I received the questions regarding whether Should you Register Company in Georgia, country daily basis. In this blog, I collected all of them. This blog might be extremely relevant to any foreigner who wants to start a business in Georgia since all these questions are derived from practices. From those people, who wanted to start a business in Georgia and register their companies in Tbilisi, Batumi, or elsewhere.
Why should I register my company in Georgia in 2021?
First of all, I would like to mention that during the past year Georgia was one of the selected best countries for digital nomads. As it was the safest country during a pandemic. Although some hits of the pandemic, Georgia still remains its status-quo and is still considered as the best place for digital nomads. Besides, Georgia had been mentioned in the safest countries’ list for digital nomads by New York Post. Secondly, Georgia is a country -ranked in the 5th place in the world of starting business easily. Favorable tax regimes and flexible business setup make it definitely worth it to invest in business in 2021.
Another significant advantage is than no CFC rules are applied. If you wander what are some of the pros and cons, and furthermore if you don’t know what CFC (controlled foreign corporation) sets, feel free to check our post regarding this.
-Is Georgia member of EU? The answer Not Yet. But along the past decades Georgia has been striving for integration in EU. It has signed some many treats so far and to apply for EU membership in 2024. Georgia already has double-taxation treaties with many European countries and also other characteristics makes Georgia worth to apply.
What Kind of Businesses are Tax Free in Georgia?
First of all, I would like to say that if the business isn’t tax-free anyway, it doesn’t make us say there aren’t any tax incentives. Moreover, there are so many tax incentives for micro and small businesses. What about absolutely tax-free business, it is IT Business, you can Check also our blog, where you can find what is exactly what countries are tax-free to start your IT business in Georgia. The countries which aren’t on the list pay 5% of the Dividend tax.
Another tax-free business opportunity is to register your business in free industrial zones in Georgia. It doesn’t mean that you don’t have to pay anything, but not with the country authorities, Free industrial zones will impose minimal taxes on you.
What about taxes if I do not have any Business in Georgia and all my clients are foreign clients? Do I still pay 15%?
If you deliver your service outside of Georgia your activities are VAT free. However, yes, you still need to pay corporate income tax on the profit generated with your Georgian Company. In contrast, Some people think that as Georgia has a territorial taxation system, if you start your business in Georgia and generate income from outside Georgia you are tax-free. But that’s not the case. Simply explained, the territorial taxation system does apply to Individuals Employed Outside of Georgia. Keep in mind that there are several legal forms that you can choose for starting a company and requirements for them are different in terms of taxation. Also, there are some special regimes within the legal forms too. For LLC such as Virtual Zone for IT Companies or Micro and Small Business Status for Individual Entrepreneurs.
What about bank account ? can I have my debit card without coming to Georgia or do I need travel to pick it up?
Unfortunately, to have your Bank Cards you need to travel to Georgia. hereby, Right now Banks only allow to distribute cards in Person. Furthermore, remote Services for Opening Bank account with Bank Cards are not available at the moment. What we can do is to open a bank account for you and assign a personal banker with whom you can easily communicate any time and who will help you to manage your account. Lastly, I want to say that you will have to come to activate internet banking and request Bank Cards Though.
What about VAT for invoices that is for foreign clients? VAT or VAT Free?
Yes! If you deliver your service outside of Georgia your activities are VAT free.
If we decide to start, how long will it take to complete everything, meaning formation and opening of bank accounts?
If you let us know in advance and we have enough time to prepare all the supporting documentation we simply need 2 working days to finalize the company formation procedure. After that, you will need 2 working days to finalize bank account opening with banks. In total, company formation will take half an hour of our time, you need to sign some documents in Public Service Hall and That’s It and for Bank Account, you need 2 hours approximately to sit and wait until bank officer finalizes the procedure. Finally, It’s as simple as this with our assistance.
