Introduction — Challenges Faced by Civil Servants in the Modern Business World
Why is this topic more important now?
Globalization, digitalization, and remote working models have led professionals to participate more frequently in cross-border economic activities. Civil servants may also consider establishing foreign companies for economic diversification or investment purposes. This situation becomes complex due to legal uncertainties, compliance obligations, and ethical requirements.
To provide the reader with a clear roadmap, this article will address the legal framework, practical applications, tax and compliance dimensions, international workforce management, and risk mitigation steps.
Regulatory Framework — Law No. 657 on Civil Servants and Its Limits
Fundamental limitations and areas of interpretation of the law
Law No. 657 on Civil Servants restricts civil servants’ participation in commercial activities. The law states that civil servants cannot engage in activities that would require them to act as merchants. However, the law does not provide a direct and clear prohibition text regarding establishing companies abroad; therefore, differences in interpretation arise.
Carefully examine the relevant provisions of the law and seek official legal advice in cases where a definitive interpretation is needed. You can access the legal text from the official legislative source:
Practical Applications — Which models are legally more reasonable?
Partnership, capital participation, and management roles
According to expert opinions and legal practices, civil servants can provide capital to foreign companies but cannot take roles in company management or supervisory bodies. To make this approach concrete, follow these steps:
- Classify your capital share as a passive investment; do not participate in daily business management.
- Clearly state in the company’s articles of association and shareholder agreement that you will not assume a management role.
- If necessary, submit a written notification or permission request to your institution.
These steps reduce legal risk but do not eliminate risks entirely; request individual legal assessment for each situation.
Tax and Compliance Obligations — Income, declaration, and double taxation
Tax liability and reporting obligations in Turkey
In accordance with Turkish tax legislation, tax liability is determined based on your residency/status. Declare foreign-sourced income and review the relevant double taxation agreement to prevent double taxation if applicable.
Applicable steps:
- Report the dividends or capital gains obtained from the foreign company in your annual income tax return.
- Timely fulfill obligations to the tax office and the Social Security Institution.
- Work with an international tax expert for tax planning and optimization; do not establish structures with the intent to evade taxes.
Corpenza provides compliant solutions in international accounting and tax optimization processes; especially supports companies in payroll and expense reporting processes for remote workers.
Risk Management and Permission Processes — Practical checklist
Step-by-step compliance and risk reduction
Before deciding to establish a foreign company, implement the following checklist:
- Review the disciplinary and ethical rules of your institution; request written permission if necessary.
- Obtain legal advice; especially seek opinions in the context of Law No. 657 and related regulations.
- Evaluate tax obligations; check the double taxation agreement.
- Design the company structure to maintain a passive role based on investor/partnership.
- Plan for international payroll and social security obligations; obtain documents like A1.
By following these steps, systematically reduce administrative, legal, and financial risks. Obtain concrete documents and written opinions before making decisions.
Conclusion and Support Available from Corpenza
Clear steps, balance of compliance and growth
Establishing a company abroad by civil servants does not appear to be completely prohibited legally; however, active participation of civil servants in commercial management is limited. As you make decisions, legal advice, internal permission processes, and tax compliance become the most critical issues.
Corpenza provides support in the following areas:
- International company establishment and structuring
- Consulting for residence permits, golden visas, and obtaining status through investment
- International accounting and tax optimization
- Payroll management; processes for reporting salaries of remote workers as expenses
- Staff leasing and posted worker solutions
Before taking action, review your institution’s regulations and your personal situation. Obtain legal and financial advice; if necessary, work directly with Corpenza to manage your processes in a compliant manner.
