For individuals considering operating their own business in Turkey in 2025, this overview details the essential rules governing sole proprietorships, known locally as Şahıs işletmesi. Below, you will find a summary of the legal structure, tax rates, and mandatory contributions relevant to these individually owned businesses under Turkish regulations.
Sole Proprietorship Status in Turkey
Turkey permits individuals to operate as a Şahıs işletmesi (Sole Proprietorship), a business format that enables direct invoicing and commercial activities without the need to establish a distinct legal entity. This is a straightforward, frequently used system for freelancers, small shop owners, and service providers. Access to this status is open to all Turkish citizens and the process is generally uncomplicated, handled through the respective local tax office (Vergi Dairesi).
Registration and Legal Requirements
- Eligibility: Available to any individual eligible to conduct business in Turkey.
- Registration Office: Local tax office (Vergi Dairesi).
- Legal Entity: Not required; the business and the individual are not legally separate.
Taxation and Social Security Contributions
The table below summarizes the key tax obligations and thresholds for sole proprietors in Turkey for 2025:
| Obligation | Threshold / Rate (TRY) | Details |
|---|---|---|
| Personal Income Tax (Gelir Vergisi) | 15% – 40% | Progressive tax rates applied to annual business profits. |
| VAT Registration (KDV) | ₺150,000 | Mandatory if annual turnover for certain services exceeds ₺150,000 (2024 threshold). Applies to turnover, not profit. |
| Social Security (Bağ-Kur) | Mandatory (Contribution rates vary) | Required for all self-employed individuals; specific rates depend on declared income and prevailing social security base amounts. |
Exchange Rate for reference (as of early 2025): 1 USD ≈ 30 TRY; ₺150,000 ≈ $5,000 (USD).
Main Features of Şahıs İşletmesi
- Simplicity: Set up involves minimal bureaucracy, with registration completed at the local tax office.
- Direct Taxation: Profits are taxed as personal income, using Turkey’s progressive tax bands.
- Obligations: VAT registration is required only if turnover exceeds specific thresholds.
- Social Contributions: All proprietors must pay mandatory Bağ-Kur (self-employed social security).
Who Commonly Uses This Status?
The sole proprietorship model is the preferred format for:
- Freelancers and independent consultants
- Small retail shop owners
- Service providers, including IT professionals, designers, and tradespeople
Pro Tips for Managing a Şahıs İşletmesi in Turkey
- Stay aware of VAT thresholds. Regularly check whether your annual turnover is nearing the ₺150,000 mark to ensure timely VAT registration, avoiding penalties.
- Keep precise records. Meticulously track your sales, expenses, and social security payments. Accurate documentation simplifies annual tax filing and protects against tax office disputes.
- Plan for progressive taxation. Since tax rates increase with profits, early income estimation and quarterly reviews can help you optimize deductions and anticipate obligations.
- Don’t overlook Bağ-Kur. Social security payments are mandatory. Set up automatic payments or reminders to avoid missing deadlines.
Official Resources for Further Information
- Revenue Administration (Gelir İdaresi Başkanlığı)
- Official E-Government Portal
- The Union of Chambers and Commodity Exchanges of Turkey (TOBB)
In summary, Turkey’s Şahıs işletmesi framework remains a practical solution for those looking to launch a business as an individual in 2025. The status is easily accessible, with clear thresholds for registration, transparent taxation, and obligatory contributions. With careful compliance—especially regarding VAT and social security rules—it offers a predictable path for freelancers and small business operators to manage their fiscal responsibilities efficiently.