How many of these have you heard before? I would like to share the truth about these common oral health myths I hear from patients almost every day. Read on to learn about them and how to keep your mouth healthy. Their separate existence is a myth.
Why Georgia? A Brief Overview of the Business Climate
Before diving into the details, let’s briefly touch upon why many foreigners choose Georgia:
Simple Registration: Procedures are streamlined, often completed within a single business day.
Low Taxes: The corporate profit tax “Estonian model” and the Small Business Status are particularly attractive.
Strategic Location: Situated at the crossroads of Europe and Asia, offering logistical and trade advantages.
Growing Economy: Stable economic growth and an open stance towards foreign investment.
The new common language will be more simple and regular than the existing European languages. It will be as simple as Occidental; in fact, it will be Occidental.
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Which Legal Form Should You Choose?
Several legal structures are available for registering a business in Georgia. The most popular and frequently used forms for foreigners include:
Limited Liability Company (LLC):
Why is it popular? Founders’ personal assets are protected from company liabilities. Management is relatively flexible.
Ideal for: Small and medium-sized businesses (SMEs), startups, subsidiaries of international companies.
Requirements: At least one founder (individual or legal entity, resident or non-resident) and at least one director. A legal address in Georgia is mandatory.
Individual Entrepreneur (Sole Proprietor):
Why is it attractive? Simplest registration process with minimal costs. Ideal for freelancers or small, one-person operations.
Main Drawback: The entrepreneur is personally liable for all business debts with their entire personal property.
Tax Advantage: Eligible for Small Business Status (1% tax on turnover up to GEL 500,000 annually for specific activities).
Joint Stock Company (JSC):
Intended for: Large businesses seeking to raise capital through issuing shares.
Complexity: Registration and governance are more complex and subject to stricter regulations compared to an LLC.
Branch Office:
What is it? A representative office of a foreign company in Georgia, not considered an independent legal entity.
Liability: The parent company is fully liable for the branch’s obligations.
The European languages are members of the same family. Their separate existence is a myth. For science, music, sport, etc, Europe uses the same vocabulary.
Which form best suits your business model? The answer depends on your business scale, risk tolerance, and future plans. In most cases, foreigners opt for an LLC in Georgia.
The Business Registration Process Step-by-Step
Registering a company (e.g., an LLC) in Georgia takes place at the National Agency of Public Registry (at the Public Service Hall or its branches) and is remarkably fast:
Prepare Required Documentation:
Identification Document: Notarized translations of passports for founders and director(s) (if the original is not in Georgian/English).
Application Form: Filled out on-site or electronically.
Company Charter (or Minutes of Partners’ Meeting): Must reflect the company structure, management rules, capital distribution, etc. (Standard templates are available).
Proof of Legal Address: This can be:
Consent from the property owner.
A lease agreement.
Consent from a legal address service provider (virtual office).
Proof of Registration Fee Payment: Standard registration (1 business day) – GEL 100; Expedited (same day) – GEL 200. (Fees are subject to change; verify at the time of registration).
Submit Documents to the Public Registry: Documents can be submitted physically at a Public Service Hall or via an authorized representative (e.g., a lawyer).
Registration Completion: Upon successful registration, you will receive an extract from the Public Registry confirming the company’s registration and its identification number.
Important Note: While electronic services are expected to improve further by 2025, the requirement for certain physical documents (especially notarized ones) will likely remain.
Post-Registration Steps: What Comes Next?
Company registration is just the first step. The subsequent crucial stages involve:
Tax Registration: The company is automatically registered with the Revenue Service as a general taxpayer. However, if you wish to benefit from special tax regimes (like Small Business Status for Sole Proprietors or LLCs under specific conditions, or registering for VAT below the threshold), you must submit an additional application to the Revenue Service (rs.ge).
Opening a Corporate Bank Account:
The Challenge: In recent years, Georgian banks have significantly tightened their Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, especially for non-residents.
What is Required? Banks frequently request:
Company registration documents.
Director’s identification document (often requiring the director’s physical presence).
Detailed information about business activities, partners, source of funds.
Sometimes, proof of genuine business ties to Georgia (office, employees, local contracts – often referred to as “economic substance”).
Advice: Be prepared to fill out extensive questionnaires and provide supplementary documentation. Consulting with several banks is recommended.
Legal and Tax Aspects
Corporate Income Tax (CIT – 0%/15%): Georgia applies the “Estonian model.” A company pays 15% CIT only when profits are distributed (dividends paid out) or upon non-business related expenses. Reinvested profits are taxed at 0%.
Value Added Tax (VAT – 18%): Mandatory VAT registration is required if annual taxable turnover exceeds GEL 100,000. Voluntary registration below the threshold is possible.
Dividend Tax (5%): Dividends paid to individuals (resident or non-resident) are taxed at 5% at the source of payment.
Personal Income Tax (20%): Levied on employee salaries.
Small Business Status (1%): Available for Sole Proprietors (and LLCs under certain conditions) with annual turnover below GEL 500,000. (Note activity restrictions).
Legal Address: Remains critically important. The company must have a registered physical or virtual legal address in Georgia to receive official correspondence. Any change of address must be registered.
Personal Data Protection: Strengthened legislation (updated in recent years) requires companies to comply with data processing rules, especially when handling customer or employee data, aligning with international standards like GDPR where applicable.
Is Legal Assistance Necessary?
Although the process is streamlined, many nuances can be challenging for foreigners (language barriers, specifics of local legislation, banking procedures). Engaging a qualified Georgian lawyer can save you time, help avoid potential mistakes, and ensure your business operates in full compliance with Georgian law.
Conclusion
Georgia undoubtedly offers an attractive proposition for foreign entrepreneurs. Company registration is fast and straightforward, and the tax system is generally favorable. However, success hinges on choosing the right legal form, navigating the registration procedures correctly, understanding tax obligations, and crucially, anticipating potential difficulties with opening a corporate bank account.
Looking towards 2025, the emphasis on transparency and compliance with international standards, particularly in the financial sector, is expected to increase. Therefore, having a reliable local legal partner is key to ensuring the stable and lawful operation of your business in Georgia.
Need assistance with business registration or legal matters in Georgia? Contact us today for a consultation!
