The concept of umbrella companies has become increasingly popular worldwide, especially among freelancers, contractors, and international businesses. In Turkey, umbrella companies are gaining traction as flexible solutions for managing legal employment, payroll, and compliance. Whether you’re a local freelancer, a foreign professional, or a company seeking to hire talent in Turkey, understanding how umbrella companies work is essential.
This article provides a step-by-step Guide Umbrella Company Turkey, explaining what umbrella companies are, how they operate, and why they’re a valuable option for both professionals and employers.
What Is an Umbrella Company in Turkey?
An umbrella company acts as an intermediary between workers and clients. Instead of registering as self-employed or setting up a business entity, professionals can join an umbrella company, which then becomes their official employer.
The umbrella company:
- Signs a legal employment contract with the worker.
- Invoices clients on behalf of the worker.
- Collects payments and processes payroll.
- Deducts taxes and social security contributions.
- Provides payslips, employee rights, and legal protections.
This allows workers to enjoy the flexibility of freelancing with the security of formal employment.
Why Use an Umbrella Company in Turkey?
Turkey’s labor and tax system can be complex, especially for freelancers and foreign workers. An umbrella company provides:
- Legal compliance with labor and tax laws.
- Simplified payroll and social security contributions.
- Work permit sponsorship for foreign nationals.
- Access to employee benefits such as healthcare and pensions.
- Credibility with clients through professional invoicing.
By removing administrative burdens, umbrella companies allow professionals to focus on their work.
Step-by-Step Guide: How to Work with an Umbrella Company in Turkey
Step 1: Research and Select a Reliable Umbrella Company
The first step is to choose a reputable umbrella provider. When evaluating your options, consider:
- Experience with freelancers and international clients.
- Transparent fee structures (fixed fees or percentage-based).
- Support for work permits and visa sponsorship.
- Availability of English-speaking staff for foreign professionals.
- Strong compliance record with Turkish tax and labor authorities.
A good umbrella company will provide clarity from the beginning, avoiding hidden costs or compliance risks.
Step 2: Sign an Agreement with the Umbrella Company
Once you’ve selected a provider, you’ll sign an employment agreement with the umbrella company. This contract outlines:
- Your salary or agreed payment terms.
- Duration of employment (fixed-term or ongoing).
- Benefits and entitlements such as paid leave.
- Tax and social security contributions.
- Termination clauses in line with Turkish labor law.
This agreement ensures you have legal employee status in Turkey.
Step 3: The Client Agreement
Your client — whether a Turkish company or an international business — signs a contract with the umbrella company. This agreement specifies:
- Scope of work.
- Payment terms.
- Project duration.
- Compliance responsibilities.
The umbrella company acts as the official employer, while the client manages your day-to-day work.
Step 4: Work and Deliver Services
You continue to provide services directly to the client, just like a freelancer or contractor. The key difference is that you are legally employed by the umbrella company. This arrangement combines flexibility with compliance.
Step 5: Invoicing and Payments
Instead of billing your client directly, the umbrella company issues invoices on your behalf. Once the client pays:
- The umbrella company receives the payment.
- Taxes and social security contributions are deducted.
- The umbrella company pays your net salary to your bank account.
- You receive an official payslip.
This ensures all income is fully compliant with taxation in Turkey.
Step 6: Tax and Social Security Compliance
One of the biggest benefits of umbrella companies is simplified compliance. They manage:
- Income tax: Deducted progressively based on Turkish tax brackets.
- Social security contributions (SGK): Both employee and employer contributions are paid on time.
- VAT obligations: When necessary, the umbrella company ensures VAT is correctly applied and reported.
This eliminates the risk of mistakes and penalties.
Step 7: Access Benefits and Employee Protections
As an umbrella company employee, you gain access to rights and protections under Turkish labor law, including:
- Public healthcare through SGK.
- Retirement contributions.
- Paid leave and public holidays.
- Severance rights in case of termination.
- Overtime and working hours protection.
For freelancers used to unstable contracts, this provides much-needed stability.
Step 8: Work Permits for Foreign Professionals
If you’re a foreign national, the umbrella company can sponsor your work permit and residence permit. The process generally includes:
- Submitting documents to the Ministry of Labor.
- Employer sponsorship from the umbrella company.
- Compliance with salary thresholds for foreign workers.
This makes umbrella companies especially valuable for international IT consultants, engineers, and digital professionals working in Turkey.
Benefits of Working with an Umbrella Company in Turkey
For Freelancers and Contractors
- Simplified invoicing and tax compliance.
- Access to healthcare and pensions.
- Legal protection under labor laws.
- Ability to work with both local and international clients.
For Foreign Professionals
- Employer sponsorship for work permits.
- Legal employment status in Turkey.
- Assistance with local compliance and regulations.
For Companies (Local and International)
- Ability to hire workers in Turkey without setting up a subsidiary.
- Reduced compliance risks.
- Quick access to skilled professionals.
Example Scenario
A software developer in Istanbul secures a contract with a UK-based company. Instead of managing tax filings and social security independently, the developer partners with an umbrella company.
The umbrella company invoices the UK client, processes payments, deducts taxes, and pays the developer a monthly salary with full SGK benefits.
The UK company gets a compliant way to hire in Turkey, while the developer enjoys both flexibility and security.
Key Considerations Before Choosing an Umbrella Company
- Fees: Some companies charge higher service fees than others.
- Scope of services: Some offer only payroll, while others include HR and legal support.
- Industry expertise: Choose a company familiar with your sector (e.g., IT, consulting, engineering).
- Language support: For foreigners, English-speaking staff is essential.
Umbrella companies are reshaping the way professionals and businesses operate in Turkey. They offer freelancers and contractors the ability to work flexibly while enjoying full employee benefits. They help foreign professionals secure work permits and stay compliant. And they give international companies a way to hire in Turkey without setting up a subsidiary.
This step-by-step Guide Umbrella Company Turkey demonstrates how simple and effective the model is: choose a provider, sign agreements, deliver your work, and let the umbrella company handle compliance, taxation, and payroll.
As flexible work and global collaboration continue to rise, umbrella companies in Turkey will play a central role in shaping the future of employment. Please contact our team for more information.