Who can open company in Georgia? Citizenship or Nationality based restrictions on opening company in Georgia
In Georgia, there is no such kind of restrictions. I can 100% assure you that Georgia is open for any Country Citizen in terms of Registering a Company. Even more, It is as easy to register a company in Georgia for foreigners as It is for Georgians.
Can I open Personal Bank Account in Georgia without visit the country? Is opening Bank Account allowed remotely?
Honestly Speaking, nobody can assure you of this and give you a 100% warranty on a successful opening. There is a special department in Banks who makes this decision of opening bank accounts. notably, they treat each and every client individually. Also, the study and evaluate upon their scope of knowledge. Therefore, there is no clear and exact guidelines, checklist of documents where we can say – If you comply with this you will be able to open personal bank account remotely. If we speak of our experience, sometimes we did indeed succeed and successfully opened bank accounts with full package services such as internet banking and bank cards. However, mainly we are able to open bank accounts with restrictions on internet banking and bank cards. To gain access to internet banking and request bank cards you need to travel to Georgia and do It in Person. If you are willing to pay a visit to Georgia, It is pretty simple to open bank account here. All you need is your passport and one hour of your time. What we can safely offer at this point is to open a bank account and assign a personal banker to you, with whom you can easily communicate and who will help you to manage your account as well as undertake necessary transactions.
If you are interested in this matters, you can watch my most recent video, regarding opening a bank account remotely in 2021.
What are the monthly and annual costs of establishing a company and maintaining a company ?
The only Legal Requirement you have after forming your Georgian LLC or any other type of legal entity is to meet taxation requirements. You are legally required to keep bookkeeping and doing declarations for tax authorities monthly basis. For more details on our accounting service offer in Georgia refer to go here. For more details on requirements after company establishment, you can see my video.
How many days in a year I need to stay in Georgia in order to maintain visa?
Do we need a virtual office? and what are the annual fees for the virtual office?
Virtual Office is an Optional Service. Hence, our package for company formation in Georgia includes a legal address which is permanent. However, some people still feel like they need to benefit from Virtual Office Services and Business Secretary in Georgia, therefore we do provide this service.
What is the difference between the Virtual office and company legal address?
The difference is that legal address is company address on papers. It is not necessarily the real address. The actual address can be different. The legal address might not even be an actual office. A virtual office includes a real office address, where people can receive post packages and forward calls and posts to you.
Should I start Individual Entrepreneurship Business in Georgia?
If you establish individual Entrepreneurship in Georgia, you are eligible to apply for small business status. With Small Business Status you will have to pay only 1 percent income tax with tax base of Gross Revenue. However, there are some major points to be considered. Individual Entrepreneurship is not Limited Company.Moreover, The company ID is assigned to your personal name. So there is not possibility to pick a name for your company. One more major drawback is that your capital is not limited to company capital. In other words, if you start Individual Entrepreneurship and you have liabilities for your company your liabilities are not limited to company capital but your personal capital will be also considered. If you are planning to have legitimate business, Individual Entrepreneurship can be a good match for you. Finally, Majority of the people in Georgia use this scheme as well as some of my clients.
Which Legal Form should I chose to start Business in Georgia? LLC or Individual Entrepreneurship?
Find below major aspects of forming Limited Liability Company or Individual Entrepreneurship in Georgia. I tried to put it in simplest way possible. For more details on starting a business in Georgia and Choosing the right legal form for it, please refer to this blogpost, I also made a case study for you there.
Aspect of Difference | LLC | Individual Entrepreneurship |
Management Body | Up to Six, possible to change and modify | Only one, no possibility of modification |
Taxation | Corporate Profit Tax 20% with tax base of net revenue with no Special Regime. | Corporate Profit Tax with small business status 1% of gross revenue. |
Liability | Limited to Company Assets | Liable with Individual Assets |
Accounting and Taxation Obligation | Yes | Yes |
VAT TAX Obligation | No VAT on Services Delivered Outside of Georgia. | No VAT on Services Delivered Outside of Georgia. |
Company Name | Of your Choice | Company Assigned to your personal name |
Can I open Company and Bank account in Georgia Remotely? Without Traveling to Georgia?
