Georgia is a former Soviet Republic on the east coast of the Black Sea, situated between Europe and Asia. Georgia shares borders with Russia, Turkey, Armenia and Azerbaijan. Population of Georgia is over 3.7 million people, half of whom live in its capital city, Tbilisi. Georgian is the official language and Georgian Lari (GEL) is the official legal currency.
Georgia is located at the crossroads of Asia and Europe in a strategic trading area and is a very attractive place to live, do business or both. The cost of living is considerably low, the process of obtaining a residence permit is easy and feasible, and due to its reduced tax burden and ease of starting a business, it can be considered an entrepreneur-friendly country.
In 2017-2018 Global Competitiveness Report of the World Economic Forum, Georgia is ranked 9th in terms of government regulatory burden, 8th in terms of total tax rate, 7th in terms of the number of procedures for starting a business, 6th in terms of the time it takes to start a business, 4th in terms of trade tariffs and 1st in terms of its inflation rate (2,1% in 2018).
Georgia is an interesting option for passport. With a Georgian passport you can obtain visa-free access to 113 countries worldwide, including all EU countries. And it is technically possible to be granted citizenship by a special presidential decree after being a resident for less than a year. We’ve successfully helped some clients who’ve acquired citizenship through this way.
It is also possible to obtain tax-free citizenship, given that no income from local sources is obtained. For businesses, if they are not sold, three days should be enough to incorporate and income can be tax-free. There are also several business sectors that are tax-free.
Such reasons make a good case for considering Georgia as a place to establish a business, invest and/or obtain residency, and many more are explained below. The article will clarify some of the key points to obtain visas, residence permits and citizenship as well as the factors that make the country a destination to consider investing and/or starting a business.
SETTING UP A COMPANY IN GEORGIA
DOING BUSINESS IN GEORGIA
For several reasons, incorporating a company in Georgia can be an attractive option: first, it is located in a strategic area bordering Asia and Europe, with a developed infrastructure. It is an important distribution hub between the two continents and also has good trade relations with virtually every country, including the European Union, the United States, China, Turkey and Iran. It is part of the World Trade Organization and has free trade agreements with the EU, the EFTA countries, Russia and other Eastern and Central European countries. This provides access to a market of more than 900 million people with no duty tariff restrictions and a generalized preferential system with the US, Canada, Japan, Norway and Switzerland.
Additionally, Georgia signed bilateral investment agreements with 32 countries.
Foreigners can fully own a business without needing any visa or authorization and it is relatively simple to incorporate a business in Georgia. As mentioned previously, Georgia ranks 7th worldwide in terms of ease of starting business and 6th for the time that is required for incorporation. For both tax and government purposes, it is a one-stop shop.
There are no restrictions on the purchase of commercial and residential real estate by foreigners, however, foreigners cannot buy agricultural land.
Tap here if you want to establish a company in Georgia remotely.
TAXES IN GEORGIA
– Corporate taxation
Georgia taxes legal entities on their worldwide income, but there may be a tax credit available for foreign tax payable up to Georgia’s income tax.
Companies licensed in Georgia have a flat corporate tax of 15 percent on their real and considered distributed profit. It ensures that the company’s retained and reinvested earnings are not subject to taxation. Payments on interest, dividends and taxes for residents and non-residents are subject to a final 5 percent withholding tax. Technical and academic benefit fees are subject to a withholding tax of 10 per cent. If a recipient is a resident company of a tax haven, a withholding tax of 15 percent can apply.
Dividends in the recipient’s hands from both resident and non-resident companies are not deemed to be a transfer of income and therefore not taxable unless they come from a state considered to be taxable. Capital gains are included in the tax base on corporate income.
With regard to anti-avoidance laws, Georgia has a robust transfer pricing law, where transactions should be made between related companies (both resident and non-resident) at fair market value and records should be retained and submitted to tax authorities on request. There are no guidelines for thin capitalization and regulated foreign firms (CFC).
There is a progressive real estate tax that cannot surpass 1% of the total residual value of fixed assets, investment property, uninstalled facilities and continuing development.
Payroll, capital and stamp fees, loans, social security, income and inheritance taxes are not included.
The accelerated depreciation of capital assets can be used with the full reduction over the first year and the remaining 10-year losses for tax purposes on company profits. Georgia’s average tariff level of 1.5 percent is the lowest of all WTO nations, as well as having the above-mentioned free trade agreements. The level of added value is 18%. In contrast, the so-called Free Industrial Zones (FIZ) provide lucrative tax incentives. FIZ-based companies, which may be overseas, are excluded from corporate tax, import and export taxes, dividend taxes, VAT and property taxes. The combination of a quick and easy registration process and the strategic location of these areas leads to a very favorable incorporation climate. The only tax that applies is 4% on transactions between free industrial areas and the rest of the country. FIZ zones in Georgia are run by private companies and investors may rent virtual office.
