In this article, I will outline the detailed steps, procedures, timing, and necessary information for business registration in the Republic of Georgia. The explanation will focus on the registration processes for Limited Liability Companies (LLCs), which are the most common legal form of companies in Georgia, as well as for Individual Entrepreneurs/sole proprietorship (IEs).
Before delving into the specifics of the registration process, it is essential to highlight several important reasons—though not exhaustive—why one might benefit from relocating and registering a business in Georgia.
Key benefits of registering your business in Georgia
Among the numerous reasons why establishing a business in Georgia can be highly advantageous, I will highlight several key points:
Favorable Corporate Income Tax System: Georgia has adopted a unique corporate income tax (CIT) model where tax is only applied upon the distribution of dividends, allowing businesses to retain or reinvest profits in Georgia without immediate tax implications.
Tax Incentives for Individuals and Entities: Various tax incentives are available for both legal entities and individuals. If you qualify for any of these incentives, seriously consider relocating to Georgia.
Low Tax Rates and International Cooperation: Georgia offers either 0% or very low tax rates while being recognized as a reputable, “white-listed” country in terms of international cooperation.
Extensive Double Taxation Treaty Network: Currently, Georgia has signed 58 double taxation agreements, with this number increasing annually, facilitating smoother international business operations.
Minimal Bureaucracy: The business registration process is efficient, often completed within one business day, significantly reducing administrative hurdles.
Competitive Pricing: The cost of living and business operations in Georgia remains lower compared to most EU countries.
Additional Advantages: Other benefits include a strategic geographical location making Georgia an attractive destination for various industries.
Below is a brief overview of the types of tax incentives offered by Georgian tax legislation.
Tax Benefits in Georgia
Georgia offers significant tax benefits for businesses, particularly through a unique model of Corporate Income Tax (CIT). Under this model, Georgian companies are subject to a 0% CIT rate unless they distribute profits to individual or non-resident shareholders, or engage in transactions deemed equivalent to profit distribution.
Key Features of the Corporate Income Tax System in Georgia
Profit Retention: Companies can generate profits without incurring annual CIT as long as the profits remain in the company’s accounts or are reinvested in Georgia. This means that companies can grow their capital without immediate tax liabilities.
In addition to the standard CIT system, Georgia provides various tax incentives and special regimes for specific types of companies and individuals.
Tax Incentives for Legal Entities in Georgia
- Virtual Zone Person (VZP): This status is available to Georgian IT companies that provide software development and related services internationally. VZPs benefit from a 0% CIT rate.
- International Company (IC): Georgian IT companies that offer a wide range of IT services abroad, maintain a physical presence in Georgia (including an office and staff), and have at least two years of experience in the IT sector can qualify for IC status. Notably, foreign shareholder companies of a Georgian IT firm can also demonstrate the required 2 years’ experience.
International IT Companies can enjoy several tax advantages, namely:
- 5% CIT (reduced from 15%);
- 0% Dividend Tax (reduced from 5%);
- 5% Wage Tax (reduced from 20%);
- 0% Property Tax (reduced from 1%).
Free Industrial Zones (FIZ) in Georgia
Georgia has established several Free Industrial Zones where companies can register and operate with significant tax advantages, including exemptions from corporate income tax and dividend tax (0% CIT and 0% Dividend Tax), along with additional tax incentives.
Special Trade Companies in Georgia
Companies registered as special trade entities primarily engaged in re-exporting goods from Georgia can benefit from a 0% corporate income tax rate.
Tax Exemptions/Incentives for Individuals in Georgia
Individuals, including Individual Entrepreneurs/Sole Proprietors (who are not classified as legal entities under Georgian law), can also take advantage of various tax exemptions and incentives:
Small Business Status (1% Personal Income Tax)
Individuals earning business revenue under the “small business” tax regime, with annual income below 500,000 GEL (approximately 175,000 USD), can obtain small business status and enjoy a reduced personal income tax rate of just 1%.
More information about taxation of small business (1% tax) you can find in the article here.
