Tax-free IT Business Registration- Virtual Zone Georgia

Tax-free IT Business Registration- Virtual Zone Georgia
Virtual Zones in Georiga

  Having an IT business? Not sure how to setup your company to benefit from taxation? Your company is 100% digital and virtual? Do you struggle with taxes? Stop It now! Reduce Taxes to Zero! In Georgia you can do It.  There is a workaround in Georgia which can help you to reduce your taxes to Zero. Enjoy Having IT business and Paying no Taxes at all. NO VAT and even not PROFIT TAX. Setting up your company in Georgia is pretty easy whilst the money you can save after is tremendous. Let me introduce the virtual zone status in Georgia, which grants you special taxation for your IT business. The true benefit of virtual zone status is that you can claim it as a foreigner, without even visiting the country, remotely. You do not have to be a resident in Georgia to be able to start a business or claim a special taxation regime, such as virtual zone status.

Virtual Zone in Georgia – My Video

If you are looking for the jurisdiction to incorporate IT or Online Business this video might be for you. In this video, I talk about special taxation in Georgia, Country for IT business – Virtual Zone Status in Georgia.  You should be aware that there are countries where it is easy to establish a company, even remote services are available and allow you to benefit from the taxation regime as a foreigner. Topics Covered:

00:00 Introduction

01:15 What is the virtual zone status for IT Business?

01:42 How easy is it to register a company in Georgia?

03:43 How easy is it to obtain Virtual Zone status for IT Business?

05:05 What activities can I have within virtual zone status?

06:55 Can I have only a non-Georgian client with Virtual Zone?

07:44 Checklist for opening Virtual Zone Company

08:45 What are the costs associated with maintaining a Georgian Company? If you watch this video you will know:

 

 

What is the virtual zone status?

First thing first, what is virtual zone status all about? Why is it even interesting? Virtual Zone Status is made to incentivize IT businesses in Georgia. This is the special taxation regime that allows the Georgian LLCs to smoothen their taxes. AS far as you may be concerned, the corporate profit tax in Georgia is 15%. Virtual Zone companies are corporate tax-free. This is a huge burden removal for IT business. Everyone operating in Informations TEchnology could benefit from this status. You do not have to be a Georgian resident to establish a company in Georgia or claim this status. You can actually claim the tax-free It zone status without even visiting the country. I have helped my clients in this matter.

How to incorporate Tax-Free IT business remotely/online?

This procedure consists of few steps, I would say, few easy steps. If you are not willing to travel and want to just benefit from tax-free IT business status, it’s absolutely possible to be done without even leaving your country. Here are the steps that we foll0w to help our clients to incorporate tax-free IT business online or remotely:

  1. After confirming the deal we prepare the POA ( Power of attorney) for you.
  2. You need to legalize or easier even, apostille this POA in your hometown together with the passport.
  3. You need to send originals by post. That’s all from your side.
  4. After the receive of the documents we translate and legalize in Georgia once again.
  5. We do the rest of the job. This includes incorporating Georgian LLC, registering with tax authorities, and claiming the status. 

If you think that you would benefit from this regime, from virtual zones of Georgia, let us help you with this. You are just  1 minute away from tax-otimization. Feel this simple form and we will follow up as soon possible.

What is IT Business by Definition of Georgian Legislation?

 

All this sounds good, right? but question is, what actually is IT business as per Georgian legislation? Well, is it good or bad news I do not know, but Georgian Legislation does actually give you a pretty broad perspective on this? I will just state below what is considered to be the IT business as per Georgian legislation below and your job is now to decide, does your activities actually follow under this description or not?

“IT is the process of research, development, support, design, production and implementation of computer and information systems; as a result, various software products are in place”. I agree, this definition is quite broad. So before you jump into setting up your business in Georgia first station is to think does your business really fall under this category?

Virtual Zone Status - How to Incorporate VAT and Corporate Profit TAX-FREE IT business

*  Good News N1: In case the service takes place outside of the Country the  operation is VAT free. How the location of the Service is Determined? Service is considered rendered outside of Georgia If Service Receiver is located outside of Georgia.  and here comes a happy conclusion! Your Service Provided for non-resident companies or Individuals is TAX FREE!

* Good News N2:   Income Generated from Virtual Zone Company rendering service outside of Georgia are exempt of Corporate Income (profit tax) !!! What is Virtual Zone Activity? Virtual Zone Business is the activity of creation of IT systems in Georgia by a legal person.  The Status of the Virtual Zone is a license (permit) to carry out business activities in Virtual Zone. 

 

How to setup tax free IT company in Virtual Zone Georgia?

Step 1: Register your Company in Georgia. Find out more about the company registration procedure in Georgia by clicking here. The good news, setting up a company in Georgia is pretty simple.  We tried to put it simply in the link before. However, if you feel overwhelmed and want to save some time here we are to assist you.  So far, we have set up quite a few IT businesses which operate successfully in Georgia. After you set up your business only obligation that you get is to meet tax and accounting obligations. 