Yes, you can open company and bank account for your company remotely without your prior visit to Georgia. Steps for the procedure is as follows:
1.We will Prepare POA for you
2. You need to apostille or legalize this POA TOGETHER WITH PASSPORT.
3. Send originals to our address.
The rest we can take care of. One note, unfortunately, banks do not have real clear procedure and guidelines for opening bank account. Each case is evalauted individually and reasons and ground of decision is not public. Mainly, we don’t face any problems with opening bank account remotely for a Georgian company. However, based on our experience, banks several times required that Company ID needs to be mentioned in the POA, which is impossible to do in advance, before company is formed. So, in worst scenario you will have to send separate POA for banks after company formation.
How quickly company can be formed remotely?
Once we receive POA and Passport we need:
- 2 working days – to translate and notarize the document.
- 2 working days – to apply for company establishment.
- 3 working days -to finalize setting up bank account.
Is it a mandatory to have a legal address for Georgian Company?
It is a legally required point for company formation in Georgia to have a Georgian legal address. This is a proof from the landlord that you can use the real estate property owned by him/her for your company or It is a rent agreement between you two. Of course, You can not establish a company in Georgia without this point. So, answer is that it is mandatory to have a legal address in the process for company establishment in Georgia. Also, With legal address base service included in our package you won’t be able to receive post emails.
Is it mandatory to have actual office in Georgia where I will receive post and emails?
If you like your post or emails to be handled properly you can use virtual office service. Hereby, I advice you to use virtual office service for handling incoming post. But, you should also know that in Georgia they do not sent much. Besides, Post Service is not that much used. Surely, Having Virtual Office makes you more professional for 3rd parties, but you have to decide is it or it is not worth for you. The takeaway is that, Legal address is a must to form a company in Georgia when virtual address is not.
does "becoming a resident" mean I have to be in Georgia over 183 days a year?
We need to differentiate two types of residence:
2) Tax Residence
For a work residence permit, you do not need to stay 183 days in Georgia You can apply as soon as your firm meets the requirements.
If your country imposes a foreign income tax, you are most likely to be interested in tax residency. For tax residency, you indeed need to stay in Georgia for at least 183 days a year.
Now, I understand, for some digital nomads, that’s not an option. Here is the workaround: You can also obtain. tax residency easier, without staying in Georiga if you are a high net worth individual.
The question logically arose. Who is a high net worth individual?
According to Georgian legislation, you are considered a high net worth individual once you ear at least 60000 EUR in your home country.
What are the alternatives of opening bank account in Georgia?
After opening a company in Georgia, you can easily open a bank account in other countries, in most countries. Most of our clients, successfully use transferwise service.
Transferwise is a kind of online bank account. Cheap. fast way to send and receive money, as well as to convert it.
Apart from transferwise, you can open a bank account in many countries, for Georgian business. We help our clients to open a bank account in several countries, such as our Neighboring countries Azerbaijan or Baltic countries – Lithuania and Latvia
What do accountants do in Georgia?
Long story short, for remote accounting services, we share with you the drive folder. All you need to do to upload the base documentation. Base dcoumentations are:
- Incoming Invoices
- Outgoing Invoices
- Bank Statements
Once a month accountant needs to send tax declarations to the tax authority. Apart from that, double-entry bookkeeping should be in place, as required by law.
For more information regarding the fees associated with accounting service refer to this blog.
With our company registration package, first-month account is included.
Ready to start company registration in Georgia, Country?
Once you are ready to start a business in Georgia and register your legal entity here contact our firm. Hereby, Be assured we provide the fastest, most reasonable, and all-in-one support for you. Definitely, We are experienced working with foreigners so with us you will find answers to all questions that may arise. We are confident we are able to remove lots of headaches and make the procedure easier for you.
Expats.