With regard to individual taxation, a tax resident is a natural person who has lived in Georgian territory for at least 183 days. Tax residents are taxed on their income from Georgian sources only. This means that Georgian taxation is not subject to income earned abroad.
While dividends, interest income is taxed at a final 5 percent withholding tax on an origin and not included in the personal tax base, the flat tax rate is 20 per cent. Rental income from residential properties is also subject to a reduced tax rate of 5 percent, as long as no deductions from this income are made. Capital gains are typically subject to the regular rate of income tax, but if it has been kept for at least two years, an exception may apply to gains on real estate sales. Proceeds from the sale of a residential property with an adjacent land plot are subject to a 5 percent reduced tax limit.
Property owners are subject to real estate tax ranging from 0.8% to 1% on the market value of the property. Nonetheless, households with annual income under GEL 40,000 (USD 16,500) are excluded and households with annual income between GEL 40,000 and GEL 100,000 (USD 41,200) are subject to a reduced tax rate of 0.05% and 0.2% on the market value of the property.
Visit the Revenue Service of Georgia’s website
for the latest tax rates and policies.
It can be a good opportunity to diversify your assets to open a bank account in Georgia. Foreigners are welcome at all banks and the opening process is fast and clear, no minimum deposit is required, no documents are required; all that is needed is a valid passport. Georgian banks usually offer the option of opening an account in USD, EUR and GEL and the fees applied to their exchange rates are small (around 0.10-0.15 percent) as well as significantly lower rates for banking services such as transfers. Today, interest rates on bank deposits are highly attractive for both short and long-term deposits: up to 10% for long-term deposits in local currency, and 3.5% for deposits in Euros or US dollars. We offer an option to open a Georgian and/or Armenian bank account and to incorporate a business in Georgia 100% remotely. For more details on this choice, please contact us directly.
With regard to the exchange of bank information, Georgia participates in FACTA, but is not committed to the Automatic Exchange of Information (AEOI) of the OECD, nor has any Tax Information Exchange Agreement been concluded.
if you want to open personal or business bank account in Georgia remotely.
Georgia is one of the world’s most open nations. Citizens of 98 countries, listed below, can reside or work in Georgia for a duration not exceeding one year without obtaining any form of visa or residency permit. This is truly very unique in the world and illustrates Georgia’s liberal immigration policy.
People can live and work in Georgia for up to 1 year without a visa from these countries: EU Countries, Albania, Andorra, Antigua and Barbuda, Argentina, Armenia, Australia, Azerbaijan, Bahamas, Bahrain, Barbados, Belarus, Belize, Bosnia & Herzegovina, Botswana, Brazil, British Dependent Territories, British Overseas Territories, Brunei, Canada, Chile (90 days), Colombia, Costa Rica, Denmark Territories, Dominican Republic, Ecuador, El Salvador, French Republic Territories, Honduras, Iceland, Israel, Iran (45 days), Japan, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Lebanon, Liechtenstein, Malaysia, Mauritius, Mexico, Moldova, Monaco, Montenegro, Netherlands, New Zealand, Norway, Oman, Panama, Qatar, Russia, Saint Vincent and Grenadines, San Marino, Saudi Arabia, Serbia, Seychelles, Singapore, South Africa, South Korea, Switzerland, Tajikistan, Thailand, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United States of America, Uruguay (90 days) and Uzbekistan.
It should also be remembered that the entry into the country ID card is appropriate for residents of the European Union or Turkey not even having a passport.
They may seek a job or begin an economic activity during the one-year period that foreigners are allowed to stay, enabling them to apply for a residence permit.
Some visa-free citizens are Iranian, Chilean and Uruguayan nationals, who can enter the country for 45, 90 and 180 days, respectively.
Citizens of other countries wishing to visit Georgia for tourism or business purposes should apply for a 30/90-day visa (C) to enter the country. You can do this online through the E-visa website or through a Georgian embassy or consulate, depending on the applicant’s type of visa, stay intention and country of origin.
RESIDENCE PERMITS IN GEORGIA
It is relatively easy to obtain residence in Georgia. Once a person gets a job, makes an investment or starts an economic activity, he or she can apply online through the Public Service Agency to any authorized representative, territorial office of the Public Service Development Agency, branch of the Public Service Center or the Community Center. The application can be submitted in Georgian, English and/or Russian as well as the necessary documents.
