Turkey’s strategic location between Europe and Asia, its growing economy, and a young, educated workforce have made it an increasingly attractive destination for foreign companies looking to expand. But before entering the Turkish market, businesses must decide how to hire local talent: should they establish a legal entity in Turkey or use an Employer of Record (EOR)?
Both options have their merits and limitations. This article will explore the key differences between EOR and local company setup in Turkey, and help you determine which hiring model aligns best with your goals, budget, and timeline.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organization that legally employs workers on behalf of another company. While the client company supervises the day-to-day work, the EOR handles all administrative and legal employment tasks, including:
- Drafting compliant employment contracts
- Payroll processing
- Income tax and social security contributions
- Benefits administration
- Compliance with Turkish labor law
- Onboarding and termination procedures
The EOR becomes the official legal employer of the worker in Turkey, even though the individual works under the client’s operational direction.
What Does Setting Up a Local Company in Turkey Involve?
Alternatively, a foreign business can choose to open a legal entity in Turkey, such as:
- A limited liability company (LLC) (en çok tercih edilen yapı)
- A joint-stock company
- A branch or liaison office
This approach involves full responsibility for managing employees, payroll, taxes, contracts, and legal compliance.
Steps typically include:
- Company registration with the Turkish Trade Registry
- Obtaining a tax number and opening a local bank account
- Registering with the Social Security Institution (SGK)
- Hiring local accountants and legal advisors
- Complying with Turkish labor, tax, and commercial laws
EOR vs. Local Entity: Key Comparison
| Feature | EOR in Turkey | Local Company Setup in Turkey |
|---|---|---|
| Time to hire | 5–10 business days | 6–12 weeks (sometimes more) |
| Legal entity required? | No | Yes |
| Who is the legal employer? | EOR | The company itself |
| Compliance responsibility | EOR assumes all local compliance | Your company is fully liable |
| Initial setup costs | Low | High (legal, accounting, banking, office setup) |
| Scalability | Highly flexible | More complex to scale or exit |
| Control over operations | Operational control remains with you | Full control, but higher complexity |
| Best for | Market testing, remote hiring, short-term operations | Long-term presence, full control of local business |
1. Speed and Simplicity of EOR
For companies looking to hire in Turkey quickly, an EOR is by far the faster route. Since the EOR already operates as a compliant employer in Turkey, it can onboard your employees within a week.
In contrast, setting up a Turkish company can take several months and requires:
- Legal incorporation documents
- A local address or registered office
- Notarization and translations
- Liaison with multiple government authorities
If speed and low commitment are priorities, EOR wins.
2. Cost Efficiency
Establishing a company in Turkey comes with significant upfront and recurring costs:
- Legal and notary fees
- Company registration costs
- Accountant and payroll service fees
- Office lease (even if virtual)
- Monthly tax filings and compliance reporting
EOR providers charge a monthly fee per employee or a percentage of the gross salary (typically 10–15%). While this may seem higher per employee, it’s more cost-effective for companies hiring fewer than 5–10 employees.
If you’re starting small or testing the waters, EOR avoids sunk costs and legal exposure.
3. Compliance and Risk Mitigation
Turkish labor law is employee-friendly and highly regulated. Issues like wrongful termination, severance, and unpaid benefits can lead to legal action or fines.
With a local company, you bear the full risk and responsibility for:
- Social security contributions (SGK)
- Income tax withholding and filing
- Paid leave, bonuses, and benefits
- Severance payments and dispute resolution
An EOR shields you from this legal liability by acting as the employer of record. The EOR ensures all statutory obligations are met and reduces your exposure to HR and legal risks.
4. Market Testing and Remote Hiring
An EOR is ideal for companies that want to:
- Hire remote employees based in Istanbul, Ankara, Izmir, or elsewhere
- Test the Turkish market before committing to long-term investment
- Launch a pilot team or project
- Hire staff for a short-term contract or fixed project
In these scenarios, setting up a full company may be too costly and time-consuming. EOR lets you hire, manage, and pay employees in full compliance, without local incorporation.
5. Long-Term Control and Brand Presence
While EOR offers convenience and flexibility, it comes with limitations:
- You don’t own the employment relationship
- Your company name won’t appear on local employment documents
- You may have limited control over benefits or HR policies
- You rely on a third party for compliance and service quality
If your goal is long-term market expansion or building a brand presence in Turkey, a local company gives you:
- Full control over hiring, payroll, and contracts
- Legal independence and credibility with local partners
- Ability to sign contracts, open bank accounts, and apply for licenses
- Authority to build infrastructure, offices, and permanent teams
For companies with a clear growth strategy in Turkey, incorporating a legal entity offers greater ownership and stability.
6. Exit Strategy
One of the key benefits of EOR is the ability to exit the Turkish market with minimal disruption. You can:
- Terminate employee contracts through the EOR
- Withdraw from the market with no legal wind-down process
- Avoid liquidation or deregistration procedures
On the other hand, closing a local company involves:
- Settling debts and obligations
- Deregistering from tax and SGK authorities
- Legal filings and possible audits
If your expansion plans are uncertain or short-term, EOR is a low-risk entry and exit option.
When to Choose EOR in Turkey
Use an EOR if:
- You want to hire quickly with minimal setup
- You’re hiring fewer than 10 employees
- You want to test the Turkish market
- You want to hire remote Turkish talent
- You are not ready to commit to a legal entity
When to Set Up a Local Company
Consider opening a company in Turkey if:
- You plan long-term business operations
- You want to open offices or physical locations
- You require full brand and operational control
- You’re hiring a large team
- You plan to sign local contracts or invoices
Choosing between an EOR and local company setup in Turkey depends on your business goals, budget, and expansion strategy. For fast, flexible, and low-risk hiring, EOR is the ideal choice. But for companies committed to long-term growth and a permanent presence, establishing a local entity provides greater control and credibility.
We help international businesses navigate both paths. Whether you need turnkey EOR solutions in Turkey or support in setting up a legal company, our team ensures compliance, speed, and peace of mind every step of the way.
Ready to hire in Turkey?
Contact us today to learn whether EOR or local setup is right for your business expansion.