Please be aware that the 1% tax rate does not apply to all types of business income. Also, if an individual entrepreneur (IE) provides services exclusively to one client, there is a risk that the tax authority of Georgia may reclassify the service fee as wages. In such cases, a 20% tax rate may apply instead of the 1%.
Important Note: It is highly recommended to consult with a tax expert before applying for the 1% tax rate. There are nuances that could pose significant tax risks if not properly considered.
0% Personal Income Tax in Georgia on Foreign Source Income
Individuals receiving income from sources outside Georgia are subject to a 0% personal income tax on that income. However, it is crucial to understand that “foreign source income” is defined specifically in Article 104 of the Georgian Tax Code, which may differ from common interpretations.
More details about Georgian and foreign source income you can read HERE.
Recommendation: To ensure compliance and clarity regarding foreign source income definitions, it is advisable to seek analysis and advice from a qualified Georgian tax expert before claiming this exemption. In some cases, applying for a tax ruling may be beneficial for enhanced clarity and security regarding your tax obligations.
If any of above factors motivate you to relocate to our country, you can find detailed procedures for business registration in Georgia in the article below.
Business Registration Procedures in Georgia
This guide outlines the registration processes for two prevalent business structures: Limited Liability Companies (LLCs) and Individual Entrepreneurs (IEs). You can register your company or individual entrepreneur while visiting Georgia or remotely, without needing to travel to the country (based on Power of Attorney).
Timing of the Business Registration Process in Georgia
The registration process in Georgia is efficient, typically completed within one business day. After submitting all required documents, you can expect confirmation of registration by the following day, provided all documents are accepted. For those opting for expedited service (available for an additional fee), the entire process can be finalized on the same day.
Government Fees for LLC Registration in Georgia
Business registration in Georgia is facilitated through the Public Service Hall (PSH), operating under the Ministry of Justice of Georgia.
The registration fee payable at PSH for an LLC is 200 GEL (approximately $70), with additional costs including 26 GEL for an English version of the registration extract and 7 GEL for each signature confirmation. If expedited service is selected, an extra fee of 200 GEL applies. Therefore, total costs are approximately:
Ordinary Registration: ~250 GEL (~$88)
Expedited Registration: ~450 GEL (~$158)
Government Fees for Individual Entrepreneur Registration in Georgia
Registering as an Individual Entrepreneur incurs a fee of about 60 GEL (approximately $21) under standard procedures, which includes the English version of the registration extract. If expedited services are required, this fee increases to around 85 GEL (approximately $30).
Documents Required for Business Registration in Georgia
The necessary documents for registering an LLC in Georgia depend on several factors:
Type of Shareholder/Director: Is the shareholder and/or director an individual or a company?
Presence in Georgia: Will the shareholder/director be present in Georgia during the registration process?
Shareholder Company Type: Is the shareholder company a Georgian entity or a foreign one?
Charter Usage: Will the newly registered company utilize the standard charter published by the Georgian government (which comply with Georgian entrepreneurial law), or will modified charter be employed?
When is the Company Registration Process in Georgia Easiest?
The registration process is most straightforward and fast when the shareholder/director is an individual present in Georgia and when using the standard articles of association/charter published by the Georgian government.
Required Documents for LLC Registration in Georgia (Individual Shareholders/Directors Present)
If the shareholder/director is an individual present in Georgia and utilizing a standard charter, the following documents are required:
- Shareholders’ Decision: Also known as the “Agreement of Foundation.” A local service provider company will prepare two copies of this document in both Georgian and English for you. These must be printed and signed before a Public Service Hall representative.
- Copies of Passports: Each applicant must provide copies of their passports. In some cases, translations of the passports into Georgian may be required, if names are difficult to pronounce in Georgian, which must be notarized.
- Legal Address of the Georgian Company: A written consent from the owner of the Georgian real estate that will serve as the company’s legal address. This consent can either be notarized or provided on-site at the Public Service Hall. Your service provider company can assist with this legal address too.
- Translation Confirmation: A signature from an independent translator confirming that the Georgian and English versions of each document are identical. The translator does not need to be a professional but must not have any vested interest in the company registration process.
