Table of content
Introduction
Georgia's relaxed tax rate, simplified business registration, and open market policies, combined with its strategic location and reduced bureaucracy, make it a highly appealing choice for entrepreneurs and companies aiming to set up, move, or grow their business operations.
The legal framework in Georgia and the Caucasus regions is continuously evolving, drawing inspiration from international institutions and driven by a commitment to foster foreign investments.
Many entrepreneurs in Georgia choose to form an LLC because of the reduced personal liability it offers, making it a popular business structure in the state.
If you're thinking about opening an LLC Business in Georgia, this guide will give you a deep dive into the process, benefits, and key considerations involved.
Why Open an LLC in Georgia?
Georgia's appeal for LLC formation lies in several key factors:
Strategic Location: Situated at the crossroads of Europe and Asia, Georgia offers excellent connectivity to both continents, making it a gateway for businesses targeting diverse markets.
Simplified Taxation: The country boasts a straightforward tax system, with a 15% corporate income tax. This translates to significant cost savings for your business.
Business-Friendly Environment: Georgia has consistently ranked among the top countries globally for ease of doing business, thanks to streamlined procedures, minimal bureaucracy, and a transparent regulatory framework.
Free Trade Agreements: Georgia has free trade agreements with numerous countries, including the EU, China, and Turkey, offering access to vast markets with reduced tariffs.
Thriving Economy: The Georgian economy has experienced robust growth in recent years, driven by sectors like tourism, real estate, and technology, presenting ample opportunities for entrepreneurs.
Georgia's strategic location, business-friendly policies, tax incentives, and access to diverse markets make it an attractive destination for entrepreneurs and investors looking to open an LLC in Georgia.
Requirements to Open an LLC in Georgia: A Complete Guide for Local and Foreign Entrepreneurs
What are the requirements to open an LLC in Georgia?
The requirements for opening an LLC in Georgia are relatively straightforward for both local and foreign entrepreneurs. Here's an overview of the legal, financial, and administrative requirements:
Legal:
Specific Requirement | Notes for Foreign Entrepreneurs |
Unique Company Name | In Georgian or Latin characters |
Registered Address in Georgia | Owned or leased property |
Bilingual Company Charter | Georgian and a language spoken by all directors |
Articles of Organization | Includes member information |
In-Country Contact | Individual or company |
Financial:
Specific Requirement | Notes for Foreign Entrepreneurs |
No Minimum Capital Requirement | - |
Share Capital | Cannot be offered to the public |
Georgian Bank Account | - |
Administrative:
Specific Requirement | Notes for Foreign Entrepreneurs |
Registration with Secretary of State | Submit documents and filing fee |
Tax Registration with Revenue Service | - |
Obtain Necessary Licenses/Permits | - |
Additional tips For Foreign entrepreneurs:
For the most part, foreign applicants are subject to all requirements that pertain to local applicants. However, they may be required to provide some extra documentation, such as:
Passports of the owners/directors.
Proof of address from the home country.
Notarized and apostilled copies of some documents.
Key Considerations
Timeframe:
The registration process would usually take between 2-7 days.
Costs:
The filing fee to register an LLC is 110 GEL, about $40. If you need expert guidance to complete your application, notary, translation, and legal fees may also apply.
Seeking the advice of a legal professional or business advisor to understand all the requirements, ensure your application is complete and accurate, and assist in navigating any specific issues or challenges you may face as a foreign entrepreneur.
Comprehensive Steps to Register an LLC in Georgia
Deciding to form an LLC is just the first step. The exciting journey of preparing for and navigating the business registration process in Georgia involves several essential steps.
In-Person Registration Requirements:
To establish a legal entity in Georgia, visit the Justice Hall with the necessary documentation:
Clearly define your main business activity.
Provide passports of all owners/directors.
Submit a bilingual company charter in Georgian and a second language spoken by all directors.
Establish a legal address in Georgia, which must be a property you own (not rented). The property owner should be present, or you must have a power of attorney.
A Georgian phone number and email address are also required.
If your Business doesn’t have a legal address or a bilingual company charter, assistance is available to help you meet these requirements.
