WHO IS INTERESTED IN COMPANY FORMATION IN GEORGIA
According to the Doing Business 2019 ranking, Georgia ranked second out of 190 in terms of ease of registering a new business. The overall rating of the country was 83.7%.
WHAT KIND OF BUSINESS IS BETTER TO START IN GEORGIA?
- It would be a good idea to open an IT company due to the preferential tax regime of the Virtual IT Zone. In particular, IT service companies;
- Trading business for conducting transactions with the whole world;
- Service business to serve customers from all over the world.
IS IT POSSIBLE TO RUN A BUSINESS REMOTE?
Certainly! That is why Georgia holds a leading position in the rating of ease of doing business.
Starting a business and managing a company can be completely remote from anywhere in the world.
In Georgia you only need a local accountant, a legal address and also a subsistence, if you want to open an account with a Georgian bank. Taxters provide all these services comprehensively and on a turnkey basis.
WHAT IS ATTRACTIVE TO GEORGIA?
- Georgia does not participate in the automatic exchange of tax information according to the CRS standard;
- Georgian companies are not considered offshore in the legislation of Ukraine and other countries;
- Foreign citizens can be directors and shareholders of Georgian companies;
- A remote procedure for registering a company by proxy is available. At will, it is possible to visit Tbilisi personally and register a company accompanied by our representative;
- The possibility to open a company and a bank account in one country with the correct organization of the substance;
- An attractive tax system according to the “Estonian” model, when the distributed dividends, rather than the company's profits, are subject to corporate tax;
- Availability of preferential tax regimes, free industrial zones;
- There are no requirements for the minimum authorized capital.
DISADVANTAGES AND RISKS OF OPENING A COMPANY IN GEORGIA
- To open an account in a Georgian bank, a substance is required: a rented office space, a salaried employee (director, accountant). We help clients with the organization of substance in Georgia;
- It is difficult or problematic to organize card acquiring (merchant account) in a Georgian bank. However, it is possible to use the services of payment systems registered outside Georgia. We select the best options for payment systems for each specific case.
WHICH FORM OF ACTIVITY IS BETTER TO CHOOSE?
In this article we will consider the most commonly used LLCs.
Such LLC in Georgia may obtain a virtual IT zone license, we will write about below.
It is also possible to register LLC in Poti, Tbilisi, Kutaisi. There are special industrial zones there. We will write about this below as well.
If you decide to move to live in Georgia and organize a small business, then it would be a good idea to open an individual entrepreneur. Microbusiness in Georgia generally takes advantage of the benefits of doing business using the form of an individual entrepreneur.
REGISTRATION OF INDIVIDUAL-ENTREPRENEUR IN GEORGIA
An individual entrepreneur in Georgia has almost the same status as his counterparts in the CIS countries. That is, it is, in fact, a private person who conducts his business activities and, accordingly, is responsible for all his property to creditors for non-fulfillment of any obligations.
Advantages of an IE in Georgia:
- Simple and fast registration procedure;
- Benevolent attitude towards immigrants from the countries of the post-Soviet space;
- Ability to go through the entire IE registration procedure remotely;
- A stable and transparent taxation system without "pitfalls";
- Ability to access the PayPal payment system;
- Minimal interaction with representatives of tax authorities;
- Territorial proximity, which allows you to quickly get from your home country to Georgia;
- You can easily open a bank account in Georgia for an IE;
- There are no requirements for a potential individual entrepreneur other than having a legal address in Georgia.
But the well-deserved sixth place in the Top 10 countries of the world in the DoingBusiness 2019 rating speaks louder than any words about the comfort of doing business in Georgia.
Taxes on IE in Georgia
The main reason for opening a sole proprietorship in Georgia is, of course, low taxes.
When registering as an individual entrepreneur, you have the opportunity to obtain the status of "Small business".
This status allows you to pay only 1% of the income, if the annual turnover of the individual enterprise does not exceed 500,000 GEL per year (about 145,000 USD).
That is, with the status of "Small business" and a turnover within 145,000 USD per year, the maximum tax will be only 1,500 USD.
If the turnover exceeds 500,000 GEL per year, the tax rate increases to 3% of the income.
