In the eyes of investors and entrepreneurs, the business environment and incentives in Georgia (a country in the Caucasus) are the best in the region. The simplicity of company registration, high-level confidentiality, and tax incentives are similar to offshore offers. Fortunately, however, this jurisdiction is not black/greylisted by FATF and other international alliances. To correctly estimate and compare the advantages of setting up a business in this country, one should appreciate the lean level of IE or LLC formation costs in Georgia.
IE or LLC Formation in Georgia
In 2021, according to the World Bank Doing Business ranking, Georgia ranked 2nd in Europe and 7th in the world by the ease of doing business. Thus, for the 4th year in a row, Georgia has remained on the Top 10 list of business-friendly countries. The most popular types of business structures are Individual Entrepreneurship (IE) and Limited Liability Company (LLC). As of April 1, 2022, out of 211,033 active business entities there were:
- 81,079 LLCs (38,42%)
- 121,183 IEs (57,42%).
IE or LLC formation in Georgia is very easy, whether they are registered by private persons or legal entities, nationals or foreigners. The House of Justice processes all applications for registration within 2 days. The documents can be filed either in person or remotely, i.e. through an authorized representative. During the months of the COVID-19 pandemic control measures involving travel restrictions and social distancing, the opportunity to apply by a proxy was especially advantageous.
Your IE or LLC formation costs in Georgia will depend on the urgency of the registration and the particular choice of the business structure type (the rates quoted below are dated 16.05.2022):
|Registration timelines||IE, fees in GEL (and in $)||LLC, fees in GEL (and in $)|
|on the day of the application||50 (~17)||200 (~67)|
|on the day after the application||20 (~7)||100 (~33)|
There are only 2 issues a foreigner may encounter when applying for IE or LLC registration:
- the need to prove a legal address in Georgia
- the need to compile and file application documents in the Georgian language.
You can quickly get access to all the benefits of doing business in Georgia by taking advantage of our fast turnkey service of IE registration in Georgia available to non-residents remotely.
Your first IE or LLC formation costs in Georgia
Your first IE or LLC formation costs in Georgia involve the following basic items:
- preparation of constituent documents
- preparation of a Power Of Attorney (if the registration is carried out through an authorized representative)
- dispatch of documents by international mail (if the registration is conducted through a trusted representative)
- lease of a legal address.
To visit Georgia in person during a pandemic is a sophisticated venture. One needs to follow the procedure and meet the requirements for crossing the border. In 2021, a mandatory 8-day quarantine was required. In 2022, for now, it is sufficient to present a certificate of vaccination with any type of COVID-19 vaccine (2 doses of any 2-component vaccine or 1 dose of the J&J COVID-19 vaccine) or the Proof of a negative pre-entry PCR test done within 72 hours before entry. However, the latter option also requires the traveler to be retested on the 3rd day of stay. The average cost of a PCR test is 150 GEL.
Time and money-wise, getting your IE or LLC in Georgia registered remotely through an authorized agent is more reasonable than trying to arrange everything on one’s own during an in-person trip to Georgia.
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IE formation costs in Georgia in 2022
IE formation costs in Georgia depend on the business revenues and other variables. The basic expenses include administrative and tax-related costs:
|Cost items||Monthly value, $||Variables affecting the value|
|Accounting services, including preparation and submission of reports||from100||— amount of primary documents|
— VAT liabilities (for turnover over GET100,000)
|Office rent||from 400-500||floor area and location|
|Cash management||from 150||cash flows|
|Merchant acquiring||from 1.5%||turnover, the bank|
|Bank commissions (on average per transaction):|
|local banks usually use package services. In general, the cost depends on the bank, the amount, and the type of transaction|
FYI: You can develop business in Georgia with a corporate account opened either with a local bank or abroad. You can use accounts set up in foreign payment systems or banks. Should you need our assistance, we’ll be glad to help you with opening private and corporate accounts for your business and private needs.
