Limited Liability Company
Country code – GE
Legal Basis – Civil law
Legal framework – Civil Code, Law on Entrepreneurship of 1994
Company form – Limited Liability Company
Liability - The liability of the partners is limited to the amount of their capital contributed.
Share Capital – There is no minimum capital requirement for an LLC. Capital is divided into shares and cannot be issued additional shares.
Shareholders – An LLC may be incorporated by one or more shareholders, who can be resident or non-resident, natural or juristic persons. Details of the shareholders are available publicly.
Directors – An LLC may have one or more directors, who can be resident or non-resident, natural or juristic persons. Details of the directors are available to the public.
Secretary – Georgian companies may appoint a secretary, but it is not mandatory.
Registered Address – A company must have a registered office in Georgia.
General Meeting – An annual general meeting is usually required.
Electronic Signature – Permitted.
Re-domiciliation – Inward/outward re-domiciliation is not allowed.
Compliance – Georgian LLCs must submit a tax return and submit financial statements annually.
Companies that either have a total value of assets over GEL 10M or GEL 20M of annual revenue or employ more than 50 people, must submit financial statements audited by an independent qualified accountant and a management report annually.
- Members not disclosed
- Managers not disclosed
- Corporate members permitted
- Corporate manager permitted
- Local manager required
- Registered office or agent required
- Annual meeting required
- Redomiciliation permitted
- Electronic signature
- Annual return
- Audited accounts
- Audited accounts exemption
- Exchange controls
- Civil law Legal basis
- 1 Minimum members
- GEL 1 Minimum registered capital
- - Minimum paid up capital
- GELUSDAny Capital currency
- 100% Foreign-ownership allowed
Tax residency – A LLC is tax-resident in Georgia if it is incorporated under Georgian laws.
Basis – Corporate income tax is levied on worldwide income.
Tax rate – Georgia levies a 15% corporate tax on dividends distributed. Profits retained in an LLC are not subject to taxation.
Capital gains – Capital gains are treated as ordinary income and taxed when distributed to shareholders.
Dividends – Dividends received by resident entities are not subject to taxation.
Interests – Interests received that were taxed at source are entitled to a credit on tax paid. Other interest income is subject to tax when distributed in the form of dividends.
Royalties – Royalties are subject to corporate tax upon distribution in the form of dividends.
Withholding Taxes – Dividends paid to non-residents are subject to a 5% withholding tax unless a tax treaty provides a reduced rate. Withholding tax rate on dividends could be increased to 15% if are paid to a resident of a low tax jurisdiction. Interests paid abroad are subject to a 5% withholding tax, unless the rate is reduced under a tax treaty. If interest is paid to a low tax jurisdiction, the tax rate is increased to 15%. Royalties paid to non-residents are also subject to a 5% withholding tax. Those paid to resident individuals are taxed at 20%, and those paid to a company resident of a low tax jurisdiction are taxed at 15%. Technical service fees paid to non-residents are subject to a 10% withholding tax, 15% to residents of low tax jurisdictions.
Foreign-source income – Foreign-source income is generally subject to corporate income tax when it is distributed in the form of dividends. Taxes withheld abroad can be offset against the corporate income tax.
Labor taxes – There are no social security contributions in Georgia.
Losses – Losses may be carried forward 5 years, or 10 years in certain cases. Carryback of losses is not allowed.
Inventory – Companies are entitled to record the cost of inventory using the individual accounting method, the averagely weighted cost method, or first in first out (FIFO).
Anti-avoidance rules – Transfer pricing legislation is applicable to all types of transactions between related persons, whether resident or non-resident, which must be conducted at arm’s length according to the OECD’s principles and supported by relevant documentation.
There are no thin capitalization and controlled foreign company rules.
Tax credits and incentives – A corporate income tax exemption may be available for income of budgetary, international, and charitable organizations, profits received from financial services conducted by international financial companies and gains on sales of securities issued by international financial companies.