A tax of 1% of the income is paid monthly by the 15th of the following month received this month. Tax returns must also be filed monthly. The annual report is submitted by April 1.
You can submit reports and pay taxes without leaving your home through your personal online office.
The Taxters team also provides accounting services to make this process easier for you.
Apart from 1% of income, an individual entrepreneur does not pay anything else in Georgia.
Restrictions for "Small Business"
In order to qualify for the status of "Small business", the activity of a sole trader in Georgia should not be related to:
- financial services;
- tax and legal consulting;
- operations with foreign currency;
- medical and architectural services;
- beauty salons;
- car repair;
How to open an individual entrepreneur in Georgia?
You can open an individual entrepreneur in Georgia quickly and remotely. You just need to write to us, and we will quickly prepare all the necessary documents and start the registration process.
In general, the registration of an individual entrepreneur in Georgia includes the following stages:
- To register, it is necessary to apply to the local House of Justice with a foreign passport or go through the entire procedure remotely with the help of a representative by proxy;
- After registration, you need to apply to the tax office for the status of "Small business";
- The moment of creation of a private entrepreneur in Georgia is the appearance of an entry in the Public Register of Entrepreneurs and Non-Entrepreneurial (Non-Commercial) Legal Entities;
- The status of "Small business" begins on the first day of the following month;
The term of registration of an IE in Georgia.
Registration and granting of IE status takes 1 day from the moment of submission of documents.
Our company has been engaged in consulting for more than 10 years, and we know like no one else that it is important to do everything promptly, qualitatively and with care when working with a client!
- You will be advised in detail regarding the registration of an IE in Georgia;
- They will help with the preparation and submission of documents to the House of Justice;
- They will help with the preparation and submission of documents to the tax service;
- They will be fully accompanied until the moment of registration and receipt of an extract from the register;
- They will provide the services of a trusted person, thanks to which the entire procedure will take place for you remotely;
- The required power of attorney will be translated into Georgian.
WHO CAN BE A FOUNDER OF A GEORGIAN COMPANY?
The founder of the company can be both an individual and a legal entity. There are no restrictions on the residence of the founders. The minimum number of founders is one.
WHO CAN BE A DIRECTOR OF A GEORGIAN COMPANY?
The director of the company can be an individual. As in the case of the founder, there are no restrictions on the residency of the director of a Georgian company. The minimum number of directors is one.
If the task is to open an account in a Georgian bank, it is advisable to appoint a resident of Georgia as a director. We help clients to find a suitable director for a Georgian company in order to open and operate a bank account.
REGISTRATION OF LLC IN GEORGIA – PROCEDURE
It is possible to establish a company in Georgia:
- remotely by proxy;
- personally visiting the beautiful city Tbilisi.
Remote registration of Georgian company is as follows:
- the founder draws up a power of attorney at a notary according to our sample. As a rule, the power of attorney does not need to be additionally legalized with the Apostille stamp (for example, if you issue a power of attorney in Ukraine), since many countries have signed agreements with Georgia on mutual legal assistance. In some cases, an Apostille may be required, what we inform about in advance;
- the original of the power of attorney is sent to Georgia by courier service;
- preparation of registration forms and their submission to the House of Justice on the basis of a power of attorney. The company is registered within one day after the submission of documents.
In case of registration a company remotely the whole procedure takes about 2 weeks.
The registration procedure for a personal visit to Tbilisi looks like this:
- preparation of registration forms for submission to the House of Justice;
- personal visit to the House of Justice accompanied by our representative;
- visiting a restaurant, wine tasting.
Also, if you have such a desire and free time, we can organize an extremely interesting excursion around Tbilisi and Mtskheta (the old capital of Georgia) with a driver and a professional guide.
The procedure for registering a company, subject to a personal visit, takes 1 day.
What's interesting: Georgians are extremely friendly towards people. They will help you register a business with great pleasure.
WHICH DOCUMENTS AND INFORMATION ARE NEEDED TO REGISTER A COMPANY IN GEORGIA?
- Power of attorney according to our sample;
- The name of the future company to check for matches;
- Completed questionnaire - description of the business;
- Passport details of the director and shareholder (high-quality scanned copies of the internal passport and passport for travelling abroad will be required);
- Address of residence of the director and shareholder;
- The email address of the company.