Remote Registration Options:
You can also register your LLC without being physically present in Georgia:
Assign a power of attorney to a representative.
Provide notarized copies of the passports for all company directors.
Opening a Company from Abroad:
It is possible to open an LLC remotely, though setting up a local business bank account without being in Georgia can be challenging. Banks have become cautious about opening accounts for foreign-owned Georgian companies. Be careful of outdated advice or services claiming to be simple without proper consultation.
Our LLC registration service offers a detailed consultation to assess the potential challenges and likelihood of successfully opening a bank account based on your specific needs.
Understanding the steps and requirements for setting up an LLC in Georgia is crucial. This knowledge allows you to navigate the process smoothly, whether you plan to do it in person or from abroad.
Setting Up Bank Accounts
Georgia's banking system is recognized for its stability and appeal to international clients. Managed by the National Bank of Georgia and comprising 15 commercial banks, the sector is viewed as a promising area for investments.
Additionally, Georgia is making strides towards implementing the Common Reporting Standard (CRS), a move that will enhance financial transparency and international cooperation.
Opening a bank account in Georgia is noted for its simplicity and efficiency, making it an appealing option for foreign investors and businesses looking to tap into the Georgian market and its banking services.
How to open a bank account Remotely for your LLC in Georgia
If a visit to Georgia is not likely, an alternative option is to open a bank account remotely by utilizing a Power of Attorney (POA). Presented below is a clear and comprehensive guide on how to open a bank account Remotely for your LLC in Georgia:
1. Choose a Trusted Representative: Find a reliable person in Georgia who can act on your behalf. This could be a legal or financial professional.
2. Draft the Power of Attorney: Ensure your POA meets Georgian legal standards. To ensure all legal requirements are met, it may be wise to employ a service that specializes in drafting POAs for Georgian banking.
3. Notarize and Apostille the POA: These steps are essential to authenticate your document in Georgia. Utilizing online notary services can simplify this process, making it more convenient.
4. Send Documents to Georgia: Once your documents are prepared and certified, send them to your representative in Georgia using a reliable courier service to ensure they are delivered securely and promptly.
5. Complete KYC Procedures: Your bank will require you to provide detailed information about your income source and anticipated account activities as part of their Know Your Customer (KYC) compliance.
6. Access Your Account Details: After your account is set up and approved, your representative in Georgia will receive your banking details. They can then assist you in taking complete control of your account.
Following these steps can make opening a bank account in Georgia straightforward, even if you cannot visit the country personally.
Financial Considerations
LLC Taxes in Georgia
When operating an LLC in Georgia, it's important to be aware of the various taxes that may apply to your business.
Corporate Income Tax - 0% / 15%
Georgia introduced a unique corporate tax model in 2017. Under this system, retained profits are exempt from taxation until they are distributed. This setup encourages reinvestment as undistributed funds remain untaxed. However, a 15% tax rate applies to profit distributions and specific non-economic activities. It's worth noting that dividends between Georgian entities or from foreign enterprises to Georgian entities are usually exempt, although there may be exceptions for international transactions.
Personal Income Tax - 20%
The personal income tax rate is 20%. Sole proprietors paying themselves in dividends are not liable for personal income tax but are subject to corporate and dividend taxes. Employers must withhold 20% of wages for taxes and an additional 4% for the pension fund for Georgian employees.
Value Added Tax (VAT) - 18%
Businesses exceeding a VAT taxable turnover of 100,000 GEL within 12 months must register as VAT taxpayers, subject to an 18% rate. Early registration is possible and beneficial for reclaiming VAT on transactions with other VAT-registered businesses.
Legal Aspects of Forming an LLC
Forming a Limited Liability Company (LLC) in Georgia involves understanding and adhering to specific legal requirements and processes. These legal aspects ensure the proper establishment and operation of your business within the Georgian legal framework.
The rules for registering a company and other related matters are outlined in the Law on Entrepreneurs.
