Turkey is an increasingly attractive destination for international professionals, freelancers, and companies looking to expand. Its strategic location, young workforce, and growing industries make it a hub for global business. However, navigating employment regulations and taxation in Turkey can be complex — especially for foreigners.
This is where umbrella companies provide a valuable solution. They simplify hiring, ensure compliance, and help both workers and businesses manage legal responsibilities effectively. In this guide, we’ll explore how umbrella companies operate in Turkey, with a focus on taxation, compliance, and legal insights.
What Is an Umbrella Company in Turkey?
An umbrella company is a third-party organization that employs contractors or freelancers on behalf of clients. Instead of managing payroll, taxes, and compliance independently, professionals sign an employment agreement with the umbrella company.
The umbrella company then:
- Invoices the client.
- Collects payments.
- Handles payroll and deductions.
- Pays income tax and social security contributions.
- Provides the worker with payslips and employment rights.
This structure allows both Turkish nationals and foreigners to work legally without the administrative burden of establishing a business.
Why Umbrella Companies Are Important in Turkey
Turkey has strict labor laws and a detailed tax system. For workers and companies, this means:
- Complex payroll requirements with mandatory deductions.
- Social security obligations (SGK) for both employees and employers.
- Work permits for foreign nationals tied to an employment contract.
- Strict penalties for non-compliance with labor and tax laws.
An umbrella company ensures that all these obligations are met, reducing risks for both the worker and the client company.
Taxation in Turkey: Key Points for Workers and Companies
Understanding how taxation works in Turkey is essential when using an umbrella company. Here are the main aspects:
1. Income Tax
Income tax in Turkey is progressive, meaning rates increase with higher earnings. For employees, the umbrella company withholds the correct tax amount directly from salaries.
As of 2025, the approximate brackets are:
- Up to ₺110,000: 15%
- ₺110,000 – ₺230,000: 20%
- ₺230,000 – ₺580,000: 27%
- ₺580,000 – ₺3,000,000: 35%
- Above ₺3,000,000: 40%
Freelancers working independently must file their own returns, but under an umbrella company, these deductions are made automatically.
2. Social Security Contributions (SGK)
Both employees and employers must contribute to Turkey’s social security system. Contributions cover healthcare, retirement pensions, disability benefits, and unemployment insurance.
- Employer contribution: around 22.5% – 23% of gross salary.
- Employee contribution: around 14% of gross salary.
Umbrella companies handle these payments directly, ensuring workers are fully registered with SGK.
3. Value-Added Tax (VAT)
For independent freelancers, VAT can be a major challenge. The umbrella company manages VAT obligations when invoicing clients, ensuring compliance with Turkish tax authorities.
4. Double Taxation Treaties
Turkey has agreements with more than 80 countries to avoid double taxation. For foreign workers, this means income earned in Turkey through an umbrella company may not be taxed again in their home country, depending on treaty provisions.
Compliance Obligations in Turkey
Compliance goes beyond taxation. Umbrella companies in Turkey ensure workers and companies follow all relevant regulations:
Employment Contracts
Contracts must comply with Turkish labor laws, including:
- Minimum wage requirements.
- Standard working hours (45 hours per week).
- Overtime pay rules.
- Paid leave and public holiday entitlements.
Work Permits for Foreigners
Foreign nationals cannot legally work in Turkey without a permit. Umbrella companies assist with:
- Preparing the required documents.
- Sponsoring work permit applications.
- Ensuring contracts align with Ministry of Labor requirements.
Termination Rules
Turkish law regulates how and when employment contracts can be terminated, including notice periods and severance pay. An umbrella company manages these processes correctly.
Data Protection
Companies operating in Turkey must comply with KVKK, the local data protection law. Umbrella companies ensure HR data is processed lawfully.
Legal Insights: Why Umbrella Companies Are Secure
For both foreign professionals and companies, the legal risks of non-compliance can be high. Working with an umbrella company offers:
- Reduced liability: The umbrella company assumes legal responsibility for employment compliance.
- Transparency: Clear contracts and payslips ensure financial and legal clarity.
- Protection for workers: Freelancers gain rights similar to employees, including access to courts in case of disputes.
- Trust for clients: International businesses hiring through umbrella companies demonstrate commitment to legal standards in Turkey.
Benefits of Using an Umbrella Company in Turkey
For Workers (Local and Foreign)
- Simplified tax and social security management.
- Legal employment status with full benefits.
- Access to healthcare and retirement plans.
- Protection under Turkish labor laws.
- Easier work permit sponsorship.
For Foreign Companies
- Ability to hire workers without creating a Turkish subsidiary.
- Full compliance with taxation and labor laws.
- Reduced administrative costs and legal risks.
- Faster market entry.
Real-World Example
A foreign company Turkey wants to hire a software developer in Istanbul for a 12-month project. Setting up a branch office would be expensive and time-consuming. Instead, the company works with an umbrella provider.
The umbrella company hires the developer, registers them with SGK, handles payroll taxes, and provides the company with monthly invoices. The foreign business controls the developer’s work, while the umbrella company manages compliance and taxation.
Umbrella Company vs. Independent Freelancing
While freelancing independently may seem attractive, it comes with risks:
- Navigating Turkish tax registration is complicated.
- Non-compliance with SGK can lead to penalties.
- Foreigners may not obtain a freelance work permit without an official employer.
Using an umbrella company eliminates these risks while providing security for both freelancers and clients.
Key Considerations When Choosing an Umbrella Company
Not all umbrella providers in Turkey offer the same level of service. Before signing, check:
- Experience with foreign workers and companies.
- Clear fee structure (percentage vs. fixed).
- Support with work permits and visas.
- Multilingual support for non-Turkish speakers.
- Strong compliance record with tax and labor authorities.
Umbrella companies are transforming the way freelancers, contractors, and international companies operate in Turkey. They simplify taxation in Turkey, ensure compliance with labor laws, and provide legal security for both workers and employers.
For professionals, this means focusing on work while enjoying full employment benefits. For foreign companies, it means hiring local talent quickly and legally without the burden of establishing a subsidiary.
If you’re exploring opportunities in Turkey — whether as a freelancer or an international employer — partnering with us is a reliable umbrella company is one of the most effective ways to ensure success.