What is an Umbrella Company in Turkey ?

Most people don’t know exactly what is an umbrella company in Turkey and why they are needed, and what they are exactly. The aim of this article to clear up the misunderstandings about these companies.

How an Umbrella Company based in Turkey works

Contractors and freelancers are employed by an umbrella Company. The contractor is then considered an employee of the Umbrella Company based in Turkey. The client will not need to manage the payroll, because this is the job of the Umbrella company in Turkey. Contractors will submit the timesheet and expenses every month, and then the umbrella company will invoice the final client directly. The contractor is considered an employee by the umbrella company, and will gain many benefits of permanent employment, like holiday/sick/maternity pay). In this way, the contractor will gain professional independence.

As a foreign company doing business in Turkey, by using an umbrella company you don’t have to pay taxes and other expenses like insurance contributions. The umbrella company based in Turkey pays these for you. PAYE (Pay as you earn) is done by the Payroll company in Turkey. It is paid with the funds received by the umbrella company. Payroll company in Turkey will obtain fees paid by the client. The same day the invoices are paid, the employee will get his/her salary and the payslip which details their income. By working under an umbrella company, employees have many advantages. Work related expenses are paid, and so the take-home pay is automatically increased. Holiday income is paid. The only things employees have to do is to submit expenses and timesheets, then just wait to be paid. All the paper work is done by Payroll company in Turkey. The best method of contracting in Turkey is choosing an umbrella company.

The advantages of Payroll services at MPS Ltd Consulting.

A team at your service.

Your legal and administrative advantages

  • With Umbrella Company in Turkey, you start your professional activity without the need to set up a legal structure. There is no need to register and know about all the formalities of setting up a business.
  • You can offer training services by benefiting from our activity declaration number (MPS Ltd Payroll Company in Turkey training organisation) and opt for the tax regime (subject or not subject to VAT) adapted to your customers.
  • You benefit from a strong administrative and legal framework: reduced formalities, online and secure dashboards and professional liability insurance.
  • Our administrative services relieves you of the management of invoicing and collection, leaving you to focus on your core business.

Your benefits with Umbrella Company in Turkey

  • With our services for Payroll Company in Turkey, you benefit from employee status: social protection (health, retirement and provident insurance) and maintenance of employment centre rights.
  • You decide how to manage your time, based on your professional and personal goals.

Your relationship advantages

  • With Turkey Payroll MPS Ltd you are supported by truly personalised, individual and collective support, tailored to your needs.
  • You are part of a network, an essential asset for the development of your activity and the main source of business. You no longer experience the isolation of a freelancer.

You can try out your business activity without risk or commitment

  • Free membership
  • Quick and easy to set up: You can start a job within 48 hours.
  • No fees or contributions in the event of a period without billing.
  • No turnover limit.
  • No surprise: You know from the start of your job, the amount of expenses and the expected income.
  • No minimum engagement period with our Payroll Company in Turkey

You benefit from a secure status, as do your customers

You are able to reassure your customers that you are a professional and you strengthen your image as an expert. That is an advantage of our Umbrella Company based in Turkey.

  • You provide them with a flexible and secure environment.
  • You give them the assurance of working within a recognised structure, respectful of the legislation in force, both social and legal.
  • You provide them with all the insurance necessary for the performance of your mission.

Myths around Umbrella Companies in Turkey and how they work

Before writing about the myths around umbrella companies in Turkey, it is important to define clearly what an umbrella company is.

As does a recruitment agency, the umbrella company employs agents as contractors or freelancers. A recruitment agency is in touch directly with the umbrella company. Then, a contractor becomes the employee of the umbrella company. The umbrella company will pay salary and taxes, and the contractor will send it information including timesheet and monthly expenses. An umbrella company will invoice its final client directly. The contractor will have the same benefits of an employee working in an normal company.

Unfortunately, many people don’t know how payroll service providers operate. Professional Employer Organisation (PEO) based in Turkey is the best option for companies and contractors wanting to manage their profits successfully.

It is a myth that an umbrella company takes 90% of the salary. This is false information. Umbrella Companies in Turkey are aligned with Turkish laws (employment taxes etc…).

The only way it can affect net salary is the fees taken by the Payroll Company.

Employees working under Umbrella Company will have the same benefits as others in terms of holiday, sick pay, maternity pay etc.

Your MPS Ltd Payroll Turkey Solution

Payroll company is an innovative form of employment. The umbrella company in Turkey links the employee to the client.

Payroll is a halfway between employment and self-employment. The payroll employee can act freely in his/her actions and the completion of his/her jobs. The payroll employee is responsible for negotiating prices and the terms of interventions with the client regarding objectives, fees etc.

He/she has to provide adequate services and report to the payroll company.

Create, test or exercise your activity freely: this is what the umbrella company offers.

Simple and efficient

This solution provides many advantages. It allows you to keep the social protection enjoyed by employees (sickness, maternity, unemployment, retirement, etc.) and to avoid the social, tax and accounting formalities to which entrepreneurs are bound.

You retain complete control over your work. Once the job has been negotiated and granted, you delegate the management of all the administrative tasks to the payroll company. The umbrella company in Turkey collects your fees and pays you a salary based on your net turnover, after the deduction of social charges and a commission for management costs.

Unlike the status of self-employment, payroll does not impose a turnover limit on you.

Tax Guide in Turkey

It is true that out of the OECD member countries, Turkey is very competitive regarding tax rates. Comparing it to international standards, Turkish corporate tax legislation is objective.

Personal income tax : This is subjected to an individual’s net amount of earnings corresponding to this tax.

Corporate income tax : This applies only to corporations. In Turkey, the application of this tax on business profits is 20%. In the past two years, the rate has increased to 22%.

VAT : Three different rates are applied, 1%, 8% and 18%. Goods and services are subject to VAT.

SCT : This means special consumption tax. Four product groups are subject to it: energy, automotive industry and the tobacco/alcohol industries.

Insurance and Banking Tax : All the transactions on these two sectors are subject to tax at 5%.

Stamp duty : This concerns lot of documents such as notes, capital contributions, contracts, banking letters and statements.

Wealth : These taxes concern automotive vehicle, property and gifts.

Real estate tax : Between 0.1% and 0.6%.  Apartments, land and buildings are subject to this tax.

Last but not least, choosing an Umbrella Company in Turkey is the best solution for foreign companies which don’t yet have  any legal structure in this country. Do not hesitate to contact our team if you are looking for further information.