Category | Details |
Business Type | Limited Liability Company (LLC) |
Minimum shareholders | 1 |
maximum shareholders | 50 |
Director Requirements | At least 1 |
nationality/residency | no restrictions |
Company Name | Unique, include "LLC" |
Bank Account | Required |
Corporate Taxes | 15% |
Foreign Ownership | Allowed |
Incorporation Time | 3-5 days |
Support Available | Yes, including legal and accounting services |
Legal Requirements for LLC Formation
Unique Business Name: ensure that it is unique and not already in use by another registered business. You can verify name availability through the National Agency of Public Registry (NAPR).
Registered Address: Your LLC must have a registered legal address in Georgia. This can be a physical office space or a virtual office address.
Director(s): You need to appoint at least one director for your LLC. The director can be a resident or non-resident of Georgia.
Articles of Organization (Charter): This is a crucial legal document that outlines important details of your LLC, such as its name, purpose, registered address, ownership structure, management details, and capital contributions. This document must be notarized.
Tax Identification Number (TIN): Once your LLC is registered, you will need to obtain a Tax Identification Number (TIN) from the Revenue Service for tax purposes.
Process of Forming an LLC in Georgia
Choose a Business Name and Check Availability: Ensure your chosen name is unique and complies with Georgian naming regulations.
Draft the Articles of Organization (Charter): Prepare a comprehensive charter detailing the aforementioned information. It's advisable to consult with a legal professional to ensure accuracy and compliance.
Notarization of the Charter: Have your charter notarized by a Georgian notary public.
Register with NAPR: Submit the notarized charter, along with other required documents and information (e.g., director's identification, legal address proof) to the NAPR. The registration process can be completed online or in person at a House of Justice.
Obtain a TIN: Register with the Revenue Service to receive your TIN.
Open a Bank Account: Choose a Georgian bank and open a corporate bank account for your LLC.
The Importance of the Articles of Organization (Charter)
The Articles of Organization (charter) are a cornerstone of your LLC's legal existence. They serve several crucial purposes:
Legal Foundation: The charter establishes your LLC as a legal entity, distinct from its owners (members). This separation of identity is essential for limited liability protection.
Operating Agreement: While not mandatory in Georgia, the charter often serves as the foundation for an operating agreement. This internal document defines the rights, responsibilities, and relationships among members, managers, and the LLC itself.
Internal Governance: The charter outlines the management structure of your LLC, specifying how decisions will be made, who has authority, and how profits and losses will be allocated.
External Communication: The charter serves as a reference document for external parties, such as banks, creditors, and government agencies, providing them with essential information about your LLC.
Virtual Zone LLC: A Unique Opportunity
Virtual zone status in Georgia is a tax break for international IT companies. Businesses with this status have significant tax advantages, including 0% corporate tax, 0% VAT, 5% capital gains tax on dividends, and no annual license fees.
Businesses must undergo complicated processes to benefit from the "legally reduced" taxes, and it's not quite as straightforward as it seems.
Besides, if the company is eligible for virtual zone status, it can enjoy a natural tax haven in Georgia.
Let's break into the topic.
Who can Get Virtual Zone Status (VZP)?
The company must meet specific criteria to get virtual zone company (VZP) status.
IT company: The business must be connected to software development, web services, IT support, and the design and production of IT systems.
Business registration: The company (legal entity) must be officially registered in Georgia;
International Businesses: The company services or products should be provided to foreign, non-resident clients
Physical presence: The business should have a local connection to Georgia (typically, it's a small office with Georgian employees)
Contact information: Businesses should have Georgian phone numbers and bank accounts for revenue service purposes.
The process of registration for virtual zone company (VZP) status involves the following steps:
Company registration (two working days);
Registering entities with the Revenue Service and its online portal (one working day);
Application of the digital Virtual Zone at http://newzone.mof.ge/ (it takes approximately ten working days to process application)
Clarification of the business model, services and products, local staff contracts, and other documentation can be requested. (minimum ten working days)
Checklist: Register Your LLC in country Georgia
Initial Considerations:
Business Idea and Purpose: Clearly define your business concept, target market, and goals.
Legal Structure: Explore different business structures, such as an LLC or sole proprietorship, and choose the one that fits your needs.
