Start a business in Georgia: This article discusses the benefits and legal forms available for starting a business in Georgia. The country’s economic growth, ranking 9th among 192 countries according to the International Monetary Fund, is attributed to foreign investments, tourism, transit status, and infrastructure capabilities. Additionally, the tax system is convenient and lenient, providing equal treatment for residents and non-residents.

The choice of legal form is a crucial consideration for prospective business owners. A range of organizational legal forms is available, including standard individual entrepreneur, an individual entrepreneur with small business status, micro-business, LLC, NGO, JSC and others,  all of which offer opportunities for business development and relatively low tax obligations. For those seeking to conduct business in Georgia without residing in the country, registering as an individual entrepreneur is the most optimal choice. Conversely, LLC registration is suitable for those who view Georgia as an attractive location to develop their business.

Moreover, LLC registration in Georgia offers a range of benefits for business development. This legal form allows for a flexible management structure, where members can be individuals or legal entities, and provides limited liability protection for members. Additionally, LLCs are not required to have a minimum share capital and can have a single member. These features make LLCs an attractive option for both small and large businesses.

On the other hand, registering as an individual entrepreneur is a suitable choice for those seeking to conduct business in Georgia without residing in the country. This legal form offers relatively low tax obligations and allows individuals to conduct business activities under their name. However, it should be noted that individual entrepreneurs do not have limited liability protection and are personally responsible for any debts or liabilities incurred by their businesses.

Overall, the choice of legal form for a business venture in Georgia should be carefully considered based on individual circumstances and goals. While LLC registration may be optimal for those seeking to develop their business in Georgia, registering as an individual entrepreneur may be more suitable for those conducting business activities remotely.

Why should you register an LLC in Georgia?

Start a business in Georgia: Firstly, a limited liability company operates on the “Estonian model” of taxation, which is already a great advantage. This model involves paying 15% on profit and 5% on dividends only when they are paid out. It should also be noted that this form of taxation is equally provided for residents and non-residents of the country.

The tax burden of a standard LLC:

– Profit tax – 15%;

– Dividend tax – 5%;

– Personal income tax for an employee – 20%;

– Property tax of the company – 1%;

– VAT – 18%;

– Pension tax, if the employee is a Georgian citizen or has a permanent residency – 2% from the company and 2% from the employee’s salary.

Another advantage of the LLC in Georgia is the potential for tax optimization through preferential tax systems such as the Virtual Zone and International Company statuses. These systems allow for conducting business outside of Georgia while paying a low tax rate.

Furthermore, registering a company in the Free Industrial Zone (FIZ) in Georgia (the country offers several industrial zones within its borders)  provides exemptions from several taxes and duties, including profit tax, VAT, customs duties, and property tax. Additionally, companies registered in this zone may receive benefits for land tax and personal income tax.

Careful consideration of the legal structure and economic ties is crucial before registering an LLC in Georgia to ensure successful business operations.

In short – the benefits of registering a business in Georgia:

– Ease of registration process;

– Possibility of opening a corporate account with only the presence of the director;

– No bureaucracy;

– Possibility of remote company registration;

– No obligation to contribute to the authorized capital;

– No currency control;

– Rapid economic growth of the country;

– Geopolitical location of Georgia;

– 57 signed agreements on avoiding double taxation;

– Country’s orientation towards the development of small and medium-sized businesses.

The BEPS project (Base Erosion and Profit Shifting) international body that dictates the legal regulation in the tax area aimed at combating international tax evasion, mandates economic ties when registering an LLC legal form in Georgia. These economic ties include the presence of representation such as an office or employees, counterparties, and a website. These conditions are mandatory not only for tax inspection but also for banking purposes.

Opening a corporate account in Georgia may involve some difficulties from the bank’s side. However, meeting certain criteria such as having a lease agreement for premises/office/warehouse, a contract with counterparties/customers, engaging in non-sanctioned actions, and confirming economic ties with Georgia increases the chances of success.

Our team of professionals provides a full range of services to support your business needs, including consulting services, selecting the appropriate legal form, accounting, and corporate services. You can rely on the experience of our specialists to handle organizational and legal matters for your business.