Recently, a frequent request of clients is to open a company in Georgia for business opportunities. According to the World Bank’s Doing business report, Georgia is on the 6th place among the countries where it is worth starting a business. In this article, we will look at the existing organizational and legal forms and the procedure for registering a company in Georgia.
Advantages of registering a company in Georgia
Georgia has a number of attractive characteristics for opening a company:
- A fairly simple registration procedure.
- Has a stable economy.
- Depending on the direction of the business being created, it is possible to register a company in an industrial zone, where tax benefits are provided for entrepreneurs.
- Low cost of business registration.
- Advantageous location of the country between Europe and Asia, acting as a transit route for goods.
- More than 50 double taxation avoidance agreements have been concluded with other countries, including the UK, Germany, and China.
Among the other main reasons for starting a business in Georgia are:
- Low taxes and a transparent tax system, where the goal is to help conduct business in compliance with the law.
- Speed of company registration even for foreigners. If you have all the documents, you will be able to get an extract on the creation of a legal entity in just 1 day.
- Loyal immigration policy. Most foreigners can stay in Georgia without a visa for 365 days. After that, this period can be reset simply by crossing the border with any country.
- Ease of business administration. Submission of reports, payment of taxes in Georgia is carried out remotely, there is practically no need to visit the local tax service. In addition, Georgian banks have convenient online banking (a Russian-language interface is rare) and most administrative services are available through state online services.
Procedure for registering a company
To register a company in Georgia, you need to complete several important steps:
Stage #1. Prepare an application for registration.
The following data should be indicated there:
- Company name.
- Type of company.
- Goals and objectives of the registered company.
- Legal address.
- Information about the founders/shareholders.
- The size of the authorized capital.
- Information about the members of the Management Board and the Supervisory Board.
The application is notarized.
Stage #2. Prepare the company’s charter.
Stage #3. Confirm that the company’s representatives are not held liable for property violations.
Stage No. 4. Provide documents on the appointment of directors and members of the board.
Stage No. 5. Pay the registration fee.
After submitting the documents, the company’s registration takes place within a few days. The organization is assigned an identification number and a tax registration number by analogy with the OGRN and TIN in Russia. To start operating in some areas, a license is required.
After successful registration, it will be possible to open an account in a Georgian bank. However, this will require having an office in the country, as well as a local director or accountant who will officially receive a salary.
The seal of the organization is issued at will.
Organizational and legal forms for doing business
1. Limited Liability Company.
It represents the most common type of company. LLC registration is carried out in the House of Justice at the address: Tbilisi, Zviada Gamsakhurdia str., 2.
To register, you need to prepare a package of documents:
- Confirmation of the legal address. In this capacity, an extract on the ownership of a real estate object, a lease agreement, or a written consent of the owner to use the address can be accepted. The owner himself must be present during registration. If there is no address, then you can get it from lawyers in Tbilisi who are engaged in registration. As a rule, there are always people at the House of Justice who provide an address for a fee.
- Passport of the founders.
- Charter of LLC. A standard charter can be requested from consultants in the House of Justice itself.
- Receipt of payment of the state fee in the amount of GEL 100. You can pay for accelerated registration, then it will cost 200 GEL.
There are no requirements for the size of the authorized capital in Georgia, therefore, when registering an LLC, it is not required to provide any documents confirming the presence of the authorized capital.
You also need to buy a SIM card of a Georgian operator in advance.
2. Joint and several liability Company.
This is a type of business activity in which several founders have a business under the same name. Unlike JSC and LLC, the participants are liable for the obligations of the company with all their property.
3. The team society.
It is an organizational and legal form in which participation in a company is possible in one of two types of business organization. Firstly, business travelers only contribute property to the company’s capital and are liable for obligations within the amount invested by them. They do not take part in the company’s activities. Secondly, the business owners receive dividends in proportion to the shares invested by them and provide their capital for trust management to other members of the company. Compliments are full–fledged members of the company who make decisions on all issues of the company’s activities and are responsible for the obligations of the company with all property.
4. Joint stock company.
The form in which the capital of a joint-stock company is divided into shares. They can be owned not only by the founders, but also by any third parties after the acquisition on the securities market. The participants of the joint-stock company are not liable to third parties, and the liability of the company itself is limited to its shares.