- Payment Receipt: A receipt confirming payment of the registration fee. Payment can be made in cash at bank branches within Public Service Hall or by card at the registration desk.
Remote Service of Company Registration in Georgia
When both the shareholder and director are individuals not present in Georgia, besides the above listed documents, a properly apostilled (or notarized/legalized depending on the country they are sent from) Power of Attorney (PoA) must be submitted to a local service provider who assists with the business registration process. This submission should also include copies of their passports. The local service provider will assist you in drafting the Power of Attorney (PoA) and translating apostilled (notarized or legalized) documents into Georgian, which will then be notarized before submission to the Public Service Hall.
Additional Documents for Foreign Company Shareholders
If a foreign company (shareholder of which is an individual(s)) is a founder in the newly registered Georgian company, additional documentation is required. This includes:
- Extraction of Registration Documents of the foreign (founder) company;
- Charter of the Foreign Founder Company;
- Shareholder’s Decision: A formal decision regarding the registration of a subsidiary in Georgia and appointing a director, accompanied by the PoA granted to your local service provider and passport copies of all decision-makers within the foreign shareholder company.
All the above documents need to be properly apostilled, notarized or legalized depending on the country of the foreign founder company.
Registration Process for Individual Entrepreneurs in Georgia
The registration of Individual Entrepreneurs (IEs) also takes place at the Public Service Hall, where having a legal address is mandatory. The property owner must provide written consent for their property to be used as this address.
Conversely, individuals who do not regularly conduct economic activities but require a Georgian tax number can register simply as physical person taxpayers at a branch of the Georgian Revenue Service (GRS). Taxpayer natural persons do not need a legal address; providing a factual address suffices without requiring consent from property owners.
Once your register a LLC or an Individual Entrepreneur in Georgia, you can see the extract of registration on the website of The National Agency of Public Registry (NAPR).
Opening a Business Bank Account for Your Company in Georgia
After successfully registering your company, the next step is to present the Georgian company registration document, along with any additional required documents, to a Georgian bank to apply for a business bank account. However, opening a business bank account in Georgia can be more complex than the registration process, especially when conducted remotely. Below is an overview of factors and documents that Georgian banks typically consider (non-exhaustive list):
Business Activity and Counterparties: The nature of your company’s business activities and the countries where your counterparties are located.
Business Substance in Georgia: The extent of your company’s presence in Georgia, such as having an office and staff.
Intermediary Activities: If your company intends to act as an intermediary between two countries, particularly if funds are transferred shortly after being received—this raises potential concerns for banks.
Shareholder and Director Information: Details about shareholders and directors, including their nationality (for individuals) or country of registration (for companies), as well as identification of the ultimate beneficial owner.
Proof of Income/funds Source: Documentation that demonstrates the source of funds and source of expected income, such as service agreements with clients.
It may be prudent to gather all necessary documents before applying for a business account to address potential requests from the bank if such advice is given by your local service provider.
Some applications can be processed quickly, with accounts opened on the same day without additional information requested by the bank; however, this varies by case.
Business Registration Procedures in Georgia – Summary
This guide provides a comprehensive overview of the business registration process in Georgia, highlighting its numerous advantages and outlining clear steps for new businesses to establish themselves successfully. In most cases, the assistance of a local service provider is recommended to ensure a smooth and successful registration process.
The article details the essential documents required and emphasizes both the simplicity of the registration procedure and potential challenges that may arise. Typically, the process can be completed remotely within a few days (from the moment of sending necessary documents to your local service provider).
While this article serves as a valuable resource for understanding business registration, it is important to note that it does not constitute legal advice and may not cover all possible scenarios.
About the author: Gela Barshovi is an experienced Georgian tax expert and the founder of TPsolution LLC, a consulting and accounting firm based in Georgia. For professional assistance with your business registration in Georgia, you can contact the author directly via email at gela.barshovi@tpsolution.ge or fill out the CONTACT FORM on the TPsolution LLC website.