Enterprises located in free industrial zones are exempt from corporate income tax, customs duties, V.A.T., property taxes and personal income tax (employees). A Free Industrial Zone enterprise is subject to a 4% tax on the market price of the goods supplied/received to/from a Georgian resident other than other Free Industrial Zone enterprise.
Personal income tax – Tax residents in Georgia are those who reside for at least 183 days in Georgian territory.
Tax residents are only taxed on their Georgian-source income. This means that income earned abroad is not subject to Georgian taxation.
The flat tax rate is 20%, although dividend, interest income is taxed at a 5% final withholding tax on source and not included in personal tax base.
Rental income from residential properties are also subject to a reduced 5% tax rate, provided that no deductions are taken from this income.
Capital Gains are usually subject to income standard tax rate, but an exemption may apply from gains on the sale of real property, if it has been held at least two years. Gains on the sale of a residential property with an attached land plot is subject to a reduced tax rate of 5%.
Other taxes – There is a real property tax for individuals ranging from 0.8% to 1% on the property market value. However, households with annual income below GEL 40,000 are exempted and those with annual income between GEL 40,000 and GEL 100,000 are subject to a reduced tax rate ranging from 0.05% and 0.2% on the property market value.
Property tax for companies is 1% on the annual average residual value of fixed assets (except for land) and investment property.
There is an annual land tax which varies according to the administrative unit, the type of land (agricultural or non-agricultural) and its land quality.
In Georgia, there are no net wealth, inheritance or transfer taxes. Gifts of certain value may be subject to taxation.
V.A.T. standard rate is 18%. Certain goods and services transactions are tax exempt.
- Tax transparent entity
- Offshore Income Tax Exemption
- Offshore capital gains tax exemption
- Offshore dividends tax exemption
- CFC Rules
- Thin Capitalisation Rules
- Patent Box
- Tax Incentives & Credits
- Property Tax
- Wealth tax
- Estate inheritance tax
- Transfer tax
- Capital duties
- 15% Offshore Income Tax Rate
- 15% Corporate Tax Rate
- 15% Capital Gains Tax Rate
- 0% Dividends Received
- 5% Dividends Withholding Tax Rate
- 5% Interests Withholding Tax Rate
- 5% Royalties Withholding Tax Rate
- 0 Losses carryback (years)
- 5 Losses carryforward (years)
- FIFOAverage cost Inventory methods permitted
- 269 Tax time (hours)
- 5 Tax payments per year
- 0% Social Security Employee
- 0% Social Security Employer
- 20% Personal Income Tax Rate
- 18% VAT Rate
- 49 Tax Treaties
Georgia is the former Soviet Republic, located on the border between Europe and Asia, on the east coast of the Black Sea. It shares a border with Russia to the north, with Turkey and Armenia to the south, and Azerbaijan to the southeast. It has a population of just over 3.7 million inhabitants, which half live in Tbilisi, its capital. Its official language is Georgian and its currency is the Georgian Lari (GEL).
The Georgian economy depends mainly on Black Sea tourism, crops of citrus, tea, and grapes, extractive mining of manganese and copper as well as a small industrial sector producing wine, metals, machinery, chemicals, and textiles.
Due to its strategic location, its liberal and market-oriented economic policy and its developed transport infrastructure, Georgia is an attractive destination for foreign investment. A business-friendly country with simplified administrative procedures, where it is possible to set up a company in less than 3 days, and a reduced number of licenses and permissions. In addition, Georgia is considered by the World Economic Forum as the ninth economy with the lowest taxes, with only 6 low rates tax figures, where corporate profits are only taxed when distributed and foreign-source personal income is usually exempt from taxation.
It also has free trade agreements with the EU and the EFTA countries, Russia, and other countries of Eastern and Central Europe. Providing access to a market of 900 million people without any duty tariff restriction, and a system of generalized preference with US, Canada, Japan, Norway, and Switzerland.
Tax treaties Map
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