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Freedom to Grow: Why Every Turkish Entrepreneur Expanding to Europe Needs to Understand EU Establishment Law

By Burçe Dündar Öztürk, Co-founder & Executive Director, Bold Future Global


When I meet with Turkish entrepreneurs who dream of taking their startups global -whether they are in Istanbul, Ankara, or already building bridges from Berlin, Brussels, or beyond - one question keeps coming up: “How do we actually establish our business in the EU?”


It’s not just a logistical question. It’s a strategic one. And increasingly, it’s a question of navigating a complex legal landscape that can either open doors wide or slam them shut, depending on how well you understand the rules.


At Bold Future Global, our mission is to empower the growing Turkish entrepreneurs that aim to start, expand or sustain their business in Europe and beyond. We are committed to doing so by not only connecting them with the networks and resources, but also to giving them the crucial knowledge they need to turn ambitious ideas into thriving, impact-driven ventures. And when it comes to expanding into European markets, understanding EU company law is not optional. It is foundational.


Today, I want to share something that might sound academic at first but has profound practical implications for every founder, investor, and innovation leader in our community: how the Court of Justice of the European Union (CJEU) interprets the freedom of establishment—and why this matters to you.


Why This Matters: From Brain Drain to Brain Gain


Our work at BFG is all about transforming brain drain into brain gain. We see brilliant Turkish minds leaving home - not because they want to abandon their roots, but because they’re chasing opportunity, resources, and markets that can turn their innovations into real-world impact.


But here’s the thing: establishing a business across borders within the EU isn’t a one-size-fits-all process. The legal framework governing how companies can move, operate, and grow across Member States has evolved dramatically over the past few decades. Understanding that evolution is key to making smart decisions about where to establish, how to structure your venture, and which legal route gives you the best shot at success. The legal rules around primary establishment (setting up your main business in an EU Member State) and secondary establishment (opening branches, subsidiaries, or agencies) will shape your growth trajectory.


So let’s dive in. Let me take you through two landmark cases that fundamentally changed the game - and what they mean for entrepreneurs like you.


The Legal Foundation: What Is “Freedom of Establishment”?


First, a quick introduction. The freedom of establishment is one of the foundational principles of the EU single market, enshrined in Articles 49 and 54 of the Treaty on the Functioning of the European Union (TFEU).


In simple terms, it means:


  • Primary establishment: You have the right to set up your main business - your headquarters, your primary operations - in any EU Member State.

  • Secondary establishment: You also have the right to open branches, agencies, or subsidiaries in other Member States to expand your reach.


On paper, this sounds fantastic. Freedom! Mobility! Growth!


But in practice? The Court of Justice has had to step in again and again to interpret what this freedom actually means - especially when national laws clash with cross-border ambitions.


Two cases tell this story perfectly: Daily Mail (1988) and Centros (1999). They represent two very different judicial philosophies - and together, they reveal the asymmetric reality of how companies can (or can’t) move across EU borders.


Case 1: Daily Mail (1988) - The Conservative Gatekeeper


Let’s start with Daily Mail and General Trust plc v. HM Treasury (1988).

The Story:Daily Mail, a UK-incorporated company, wanted to relocate its central management and control to the Netherlands for tax reasons. But there was a catch: UK law at the time required Treasury consent before a company could transfer its residence abroad -essentially an exit tax mechanism.

Daily Mail argued this restriction violated their freedom of establishment under EU law.


The Court’s Response:The CJEU said: Not so fast.


The Court held that companies, unlike natural persons, exist only by virtue of the national legislation that created them. Therefore, Member States retain the power to impose conditions on a company’s departure - including requiring consent or imposing exit taxes.


The freedom of establishment, the Court explained, does not guarantee a right to exit your country of incorporation and relocate to another Member State while maintaining your legal identity.


The Implications: For Turkish entrepreneurs looking to establish in the EU, this case is a reminder that primary establishment (where you set up your headquarters) is not a free-for-all. The country where you incorporate has significant control over your ability to leave that jurisdiction later. If you’re thinking long-term about mobility, incorporation strategy matters from day one.

Want to start in Germany but maybe move to France later? That could be legally complicated - or expensive. This is where expert legal guidance (and understanding the nuances of different Member States’ laws) becomes critical.


Case 2: Centros (1999) - The Liberal Breakthrough


Now, let’s move quickly to Centros Ltd v. Erhvervs- og Selskabsstyrelsen (1999)—a case that reversed the past position of the Court.


