Business Setup Georgia
How to Setup your business in Georgia
Business Setup in Georgia take time to explore and research ideas for your business. At this stage, take into consideration your own interests, skills, resources, availability, and the reasons why you want to form a business. You should also consider the likelihood of success based on the interests of your community, and whether your business idea will meet an unmet need. Read our article for more tips on how to evaluate business ideas.
After you select an idea business startup in Georgia, consider drafting a business plan to determine your chances of making a profit. When you create a plan, you will have a better idea of the startup costs, your competition, and strategies for making money. Investors and lenders will want to review your business plan before providing financial assistance, and you can be prepared by drafting a plan before you start soliciting funding.
Purchase Insurance
Business insurance in Georgia can shield your assets from the effects of unplanned calamities including legal actions for personal injury and natural disasters. Your business may benefit from general liability insurance to defend you against claims of property damage or bodily injury, or cyber liability insurance to pay legal and settlement costs in the event of a data security breach. An insurance agent can assist you in examining the various coverage options for your company.
Choose a legal framework
| Types of companies | Limited Liability Company (LLC, Ltd) Joint Stock Company (JSC) General Partnership (GP) Limited Partnership (LP) Cooperative |
Minimum share capital for LTD Company | Not required |
Minimum number of shareholders for Limited Company | 1 |
| Time frame for the incorporation | 2-3 days |
| Corporate tax rate | 15% |
| Dividend tax rate | 5% |
| VAT Rate | 18% |
| Are Shelf Companies Available? | No |
| Do you supply a Registered Address/Virtual Office? | Registered address – Yes; Virtual office – No |
| Local Director Required | No |
| Annual Meeting Required | No |
| Redomiciliation Permitted | Yes |
| Electronic Signature | Yes |
| Is Accounting/Annual Return Required? | No |
| Foreign-Ownership Allowed | Yes -100% |
| Any tax incentives (if applicable) | 5% tax for Virtual Zone Company (which works in IT or IT-related sector) |
| Any Tax Exemptions Available? | Free Industrial Zone with 0% tax |
Steps for company formation in Georgia
- In order to open a company in Georgia, the following steps have to be followed by both local and foreign investors:
- select one of the company types that is most suitable for the business activities that will be developed in Georgia;
- select a suitable company name and register with the National Public Registry of Georgia;
- the company’s representatives have to prepare and notarize the statutory documents;
- register with the Entrepreneurial Register, which will issue an identification number and a certificate of state and will handle the tax registration procedure for the new company;
- open a corporate bank account at any local commercial bank.
We can help you with every procedure if you need to start a company in Georgia.
What types of legal entities can investors set up in Georgia?
- There are a few types of entities the foreign investors can establish in Georgia:
- – the limited liability company,
- – the general/ limited partnership,
- – subsidiary,
- – branch office.
Please note that the subsidiary is considered an independent business structure, as opposed to the branch office.
Report and File Taxes
- Georgia levies tax on all types of businesses. For further details on Georgia’s state business taxes, see Georgia State Business Income Tax.
- single-person businesses. As part of their personal state income tax returns, they pay state taxes on business income (Form 500).
- Partnerships. On their personal tax returns, partners must pay state taxes on partnership income.
- LLCs. On their personal tax returns, members must pay state taxes on their portion of LLC revenue. LLCs must also submit a separate state tax form, either a partnership return or a corporation return. Depending on how the LLC is categorized for federal tax reasons, a special form may be required.
- Corporations. State taxes must be paid by shareholders on corporate dividends. On his or her individual state tax return, a shareholder-employee who receives a salary must also pay state income tax. Additionally, Georgia corporation taxes are levied on the corporation itself.
If a foreign businessman wants to set up a limited liability company in Georgia, he or she can start the procedure by registering it with the Entrepreneurial Register. The institution will require a set of company documents, which are compulsory during the registration procedure. The necessary documents for company formation in Georgia are the following:
- • the company charter – which is the formal document that establishes the legal entity that will operate in Georgia;
- • the document which stipulates the value of the contribution of each member;
- • an application which contains information regarding the name of the company, the legal entity of the company, the amount of share capital, documents for naming each member of the supervisory board and management board;
- • in the situation of a company set up as a limited liability, the application should also contain the address, the business plan, date of starting the business and details providing information on the founder of the company (name, address, place of birth and his or her profession).
After depositing the above mentioned documents, the representatives of the limited liability company have to open a bank account. The corporate bank account can be set up at any commercial bank in Georgia, after providing certain documents requested by the institution. After this, the limited liability company is entitled to start its commercial activities.
