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.
What is IT Business by Definition of Georgian Legislation?
“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?
Good News! VAT and Corporate Profit TAX FREE!
* 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 company registration procedure in Georgia by clicking here. Good news, setting up company in Georgia is pretty simple. We tried to put it simple 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 setup quite a few IT businesses which operates successfully in Georgia. After you setup 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 setup 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, double taxation treaty releases 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 status of a Virtual Zone. Piece of Related Regulation to be found here.
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?
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
FAQ on Virtual Zone status
1. 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 a limit imposed. Hence, It does not matter how many Invoices you have or dividends you pay out, you still pay 5% on dividend tax.
2. 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.
3. 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.