WHICH SERVICES ARE NECESSARY FOR REGISTRATION OF A COMPANY IN GEORGIA?
To register a company in Georgia remotely, you will need:
- Services of an attorney who will visit the House of Justice in Tbilisi;
- Legal address in Georgia;
- Competently compiled charter of the company (we compile such a charter in a bilingual format: English and Georgian).
Taxters provides comprehensive assistance in registering a company in Georgia.
PRICES FOR REGISTRATION OF A COMPANY IN GEORGIA
A full range of services for registering a company in Georgia with a remote procedure costs approximately 950 Euros.
The price include:
- Preliminary consultations before registering a company;
- Assistance in choosing a name for the company, checking it;
- Constituent documents of the company according to our sample (charter in English and Georgian);
- Lease of legal address of the company for one year;
- Payment of state fees for company registration;
- All the necessary measures related to the registration of the company (creation of a legal entity), registration of the company in all relevant government authorities, including the tax authority;
- Sending company documents from Georgia by courier service;
- Translation one of the power of attorney into Georgian;
- Opening one bank account.
Additionally, such overhead costs may arise, which should be taken into account separately depending on the needs of the client:
- Development of a specific charter;
- Translation of the charter into Russian;
- Translation of additional powers of attorney into Georgian (if the company has more than one founder - at the rate of the translation agency);
- Apostille of the documents.
To get an accurate calculation for registering a company in Georgia, leave a request on the Taxters website. We always respond promptly.
COMPANY SERVICE IN GEORGIA
It should be noted that Georgian companies are quite simple to administer.
You only have to send the primary documentation for your company to the Georgian accountant once a month so that he can compile and submit reports.
The director of the company (who, of course, may be a non-resident of Georgia) does not have to appear in Georgia in order to manage the company.
It should also be remembered that once a year the service of a legal address in Georgia should be renewed.
WHERE AN ACCOUNT FOR A GEORGIAN COMPANY CAN BE OPENED?
After you register a company, you should start opening an account. For Georgian companies, you can open accounts in the following financial institutions:
Georgian banks with proper organization of substance:
- Bank of Georgia;
- Silk Road Bank;
- Other banks.
You will receive quality service at a reasonable price. The tariffs of Georgian banks compare favorably with the tariffs of foreign banks working with non-resident companies.
Banks outside Georgia
A common example is the Swiss CIM Banque. Tariffs are significantly higher compared to Georgian banks, and you will also need a substance organization in Georgia. No personal visit to Switzerland is required. To open an account with CIM Banque, we will help you remotely.
Payment systems outside Georgia
Here are some examples of popular payment systems:
It should be remembered that not all payment systems are ready to provide direct account details in the IBAN format in the required currency.
We help clients choose the payment system that is best suited for a specific business model.
Among the advantages, one can single out: the remote procedure for opening an account and the absence of requirements for organizing a substance in Georgia.
HOW TO OPEN AN ACCOUNT WITH THE BANK OF GEORGIA?
Even before 2019, it was possible to nominally open an account with Bank of Georgia for almost any Georgian company without unnecessary questions about the presence of a local director, office and staff (such questions, as a rule, arose immediately after the start of active use of the account).
In 2021, it makes no sense to even try to apply to the Bank of Georgia without an issued submission. In this sense, Bank of Georgia has significantly tightened its rules for onboarding new clients.
Thus, first we prepare a set of measures called substance, and then we go to "knock" at the Bank of Georgia if you want to open an account in this particular bank.
By the way, Bank of Georgia has the largest network of branches in the entire country.
TBC Bank is considered a good alternative to the Bank of Georgia. This bank also requires subsistence, but the account itself can be opened without it. Substance will be asked to show at the beginning of active use of the account.
ACCOUNTING OF GEORGIAN COMPANIES
After the LLC is successfully registered in Georgia, an account is opened and the company begins to operate actively, an obligation arises to compile accounting reports and submit them to the tax office.
Reports are submitted once a month until the 14th day of the month that follows the reporting one.
In some cases, it is appropriate to register as a VAT payer in Georgia so that there are no additional tax costs when paying for the services of foreign counterparties. For example, when a Georgian IT company with the status of IT Virtual Zone pays a Ukrainian individual entrepreneur for the development of software code, obligations to pay reverse VAT arise if the company does not have a VAT number in Georgia.