Georgia is a business-friendly country, which has developed over the years its relations with other jurisdictions. Foreign businessmen who want to register a Georgian company can apply for a business visa, provided that they will be able to invest a minimum amount of GEL 300,000. If this condition is satisfied, the businessman will receive a permanent residence permit, but prior to this, it is necessary to confirm the value of the investment by an auditor.
However, it is important to know that the procedure of company formation in Georgia for a foreign investor is not limited by the above mentioned value. Lower investments can also be made, but in this case, the foreign applicant can only receive a permit issued for a period of one year. In this particular case, the foreigner must actively be involved in the operations of the business, by being an employee of his or her company.
Other types of visas that can be used by foreign businessmen is the Diplomatic Visa – A1 category visa and A5 visa, that can be used by investors when arriving in the country for a specific business purpose. Businessmen may also request an Ordinary Visa (C3 category visa, which is employed when arriving in Georgia for business negotiations, workshops and other similar short-term corporate events).
The main costs associated with the registration of a Georgian company are presented below:
- registration fee: the registration fee is GEL100 (approximately EUR32) for the standard registration procedure (completed in one day) or GEL200 for the straightforward registration;
- virtual office cost: the virtual office is the least expensive way of obtaining a business address in Georgia, and the cost for it is approximately EUR20/month;
- minimum share capital: when opening a limited liability company, there is no requirement concerning the company’s capital;
- company formation fee: our team of specialists in company registration in Georgia can provide full assistance at a very competitive price, of approximately EUR 900;
- accounting costs: the price starts from approximately EUR150/month, and it includes bookkeeping assistance and advice on the corporate taxation system.
The capital of the limited liability company opened in Georgia is divided into shares and the responsibility of each member is limited to the value of his/her shares. The shares of the company can be transferred and the members have the right to leave them as inheritance. If a member of the company owns a single share, that share can’t be sold. At the same time, it is important to know that the entity registered as a limited liability company must add in its trading name the particle “LLC”, the abbreviation available for this legal entity.
Another important aspect referring to the limited liability company in Georgia is that this entity can be set up by an individual or by a legal entity who want to start a company in Georgia. This is the most common business form registered in Georgia due the liability of the shareholders, which is limited to the number of shares they own in the company. Each limited liability company is founded on a charter, which prescribes the internal regulations of the company.
A limited liability company (LLC) in Georgia is a legal entity that can be set up by maximum 50 shareholders and may be incorporated by at least one founder. This is the most popular type of legal entity preferred for incorporation by both local and foreign investors and our team of specialists in company formation in Georgia can offer in-depth assistance regarding the registration of this business form.
The highest authority in a limited liability company in Georgia is the general meeting of the shareholders. The general meeting is usually held on a yearly basis and the shareholders can take decisions regarding the beginning and termination of the commercial activities in which the company is involved, the purchasing or selling of real estate property, buying or selling shares, the approval of the annual statements. They may also decide on matters such as borrowing money, the request of paying deposits or refunding deposits, naming the directors and approving their reports.
A limited liability company established in Georgia can also be represented by a supervisory board, named by the general meeting. The limited liability company’s interests are represented by an appointed director. Our team of Georgian company formation agents can offer more details related to other similar matters. We can help you start a company in Georgia.
The registration of company in Georgia is performed following the rules and regulations imposed by the Civil Code amended in 1997, the Law on Entrepreneurs (1994) and the Law on Assistance and Guarantees for foreign investments. These rules of law prescribe the manner in which new businesses are set up here. For example, the documents which are necessary for the registration procedure have to be translated into the local language.
Moreover, foreign investors interested in setting up a company in Georgia have to notarize the company’s documents at a public notary. Furthermore, the documents have to be legalized in the country in which the foreign shareholders are residents, in accordance with the provisions set up by the Hague Convention.
Those who want to register a limited liability company must know that they have to be present in the country during the incorporation procedure, for legal matters concerning the notarial aspects or to submit the requested documents to relevant authorities. Another important aspect refers to the duration of the incorporation process. Businessmen should know that the procedure can be performed in maximum one week.
In Georgia, the standard value added tax (VAT) rate is 18%. There are no reduced rates, but a 0% VAT rate applies to exports, services of tour operators, electrical power, international shipping activities or transfers of gold to the National Bank of Georgia. The corporate income tax rate for a company in Georgia is 15%. As a general rule, Georgia does not apply the excise tax, but certain categories of products can be subjected to this tax. It is important to know that a company has to register for VAT purposes in Georgia as long as the company’s annual revenue is of minimum GEL 100,000.
