Turkish Companies Entering the U.S. Market: A Legal Roadmap

The United States remains the world's largest consumer market and the most sought-after destination for Turkish companies with global ambitions. Yet the path from Istanbul to New York is rarely straightforward. Regulatory requirements, entity structures, tax obligations, and contract norms differ sharply from what Turkish executives are accustomed to at home.

This guide outlines the key legal steps Turkish companies must navigate when establishing a U.S. presence — and the pitfalls that most commonly derail first-time market entrants.

Many Turkish companies approach U.S. expansion the same way they approached expansion into Germany or the Gulf: find a local partner, sign a distribution agreement, and see what happens. That approach rarely works in the United States.

The U.S. legal environment is highly litigious. Contracts are interpreted literally and enforced aggressively. Regulatory frameworks vary not only at the federal level but across 50 states, each with its own corporate law, employment rules, and licensing requirements. A company that enters without proper legal infrastructure exposes itself to liability from day one.

The good news: with the right structure in place, the U.S. market rewards foreign companies that commit to it properly.

The first decision — and often the most consequential — is which type of legal entity to form. Turkish companies typically choose between three options:

The LLC is the most popular choice for foreign-owned businesses entering the U.S. It offers:

• Limited liability protection for the parent company
• Pass-through taxation (profits taxed at the owner level, not the entity level)
• Flexible management structure with no board requirements
• Minimal formalities compared to a corporation

For Turkish companies that want to test the U.S. market without committing to a full corporate structure, a single-member LLC owned by the Turkish parent is often the right starting point.

If your company plans to raise venture capital, list on a U.S. stock exchange, or issue equity to U.S. employees, a Delaware C-Corporation is the standard. Delaware is the preferred state of incorporation for most U.S. companies due to its well-developed corporate law and business-friendly courts.

The C-Corp is subject to double taxation (corporate tax plus dividend tax), but this is often manageable through proper structuring.

A branch office is not a separate legal entity — it is an extension of the Turkish parent company. This means the parent bears full liability for the branch's activities. Branch offices are rarely advisable for Turkish companies entering the U.S. for the first time, as they expose the entire parent entity to U.S. legal risk.

Where you incorporate and where you operate are two different questions.

Delaware is the default choice for incorporation due to its predictable corporate law, the Court of Chancery (a specialized business court), and the fact that most U.S. investors and counterparties expect it.

New York is the natural operational base for Turkish companies given the size of the Turkish-American business community, the concentration of financial services, and direct flight connections to Istanbul. However, New York imposes a publication requirement on LLCs — newly formed LLCs must publish a notice in two local newspapers for six consecutive weeks, which can cost $1,000–$2,000.

Texas and Florida are increasingly popular for Turkish companies in manufacturing, logistics, and real estate due to lower operating costs and no state income tax.

Once the entity is formed, two immediate priorities are:

Employer Identification Number (EIN): This is the U.S. tax identification number for your entity, issued by the IRS. It is required to open a bank account, hire employees, and file taxes. Foreign-owned entities can obtain an EIN by mail or fax — the process takes 4–6 weeks without a U.S. Social Security Number.

U.S. Bank Account: This is often the most frustrating step for Turkish companies. U.S. banks are subject to strict anti-money laundering (AML) and Know Your Customer (KYC) requirements. Many banks refuse to open accounts for foreign-owned entities without a U.S. resident signatory. Working with a legal advisor who has established banking relationships significantly accelerates this process.

Turkish business culture places significant weight on relationships and oral agreements. U.S. business culture does not. Every material commitment — distribution agreements, service contracts, employment terms, lease agreements — must be in writing and reviewed by U.S. counsel before signing.

Key differences Turkish companies frequently encounter:

• Limitation of liability clauses: U.S. contracts routinely cap one party's liability at the contract value. Turkish companies sometimes sign these without realizing they have waived the right to recover consequential damages.
• Governing law and jurisdiction: Always negotiate for New York or Delaware law and courts if you have a choice. Avoid agreeing to arbitration in unfamiliar venues.
• Intellectual property assignments: U.S. employment and contractor agreements typically include broad IP assignment clauses. Ensure your Turkish parent retains ownership of any IP developed in the U.S.
• Non-compete and non-solicitation clauses: Enforceability varies dramatically by state. California bans non-competes almost entirely; New York enforces them narrowly.

Most Turkish companies need to send executives or technical staff to the U.S. to manage the new operation. The primary visa options are:

E-2 Treaty Investor Visa: Turkey has a bilateral investment treaty with the United States that allows Turkish nationals to obtain an E-2 visa by making a "substantial" investment in a U.S. business. There is no fixed minimum, but investments below $100,000 are rarely approved. The E-2 is renewable indefinitely as long as the business remains operational.

L-1 Intracompany Transferee Visa: If the Turkish parent company has been operating for at least one year, it can transfer executives, managers, or employees with specialized knowledge to the U.S. entity on an L-1 visa. The L-1A (for executives and managers) can lead to a green card through the EB-1C category.

O-1 Visa: For individuals with extraordinary ability in their field — useful for senior technical talent or recognized industry experts.

The Committee on Foreign Investment in the United States (CFIUS) reviews foreign acquisitions of U.S. businesses that could affect national security. While most Turkish companies entering the U.S. through organic growth (rather than acquisition) will not trigger CFIUS review, companies in technology, defense supply chains, telecommunications, or critical infrastructure should seek legal advice before proceeding.

Sector-specific licenses may also apply. Financial services, healthcare, insurance, and certain technology sectors require state or federal licenses before operations can begin.

U.S. tax law is complex, and the interaction between U.S. and Turkish tax obligations requires careful planning. Key considerations include:

• Transfer pricing: Transactions between the U.S. subsidiary and the Turkish parent must be priced at arm's length. The IRS scrutinizes intercompany transactions closely.
• Withholding tax on dividends: The U.S.-Turkey tax treaty reduces the withholding tax on dividends paid from the U.S. subsidiary to the Turkish parent to 15% (or 5% if the Turkish parent owns at least 10% of the U.S. entity).
• GILTI and BEAT: Large Turkish multinationals with significant U.S. operations may be subject to the Global Intangible Low-Taxed Income (GILTI) rules and the Base Erosion and Anti-Abuse Tax (BEAT).

After advising hundreds of Turkish companies on U.S. market entry, we see the same mistakes repeatedly:

1. Incorporating without a plan: Forming an LLC takes 24 hours online. Building the legal infrastructure to operate safely takes months. Many companies form the entity and then discover they are not ready to operate.

2. Relying on Turkish-speaking advisors without U.S. qualifications: There is no shortage of Turkish-speaking consultants in New York. Not all of them are licensed U.S. attorneys. Legal advice on U.S. law must come from a licensed U.S. attorney.

3. Signing U.S. contracts without review: The standard U.S. commercial contract is not the same as a Turkish commercial contract. Signing without review is one of the most expensive mistakes a Turkish company can make.

4. Underestimating employment law exposure: U.S. employment law is highly protective of employees. Misclassifying workers as independent contractors, failing to pay overtime, or terminating employees without proper documentation can result in significant liability.

5. Ignoring state and local tax obligations: Federal tax is only part of the picture. New York City, for example, imposes its own corporate income tax on top of the New York State tax.

ULF New York was established exclusively to serve the U.S. legal needs of Turkish companies and individuals. Our team combines deep knowledge of U.S. corporate, immigration, and contract law with an understanding of Turkish business culture and the specific challenges Turkish companies face when entering the American market.

Whether you are at the planning stage or already operating in the U.S. and facing a legal challenge, we are here to help.

Contact us to schedule a consultation.