We offer some very competitively priced packages that include all the administrative procedures and fee payments for setting up a business or investing in real estate, as well as the request for permanent or temporary residence permits that include these investments.
There are several forms of residence permits, but here the emphasis will be on three: temporary residence permits, investment and permanent residence permits:
- Temporary residence permit: it is issued for people who are going to do business and work for themselves and others. The applicant must sign an employment contract of at least 6 months with a minimum salary of GEL 1,000 per month in a Georgian business with an annual turnover of at least GEL 50,000 per working foreigner or at least USD 20,000 annual turnover for a business that is owned by itself. Persons who have registered a business in Georgia must also put USD 5,000 in the company account before applying for temporary residency. Possession of a D1/D2 immigration visa will be required in the case of non-visa-free nationals. The fees vary depending on the time the permit is issued. The request can also be made via a Power of Attorney given on our representative’s name (PoA) remotely.
- Investment Residence Permit: an indefinite residence permit is given to a foreign national (and his/her spouse and dependents) who has invested at least USD 300,000 in the country, in accordance with the Georgia Promotion and Investment Guarantees Act. The request would include a document certifying the investment and criminal record statement;
- Permanent Residence Permit: A foreign citizen who has a Georgian citizen’s spouse or father or mother or who has resided legally on the territory with a temporary residence permit for 6 years (except for studies, medical treatment or diplomatic issues) may apply for a permanent residence permit. A certificate will be required to verify the legal income of the applicant.
APPLYING FOR GEORGIAN CITIZENSHIP
As it has already been mentioned, getting the Georgian passport has become considerably attractive. Following an agreement between the EU and Georgia that came into force in 2017, Georgian citizens can travel to the member states of the Schengen Area without having to apply for a visa. In addition, Georgia nationals have visa-free access in most countries of Latin America, Malaysia and Indonesia, among others.
In addition to citizenship through blood ties, a foreigner can apply for citizenship in Georgia if they meet the following requirements:
- Georgian citizenship according to the ordinary procedure: Possession of a job or real estate or develop business activities or possession of shares in a national company, 10 years of legal and uninterrupted residency, knowing the language, Georgian history fundamentals and the general principles of law.
- Georgian citizenship according to the simplified procedure: Spouse of a Georgian citizen who has resided legally and uninterruptedly in the country for 5 years. As in the previous case, knowledge of the language, history and general principles of Georgian law is required.
- Georgian citizenship as an exception: A foreign citizen may apply for foreign citizenship as an exception, to be granted by the President of Georgia under Article 12 (2) of the Constitution, if the foreigner has special merit before Georgia or the issuance of their citizenship is a State interest or of significant benefit to the Georgian economy. At least two reference letters from natural or legal persons registered in Georgia will be required.
When Georgian citizenship is granted to a foreigner, he or she must relinquish their previous citizenship unless it has been explicitly granted as an exception by the President of Georgia.
For more information about residence permit and citizenship in Georgia please contact us. We know how to help you.
Georgia has relatively liberal immigration policies and it is relatively straightforward to obtain residency in the country. The establishment of a company or the accreditation of a professional practice and/or the evidence of adequate means of subsistence may be necessary to obtain a temporary permit. Through making an investment of US$ 300,000, a person can apply for a temporary investment residence permit, which after 5 years can be transformed into a permanent residence permit. Establishing tax residence in Georgia may be quite interesting in terms of personal income due to its territorial tax system; it is possible to have tax-free residence, given that there is no income from Georgian sources. Although local-source income is taxed at 20 per cent, dividends and interests are taxed at source only at a 5 per cent final withholding tax rate and do not include a personal income tax base, although rental income is also subject to a 5 per cent reduced tax level.
Georgia is an entrepreneurial and business-friendly country. With a quick and simple business registration process, incorporation is painless. This boasts a low tax burden, where the reinvested gains can be tax-free, those distributed are taxed at 15 percent and earned foreign-source dividends are not taxable. It could also be an interesting place for banking; opening a bank account is simple and banks are currently paying good returns on deposits.
In short, due to its rapid incorporation process, low-tax regime, easy banking, along with its strategic location, low labor and living cost and an easy and accessible residence permit, make Georgia a real deal to live and the most convenient place in order to diversify your business and personal finance.
MORE INFORMATION AND HOW WE CAN HELP YOU
We are at your service to settle any queries you may have and begin your process of incorporation or immigration in Georgia. Contact us or see how we can support you by evaluating your case in depth to provide you with the best solutions for personal and corporate internationalization, depending on your situation, needs and goals.