Taxes payable by IEs in Georgia
The taxes payable by individual entrepreneurs in Georgia depend on the status of the taxpayer. The list of the main taxes and rates is as follows:
|Taxes||Microbusiness (with a turnover up to GEL30,000)||Small business (with a turnover up to GEL50,000)|
|Example: annual turnover of up to GEL55,000 and expenses of up to GEL15,000||0||GEL55,000*1%= GEL550|
|Value (payable from the turnover exceeding GEL100,000)||—||18% (charged only on the locally generated revenues, while foreign incomes are not taxed)|
|Salary tax (withheld only from citizens and foreigners holding permanent residence permits)||20%||20%|
|Contribution to the Pension Fund charged on the salaries (withheld only from citizens and foreigners holding permanent residence permits)||2% — employer|
2% — employee
|2% — employer|
2% — employee
IEs in Georgia selling excisable products are liable to pay the excise tax at the rates relevant to the types of the products.
Please note: The status of a Small Business is effective from the 1st day of the month following the date of the application to the tax office. Therefore, the corporation tax rate for IEs in Georgia is always 20% during the very 1st month after the registration.
In practice, an IE with the status of a Small Business holding an account with a payment system or a foreign bank is the most profitable business entity type for business activities under foreign contracts worth not more than $100,000 / year. For example, this option can be a very favorable solution for an Estonian IT company paying salaries to its employees registered as Georgian IEs.
IE’s administrative costs in Georgia
Banking and operating expenses of an LLC and an IE are computed in the same way. Standard taxes for all legal entities in Georgia are as follows:
- corporation tax on distributed profits – 15%;
- tax on dividends – 5%;
- VAT – 18%;
- Property tax – up to 1%;
- customs duties – 0/5/12%;
- excise tax.
It may seem that foreigners have little interest in Georgia’s domestic market, due to its small size and the shortage of solvent consumers. However, for most international investors, the jurisdiction is interesting as an excellent gate to international markets. Exporters of goods manufactured in Georgia can enjoy a preferential status that reduces tax rates to almost 0%.
FYI: Our experts will help you jumpstart your profitable international business in Georgia within a couple of days remotely. You are welcome to order and get your company registered remotely in Tbilisi or Kutaisi Free Industrial Zones. IT companies incorporated in the Virtual Zone are also very popular with non-residents because of the incentives that optimize the IE or LLC formation costs in Georgia.
|Taxes||Standard rates||Rates in Free Industrial Zones in Georgia||Virtual Zone rates||Special rates for international companies|
|Corporation tax on distributed profits|
|Contributions to the Pension fund|
Personal income tax
20% (payable and accounted by the employee)
|Best suited for||Any activity||Exporters||IT companies|
|IT companies |
In addition to the above expenses, companies registered in Georgia incur the following costs, depending on their special status:
|Services||Standard rates||Rates in Free Industrial Zones in Georgia||Virtual Zone rates||Special rates for international companies|
|LLC registration by proxy issued to the Offshore Pro Group||from EUR 2,000||from EUR 4,000||from EUR 3,000||Specified on a case-by-case basis|
|Additional annual licensing (depending on the number of business activities and the terms specified by each FIZ in Georgia)|
All of the above calculations are approximate, but they allow estimation of the breakeven threshold and the possible profitability of an LLC or IE registered in Georgia.
If you need more specific data and references on IE or LLC formation costs in Georgia, please contact us for an online private discussion with an expert. Just fill in the booking form, or write to our e-mail address and messengers given at the top of this page.
What makes Georgia attractive to foreign businessmen?
The country offers the best taxation system in the region. The IE and LLC formation costs in Georgia are quite lean. The locally registered companies enjoy free access to the international markets and are free to use the services of Georgian or foreign financial institutions. Georgian legal entities and individual entrepreneurs are not subject to international sanctions. Georgia does not exchange financial information under the CRS; the first-ever data exchange may start in 2023 (with Germany only).
How quickly can I have my business registered in Georgia?
The remote registration of a business in Georgia takes a couple of days. However, depending on the complexity of the documents to be drawn up and the urgency of their delivery to Georgia for submission to the House of Justice, the entire process may take up to 2 weeks.
Who benefits from registering a business in Georgia?
IE and LLC formation in Georgia is popular with IT specialists, as well as entrepreneurs who receive sustainable income from foreign sources. This is because the Georgian legislation exempts all foreign revenues from taxes.