The question Turkish startups selling into Europe bring us most often is “in which country should we incorporate”. Put that way, the question misleads, because incorporating abroad is not a choice of country but a choice of function. Will the new company be a sales and invoicing vehicle, the group’s holding layer, or the parent entity you show to investors? The same country can be excellent at one of these functions and mediocre at another.
One boundary first: this decision is different from a flip-up. A flip-up moves the group’s top company at an investor’s request, and for US-focused rounds the address is usually Delaware; the details are in the five key points of the flip-up. A European company, in most files, is a market entry vehicle: customers want a European invoice, procurement teams want an EU counterparty, some tenders require an EU-established legal entity. Confusing the two decisions ends with two structures built on top of each other, one of them unnecessary.
Below we compare the three popular options (the Dutch BV, the Irish Ltd and the Estonian OÜ) along four practical axes: treaty network and holding regime, incorporation and management practice, the reality of bank accounts, and which founder profile each one suits.
The question is not “which country” but “which function”
No comparison works until the function is fixed. For a sales and invoicing function, what matters is the treaty relationship with the countries your customers sit in, the practicalities of VAT registration and the banking infrastructure. For a holding function, what matters is the exemption regime for participation income, the withholding burden on distributions and the breadth of the double tax treaty network. For a fundraising function, the deciding factor is investor familiarity with that legal system; a fund unwilling to invest into a country whose contract set it does not know will simply make you move the structure.
One further warning: wherever you incorporate, if management in fact runs from Türkiye, the tax residency and permanent establishment debate follows you. A company that is in Amsterdam on paper but managed from Kadıköy in practice is the ideal candidate for getting squeezed between two tax administrations. When the structure is set up, a minimum of reality abroad — decision-making processes, local services, ideally a local director — should be planned in.
The Dutch BV: a legal system with a holding reflex
The Netherlands has hosted the holding layers of international groups for decades, and its legal practice is shaped accordingly. The BV is a flexible limited company that can be formed with symbolic capital; incorporation runs through a civil-law notary, which makes the process somewhat more ceremonial than in Ireland or Estonia. The real attraction sits in two places: a broad tax treaty network, and the well-established participation exemption regime that, under certain conditions, exempts income from subsidiaries. Thanks to that regime, the BV works well as a holding company layer that can efficiently collect dividends and sale gains from the operating companies beneath it.
The other side of the coin is the Netherlands’ increasingly firm substance expectations towards paper-only structures. An empty BV will struggle to claim treaty benefits. If local management, an office and genuine decision-making cannot be shown, a substantial part of what the BV promises stays theoretical. On cost, too, the Netherlands is the most expensive of the three options: notary fees, local advisers and annual compliance belong in the budget from day one.
The Irish Ltd: strong as an operating company
Ireland’s strength is that it is an English-speaking common law country which has hosted the European operations of the US technology ecosystem for decades. Investors and enterprise customers are used to signing with Irish companies; legal and accounting support is easy to find; incorporation completes within a reasonable time and without a notary. The corporate tax regime’s treatment of trading income has historically been favourable; without going into rates, it is enough to say that what makes Ireland attractive is not tax alone but the combination of tax and ecosystem.
The practical hurdle is the local residency expectations: rules such as keeping a director resident in the European Economic Area on the board, or posting a bond instead, mean extra cost and structuring for a company run entirely from Türkiye. Ireland is also not a classic holding jurisdiction; its role is more that of an operating hub, a sales and invoicing base. For startups selling to enterprise customers across Europe and planning to build a team there, Ireland is a strong candidate; for those looking only for a layer to hold passive participations, it may not be the first choice.
The Estonian OÜ: e-Residency is not a passport
Estonia’s e-Residency programme lets you obtain a digital identity from anywhere in the world, form an OÜ and run it with remote signatures. The speed of formation and the digitisation of administrative filings are genuinely unmatched. The tax model is distinctive too: corporate profits are not taxed as long as they are retained, and tax arises on distribution. For a lean SaaS business that keeps cash in the company and grows, that model is kind to cash flow.
Let us state the limits just as plainly. E-Residency gives you no right to reside, work or become tax resident in Estonia; it gives you a digital identity, nothing more. If the company’s place of management is Türkiye, the residency debate applies in full. The bank account, as we discuss below, is the biggest practical problem e-Residency does not solve. And on perception, the OÜ does not enjoy the same recognition as a BV or an Irish Ltd with large European customers and classic venture funds. Estonia is an efficient vehicle for businesses selling digitally with a solo founder or a small team; as the vehicle for large enterprise contracts and large rounds, it has limits.
The bank account test
In practice, structures collapse not at incorporation but at the bank. When opening accounts, European banks look at where the director lives, the company’s genuine connection to the country and the logic of the money flows; anti-money-laundering rules tighten that review a little further every year. A classic bank account opened remotely by a sole founder living in Türkiye is not easy in any of the three countries; in the Netherlands and Ireland the absence of a local director and address slows things down, and in Estonia the local banks look for a connection to the country.
Licensed fintech e-money institutions fill this gap and are enough for most startups in the first year. But two limits should be understood: some enterprise customers and public buyers insist on paying into a classic bank account; and fintech accounts can be closed relatively quickly when risk policies change. The healthy plan is to start with a fintech account and to plan, from the outset, a move to a classic bank as the company’s reality in that country grows.
Which profile points to which structure?
In our advisory practice the decision usually lands on one of three profiles.
- The startup building enterprise sales and a local team. If a European sales team, customer support and a real office are planned, the Irish Ltd — especially in US-connected businesses — is the most balanced choice; for the same profile with a continental European centre of gravity, the Dutch BV is its equal.
- The group looking for a holding layer. If participations in several countries are to be collected and the layer is built for the long term, the Dutch BV with its participation exemption and treaty network is the classic choice; the cost of substance is the deliberate price of that choice.
- The small team selling purely digitally. For a startup selling its product entirely online with no plans for a European team, the Estonian OÜ is a fast, low-cost vehicle; it should be used in the knowledge that the structure will be revisited when enterprise customers and a large round arrive.
The order of decisions should always be the same: function first, country second, the incorporation formalities last. Founders who choose the country before the function end up relocating the structure when needs change, and relocating is always more expensive than building. Whatever the structure, an honest answer to the question of where management actually runs from is the precondition for every advantage the chosen country offers.
This article is provided for general information only and does not constitute legal advice. Please seek legal support for an assessment of any specific matter.
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