5. Individual entrepreneur.
There are two ways to open an IP in Georgia:
- Remotely by proxy. The simplest and most expensive, but it can carry risks. It is important to take into account that since September 2022, the percentage of approval of such actions by proxy has been steadily falling.
- With a personal presence in Georgia, but with the support of local assistants. It’s fast, simple and quite affordable. Assistants prepare documents, and the businessman communicates with government agencies.
- Independently and with personal presence in Georgia. It’s easy and inexpensive. To do this, you need to understand some of the features of registering an individual entrepreneur in Georgia.
To register in Georgia as an individual entrepreneur in 2023, you will need:
- A passport with a mark on the legal crossing of the border of Georgia.
- Legal address in Georgia. It is issued jointly with the owner of the rental property. Any apartment will do.
- Mobile phone with a local SIM card.
- Email address, preferably gmail.com .
- Funds for payment of state duties – approximately $50-$60 (150 lari).
This type of organization is created by the founders to perform specific tasks. The purpose of making a profit in this case is secondary.
The legislation of Georgia allows any legally capable person, including citizens of the Russian Federation, to register a company. It is not prohibited to acquire a ready-made company.
Features of LLC registration in Georgia
It should be borne in mind that the capital of the LLC is divided into shares, and the liability of the owners of the company is limited only to the shares invested by them. The number of shareholders is limited to 50 persons. The company is also required to submit annual financial statements to the tax service.
It is necessary to know that the state authorities do not require confirmation of the existence of the authorized capital of the company. Largely due to this, the registration process is quite simple and does not require personal presence. The only difficulty is the requirement to issue documents in the Georgian language.
Business benefits in Georgia
Georgia provides tax benefits for the IT industry – the so–called virtual zone. The profit tax for companies in this industry is 0%, the tax on income from dividends is 5%, the property tax is up to 1%
Tax benefits also exist for international corporations that have been operating for more than 2 years and are engaged in certain types of activities. There are also benefits for small businesses, provided that the annual turnover does not exceed 500,000 lari (about 14 million rubles).
Tax policy in Georgia
The company must pay a 20% tax on each employee. Also, a contribution to the pension fund is deducted from the salary – 2%. However, if the employee’s annual income is from GEL 24,000 to GEL 60,000, then the company’s contribution is 1%, if more than GEL 60,000, the company may not transfer funds to the pension account.
Microenterprises in Georgia do not pay taxes. However, this is possible if the firm meets three criteria:
- Annual turnover is less than 30,000 lari ($10,000).
- There are no employees.
- Was registered as a microenterprise.
However, even such firms are required to make contributions to the pension fund in the amount of 4% as self-employed.
For small businesses, the fiscal burden is only 1%. This applies to companies whose annual revenue does not exceed 500,000 lari ($180,000).
In general, it should be noted that registering a company in Georgia makes sense if you plan to work with foreign clients or need access to regional markets, as well as the market of Central Asian countries. Georgia has good conditions for starting a business. The process of registering companies is simple and fast.
Question and answer
These are the efficiency and ease of opening an individual entrepreneur or LLC, relatively small associated costs, loyal tax regimes, knowledge of the Russian language by the local population and historical ties between states.
In about 60% of cases, Russian investors prefer sole proprietors. The remaining third chooses LLC.
For the normal operation of the business, it is necessary to register with the tax service and open a bank account.
The status is designed primarily for IT companies and marine corporations. Legal entities that meet the following criteria can receive the status of an “International Company”:
• At least 2 years of work in the IT field.
• Conducting activities from the list specified in Resolution No. 619;
• Availability of qualified employees and sufficient equipment and equipment for successful operation.
If the criteria are met, the company gets the opportunity to significantly reduce its tax burden, for example:
• Corporate income tax of up to 5%.
• Tax on dividends up to 0%.
• Personal income tax on the salary of employees up to 5%.
• Property tax up to 5%.
• Deduction of R&D expenses.
It is important to take into account that many IT companies have already opened their offices in the country thanks to tax benefits. That is why there is competition in the high-tech sector in Georgia.
In this case, there is a demand for the repayment of taxes, or the property is being searched. In the second case, an arrest is imposed. The tax service may also require a list of property in the property, conduct an inventory, draw up an act on the seizure of property and transfer the property to state ownership.
If you suspect a violation of your rights, you can contact the tax Ombudsman. He will consider the complaints and demand clarification from the tax authorities. He can also apply to higher authorities to restore the rights of taxpayers.