When expanding into Turkey or starting a project as a foreign professional, understanding local employment structures is essential. Two of the most common solutions that simplify legal hiring and payroll are the umbrella company model and the Employer of Record (EOR) model.
Both approaches allow businesses and professionals to operate in Turkey without setting up a local entity, but they serve different purposes. If you are researching EOR umbrella company Turkey, this guide explains the distinctions, benefits, and use cases of each model.
Why Employment Solutions Matter in Turkey
Turkey has a dynamic economy, a strategic location between Europe and Asia, and a growing pool of skilled talent. However, hiring foreign workers or managing contractors can be complicated due to:
- Strict work permit requirements for non-Turkish nationals.
- Payroll and tax compliance obligations.
- Social security contributions (SGK).
- Employment law protections for workers.
For companies and individuals, directly navigating Turkish regulations can be time-consuming and risky. This is where umbrella companies and EOR providers come into play.
What Is an Umbrella Company in Turkey?
An umbrella company acts as the legal employer of independent contractors or freelancers. Instead of registering as self-employed or setting up a local company, professionals can sign an employment contract with the umbrella company.
The umbrella company then:
- Invoices the client on behalf of the worker.
- Processes payroll and deducts income tax.
- Registers the worker with social security (SGK).
- Provides employee benefits such as healthcare coverage.
For contractors, consultants, and freelancers, this is an efficient way to work in Turkey without managing administrative or legal complexities.
What Is an Employer of Record (EOR) in Turkey?
An Employer of Record (EOR) is a third-party organization that legally employs workers on behalf of a client company. Unlike umbrella companies, EORs are designed for businesses rather than individuals.
The EOR assumes full legal responsibility for:
- Employment contracts.
- Payroll administration.
- Tax compliance.
- Social security contributions.
- HR and labor law compliance.
This allows a foreign company to hire staff in Turkey without setting up a local subsidiary. The EOR manages compliance, while the client retains operational control over the employee’s daily tasks.
Key Differences Between an Umbrella Company and EOR in Turkey
Although both models provide legal employment structures, they are not interchangeable. Here are the main differences explained:
1. Target Users
- Umbrella Company: Designed for individuals (contractors, freelancers, consultants) who want to work in Turkey with minimal bureaucracy.
- EOR: Tailored for foreign companies hiring employees in Turkey without opening a legal entity.
2. Legal Employer
- Umbrella Company: The contractor becomes an employee of the umbrella company for tax and compliance purposes.
- EOR: The EOR becomes the official employer of record for the company’s staff in Turkey.
3. Scope of Services
- Umbrella Company: Focused mainly on payroll, tax deductions, and social security registration.
- EOR: Provides broader HR services including compliance, employee onboarding, benefits management, and legal support.
4. Duration of Engagement
- Umbrella Company: More suitable for short-term or project-based assignments.
- EOR: Ideal for long-term employment and business expansion.
5. Control Over Employees
- Umbrella Company: The worker manages their client relationships directly.
- EOR: The foreign company manages daily work, but the EOR manages legal employment.
When to Use an Umbrella Company in Turkey
An umbrella company is the right choice if you are:
- A freelancer or contractor working on short-term assignments.
- A foreign professional who does not want to establish a business in Turkey.
- An individual seeking legal employment status for work and residency permits.
- A consultant working with multiple clients at the same time.
This model is particularly common in IT, engineering, and consulting projects.
When to Use an Employer of Record in Turkey
An EOR is the right solution if you are:
- A foreign company wanting to hire Turkish employees without creating a subsidiary.
- A business needing long-term staff in Turkey.
- A company seeking to ensure full compliance with labor law and HR policies.
- An organization expanding to Turkey but testing the market before setting up a local branch.
EOR services are widely used in industries such as tech, manufacturing, and professional services.
Benefits of Umbrella Companies in Turkey
- Simplicity: Quick onboarding without complex paperwork.
- Flexibility: Ability to work with multiple clients.
- Legal Compliance: Taxes and social security handled correctly.
- Worker Protection: Coverage under Turkish labor laws.
Benefits of EOR Services in Turkey
- Entity-Free Expansion: No need to set up a local company.
- Comprehensive HR Support: Covers payroll, benefits, and compliance.
- Reduced Risk: The EOR assumes legal responsibility.
- Scalability: Hire employees quickly as your business grows.
Challenges and Considerations
While both solutions are highly effective, there are some limitations:
- Umbrella Companies: Not suitable for large-scale hiring or companies managing teams. Fees are usually charged as a percentage of income.
- EOR Services: More expensive for freelancers; primarily designed for businesses, not individuals.
Choosing between an EOR umbrella company Turkey depends on whether you are an individual contractor or a foreign company hiring staff.
Real-World Example
- A freelance software developer from Europe wants to work for a Turkish startup. Instead of creating a Turkish company, they join an umbrella company, which handles payroll and tax compliance.
- A US-based tech firm wants to hire three Turkish engineers but doesn’t want to open a subsidiary. They use an EOR service, which becomes the legal employer while the engineers work for the US company.
Both umbrella companies and EOR services provide practical solutions for navigating Turkey’s employment regulations.
- Use an umbrella company if you are an individual contractor or freelancer seeking flexibility and legal compliance.
- Use an EOR service if you are a foreign company hiring multiple employees in Turkey and need comprehensive HR and compliance support.
By understanding the key differences between umbrella companies and EOR services in Turkey, professionals and businesses can choose the right model for their needs.
If you are exploring EOR umbrella company Turkey solutions, the best approach is to evaluate your goals: Are you an individual looking to work legally, or a company expanding into the Turkish market? The answer will guide your decision.