In Georgia, dividends distributed by a company are subject to a 5% dividend tax rate, no matter if the dividends are paid to a non-resident entity or an individual. However, in the case of the dividends distributed from a Georgian company to another local company, there is no tax base. Businessmen who want to open a company in Georgia should know that, overall, the country provides an attractive and welcoming business environment.
When starting a business activity in Georgia, one of the compulsory requirements is to have a business address and an official business office. Although most of the companies need an actual office, where the company’s employees meet according to the schedule of the company, numerous business activities can be developed through the services of a virtual office.
Our team of consultants in company registration in Georgia can offer assistance on the main services that can be requested in this case and can provide advice on the main advantages of developing a business activity through a virtual office. However, it is necessary to know that the virtual office provides the advantage of having a very low monthly rent (GEL60-135), this being an important advantage for any small start-up business and foreign investors who want to open a company in Georgia.
Georgia has one of the most competitive markets in its region, which offers numerous incentives for the development of the business environment. This country has three industrial zones, created to cater the needs of specific business sectors and they are to be found in Poti, Kutaisi and Tbilisi.
One of the main advantages for starting the procedure of company formation in Georgia in one of its free economic zones refers to the tax advantages the investors can receive, as such areas provide specific tax exemptions, depending on the company’s activities. For example, in the case of company exporting goods, the personal income tax will be the single tax that will be applied to the company.
Investors who want to open a company in Georgia can also benefit from the provisions of the double taxation treaties signed by this country, as long as they are tax residents of one of the countries with which the Georgian authorities have concluded an agreement. Georgia has signed approx. 54 treaties for the avoidance of double taxation.
Investors who want to expand their business activities in a foreign country should take into consideration that Georgia became one of the most attractive business locations in the European and Central Asian region. World Bank Group (WBG) has recently presented the “Measuring Regulatory Quality and Efficiency” report, in which Georgia ranked as the 4th economy in the European and Central Asian region in terms of ease of doing business. If you are interested in the business environment in Georgia, our Georgian company formation specialists can provide you with an in-depth presentation on this matter.
The WBG report has revealed that Georgia is ranked as the 24th economy in the world in terms of doing business, in a study that has included 189 countries. The study analyses the last 12 years experienced by Georgia in terms of doing business, revealing that the state had the best results in this matter. The output per capita increased by 66% in this period and the density of businesses in Georgia tripled.
The report states that the main reasons for these remarkable results are the government’s reforms aimed at the entrepreneurs’ access on the local business market. Georgia implemented several reforms which improved the process of doing businesses here. The local authorities have implemented a digital filing system and simplified the process of issuing the construction permit which is good to know for foreign investors who want to open a company in Georgia.
The report presented by WBG report established the ease of doing business based upon 10 factors, for which Georgia received the following scores:
• starting a business – Georgia ranked on the 3 place (out of 189 economies);
• dealing with construction permits – 2nd place;
• getting electricity – 6th place;
• registering a property – 2nd place;
• getting credit – 1st place;
• protecting minority investors – 4th place;
• paying taxes – 7th place;
• trading across border – 18th place;
• enforcing contracts – 5th place;
• resolving insolvency – 19th place.
Georgia is located in a hot spot, at the crossroads between Western Asia and Eastern Europe, and it is precisely its geographical location that makes it a good place to invest and access the two markets. At the same time, there have been investors who have questioned the country’s ability to regain from political changes and influences brought by its neighbors, especially Russia.
Local and foreign investors who need to set up a company in Georgia may contact our specialists in company formation who will offer full assistance for company registration and other additional services. We can also offer information about the company formation process in other countries, through our local affiliates.
The procedure to open a company in Georgia is one of the simplest at a global level, but even so, it is highly recommended to receive legal assistance, especially when we consider that language barriers can appear.
Although Georgians have a good command of foreign languages, this does not apply to the entire society and language barriers can easily appear, given that Georgians have a different writing system.
When you will open a business in Georgia, you will need to select the most suitable company type. This step must be concluded based on the type of liability you want to have as an investor, the available capital, the size of the company and many others.
Our team of consultants can explain the benefits you can have as the owner of any company type regulated under the Georgian law.
Once you will set up your business, you will need to address to accountants in Georgia for accounting services. The bookkeeping and any other accounting documents must be maintained only by persons who have obtained a certification in this field.
Thus, it is compulsory to address to an accountant or to hire an accountant or a team of accountants, depending on the size of your business.