- Doing business/individual entrepreneurship in the Republic of Georgia
- The bodies that register individual entrepreneurship in the Republic of Georgia
- The application procedure set for foreigners who intend to register individual entrepreneurship in the Republic of Georgia remotely
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- Incentives for foreigners who intend to register individual entrepreneurship in the Republic of Georgia
- Remote solutions for foreigners who intend to register individual entrepreneurship in the Republic of Georgia
Georgia, a business- and investor-friendly jurisdiction in the Caucasus, offers a lot of advantages to foreigners wishing to register individual entrepreneurship (IE) or launch other business structures in its territory. Its incentives include the ease of doing business, free access to international markets, high-level confidentiality, and a liberal taxation system. If the company is big enough and export-oriented, the best option would be to register it in the Free Industrial Zone of Georgia. IT businesses can profit a lot from the status of a Virtual Zone Person coming with many perks. Such strengths and generous offers of Georgia are far from being exhaustive.
Individual entrepreneurship (also known as a sole proprietorship) is the most popular business option available in Georgia. It is particularly advantageous for freelancers, digital nomads, and other expats generating a relatively small gross income (below GEL 500,000 a year).
Do you maintain a sustainable income in another country and would like to significantly optimize your business costs/taxes legally? Just imagine that in Georgia, you can pay only the 0% or 1% tax on your gross business turnover if it is below GEL 500,000, and 3% on all turnover past this threshold. Let us explore the obvious and hidden benefits of registering your individual entrepreneurship in the Republic of Georgia.
You are welcome to contact us for fast, effective, customized remote solutions. You will be able to launch your individual entrepreneurship in Georgia within 1-2 working days from anywhere in the world. No in-person travel is required. Before too long, you will enjoy significant savings and benign taxes.
The cost of the remote registration of individual entrepreneurship in Georgia for non-residents is from 1,500 USD.
Doing business/individual entrepreneurship in the Republic of Georgia
In 2021, Georgia ranked 2nd in Europe and 7th in the world for the ease of doing business, according to the World Bank Doing Business 2020 ranking. This status (awarded also in 2019 and 2018) is the fruit of national reforms launched in each of the indicator areas since 2015.
Sole entrepreneurs play a key role in the Georgian economy. As of April 1, 2022, individual entrepreneurs comprise 121183 out of 211033 active registered entities. They were inspired by the following obvious advantages of individual entrepreneurship:
- The locals claim that individual entrepreneurship is fast and easy to register in person.
- Non-residents can resort to professional services and register their IE remotely by proxy.
- The reporting requirements are minimal.
- The costs of launching and running a sole proprietorship are low.
- The tax rates can be as low as 0%-3%, depending on the gross turnover.
- Foreign and local investors are treated equally in terms of entitlement to grants and incentives.
- A sole proprietor is a natural person, not a legal entity. Such entrepreneurs are liable to creditors personally, and their assets are not separated from the business.
- IEs are not liable to pay the Corporate Income tax, the pension contributions, and the personal income tax on one’s business-related earnings.
At the moment, the Georgian corporate law undergoes substantial changes to be harmonized with the EU legal framework. The legal reform has triggered amendments to the Civil Code, Civil Procedure Code, Law on Securities Market, Law on National Agency of Public Registry, Labor Code, Law on Commercial Bank Activities, etc.
To this end, the new Law on Entrepreneurs, effective since 1 Jan 2022, has abandoned or detailed a number of old stipulations (adopted since 1994) and introduced some new ones.
Here are several examples of the relevant legal innovations:
- All founders of new enterprises (general partnerships/GP, limited liability partnerships/LP, limited liability companies/LLC, joint-stock companies/JSC, cooperatives) need to sign and submit to the registration authority the Founders’ Agreement covering the required data.
- The new simplified Standard Charter templates are designed for different forms of business.
- The minimal mandatory initial capital for any JSC is set at GEL 100,000.
- There are also new regulations on brand names, business letters, electronic addresses, websites, and the management body/management person, the fair competition rules, the notifications by the registration authority, the Employment (Service) Contract, the authorized capital shares, the dividend distribution, the reorganization rules, the right to establish in Georgia a branch of a foreign individual entrepreneur, some other incentives and specifications.
- Sole proprietors can now indicate only one’s name, or a surname in their title (whereas previously they were obliged to mention the name in full).
