Accounting for a Registered Turkish Branch: Monthly Books and Head-Office Transactions

A registered Turkish branch is not a separate legal entity from its foreign head office. That legal point, however, does not eliminate the branch's Turkish accounting workload. The branch has a local tax and bookkeeping footprint, must support the transactions attributable to its Turkish activity, and needs a disciplined bridge between Turkish statutory records and the head office's group reporting system.

The practical risk is rarely the absence of a ledger. It is the lack of a repeatable monthly process that explains how local invoices, payroll, bank movements, head-office funding and allocated costs reach both the Turkish books and the overseas close pack. This guide turns that process into a control framework for a foreign company already operating through a registered branch in Türkiye.

Why a branch needs its own monthly accounting discipline

The Ministry of Trade describes a branch as a place connected to a commercial enterprise where industrial or commercial activity is carried on independently, regardless of whether it has separate capital or accounting. The Presidency of the Republic of Türkiye Investment Office likewise explains that a branch is not a separate legal entity, but is treated as a taxpayer in Türkiye for tax purposes.

This produces two simultaneous views:

• Legal view: the branch remains part of the foreign company and the head office ultimately bears its obligations.
• Turkish compliance view: transactions attributable to the branch must be recorded, documented, declared and reconciled under Turkish rules.
• Group reporting view: the same activity may need to be mapped into the head office chart of accounts, reporting currency and consolidation timetable.

A group ledger or ERP extract cannot replace Turkish statutory records. Conversely, a Turkish trial balance alone may not answer the head office's questions about intercompany classification, functional reporting lines or group-period cut-off. The monthly close needs both outputs and a controlled bridge between them.

1. Define the branch books and tax profile before the close

The first control is a written branch profile. It should identify what the branch is registered to do, which tax registrations are active, whether it has employees, which electronic document systems apply, which banks and currencies it uses, and what the head office expects in the monthly reporting pack.

The Turkish Revenue Administration's 2026 corporate tax guide states that a foreign company's Turkish branch is generally registered for corporate income tax, VAT and advance corporate tax. Withholding and combined payroll filings also arise when the underlying payments or employment position require them. The precise filing calendar must therefore be built from the branch's live registrations, not copied from another group entity.

For a wider operating framework, review the site's Turkey business tax and accounting guide. The branch close described here is deliberately narrower: it focuses on what must happen repeatedly after registration.

2. Separate head-office funding from income and expense

Money received from the foreign head office is not automatically branch revenue. A transfer may fund rent, payroll, taxes or other local operating costs. The accounting team should first identify the economic purpose and then book the movement consistently with the supporting records.

A Turkish Revenue Administration ruling dated 18 August 2020 discusses cash transfers from a foreign head office to its Turkish branch for operating expenses and the use of the “393 — Head Office and Branches Current Account” in that fact pattern. The ruling also distinguishes pure cash movements from purchases and sales of goods or services. Because private rulings apply to their particular facts, the account treatment should be confirmed against the branch's own transaction flow rather than copied mechanically.

Monthly evidence for funding movements

• head-office remittance instruction or treasury memo;
• Turkish bank receipt and value date;
• currency and exchange-rate evidence used for the local entry;
• purpose of the transfer and the period it is intended to fund;
• reconciliation of the branch current account to the head office mirror account; and
• an explanation for old, unmatched or one-sided balances.

3. Test head-office cost allocations before booking them

Corporate Tax Law Article 22 contains specific restrictions for non-resident taxpayers. In broad terms, interest, commissions and similar amounts paid to the head office or foreign branches for purchases and sales made on behalf of the Turkish operation are not automatically deductible. Shares of head-office general management costs also require a direct connection with earning and maintaining Turkish income and an arm's-length allocation key; unsupported participation in overseas losses or overhead is not enough.

The monthly close should therefore ask more than “Did headquarters issue an invoice?” It should establish:

1. What was supplied? Identify the actual service, resource, right or cost pool.
2. Did the Turkish branch benefit? Keep deliverables, correspondence, access records or other evidence.
3. How was the amount calculated? Preserve the cost base and allocation key, such as headcount, usage or time.
4. Is the allocation arm's length? Review transfer-pricing support and consistency with the intercompany policy.
5. What Turkish taxes arise? Check deductibility, withholding, reverse-charge VAT and treaty documentation before payment.

