment and tax treaties with individual states, not with the European Union. There is no single EU-Turkey investment treaty and no single EU-Turkey tax treaty, which means the position of a Dutch holding company and a German one are not the same in Turkey.
Two consequences follow.
Investment protection varies by member state. Bilateral investment treaties between individual member states and Turkey remain in force. Because Turkey is not an EU member state, these are not affected by the arrangements that terminated treaties between member states. The substantive protections and the dispute settlement provisions differ between instruments, and an investment held through one member state may enjoy protection that the same investment held through another does not.
Withholding rates vary by member state. Double taxation agreements between individual member states and Turkey set the applicable rates on dividends, interest and royalties, and those rates differ. Treaty relief is documentary: a certificate of residence from the member state authority, in the form Turkish authorities accept, is required before the reduced rate is applied.
A structural point deserves emphasis because it is often decided elsewhere in the group for unrelated reasons. The EU holding jurisdiction is frequently selected for internal tax or governance considerations, and the Turkish consequences of that selection are discovered afterwards. Where a Turkish investment is significant, the treaty position should be one of the inputs into the holding decision rather than a result of it.
Anti-abuse rules constrain the planning. Turkey participates in the multilateral instrument implementing the treaty-related measures against base erosion, which introduces a principal purpose test into covered treaties. A holding structure whose main purpose is obtaining treaty benefit can be denied that benefit, so the structure must be substantive and established for reasons that survive scrutiny.
The general mechanism is set out in our note on double tax treaties in Turkey, the underlying concepts in our note on types of double taxation, and the wider framework on our tax practice page.
⚖️ EU Regulatory Obligations That Follow the Group into Turkey
An EU undertaking does not leave its European obligations at the Turkish border. Several regimes apply by reference to the parent’s establishment in the Union and reach conduct carried out through a Turkish subsidiary.
Sanctions. European Union restrictive measures bind EU nationals and undertakings incorporated under the law of a member state, and apply to business done anywhere. A Turkish subsidiary operating in a region or with counterparties subject to measures can create exposure for the EU parent and for individuals within it. Turkey maintains its own foreign policy positions and applies United Nations measures, which means a transaction lawful under Turkish law may nonetheless be prohibited for the EU group. Counterparty screening in the Turkish operation therefore needs to run against the group’s list, not only against Turkish requirements.
Supply chain and sustainability obligations. Reporting and diligence regimes adopted at Union level increasingly extend to the activities of subsidiaries and, in some cases, to suppliers. Where the Turkish operation sits inside a reporting group’s value chain, information gathering and contractual flow-down obligations reach Turkish suppliers who are not themselves subject to the European rules.
Anti-bribery and internal controls. Member state legislation implementing anti-corruption obligations generally reaches conduct abroad. Turkish anti-bribery provisions exist independently, but the group’s exposure is usually determined by the home jurisdiction’s rules and by the adequacy of the controls extended to the Turkish entity.
The practical requirement is that the Turkish subsidiary’s compliance framework satisfies two sets of expectations simultaneously, and that the group can demonstrate it did so at the time rather than reconstruct it afterwards. Compliance structuring is handled through our compliance strategy and regulatory compliance practices, with financial crime obligations addressed in our note on MASAK compliance in Turkey.
⚖️ Can an EU Court Judgment Be Enforced in Turkey?
Not automatically. The instruments that allow judgments to circulate between member states do not extend to Turkey, and a judgment of a member state court requires a recognition and enforcement action before a Turkish court.
The Turkish court examines whether reciprocity exists between Turkey and the state of origin, whether the defendant was properly served and able to present a defence, whether the judgment is compatible with Turkish public order, and whether the matter fell within the exclusive jurisdiction of Turkish courts. Reciprocity is assessed against the individual member state, since it rests on treaty, statute or demonstrated practice between the two states rather than on Union membership (which means the answer for a Dutch judgment and a Bulgarian one need not be the same).
Arbitral awards follow a different and considerably smoother path. Turkey and every EU member state are parties to the New York Convention, refusal grounds are narrow and defined by the Convention, and the Turkish court does not review the merits.
The drafting consequence is direct and it runs against the habit of EU contracting. A jurisdiction clause in favour of a member state court is efficient within the Union and weak where the assets are in Turkey. Where the counterparty’s assets are Turkish and the remedy sought is monetary, an arbitration clause produces a materially more collectable outcome.
Two further points recur.
Interim relief. Attachment over Turkish assets through Turkish courts remains available where the merits are arbitrated or litigated elsewhere, and it is frequently the step that determines whether an eventual award or judgment is collectable.
Exclusive jurisdiction. Disputes concerning Turkish immovable property may fall within exclusive Turkish jurisdiction irrespective of the contract.
Enforcement work is handled through our recognition and enforcement and arbitration practices, contract drafting through our contract practice, and disputes arising from supply and distribution relationships on our commercial contract disputes page.
⚖️ Establishment, Employment and Intellectual Property
The mechanics of establishing and operating in Turkey are addressed in full on the general foreign investor page, but three areas produce recurring surprises for EU groups specifically.
Entity choice. The limited liability company and the joint stock company differ in minimum capital, share transfer mechanics, tax treatment of a share sale, and whether shareholders can be pursued personally for the company’s unpaid public debts. The last of these has no direct equivalent in several member state systems and is frequently the point that changes the decision. The comparison is set out in our note on limited versus joint stock companies, and the incorporation sequence on our company formation page.
Employment. Turkish employment law contains job security provisions and statutory severance accrual, and social security registration must be completed before the employee starts work rather than at the end of the first month. Fixed-term contracts require objective justification and are not freely available as a substitute for indefinite-term employment. Personnel transferred from the group require work permits obtained by the Turkish employer. These are addressed on our employment law and corporate immigration pages.
Intellectual property. Turkish registration is territorial and separate from the European Union trade mark system. An EU trade mark does not extend to Turkey. Groups holding an EU registration should designate Turkey through the Madrid Protocol or file nationally, and should do so before market entry rather than after the first shipment, because a mark used in Turkey without registration can be registered by an unrelated party (typically a former distributor, and typically discovered through a cease and desist letter). This is handled through our intellectual property practice.
⚖️ The Cost of Recognising Everything
Turkey is, for a European investor, the least foreign of the major emerging destinations. The commercial code descends from the same tradition. The competition rules read like the ones at home. The data protection framework was rebuilt in 2024 to a familiar design. Goods cross the border without duty. A legal department in Munich or Rotterdam opens a Turkish file and finds itself on ground it knows.
The difficulty is not that this impression is wrong. It is that it is right about the concepts and silent about the instruments. The concepts travel; the paperwork does not. A group can hold a correct understanding of Turkish competition law and still fail to file, a correct understanding of the transfer hierarchy and still execute the wrong clauses, a correct understanding of free circulation and still misdeclare origin.
The questions that decide a European investment in Turkey are therefore narrower than the ones that decide investments from further away. Not whether the law permits it, and rarely whether the law is comprehensible. Which instrument, filed with whom, within how many days, in which language, and signed how.
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Whether you are extending group documentation to a Turkish entity, designing production to satisfy origin rules, or establishing which member state treaty governs your Turkish investment, our Istanbul-based investment lawyers can establish where you stand.