Moving a business to Georgia is an attractive option for many investors, and here’s why:
- In recent years, the government has significantly simplified the system of doing business by setting up administrative procedures such as tax registration and licensing.
- Since tax policy plays a key role in attracting foreign business to the country, namely to SEZs, Georgia has revised VAT rates and exempted commercial organizations from property tax and income tax. Numerous tax returns are also a thing of the past, thanks to the optimization of the tax accounting system.
- The country is investing heavily in infrastructure development: developing transport networks, communication systems and electronic payment systems that facilitate business transactions.
- Georgia's geographic location between Europe and Central Asia provides a strategic advantage to trade businesses, providing companies with easy access to multiple markets to re-export goods to other countries.
What else do entrepreneurs who decide to open a business in Georgia get?
- State support. The Georgian government actively encourages foreign investment and supports innovative businesses.
- Qualified labor force. Georgia has a reserve of qualified personnel.
- Residence permit options. Investors and employees can obtain residence permits in Georgia based on investment or employment conditions. This allows people to stay in the country for a long period.
Relocating a business to a new jurisdiction, such as Georgia, involves a multitude of considerations and decisions. Before embarking on this journey, it's crucial to address various aspects to ensure a smooth transition. Here, we delve into the essential steps and choices that business owners need to make when relocating their operations to Georgia.
step 1 – Select your company structure
For many foreign investors, the Limited Liability Company (LLC) is an attractive choice. An LLC establishes a separate legal entity, shielding shareholders from personal liability. Remarkably, there is no minimum capital requirement for LLC registration in Georgia, offering flexibility for businesses of all sizes.
- Key LLC's pros:
- providing a distinct legal identity for the business;
- liablity only to the extent of capital contributions;
- there is no substantial capital investment for registering an LLC in Georgia.
For larger enterprises aiming to raise capital and accommodate multiple shareholders, a Joint Stock Company (JSC) in Georgia is an appealing option. A JSC is a legal entity with limited liability to creditors and a capital structure divided into shares, as defined by its charter.
Embracing the Virtual Zone
The thriving IT industry fully realizes its potential in Georgia's virtual zone company structure. Ideal for IT businesses, this category offers enticing tax benefits, including a 5% corporation tax rate and 0% VAT on software sales to foreign customers, provided the applicant fulfills the legal prerequisites.
step 2 – Navigating regulatory requirements and documentation for a smooth launch
Relocating involves choosing the right structure and adhering to regulatory requirements. Depending on your business activities, you may need specific permits, licenses, and approvals. Furthermore, understanding visa requirements for company owners and employees is paramount.
To kickstart your business in Georgia, prepare a comprehensive set of documents. This package typically includes:
- Constituent documents such as the Memorandum and Charter, share certificates, licenses, and permits.
- Information about shareholders, directors, and the secretary (if applicable). This should include copies of their passports, visas, utility bills, and other relevant documentation.
These documents serve as the foundation for establishing your business presence in Georgia and ensure legal compliance.
Basic tax rates
- 1. VAT
- Standard VAT Rate: 18%
- SME Exemption: Small and medium enterprises (SMEs) are exempt from VAT if their annual profit does not exceed GEL 100,000 in any 12-month period.
- 2. CIT
- Corporate Income Tax Rate: 15%
- Dividend Tax: Dividends are subject to a 5% tax in addition to the corporate income tax. This can result in a total tax rate of 20% on distributed profits.
- 3. Excise Tax:
- Georgia generally does not impose an excise tax. However, some specific products may be subject to excise taxes. The applicability of excise taxes depends on the type of product.
Georgian virtual zone
For information technology service providers and tech startups, Georgia's virtual zone offers a great opportunity to thrive. The benefits of Tax Free status are a significant plus for those who are seeking an opportunity to expand and make a profit. Here we will delve into the process of registering a company in the Georgian virtual zone and look at the tax advantages it provides to IT businesses.
Registration in the virtual zone of Georgia
To begin this path, applicants must submit an application to the Financial Analytical Service. It is noteworthy that in just 10 working days you can be granted the coveted status of a virtual IT zone in Georgia. While the initial application is the first step, additional documents may be requested to confirm the business model, clarify the products and services offered, and demonstrate employment contracts with local staff. Once achieved, the virtual zone status will become permanent, provided that the company’s activities comply with the legislative framework of Georgia.
Tax advantages in the virtual zone
The appeal of Georgia's virtual zone extends to its tax incentives, providing a compelling reason for IT businesses to establish a presence here.
- 0% corporate income tax (on income received from the provision of services abroad) in the virtual zone instead of 15% outside the zone;
- exemption from VAT (for services provided to clients abroad) instead of 18% tax outside the zone;
- duty-free export;
- only distributed dividends are taxed at a reduced rate of 5%.
Georgia's welcoming stance extends to its visa policy. In 2014, the government passed a regulation allowing citizens of the Schengen area and 95 other countries to enter Georgia without the need for a visa. However, for residents of countries not included in this list, a business visa may be requested. In Georgia, this visa can be either single-entry, allowing a stay of up to 30 days, or multiple-entry, issued for a period not exceeding five years. Compliance with the stipulated requirements and conditions for obtaining a Georgian visa opens the door to uninterrupted business activities within the country.
Support in business relocation to Georgia for your progress
For business owners and founders, achieving growth and efficient scaling are paramount after the relocation will end. Yet, relocating a business, whether to Georgia or any other country, entails navigating a labyrinth of complex issues. That's where our expertise is necessary.
Our company boasts a wealth of experience in facilitating the seamless relocation of foreign businesses. Our comprehensive suite of services covers every facet of the process, ensuring a smooth transition:
- Business regulation consultations. We provide advice on business regulation in Georgia, helping you make informed decisions.
- Corporate structure optimization. Choosing the right corporate structure is crucial. We offer expert guidance to identify the optimal structure for your company's goals.
- Efficient company registration. Our support extends to registering your company in Georgia efficiently, streamlining the administrative aspects.
- License and permit advocacy. Navigating the labyrinth of licenses and permits can be daunting. We represent your interests, simplifying the process.
- Residence permit procurement. For those seeking a residence permit in Georgia, our assistance ensures a smooth journey.
- Bank account setup. We facilitate the opening of both personal and corporate accounts, removing the administrative hurdles.