The Story:Two Danish nationals incorporated a company in the UK (where formation requirements were minimal and cheap) but had no intention of doing business there. Instead, they wanted to open a branch in Denmark to conduct all their actual operations.


The Danish authorities refused to register the branch, arguing this was an attempt to evade Danish minimum capital requirements and amounted to abuse of the freedom of establishment.


The Court’s Response:The CJEU disagreed - firmly.


The Court held that the right of secondary establishment is a fundamental freedom. The fact that Centros was incorporated in the UK purely to avoid stricter Danish rules was irrelevant. As long as the company was lawfully established in one Member State, it had the right to operate branches in any other Member State.


Denmark couldn’t impose its own incorporation requirements as a backdoor restriction on cross-border activity.


The Implications: This case was a game-changer. It legitimized “regulatory arbitrage” - the practice of incorporating in a Member State with favorable laws and then operating freely across the EU.


For Turkish entrepreneurs, Centros opens strategic possibilities:- Want to incorporate quickly and affordably? Consider jurisdictions like Ireland or Estonia.- Need to operate in multiple EU markets? You can set up in one country and expand through branches - without meeting each country’s incorporation requirements.- Thinking about which legal structure gives you the most flexibility? This case suggests that where you incorporate matters - but you’re not locked into operating only there.


The Asymmetric Reality: What This Means for You


Here’s the key insight from comparing these two cases:


The CJEU has created an asymmetric system:


  • Leaving is hard (Daily Mail): If you want to relocate your company’s seat or headquarters to another Member State, your home country can stop you or impose conditions.

  • Arriving is easy (Centros): If you want to set up operations in another Member State through branches or subsidiaries, the host country generally cannot stop you.


This asymmetry shapes strategic choices:


  • For early-stage startups: Centros gives you flexibility to incorporate smartly and expand without re-incorporating everywhere.

  • For scaling ventures: Be mindful that once you’re incorporated somewhere, moving your legal seat later (if needed for funding, tax, or strategic reasons) may be complex.

  • For international founders: Understanding incorporation theory (real seat vs. incorporation doctrine) in different Member States helps you choose the right jurisdiction upfront.


What BFG Does: Connecting Knowledge to Opportunity


This is exactly why Bold Future Global exists.


We don’t just connect Turkish talent with funding opportunities like Horizon Europe or the EIC Accelerator. We connect them with the strategic knowledge needed to navigate complex regulatory landscapes - whether that’s EU company law, cross-border research collaboration rules, or international business structuring.


When you’re part of the BFG community, you’re not alone in figuring out these questions. Our network includes legal experts, experienced entrepreneurs who’ve scaled across borders, and advisors who’ve helped ventures navigate everything from incorporation to internationalization.


We’ve seen firsthand how the right legal structure at the right time can accelerate growth or how a mistake can create costly complications down the road.


Key Takeaways for Turkish Entrepreneurs


If you’re building a venture with European ambitions, here’s what you need to know:


✅ Freedom of establishment is real - but asymmetric. You can expand easily through branches and subsidiaries (Centros), but relocating your headquarters later is harder (Daily Mail).

✅ Incorporation strategy matters from day one. Choose your jurisdiction carefully based on regulatory environment, tax treatment, capital requirements, and long-term mobility needs.

✅ Regulatory arbitrage is legitimate. You can incorporate in one Member State and operate in others - this isn’t “gaming the system,” it’s using the freedoms the EU provides.

✅ Legal expertise is a competitive advantage. Understanding CJEU case law and how different Member States interpret establishment rules can save you time, money, and headaches.

✅ Community and mentorship accelerate learning. At BFG, we believe no one should navigate these complexities alone. Our mentors and advisors have been there - and they’re ready to help you chart the smartest path forward.


At the end of the day, innovation doesn’t happen in isolation. It happens when bold minds come together, share knowledge, and build something bigger than themselves.


Be bold. Join our mission.


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About the Author

Burçe Dündar Öztürk is Co-founder and Executive Director of Bold Future Global. With a legal background and over 27 years of expertise in migration and international development, she has led large-scale, high-budget, and technically complex programmes for the EU and UN. She currently manages projects and gives legal advice in the biotech field, always with a focus on social impact, and is passionate about empowering Turkish innovators to create global change.


Further Reading

This article is based on research and analysis conducted for an EU company law seminar and reflects the author’s expertise in international law and cross-border business strategy.


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