Company Name: Per Georgian naming regulations, find a unique name. Check for availability through the National Agency of Public Registry.
Registered Address: Pick up a physical office space or virtual office address for your LLC.
Director(s): Nominate and appoint at least one director for your LLC. This person does not have to be a citizen of Georgia.
Shareholders: Define if your LLC will have multiple shareholders and outline their ownership percentage.
Professional Help: Consider hiring a lawyer or business consultant to guide you through the legal and administrative aspects.
Preparation and Documentation:
Draft Articles of Organization (Charter): Have on hand a well-defined charter spelling out your LLC name, purpose, registered address, ownership structure, management details, and capital contributions.
Get the Charter Notarized: Get your charter from a Georgian notary public.
Gather Additional Documents: Prepare copies of the director's identification documents—passport or ID card—proof of legal address, and any other documents the NAPR might require.
Registration Process:
Submit to NAPR: Submit the notarized charter and supporting documents to the NAPR. You can do it online or in person at a House of Justice. Pay the registration fee, depending on the processing time.
Get a Tax Identification Number (TIN): Register with the Revenue Service for your TIN.
Open a Bank Account: Choose a Georgian bank and open a corporate account for your LLC.
Post-Registration Tasks:
Register for VAT (If Applicable): If your yearly turnover exceeds 100,000 GEL, you have to register for Value-Added Tax (VAT).
Accounting and Reporting: Set up an accounting system and prepare for annual financial reporting.
Get Licenses and Permits: Get any licenses or permits required for your business activity.
Tips for the Smooth Passage of the Registration Process:
Start Early: Make the necessary research and preparations before the last-minute hustle.
Get Professional Advice: Consult with a lawyer or business consultant for your protection from the viewpoint of the law and for the avoidance of extremely costly mistakes.
Use Online Resources: Leverage online platforms and services provided by the NAPR and the Revenue Service.
Double-Check Documents: Carefully review all documents before sending them to avoid delays that might stem from mistakes.
Be Organized: Keep all your documents and records organized and easy to refer to for future use. This includes:
A copy of your LLC's Articles of Organization (Charter)
Notarization documents
Registration confirmation from the NAPR
Tax Identification Number (TIN) certificate
Bank account statements
Business contracts and agreements
Receipts and invoices
Employee records (if applicable)
Any licenses or permits obtained
Be Patient: The registration process typically takes two business days to 4-5 weeks, depending on the chosen processing method. Expedited processing options are available for an additional fee, but the standard processing time can vary depending on the workload at the NAPR. Be prepared to wait and follow up if your application takes longer than expected.
Conclusion
Setting up an LLC in Georgia offers numerous benefits for entrepreneurs, both local and international. Its prime location at the intersection of Europe and Asia provides excellent market access, coupled with a straightforward tax system and a business-friendly environment that consistently ranks high in global ease of doing business indices. With competitive corporate income tax rates, no capital gains or dividend taxes for LLCs, and access to free trade agreements with major economies, Georgia is a top choice for business incorporation.
Beyond these advantages, the region's legal complexities and cultural nuances remain the main difficulties in doing business in Georgia.
Most business is done using the Georgian language, and official laws and rules are also written in Georgian. On the recommendation of the International Trade Administration, it's a good idea to talk to a lawyer who's allowed to work in Georgia before doing any big business deals.
Gegidze assists entrepreneurs in the Register an LLC in Georgia and offers all the guidance businesses need, like selecting the proper structure, managing filings, and ensuring compliance with all local regulations.
Ready to open An LLC business In Georgia? Don't navigate this path alone! We offer expert guidance and comprehensive consultation services to help you understand and meet all the requirements for successfully setting up your LLC.
For more information get a free consultation with one of our fluent bilingual tax advisers.
Frequently Asked Questions (FAQs)
Can I open a bank account remotely for my Georgian LLC?
Yes, you can open a bank account remotely for your Georgian LLC. Most Georgian banks allow this through a power of attorney (POA), where you authorize a representative in Georgia to act on your behalf. This requires notarization and apostille the POA and your identification documents. Some banks also offer online account opening with video identification. Contact your chosen bank for specific procedures and requirements.