To answer some of the FAQs, let us refer to the current corporate “Law on Entrepreneurship” in the Republic of Georgia:
- individual entrepreneurship shall be deemed established only upon registration in the Entrepreneurial Registry;
- the registration procedure takes only 1 business day, plus one more day for other optional arrangements;
- individual entrepreneurs shall fulfill their rights and obligations in business relations under his/her own name, as natural persons, and shall be personally liable to creditors with all of his/her assets;
- any transfer of agricultural lands to foreign private persons, sole entrepreneurs, or entities, including joint ventures, is prohibited.
The main incentive to register individual entrepreneurship is the incredibly attractive tax rates in Georgia.
If you get the Small Business status (available if your gross annual turnover is between GEL 30,000 and GEL 500,000, and you are not a local resident) you will only pay 1% tax due every month on your gross turnover.
The 1% tax rate benefit is not, however, granted automatically. It does not apply retroactively, either. To gain it, you need to apply for the Small Business status, either in person or via an agent.
Please note: If you had received income working remotely from Georgia or locally before you obtained the Small Business Status, you will be subject to the 20% tax on your gross income during that period. This is the reason why you should register your business as soon as you arrive in Georgia. Otherwise, you will have to pay the 20% tax instead of the 1% rate on your income.
If your turnover exceeds GEL 500,000, from that moment and until the end of the year the tax rate will be 3% payable on all the revenues above the threshold if you have the Small Business status.
In case your turnover was under GEL 30,000 during the previous calendar year, you can qualify for Micro Business Status and the annual tax rate of 0%.
Sole proprietors can come from any country. However, they are subject to taxation in Georgia only on revenues from Georgian sources and exempt from taxation on income from non-Georgian sources.
However, if you spend less than 183 days in Georgia a year, you will not be a tax resident, and you cannot be entitled to the tax benefits explained above and the Georgian double taxation treaties. The status of resident or non-resident is specified for each tax period.
Please note: Georgia does not tax resident individuals on their foreign-source income. Besides, it has concluded DTTs with nearly 50 countries.
Please compare the standard tax rates in Georgia that are normally NOT relevant to individual entrepreneurship:
- 20% Income Tax (levied, for example, on the salaries of the IE’s staff)
- 15% Corporate Income Tax (levied on incomes of legal entities other than individual entrepreneurs)
- 2%+2% pension contribution (set for permanent residents/citizens only; the pension scheme is not mandatory for self-employed individuals)
- 18% VAT on the IE’s VATable turnover exceeding GEL 100,000 in any 12-month period (except for certain business activities, including those provided abroad, that are completely exempt from paying VAT).
Recruitment of employees is allowed, and the amounts of the tax withheld on employees’ salaries depend on the amount earned by the person, as well as on the total business turnover. Usually, the salary tax rate is 20%.
The rates of 1% and 3% do NOT apply to the following types of income:
- property leasing
- profits from selling property, vehicles, securities
- incomes from inherited property
- interest rates
- incomes from debt forgiveness
- the sales of partner shares.
Simple tax declarations need to be filed by IEs no later than the 15th of each month, plus the annual tax declarations – before April 1. Besides, you should keep a special journal to prove in case of audits all of your expenses.
Micro businesses are only required to submit annual tax declarations by March 31.
Please note: The simplicity and low costs of setup are the key advantages of starting individual entrepreneurship in the Republic of Georgia. However, our professional consulting and accounting services will be a great asset to you if you are foreign to Georgia.
A sole proprietor can do business in multiple fields:
- marketing services
- cryptocurrency trading
- online trade
- intermediary services
- other services unless they fall within the category of prohibited activities.
In Georgia, it is very common for foreign sole proprietors to operate in trade, restaurant and hotel business, and IT.
The fields prohibited or not considered an entrepreneurial activity in the Republic of Georgia include:
- activities that require licensing or permission
- activities requiring a significant investment (manufacturing of excisable goods)
- foreign exchange transactions
- medical, scientific, architectural, artistic, legal or notary, audit, consulting (including tax consultants) activities
- financial services and operations
- foreign exchange transactions
- beauty centers
- car repair services
- agricultural or timber-industry activities (unless certain requirements are met).
To register individual entrepreneurship in Georgia, you do not have to study every detail on your own, nor travel across the world.
Our experts are ready to assist you at every stage of your business arrangements and activities in Georgia.
OUR PROFESSIONAL SERVICES IN GEORGIA
The bodies that register individual entrepreneurship in the Republic of Georgia
Anyone, including foreigners, eager to register individual entrepreneurship in the Republic of Georgia can register in person or by a proxy at the House of Justice. It has offices in every major city in the country.
