Basic information on branch offices in Georgia
A branch office is essentially an extension of the parent company abroad. It represents only a sub-unit of the parent company and does not have legal personality, under the Georgian law. Due to this, the parent company also holds the legal responsibility for the debts and other liabilities of the Georgian branch.
However, it must be noted that the branch office
does have certain advantages, one of them referring to the management of the entire company, as the branch office
will follow the same business model as its parent company
. Through this model, the parent company
is assured that its policies are followed as needed by all its representative units across the world, and that the Georgian branch
follows the same standards available anywhere else. Also, given that the company is incorporated following simpler rules, one will also benefit from lower registration costs
Because the branch
is not a separate legal entity in Georgia
, the incorporation procedure
will generally be
less expensive than in the case of any other type of company and the branch
can become operational in a shorter amount of time compared to starting a new business.
Our specialists in company registration in Georgia
can also offer advice on the disadvantages of opening a branch
, which mainly refers to the liability that falls onto the parent company
. If the branch
financial difficulties or
files for bankruptcy, the parent company
abroad must be aware that these
financial liabilities fall under its obligations towards the branch
. If you want to open a branch in other countries, such as Spain
, we can put you in touch with our local partners.
Registration requirements for a branch in Georgia
A branch in Georgia
must be registered with the National Agency of Public Registry
belonging to the Ministry of Justice
. For this purpose, the company’s representatives will need to provide a set of documents, which are customarily submitted when
- • the parent company’s decision to open a branch in Georgia;
- • the original articles of association of the foreign company that wants to operate through a branch office;
- • one must also add a document which provides information on the names of the persons who act as company representatives, as well as certain corporate information on the parent company;
- • identification details for the appointed director of the branch registered in Georgia;
- • a receipt proving that the registration fee has been paid with the relevant authority.
Besides the documents mentioned above, those who want to start the process of company formation in Georgia
for a branch office
should also prepare other papers, such as: a copy of the identity document (passport) of the person who will act as a director of the branch
and the person’s signature sample, which must be certified by a notary in Georgia
Investors must also prepare the trading name under which the branch will operate in Georgia, as well as the official address where the branch will develop its business activities. All the registration information of the parent company is required – the legal name of the founder, the registration detail of the respective company obtained from the Companies Register in the respective country, as well as the respective company’s identification code.
The documents that will presented to the Georgian authorities
, issued by the institutions of the country where the parent company
originates, have to be notarized or apostilled in the said country. When they will be added to the registration file, for a successful process of company formation in Georgia
, the said documents will have to be translated and certified by a local public notary. If you need in-depth information on the full procedure, you can rely on our team of consultants in company registration in Georgia
Are there any other registration requirements for a Georgian branch?
When starting a Georgian branch
, it will also be necessary to
choose a business form. As a general rule, foreign investors can set up the branch
as a limited liability company
or as a public company. This is decided depending on the
legal entity under which the parent company
It is important to know that Georgia
simple registration procedure and thus, the branch
can be registered with the authorities working under the Ministry of Justice
in only one day. If the company’s representatives pay an extra fee, the registration can be completed in the same day in which the required documents were deposited with these institutions. Foreign investors must also observe the requirements applicable for VAT registration in Georgia
Furthermore, the investors will also need to open a corporate bank account
for the branch office operating in Georgia
, which can be set up in the local currency or any other foreign currency. In this situation, the representatives of the parent company
need to provide documents that attest the fact that the beneficial owners hold at least 25% of the capital of the legal entity.
In some cases, a power of attorney empowering the director of the branch
may be needed together with the aforementioned documents. Additionally, we can help you notarize and translate any documents. Our company formation experts in Georgia
can help you obtain a power of attorney and submit any other documents needed for the incorporation of the branch
What are the tax advantages of starting a branch in Georgia?
A branch in Georgia
will be liable to the payment of the same taxes that are charged to other company types. However, the branch
will have to pay its taxes only for the commercial activity that was carried out on the Georgian territory
. Businessmen who want to open a company in Georgia
operating as a branch office
or as another business form will pay the following taxes
- • the corporate income tax, charged at the standard rate of 15%;
- • the value added tax, charged at the standard rate of 18%;
- • those who want to open a company in Georgia must know that they will become liable for the payment of the value added tax when the annual taxable turnover reaches GEL 100,000;
- • in the case in which the Georgian branch is involved in import activities, one must know that customs duties can be charged at rates of 0%, 5% or 12%, depending on the nature of the goods;
- • Georgia also charges the excise tax, applied to specific categories of goods, such as alcohol, tobacco, automobiles, natural gas and others and the rates vary from GEL 0.12 per unit to GEL 800 per unit.
With regards to taxes, it is important to know that Georgia charges the property tax and the land tax. Those owning a property in Georgia will be charged with a tax of 1% on the value of the fixed asset, but properties bought prior to 2005 can be charged with other taxes.
The land tax is calculated per 1 hectare of land and it can vary between GEL 5 to GEL 100, but the value of a hectare can increase based on the location of the respective land. One should know that Georgia does not charge the stamp duty, nor does it charge transfer taxes. Investors arriving from countries where the tax base is higher can easily consider the tax system in Georgia as an attractive one.
However, it its region, the country provides one of the most competitive tax systems and one of the most attractive markets for starting a business. For example, the withholding taxes on the distribution of dividends are charged with a tax rate of only 5%. This applies for both local and non-resident entities and one should know that this tax rate can be charged at a lower rate, if a double tax treaty applies and if it mentions a lower rate.
The same rate applies on the payment of interest and royalties, while the technical service fee is charged with an withholding tax of 10%. However, a rate of only 4% is applied to those charging the technical service fee in the field of oil and gas industries. If the recipient of the interest of royalties is a tax resident of an offshore jurisdiction (or other type of jurisdiction with a low tax regime), then the withholding tax will be charged at a higher rate, of 15%. You can receive more details with regards to the withholding tax regimes from our team of consultants in company registration in Georgia
If you want to open a branch in Georgia
or you are interested in exploring other available business options, please contact our team of specialists in company formation in Georgia
, who can provide legal counselling and consultancy services regarding the registration of any of the company types prescribed by the national law.