Step 2: Register your Business in Virtual Zone. What is Virtual Zone?  A Virtual Zone is a person or a group of persons of a Virtual Zone. With Virtual Zone status you are free of corporate profit tax for your LLC business in Georgia. However, you should take into account that there is still dividend tax which you still need to pay. Some people somehow think that after they set up LLC in Georgia they do not need to do accounting or pay any tax. It does not work like that. As soon as you finish setting up your business in Georgia you have tax and accounting obligations. Does not really matter what kind of business is It. Literally for any type of business. You are free of Corporate income tax which is 15% in Georgia but you still need to take into account 5% of dividend tax. However, double taxation treaties are superior by power. For some country nations, a double taxation treaty releases the obligation of payment of dividend tax and at the end, you don’t pay any tax in Georgia at all.  The Ministry of Finance of Georgia is the responsible body to grant the status of a Virtual Zone. Piece of Related Regulation to be found here

Wrap up, the steps of incorporating tax fee IT business in the virtual zone are as follows:

  1. LLC registration in Georgia
  2. Registration with the Tax authorities
  3. Claiming the status with the Ministry of Finance of Georgia. 

Frequently Asked Questions on Virtual Zone in Georgia

Who one can be granted Virtual Zone Status right after setting up an LLC in Georgia?

There is no restrictions on this.  No minimum capital, no special proof required for this status. All you are required to have is active company in Georgia and that’s It. Any foreigner can apply for It.  Did you know you can establish a company  and claim your tax free status even without visiting Georgia

How easy It is to be granted Virtual Zone TAX Free It zone status?

I would say, it is pretty much easy. All the applications filled by us was successfully completed. No application has been rejected so far.  The Status is granted by the LEPL Financial Analytical Service within 10 working days from submission of the application.
The applicant shall be sent an electronic certificate to confirm that the status is granted.
The Status of the Virtual Zone is permanent.

What are the costs associated to maintan the Status?

There is no maintenance fees. The status is permanent. 

Am I obligated for Tax Reporting if I have a Virtual Zone Company in Georgia?

Well, yes you are! Any business that is setup in Georgia needs to do so. You need to meet Georgian Tax Requirements, However, for service type companies there are some reasonable accounting offers out there. 

Should I visit Georgia or Be in Georgia to open and Maintain Georgian Tax Free Company?

Neither of It! Opening a company in Georgia is pretty simple. It takes 2 working days only. Process of Company Formation can be completed remotely as well. Setting up company remotely in Georgia is nothing complicated. However, opening a bank accounts can be sometimes tough procedure.

Can I open a Georgian company and have non-Georgian, International Customers?

Yes! However, make sure to collect base documentations for accounting transactions. Base documentations are usually Invoices and Receipts. 

What are the after company setup Requirements in Georgia?

  • There is no minimum capital requirement.
  • No Requirement to hire
  • Not required to operate an office, though you must have a registered address to establish a company
  • No requirement and expenses at all. Only requirement thing will be to comply with taxation and accounting requirements and cooperate with revenue house

What is the maximum amount of dividends so as not to exceed 5% Dividend tax for virtual zone status in Georgia?

Actually, there is no such limit imposed. Hence, It does not matter how many Invoices you have or dividends you pay out, you still pay 5% on dividend tax.

Do dividends from abroad have to be paid to the LLC in Georgia into my personal account in Georgia?

No, there is not such an obligation. You can transfer dividends to your foreign bank account if you wish.

Declaration of dividends, they are to be made monthly? Do you do it, is it possible to do it from abroad and what are the steps to make these declarations.

The status of virtual zone does not remove obligation of accounting and taxation for your LLC. Actually, only requirement after company formation in Georgia you have is to meet accounting and taxation requirements. You. need internal bookkeeping in place as well as tax reporting. Our company does offer these support after incorporating your LLC for quite a reasonable price, I would say.

Can I get virtual zone status in Georgia in 2021?

So now it’s 2021 and I have been asked quite a few times, is it still a thing? Can I still get virtual zone status to benefit from simplifies taxation for my IT business as a foreigner?  The answer is going to make you happy since I am going to tell you that virtual zone is still a thing in 2021. It works in 2021 still. You can still register your company in Georgia easily in 2021 and claim special taxation and optimize your taxes.

How easy it is to open a virtual zone company in Georgia?

Is it as easy as it was before in 2021 to open LLC in Georgia and claim the virtual zone status? that’s the next thing I have been asked few times. It is still easy. I still have a success rate of 100% of opening virtual zone companies in Georgia for my clients, however, it’s slightly different, a little bit more complicated. If before they would grant the status for IT business without any further do, to basically everyone who would apply, now they may ask you additional document – agreement/contract with your clients. Luckily, your client does not have to be Georgia, neither the contract should be any sophisticated one. Once you reply, they accept any agreement, any simple one, and does not matter where is your client located.

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