The resolution on the establishment of a sole proprietorship enters into force from the moment of its official notification or publication on the website of the registering authority.
The new law specifies the procedure for the delivery of the notification by the registration authority: “The notification will be considered as delivered will be considered in the following cases: 1. Once the entrepreneur reads the notification; 2. From the moment of delivery of the notification to the legal address or 3. On the 15th day after posting the notification on the electronic address.”
Besides the official registration, foreign entrepreneurs need to undergo registration with the Tax Service.
The entrepreneur is registered at the address indicated in the application form. Correspondence sent to that address will be considered official communication.
Entrepreneurs also need to indicate their contact telephone number and e-mail address.
The status of a private entrepreneur in Georgia is confirmed by an extract from the register. This document can be issued in Georgian as well as in English and has the same legal force as the certificate of registration issued by the Tax Service.
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The application procedure set for foreigners who intend to register individual entrepreneurship in the Republic of Georgia remotely
To register individual entrepreneurship in Georgia remotely, you will need to issue a Power Of Attorney, get it translated into Georgian, notarized, and apostilled.
Please note that you must indicate in the application your legal address in Georgia. A mailbox rented at the post office would not be sufficient. For your information: the individual entrepreneurship registered in Georgia may move its registration to a foreign country in the future, without interrupting the continuity of business (if certain conditions are met).
Please note: If you do not speak the Georgian language, if there are issues with getting the required documents translated/notarized/apostilled, and if you would like to register remotely, your best option will be to apply by proxy. Our experts are ready to help you with the address, the POA, and all other arrangements.
If you can visit Georgia in person and can do without consultants and language assistants, the standard application procedure for individual entrepreneurship registration in Georgia includes the following 3 steps. If you decide to apply by proxy, it will take you only 1 step, and our experts will take care of the rest.
You or your authorized representative will need to submit in your application for registration the following data:
- the full name of the applicant
- the legal address (location) of the individual entrepreneur
- the applicant’s personal ID/passport details
- the date of filing the application
- the applicant’s signature
- the contact telephone number and the contact e-mail address
- the contact address at which mail will be delivered (it needs to differ from the legal address indicated above).
Along with the application, it is also necessary to submit the following documents:
- the passport (or a notarized copy of the passport, certified by a notary, and a power of attorney certified by a notary)
- the proof of legal address
- the power of attorney (if the registration is performed by our authorized representative).
The proof of the legal address can be:
- your lease agreement
- an abstract of title to your real estate
- the written consent of the property owner in Georgia stating that you as an individual entrepreneur can be registered at a specific address.
All foreign language documents that you submit will need to be translated into Georgian.
You do not need to draw up a charter or any other legal document.
For a local resident, it can take about 30 minutes to open an IE in Georgia at the House of Justice. The state charges a fee, which amount depends on the urgency of the registration:
- 1 business day – GEL 90
- Immediately (on the day of application) – GEL 45.
The fee can be paid at a bank office at the House of Justice.
If you apply by proxy, our local representative will take care of all the arrangements and dues, so that you would not have to travel and visit the registration authority in person.
After paying the state fee, the applicant receives an SMS and e-mail message with a link to the certificate of registration. It can be downloaded and used for business purposes.
Having obtained the confirmation (step 2), you will need to register with the Tax Service. This is when you should state your wish to obtain the Small Business status if your annual income in Georgia is not expected to exceed GEL 500,000 per year.
You can get the Small Business status on the same day. However, it will not be valid until the first day of the next month. This is a very important note, as any revenues received before this date will be subject to the 20% tax on your gross turnover!
A special free electronic service in Georgian and English is the platform for generating and submitting reports, accessing essential information, and finding primary documentation.
Unlike legal entities, an individual entrepreneur enjoys a simplified regime for tax and accounting reports to the tax authorities: you will need to submit only 1 income declaration for the reporting period.
The tax is payable monthly, no later than the 15th day following the reporting month. The declaration is also filed monthly, no later than the 15th day following the reporting month. The annual tax declarations need to be filed before 1 April.
Micro businesses are only required to submit annual tax declarations, by March 31st.
Please note: Georgian double taxation treaties often cannot protect you from taxation abroad if you are not a tax resident of Georgia AND you spend less than 183 days in Georgia. Therefore, income generated while you were not physically present in Georgia, may in some cases be exempt from Georgian tax, and you may be liable to pay tax on some or all of your income in another country. Please discuss the details with our expert.
