EOR in Turkey vs. Setting Up a Subsidiary
Turkey’s rapidly growing tech sector, skilled workforce, and strategic location have made it a key destination for global expansion. Whether you’re a startup eyeing market entry or an established business looking to access Turkish talent, you’ll eventually face the big decision:
Should you use an Employer of Record (EOR) in Turkey or set up a local subsidiary?
Both routes can help you hire employees in Turkey legally, but the financial, administrative, and strategic implications are vastly different.
In this article, we break down the true costs and benefits of using an Employer of Record in Turkey compared to setting up your own subsidiary—so you can make an informed choice for your business.
What Is an Employer of Record (EOR) in Turkey?
An Employer of Record (EOR) is a third-party provider that legally hires employees on your behalf in Turkey. The EOR becomes the official employer on paper, managing:
- Employment contracts
- Payroll and social security contributions (SGK)
- Tax withholdings
- Benefits and leave entitlements
- Labor law compliance
- Work permit sponsorship (if needed)
You, the client company, maintain full control over the employee’s day-to-day work.
What Is a Subsidiary?
A subsidiary is a separate legal entity registered under Turkish law, fully or partially owned by a foreign parent company. This option allows you to:
- Hire employees directly under your own Turkish legal structure
- Sign local contracts and leases
- Open Turkish bank accounts
- Conduct sales, invoicing, and operations in the country
While this offers more autonomy, it also comes with higher setup costs, operational obligations, and long-term commitments.
Cost Comparison: EOR vs. Subsidiary in Turkey
Let’s compare the major cost components between using an EOR and setting up a subsidiary in Turkey:
| Category | EOR in Turkey | Subsidiary in Turkey |
|---|---|---|
| Setup Time | 5–10 business days | 3–6 months |
| Setup Costs | $0–$1,000 | $5,000–$15,000 (legal, notary, translation, government fees) |
| Monthly Payroll Admin | Included in EOR fee | $300–$700/month for accounting & HR |
| Employment Contracts | Handled by EOR | You must draft or localize legally |
| Payroll Taxes (SGK) | Included and managed | You handle directly (approx. 22.5%–25% on gross salary) |
| Ongoing Compliance | Covered by EOR | Your responsibility (audits, filings, labor law updates) |
| Legal Risk | Minimal – EOR is employer of record | High – You assume liability for disputes, severance, etc. |
| Exit Cost | Simple offboarding | Complex wind-down and deregistration process |
| Total First-Year Cost (1 employee) | ~$12,000–$20,000 | ~$20,000–$30,000+ |
Conclusion: For companies hiring fewer than 5 employees in Turkey, an EOR is typically 30–50% more cost-effective in the first year.
Example: Hiring One Employee in Istanbul
Let’s say you want to hire a full-time software engineer in Istanbul with a gross monthly salary of ₺60,000 (approx. $2,000).
✅ Via Employer of Record Turkey:
- EOR service fee: 15–20% of gross salary
- SGK & tax compliance: Included
- Monthly cost: ~$2,300–$2,400
- First-year total: ~$28,000 (including onboarding)
✅ Via Subsidiary:
- Entity setup: $10,000 (legal, notary, translator, tax office)
- HR and payroll services: $5,000 annually
- SGK, taxes, salary: ~$2,200/month
- First-year total: ~$40,000+
Bottom line: The EOR is faster and significantly cheaper if you’re only hiring a few team members.
Time-to-Hire Comparison
| Step | EOR | Subsidiary |
|---|---|---|
| Legal readiness | 1 week | 3–6 months |
| Employee onboarding | Immediate after contract | After entity is operational |
| Tax & SGK registration | Done by EOR | You must apply and manage |
| Risk of delay | Low | High (bureaucracy, inspections, bank approval) |
If your priority is speed and flexibility, EORs win every time.
Legal and HR Complexity
Setting up a company in Turkey comes with responsibilities:
- Appointing a resident legal representative
- Hiring a local accountant and HR personnel
- Submitting monthly and annual financial statements
- Dealing with labor inspections, audits, and compliance updates
An EOR shields you from all of this. They:
- Stay up to date with Turkish labor laws
- Handle severance pay, leave accruals, and overtime compliance
- Protect you from penalties due to misclassification or payroll errors
Flexibility and Risk
A subsidiary is a long-term bet. You take on fixed costs and long-term liabilities. If you exit Turkey, you must:
- Settle employee contracts and severance
- Close bank accounts and file tax returns
- De-register from SGK and trade registry
- Hire legal counsel for closure
By contrast, an EOR allows you to exit at any time, with minimal legal burden. You simply notify the EOR to offboard the employee as per Turkish law, and you’re done.
When Does Setting Up a Subsidiary Make Sense?
A subsidiary is worth considering if:
- You plan to hire more than 10–15 employees within a year
- You want to invoice Turkish clients directly
- You need a physical office or warehouse presence
- You want to benefit from investment incentives or government programs
- You are entering into joint ventures or public tenders in regulated sectors
Otherwise, an EOR gives you all the benefits of hiring—without the overhead.
Strategic Use: Start with EOR, Transition to Subsidiary Later
Many companies use EORs as a stepping stone to full market entry. The typical journey looks like:
- Hire initial team (1–5 employees) through EOR
- Validate market fit and business potential in Turkey
- Build local relationships, test legal waters
- If growth continues, establish a legal entity
- Transition employees from EOR to your own payroll later
This de-risks your entry while allowing fast execution.
Final Verdict: Is EOR in Turkey Worth It?
✅ If you’re hiring fewer than 10 employees
✅ If you want to launch quickly and legally
✅ If you’re testing the Turkish market
✅ If you want minimal liability and admin overhead
✅ If you want to stay lean and agile
Then YES—using an Employer of Record in Turkey is 100% worth it.
For long-term, large-scale operations, setting up a subsidiary may become more cost-effective over time—but only after validation and growth.
Final Thoughts
As global talent becomes more distributed and businesses seek expansion in high-potential markets like Turkey, the EOR model offers unmatched flexibility, cost control, and compliance.
Before you invest tens of thousands in entity formation and years of local operations, ask yourself:
“Could we achieve the same results—faster, leaner, and legally—through an EOR?”
For many companies, the answer is yes.
Looking to hire in Turkey without the cost and risk of setting up a subsidiary?
Let us help. Our EOR services in Turkey provide fast, compliant, and scalable hiring for global businesses.
Contact us today to get a custom quote and start building your team in Turkey—risk-free.