We accompany our clients on all issues related to the accounting of Georgian companies.
THE TAX SYSTEM OF GEORGIA
In 2017, Georgia switched to a new corporate tax model similar to that of Estonia. The essence of the changes is that income tax is not levied until the moment of its distribution.
The following transactions are subject to corporate tax:
- Distribution of profits;
- Expenses incurred, as well as other payments not related to economic activity (this includes: undocumented expenses; expenses not related to obtaining profit, income or compensation; payment of interest on a loan when the annual interest rate exceeds the interest rate established by the Ministry of Finance of Georgia);
- Free delivery of goods / services or transfer of funds;
- Entertainment expenses in excess of the maximum amount stipulated by tax legislation.
The corporate income tax rate is 15%. At the same time, the withholding tax rate paid by shareholders of Georgian companies is 5%. Thus, the total tax burden in the distribution of dividends is 20%
IT VIRTUAL ZONE
Once the company is registered, it is possible to apply for IT Virtual Zone status. This status will be useful to those who are somehow connected with IT - study, support, development, design, production and implementation of computer information systems, as a result of which software products are produced (literal excerpt from the Law).
To obtain the status of a virtual zone, it is enough to prepare a description of activities of the company for 1000 characters and submit it for consideration. IT Virtual Zone status is assigned within 2-3 days from the date of application.
In fact, we are talking about a tax-free IT company (preferential company).
However, when distributing profits, the shareholder pays only 5% tax on dividends.
And if we consider that Georgia has concluded agreements on the avoidance of double taxation with many countries, then this 5% tax paid in Georgia can be deducted from tax liabilities on personal income tax in the country of tax residence of the shareholder.
FREE INDUSTRIAL ZONES (FIZ) IN GEORGIA
Today, free industrial zones (FIZ) have lost some of their relevance due to the fact that it has become almost impossible for companies registered in such zones to open an account in a Georgian bank, even if there is a properly organized substance.
However, in cases where the business will be geographically linked directly to Georgia or if you need to significantly save on corporate tax, you can consider registration companies in FIZ.
Here is the list the main characteristics of companies registered in Georgian FIZ:
- Profits earned by a company registered in the FIZ from permitted activities are exempt from corporate income tax. That is, the activity is carried out without taxes;
- Import of goods into FIZ is not subject to customs duties and VAT;
- Activities carried out in FIZ are not subject to VAT;
- Property located on the territory of the FIZ is not subject to property tax;
- Lack of requirements for filing accounting and financial statements
- Companies registered in FIZ are considered tax residents of Georgia;
- Companies incorporated in FIZ pay an annual license fee, the amount of which depends on the type of activity, as well as on the specific FIZ in which the company is registered. It ranges from 2 to 10 thousand USD per year.
There are the following free industrial zones in Georgia:
- Tbilisi (suitable for IT companies wishing to provide only services or engage in consulting);
- Poti (suitable for import-export operations, storage and distribution of goods);
- Kutaisi (suitable for trade with the EU, USA, CIS, Canada, Japan).
Which documents will I receive after registering a company in Georgia?
Charter in Georgian and English; extract from the House of Justice of Georgia in English.
How to withdraw money from a Georgian company?
By distributing dividends to a shareholder; by paying salaries to the director or employees.
Is it possible to get a VAT number for a Georgian company?
Yes, it is. In some cases, it is even necessary not to overpay the reverse VAT when importing services (for example, when a Georgian company makes payments to individuals-entrepreneurs under a software development contract).
How to get rid of the Georgian company if it is no longer needed?
How often do I need to submit accounting reports for a Georgian company?
Accounting reports for a Georgian company are submitted once a month.
What primary documents does an accountant need to compile and submit a report?
Account statements in banks and payment systems; contracts; invoices.
Is it possible not to pay the salary to the director of a Georgian company?
Yes, it is.
Is it possible to apostille documents for a Georgian company?
Yes, it is. Georgia is a party to the Hague Convention on the Legalization of Documents by Affixing the Apostille Stamp.
Is it possible not to fall in love with Georgian wine?
No, it is not
✈️ When are we going to Batumi?
As soon as possible