Establishing a company and obtaining permits: a duo often sought together but whose order is confused

There are two topics most frequently asked together by foreigners who want to establish a business in Turkey: company establishment and work + residence permit. Most people assume these are a single process; however, these are separate processes, and their order is important. Starting in the wrong order leads to rejected applications and lost time.

In this guide, we clarify three critical points: the correct order of permits (first residence → then work permit from within the country), a work permit serving as a residence permit, and the fundamental condition for all of them: the company operating in a “genuine” manner.

First, clarify the distinction: Owning ≠ working

Owning a Turkish company and actively working in that company are different things:

Passive partner / person managing from abroad: No work permit is required.

Partner/manager actively working in Turkey, managing on-site: Whether they receive a salary or not, a work permit is mandatory.

Owning a company does not automatically grant residence or work rights. If you want to live in Turkey and personally manage your company, you need to structure the permit process correctly.

Two paths: Application from abroad or from within the country?

Work permit applications are made in two ways, depending on where the foreigner is located:

For investors who want to establish their company in Turkey and manage it while living here, the most frequently used and manageable method in practice is the application from within the country — but it has a prerequisite.

Correct order: First residence permit → then work permit from within the country

For a foreigner to be able to apply for a work permit from within the country, they must have a residence permit valid for at least 6 months and not expired. Therefore, the logical order is as follows:

Obtain a residence permit. Acquire a valid residence permit that allows you to legally reside in Turkey. (Residence permit type and obtainability vary by region and situation; it is important to check eligibility before applying.)

Establish / activate your company. The company’s commencement of real activity is the basis of the permit evaluation (we explain below).

Apply for a work permit from within the country. The application is made through the e-Permit system with your valid residence permit and Foreigner’s ID Number (YKN).

If the foreigner does not have a valid residence permit, they must first obtain a reference number from the consulate and follow the overseas application process.

Work permit replaces residence permit

The most practical advantage of the process is this: A valid work permit also serves as a residence permit. This means that when your work permit is approved, you do not need to carry a separate residence permit; the work permit also covers your right to legal stay in Turkey.

This means: The residence permit is the gateway to the work permit application; after obtaining the work permit, it becomes the basis for your legal stay. Therefore, it is necessary to plan the validity period of your residence permit and the timing of your work permit application together.

The most critical condition: The company demonstrating “real” activity

In work permit applications — especially for foreign company partners — the Ministry looks not just at a company on paper, but at real economic activity. The following factors are decisive in the evaluation:

The company must be actively operating. Companies established only on paper/as a signboard, and not actually doing business, are at risk.

Tax and SSI (Social Security Institution) obligations must be fulfilled regularly.

The value brought by the foreign partner to the company must be demonstrated — it must be justified why this person needs to work in Turkey.

The share ratio must reflect a real economic value. Applications made with a very low, symbolic share ratio are scrutinized more strictly, and those with weak justifications are rejected. The share ratio is not only a legal but also a strategic element.

In short: Companies established ostensibly “to obtain a permit” are rejected for precisely this reason. The basis of a solid application is a real and justified business structure.

Work permit criteria for foreign company partners

For a foreigner who will obtain a work permit as a company partner, the general evaluation criteria adapted for partners are sought:

Capital and share: Provided that the company’s paid-in capital is at least 500,000 TL, the foreigner’s capital share must be at least 500,000 TL and their partnership share must be at least 20%.

Employment criterion: The requirement for 5 Turkish employees for company partners is sought for the last 6 months of the work permit (as of approximately the 7th month of the permit period, at least 5 Republic of Turkey insured personnel).

Exemption threshold: If the foreign partner’s capital share is 100,000 USD or more, the financial adequacy and employment criteria are not applied.

Since the relevant thresholds and multiplier values can change periodically, the current criteria must be confirmed before applying.

Cases not requiring a permit (exemption)

A work permit is not required for every partner:

Non-resident board members of a joint-stock company in Turkey and

Partners who are not in managerial positions in companies other than joint-stock companies are not required to obtain a work permit. These individuals can, if necessary, apply for a work permit exemption (for a maximum of 3 months); the exemption document grants the right to work and reside without obtaining a work permit during its validity period.

However, a work permit is mandatory for a manager/partner who is actually and actively working in the company.

Step-by-step process (domestic route)

Residence permit: Obtaining a valid residence permit for at least 6 months.

Establishment of company structure: Planning the type, capital, and share structure in accordance with work permit criteria.

Commencement of operations: Tax/SSI registration, genuine commercial activity, and regular obligations.

e-Permit application: Online work permit application with YKN and uploading documents.

Evaluation: The Ministry’s review based on criteria and actual activity.

Result: Approval of the work permit — this permit also serves as a residence permit.

Frequently Asked Questions (FAQ)

I am a company partner, do I still need a work permit? If you are actively working in the company, yes — it is mandatory. Whether you receive a salary or not does not change the outcome. A permit may not be required only if you are a passive partner or covered by an exemption.

Does a work permit replace a residence permit? Yes. A valid work permit replaces a residence permit and provides the right to legally stay in Turkey.

What is required for an application from within Turkey? A residence permit valid for at least 6 months and not expired. Without this, an application from within Turkey cannot be made; in this case, the process from abroad (consulate + reference number) is followed.

Can a permit be obtained with a low share ratio? It’s difficult. Applications made with a very low/symbolic share ratio are scrutinized more strictly, and those with weak justifications may be rejected. The share ratio should be strategically planned.

Will a sham (on paper) company work? No. The company is expected to be genuinely active, fulfill its tax/SSI obligations regularly, and demonstrate the value added by the foreign national. Companies that are not active are rejected.

If I get married, does the work permit requirement disappear? Marriage itself does not grant the right to work; if you will actually work, the relevant permit processes are still required.

What happens if I work without a permit? There is a risk of administrative monetary fine, deportation, and an entry ban. Both the foreign national and the employer face punitive sanctions.

What changes if my capital share is over 100,000 USD? In this case, financial adequacy and employment criteria are not applied to the foreign company partner; the process is significantly eased.

Why is expert lawyer support necessary? — 2M Law Office

The company + permit process is a process whose success depends on the correct sequence and correct structure. The timing of the residence permit, the compliance of the company type and share structure with work permit criteria, the documentation of the actual activity, and the justification of the application — if any of these are missing, the application will be rejected, wasting both time and expense. Moreover, working without a permit leads to severe consequences such as fines, deportation, and entry bans.

Tuzla-based 2M Law Office (Founder: Atty. Meryem Günay) provides legal consultancy to businesses and investors in Istanbul’s Anatolian Side (Tuzla, Pendik, Kartal, Maltepe) and Kocaeli region. In this region, which is intensive in industry, logistics, and maritime, there is a high demand for foreign investors and skilled labor; the office’s expertise in commercial, maritime, and corporate law directly benefits the investor’s company + permit process.

Support 2M Law can offer in this process:

Process sequence and timing: Correct structuring of residence permit → work permit steps and their validity periods.

Company structure consultancy: Planning capital, share ratio, and company type in compliance with work permit criteria; evaluating advantages such as the 100,000 USD threshold when necessary.

Documentation of actual activity: Strongly presenting the economic justification of the application and the value added by the foreigner.

Application and file management: Complete file preparation, e-Permit application, and process tracking.

Objection in case of rejection: Handling administrative objections and, if necessary, annulment lawsuits in the administrative court.

Complete the permit process in the correct sequence, successfully on the first attempt. Contact 2M Hukuk Avukatlık Bürosu for work and residence permit planning through your company.