Our accountants can handle all financial issues for you, including taxes, reports, and any eligible allowances. You will find this offer particularly helpful, as any written, electronic and oral interaction with the Tax Service and other authorities needs to be conducted in the Georgian language. This is why our professional assistance to expats in fiscal matters is a popular service.
Benefits of the Small Business status for foreigners who intend to register individual entrepreneurship in the Republic of Georgia
According to legislation, your tax liability is on gross turnover. If you have a Small Business status, do not hire personnel, and your annual revenues are under GEL 500,00, you are entitled to the 1% tax rate.
If your gross income exceeds this threshold, the tax on the revenues surpassing the threshold will be at 3%, and your Small Business status will be retained.
As soon as your annual income exceeds GEL 100,000 in any 12-month period, you will need to apply for your registration as a VAT payer (at the regular 18% rate). However, if your revenues are 100% generated outside Georgia, you are not subject to VAT charges, and you will not need to register as a VAT payer.
Incentives for foreigners who intend to register individual entrepreneurship in the Republic of Georgia
There can be many reasons why expats intend to register individual entrepreneurship in the Republic of Georgia:
- Low taxes. Non-residents pay only 1% tax (unless their annual gross turnover is above the set threshold). If income is generated abroad, the sole proprietor may be exempt from paying VAT, and as a non-resident, he/she also does not have to pay contributions to the Pension Fund.
- Free international settlements. Georgian banks do not impose restrictions on foreign entrepreneurs’ financial activities. They can receive transfers from abroad very quickly, and the money can be withdrawn at ATMs both in Georgia and in other countries.
- Advanced online banking solutions. Georgian banks offer their business clients a wide range of remote account management tools in English and some other languages.
- Low banking fees and charges. Fees in Georgian banks are among the lowest in Europe.
- Full confidentiality. Georgia does not share information with foreign tax services, as it does not participate in the CRS.
Thanks to the above-mentioned strengths, the strategy to register non-resident individual entrepreneurship in the Republic of Georgia has been gaining popularity over recent years.
Expats highlight their financial returns of individual entrepreneurship in Georgia:
- Individual entrepreneurs can save much on taxes.
- Individual entrepreneurs can save much on the low costs of banking services.
- The proceeds are legal and can be withdrawn or for different purposes abroad.
Besides, an individual entrepreneur can stay in Georgia for up to 365 days without a residence permit and/or receive a residence permit if the annual turnover is above GEL 50,000.
Software developers, designers of mobile applications, web designers, and other digital nomads are on the move around the world. While looking for places where their business can thrive, they have already discovered and appreciated the advantages of Georgia. They register as Georgian IEs, receive payments from abroad, and enjoy the above-mentioned and some other incentives geared for IT entrepreneurs in Georgia.
You, too, can profit from starting individual entrepreneurship in Georgia. And this can happen very quickly.
Remote solutions for foreigners who intend to register individual entrepreneurship in the Republic of Georgia
A scope of attractive implications will arise for you from Georgia’s business-friendly policy if you register as an individual entrepreneur in this hospitable, dynamic country. As a minimum, you will be able to substantially cut your costs and channel the proceeds into your business development, global presence, and/or personal accomplishments. Your success is just 4 steps away from you:
Send us a message stating your interest to register individual entrepreneurship in the Republic of Georgia: email@example.com.
Accept our invitation to the online session with our expert and discuss all the main arrangements and solutions that we can provide.
Pay the fee for our professional services. We accept bank transfers and payments via Webmoney, Paypal, Western Union, or other payment systems.
Send us a package of the required documents (according to our guidelines), including a notarized copy of your passport and notarized Power Of Attorney.
Once we receive the documents, we will register the individual entrepreneurship in Georgia in your name in just 2 working days. You won’t even have to contribute your time, money, and attention to monitor the details. Everything will be done and reported for you remotely, and you will celebrate your new success and opportunities.
Can foreigners register individual entrepreneurship in Georgia?
Yes, Georgian legislation allows and encourages non-residents to register individual entrepreneurship. However, some fields of business are not considered legitimate entrepreneurial activities: artistic, scientific, medical, architectural, legal or notary, audit, consulting (including tax consultants’), agricultural or timber-industry activities of natural persons shall not be considered entrepreneurial activity (Article 1 of the Georgian Law “On Entrepreneurs”).
Can foreigners register individual entrepreneurship in Georgia remotely?
Yes, foreigners can register individual entrepreneurship in the Republic of Georgia remotely – through our authorized representative.
How long does it take to register individual entrepreneurship in Georgia?
With our help, a foreigner can register individual entrepreneurship in the Republic of Georgia remotely within just 2 working days.