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Open a Company in Georgia
Updated on Wednesday 17th June 2020 Rate this article
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Georgia provides a set of advantages for starting a business. At a global level, Georgia stands out as one of the countries with the simplest registration procedures; at the same time, the registration of a Georgian business has very low fees, this being an advantage when investing in a foreign country.
Even if the registration of a company is based on simple principles, it is highly advisable to request the representation of local specialists in company formation, considering that there can be language barriers. In this sense, our company - Business Setup Georgia LLC - provides legal services, designed to cover all the aspects concerning the registration of a local business.
Business Setup Georgia LLC is based in Tbilisi, the country’s capital city, and has experience of 15 years in the field of company formation; its specialists are focused on offering high quality services and currently, Business Setup Georgia LLC provides a wide range of services, as follows: legal services (in branches of law such as civil law, insurance law, business licenses and permits or intellectual property law) and company formation services (legal advice on choosing a suitable business form, assistance in incorporating any of the company types available under the Georgian legislation) etc.
Besides these basic services, investors can rely on professional advice for immigration matters (applying for a residence permit or obtaining the Georgian citizenship), real estate services (legal assistance in drafting specific real estate contracts) or accounting services (preparing the company’s financial statements or implementing the accounting procedures available here).
What are the main incorporation aspects related to the Georgian LLC?
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. 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.
We invite you to watch a short video about how you can open a company in Georgia:
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.
What happens during the general meeting of the shareholders in Georgia?
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 general meeting can also be established by the company’s director. He must send an invitation alongside with the meeting agenda to all the participants minimum one week before the meeting. The participants may bring modifications to the agenda in maximum three days after receiving it. The participants at the meeting are allowed to take decisions only if the partners with decisional power are attending. If they can’t attend, another meeting related to the same subject can be appointed. In this situation, the decisions can be taken even if the partners who have decisional power are not attending.
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.
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;
- in order to register with this institution, the company’s representatives have to prepare the statutory documents;
- the company’s statutory documents have to be notarized by a public notary in Georgia;
- register with the Entrepreneurial Register, which will issue an identification number;
- the institution will also issue 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.
How can a foreign investor register a company in Georgia?
If the 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 contributions 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.
How can a foreign businessman receive the right to invest in Georgia?
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 in this country 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, as lower investments can also be concluded, 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.
Furthermore, the regulation is addressed to foreign persons who work as freelancers (through a sole trader), but they will have to provide a bank statement, confirming that they have sufficient financial funds to work and live in Georgia. Freelancers can apply for C2 category visa, included in the Ordinary Visa type. Our team of specialists in company formation in Georgia can offer more details concerning these requirements.
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).
Costs for forming a company in Georgia
The main costs associated with the registration of a Georgian company are presented below:
- registration fee: the registration fee is of GEL 100 (approximately EUR32) for the standard registration procedure (completed in one day) or GEL 200 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 of approximately EUR 20/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, and it includes bookkeeping assistance and advice on the corporate taxation system.
What are the main regulations related to company formation in Georgia?
The registration of company in Georgia is performed following the rules and regulations imposed by the Civil Code 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.
What types of legal entities can investors set up in Georgia?
Besides the limited liability company, foreign investors may also set up other types of business forms. For example, both local and foreign businessmen can start a general or a limited partnership. Also, foreign companies can expand on the local market through a subsidiary or a branch office. Please note that the subsidiary is considered an independent business structure, as opposed to the branch office.
What are the main corporate taxes in Georgia?
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.
Virtual office services in Georgia, available for foreign businessmen
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 (GEL 60-135), this being an important advantage for any small start-up business.
Why invest in Georgia?
Georgia has one of the most competitive markets in its region, which offers numerous incentives for the development of the business environment. Georgia offers 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 can also benefit from the provisions of the double taxation treaties signed in this country, as long as they are tax residents of one of the countries with which the Georgian authorities have concluded an agreement in this sense. As the moment, Georgia has 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 location 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.
Ease of doing business in Georgia
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.
The report presented by WBG report established the ease of doing business based upon 10 factors, for which Georgia receive 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 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.
The country is a beautiful surprise in terms of benefits for foreign investors. Not only does it rank high in the World Bank’s Ease of Doing Business Index, but it is also a country that offers great attention to its investors.
Agriculture and transportation are just two of the business sectors that have significant potential for investments. Another area targeted by foreign investors is the energy sector, both for hydroelectric energy as well as for traditional energy.
Georgia is known around the world as a wine producer and wine along with other agricultural products are at the top of the list of exported products. The country also exports wine to Russia so the wine business might just be one of the most profitable businesses in Georgia.
Georgia’s location between Europe and Asia makes it an important transit route for goods brought to and from the two continents. That’s why investments in the infrastructure are always welcomed in the country. Foreign investors have also won from investments in the country’s hydroelectric energy supply, an area in which Georgia has yet to use its resources to their greatest potential.
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.
Meet us in Tbilisi
Call us now at +995 595 11 88 22 to set up an appointment with Valeri Bendianishvili, one of our specialists in company formation in Tbilisi, Georgia. Alternatively you can incorporate your company without traveling to Georgia.
As a Business Setup Georgia LLC client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Georgia.
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