Estonian Company Run from Turkey: Tax Residence

Many Turkish entrepreneurs become e-residents and form or buy an Estonian private limited company (OÜ) to run from Turkey. That works, but Turkish corporate tax law does not look only at where a company is registered: a company whose business centre is in Turkey is fully liable to Turkish corporate tax, and a Turkish resident owner can be taxed on the profit of a controlled foreign company. The tax treaty between Estonia and Turkey has its own rule for a company both countries count as resident. This guide sets out these rules with the official texts, and what we do on the Estonian side.

The guide is general information, not tax advice. How your company is taxed depends on the facts of your case; ask a Turkish tax adviser (vergi danışmanı) before you form or buy the company. The Corporate Tax Law No. 5520 (Kurumlar Vergisi Kanunu) was read on mevzuat.gov.tr, and the treaty in its Estonian text in Riigi Teataja, on 21 October 2026; the English wording below is our translation.

In Estonia: an Estonian company is Estonian

A company established under Estonian law is resident in Estonia for tax purposes (Income Tax Act § 6). Its profit is taxed when it is distributed, not while it stays in the company — the guide how Estonia taxes company profit explains the rule. The company keeps its Estonian duties wherever its owners live: accounts, an annual report to the commercial register and, if its address is abroad, a contact person in Estonia.

In Turkey: legal seat or business centre

Full liability. A company whose legal seat (kanunî merkez) or business centre (iş merkezi) is in Turkey is taxed on all its earnings, in Turkey and abroad (Law No. 5520, article 3(1)).
What the business centre is. The law defines it as the centre where the company's business operations are in fact concentrated and managed (article 3(6)); the legal seat is the one named in the company's founding documents (article 3(5)).
Without either in Turkey, a company is taxed only on the earnings it makes in Turkey, for example through a workplace or a permanent representative there (article 3(2) and (3)).

In Turkey: controlled foreign company rules

Who is caught. When fully liable Turkish individuals and companies together or separately control at least 50 percent of the capital, profit share or voting rights of a foreign subsidiary, its profit is subject to Turkish corporate tax, whether or not it is distributed, if three conditions are all met (article 7(1)):
25 percent or more of the subsidiary's gross revenue is passive income such as interest, dividends, rent, licence fees or gains from securities — not income from a commercial, agricultural or professional activity carried on with capital, organisation and staff in proportion to it;
the subsidiary bears a total income-tax burden of less than 10 percent of its commercial balance-sheet profit;
its total gross revenue for the year exceeds the foreign-currency equivalent of 100,000 YTL.

The law then adds that profit to the tax base of the fully liable Turkish companies that hold the subsidiary, in proportion to their shares (article 7(4)); how the rule reaches an individual owner is a question for your adviser. An Estonian company pays corporate income tax only when it distributes profit, so in a year in which it keeps its profit its tax burden can be below the 10 percent threshold. Whether the rule applies then depends above all on the share of passive income — a question for your Turkish tax adviser with your company's figures.

What the Estonia–Turkey tax treaty says

Resident in both countries. If a person other than an individual is resident in both states, the competent authorities decide by agreement how the treaty applies to it; if they do not agree, the person is not treated as resident of either state and gets none of the treaty's benefits (agreement signed on 25 August 2003, article 4(3)).
Permanent establishment. A permanent establishment is a fixed place of business through which the enterprise's business is wholly or partly carried on; it includes especially a place of management, a branch and an office (article 5(1) and (2)). The profit attributable to it may be taxed in the state where it is (article 7(1)).
Director's fees. Fees a Turkish resident receives as a member of the management or supervisory board of an Estonian company may be taxed in Estonia (article 16) — see board member fee or dividend from abroad.
Dividends. Dividends paid by an Estonian company to a Turkish resident may be taxed in Turkey; if Estonia also taxes them at source, the treaty limits that tax to 10 percent of the gross amount (article 10(1) and (2)).

So, as with the United Kingdom, the treaty does not settle a double residence by itself: a company whose business is in fact run from Turkey may need an agreement between the two tax administrations before it can rely on the treaty. The multilateral convention on tax treaty measures (MLI) can change the rules of tax treaties; how it applies to your company is a question for your Turkish tax adviser — we do not give that ruling.

What to decide before you form or buy the company

Where the business is really run. Where operations are in fact concentrated and managed is the fact the Turkish law looks at.
What the company earns. Active trading income and passive income are treated differently under the controlled foreign company rule.
Where the work is done. An office or other fixed place of business in Turkey can be a permanent establishment.

What we do on the Estonian side

online formation for an e-resident — €950 Registered address and contact person service for one year are included., or formation by power of attorney — €1,250;
a ready-made company bought remotely — €1,200 Registered address and contact person service for one year are included.;
accounting — from €150 / month and the annual report — from €450;
the registered address and contact person after the first 12 months — €350 / year.

Our accounting covers the Estonian company's Estonian obligations. Turkish tax returns and Turkish tax advice are not included. Owners in other countries: Estonian company run from abroad compares the rules side by side.

Prices exclude VAT. All communication takes place by email.

Ready to start? A new Estonian company — online for e-residents or by power of attorney; Turkish tax advice is not included. Order.

Official sources

The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.

Income Tax Act — Riigi Teataja, English translation

Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.

Frequently asked questions

Is my Estonian company taxed in Turkey if I run it from Turkey?

It can be. A company whose legal seat or business centre is in Turkey — the centre where its business operations are in fact concentrated and managed — is taxed in Turkey on all its earnings (Corporate Tax Law No. 5520, article 3(1) and (6)). In Estonia the company stays resident because it was established under Estonian law (Income Tax Act § 6). Under the Estonia–Turkey tax treaty the competent authorities decide such a double residence by agreement; without an agreement the company gets none of the treaty's benefits (article 4(3)). Turkish owners of 50 percent or more can also be caught by the controlled foreign company rule (article 7). Ask a Turkish tax adviser before you form or buy the company; we handle the Estonian side.

Estonian company run from Turkey: where it is taxed