Discover How an LLC Company Formation in Georgia
Is Easy and Fast (48h)
Among the different types of business structures, the LLC is the most popular in Georgia due to the lower risk of having limited liability. Easy to manage and maintain, no minimum capital investment is required, and foreigners can own an LLC fully. Open an LLC in Georgia and benefit from 15% flat tax on profits and 5% flat tax on dividends, and 0% if profits are retained or reinvested.
LLC Company Formation In Georgia
- There is no minimum capital required to open your LLC in Georgia.
- One or more foreign owners/directors can own an LLC in Georgia.
- The Company Owner(s) and Director do not have to be Georgia resident(s).
- Employees can be Georgian or foreigners from any country.
- You are not personally liable for debts if the company goes bankrupt or is sued.
- There are no annual fees and no need to renew your registration yearly.
Key Tax Benefits For An LLC Formation In Georgia
- 15% Corporate Income Tax on profit only if profits are taken.
- 5% Dividend Tax
- 0% CIT and 0% Dividend Tax when distributed to other legal entities in Georgia
- Wages are subject to a 20% withholding tax from the gross salary and paid on behalf of the employees. An additional 4% is due if your employees are Georgian citizens or residents.
- 20% Personal Income Tax. Suppose you work alone in your company and pay dividends; you do not have to pay Personal Income Tax – just CIT 15% and Dividend Tax 5%.
- 18% VAT. Suppose the gross VAT taxable turnover during 12 calendar months exceeds 100,000 GEL. In that case, you need to register your business as a VAT taxpayer to the Revenue Service of Georgia. You can voluntarily report to VAT to benefit from a VAT refund on your company purchases.
- The company’s profits are not taxed until they are distributed to individuals and not taxed if distributed to another Georgian resident legal entity or reinvested.
- You are not personally liable for debts if the company goes bankrupt or is sued.
Are you an IT Company?
Discover the Tax-Free Benefits of Virtual Zone in Georgia. Indeed, LLC whose activity is related to IT services shall be qualified for the Virtual Zone Status (0% VAT, 0% Corporate Tax, 5% Dividend Withholding Tax).
Requirements For An LLC Company Formation In Georgia
To set up an LLC Legal entity in Georgia, you must go to the Public Service Hall and submit the required documents. To apply in person, physically, you need to provide PSH with the following documents:
- Your principal business activity is defined in the Company Charter
- Passports of the owner(s) and director(s)
- Company charter (usually a bi-lingual charter Georgian-English)
- A Legal Address
- A phone number (Georgian or foreign number)
- An email address
We can provide you with this legal address if you do not have a legal address.
LLC Company Formation In Georgia Remotely
Your physical presence is not required to open an LLC in Georgia. We offer a simple procedure to open your LLC in Georgia at distance. With your Power of Attorney, we can carry out all the necessary steps for its registration on your behalf, including the Revenue Service registration. The LLC incorporation documents will be sent to you by Express Delivery service (DHL, UPS, or FedEx).
Business Bank Account Opening For Your LLC In Georgia
After your LLC registration in Georgia, we can introduce you to the Bank Manager of one of our Partner banks if you want to open a corporate bank account.
Our banking service is not just a basic introduction to the Bank. We assist you in filling out the Business Plan forms appropriately. We help you understand and provide business details, commercial information, and the purpose/use of the bank account that banks want to know to approve your account application. Banks in Georgia want to be reassured about how you will use this account. We will work with you to ensure that the KYC will be submitted correctly to the Bank to make the opening process management smooth.
Consult us on factors that will affect the success or failure of your corporate bank account opening, based on your specific situation.
Business Bank Account Opening Remotely
Your physical presence is not required to open the corporate bank account of your LLC in Georgia. By giving a Power of Attorney to our Trustee, we can carry out the entire opening procedure on your behalf. Our service offers a fast, simple, and reliable bank account opening service in one of our partner Banks. This service includes an Express Delivery service of your LLC’s bank documents to your mail address by DHL- UPS – FedEx or TNT.
If you do not need a Georgian bank account, you can use online banks like Wise linked to your LLC in Georgia. Please note that a Georgian bank account is required to pay your taxes. Still, a representative in Georgia can pay these ones.
How Do I Pay Myself From My LLC?
You can pay yourself in different ways, Salary, Dividends, Capital Reduction, and loans.
Salary
You can take a salary like any other employee of the LLC Company. In that case, you would pay 20% withholding income tax and, if you are a legal resident in Georgia, 2%+2% to the Pension fund. You do not need to pay the 2% + 2% pension contribution if you are not a resident person in Georgia.
Dividends
Usually, owners of the company get dividends from an LLC. Dividends are taxed at 5% on a personal level. Keep in mind : when dividends are distributed, the company has to calculate Corporate Income Tax on its profit tax, too. It would include the 15% corporate tax. So the tax would be 15% on profits + 5% on dividends (approximately 20%).
Capital Reduction
Although the Georgian Law does not require an LLC to have a minimum capital, the shareholders have the right to provide capital to the entity. Subsequently, the LLC’s capital can be reduced to any level, and these transactions are not subject to taxation.
Loan
You can give your LLC a loan and later pay yourself back. To do so, you must pay yourself interest at the market level. Interest is taxed at 10% income tax.
When To File Declarations And Pay Taxes
Personal Income Tax and CIT (Corporate Income Tax) declarations shall be done by the 15th of each month. Corporate Income Tax is declared as zero if no profits or dividends are distributed. Personal Income Tax should be paid at the time when salary is paid.
A VAT tax declaration shall be made by the 15th of each month if the company is a VAT taxpayer. The monthly payment should be made before this date.
Declarations are submitted on to the revenue service. The payment of taxes must be made from a Georgian bank account.
Declarations are made in Georgian. We advise you to use the services of a Georgian accountant to make these declarations and payments.
What Can Be Expensed Within An LLC?
Depending on your type of business, you shall have different expenses.
Operational Expenses
All expenses incurred to operate, produce goods, sell or provide services should be tax-deductible (Tax Code, Article 105). As well as indirect expenses, like marketing expenses.
Capital Assets
A fixed asset is a tangible object that your LLC buys and that you will use for more than one year. Examples: Computers, Printers, Car…needed to operate your business.
Following Georgian tax code provisions, purchases of capital assets should gradually be depreciated into an LLC over a number of years. Computers, printers, mobile phones, etc. are depreciated at a 20% rate. If your LLC purchases Real Estate, it is usually depreciated at a rate of 5%.
The International Financial Reporting Standards are now in force in Georgia. You can choose your depreciation policy. You can choose to expense the whole amount of a capital purchase at once. We advise you to be consistent over the years you depreciate: typically, 20% per year over five years is a good practice.
VAT: when buying an asset, if you are a VAT taxpayer and buying from another VAT taxpayer, you can claim the 18% VAT and deduct it from your tax bill.
Other Expenses
As a business, you might have representative expenses. Expenses that are for the purposes of economic activity can be expensed into an LLC. That includes entertainment expenses, actually all expenses incurred by a person within the scope of your economic activity:
- Expenses related to events (meetings, presentations, receptions, food § drinks);
- Expenses for parties, cultural and entertainment events;
- Gift costs;
- Transportation costs, taxis, etc.
- Hotel costs
Happy Georgia Helps For Your LLC Company Formation In Georgia
Our service includes full assistance. We will be with you during the incorporation process and advise you on the best solution. Typically, an LLC incorporation takes 1-2 business days to incorporate. We will help you to register your new company to the Revenue Service of Georgia and will introduce you to the Bank to open your corporate account.
Ready to open an LLC in Georgia? Get a consultation with one of our advisers.