The site's guide to deductible business expenses in Turkey explains why a broad group allocation is not deductible solely because it appears in consolidated accounts.

4. Build VAT, payroll and document flows into the close

A branch close is not complete when the bank is reconciled. Local invoices, imported services, payroll and electronic documents must agree with the tax filings and statutory accounts.

VAT and imported services

For services supplied by a non-resident and used in Türkiye, the VAT General Application Communiqué may require the Turkish recipient to declare the VAT under the reverse-charge mechanism. A head-office invoice should therefore be reviewed for place of supply, use in Türkiye, exemption status and the branch's role as recipient. The result should be tied to both the VAT return and the general ledger.

Payroll and SGK

If the branch employs staff, the close pack should reconcile the payroll register to net salary payments, withholding accounts, social-security liabilities, benefits, expense reimbursements and leave or attendance records. Any remuneration or benefit paid by the head office on behalf of Turkish branch employees should be flagged for a local payroll and tax review.

Document cut-off

Set an internal deadline for incoming invoices, expense claims, customs records, bank statements and head-office allocations. Late documents should enter an exception list showing the transaction date, expected accounting period, estimated amount, owner and planned correction. This prevents the same cut-off issue from recurring invisibly every month.

5. Use a branch-to-head-office reconciliation bridge

The most useful monthly deliverable is not a raw ledger export. It is a bridge that explains how the Turkish statutory trial balance becomes the head office reporting package.

The bridge should end with the Turkish trial balance, reporting adjustments and final group pack all mathematically linked. If the head office uses IFRS or another group basis, those adjustments should not be silently posted into the statutory ledger. Their purpose, preparer, reviewer and reversal policy should be visible.

A practical monthly close sequence

1. Collect: receive invoices, bank statements, payroll inputs, customs records and head-office files.
2. Classify: separate local operations, funding, reimbursements, services, financing and other cross-border items.
3. Book: record supported transactions in the correct Turkish statutory period and currency.
4. Reconcile: clear bank, cash, receivables, payables, taxes, payroll and head-office current accounts.
5. Review tax: connect ledger balances to VAT, withholding, payroll, advance tax and other applicable filings.
6. Bridge: map the signed-off Turkish trial balance to the head office chart and reporting currency.
7. Explain: prepare variance commentary, old-balance actions and a list of missing evidence.
8. Approve: obtain local accounting and head-office sign-off, then lock the close pack and archive its evidence.

Monthly branch close checklist

Common control failures

• Treating the branch like an ordinary subsidiary: the legal relationship and head-office current account require a different analysis.
• Booking every head-office debit as deductible: an invoice does not prove local benefit or compliance with Article 22.
• Using the group close as the statutory close: group adjustments and reporting currency do not replace Turkish books.
• Leaving intercompany differences until year-end: one-sided entries become harder to evidence and may distort tax accounts.
• Ignoring benefits paid abroad: head-office payments may still affect Turkish payroll, withholding or VAT treatment.
• Applying a generic filing calendar: the branch's actual tax registrations and activity determine the returns due.

For background on the legal form, use the site's comparison of LLCs, JSCs, branches and liaison offices in Turkey. For the underlying document-retention framework, see statutory books and accounting records in Turkey.

Official sources

• Invest in Türkiye — Establishing a Business
• Invest in Türkiye — The Turkish Tax System
• Ministry of Trade — Company and Branch Information
• Turkish Revenue Administration — Corporate Tax Law
• Turkish Revenue Administration — 2026 Corporate Tax Return Guide
• Turkish Revenue Administration — Ruling on Head-Office Funding and Branch Current Accounts
• Turkish Revenue Administration — VAT General Application Communiqué

Reviewed on 29 October 2026. The branch's sector, tax treaty, registrations, transaction terms and head-office country may change the result; transaction-specific review is recommended.