IT Virtual Zone Company In Georgia Pays An Incredible 0% Tax On Income.
The Virtual Zone is designed for the IT sector. To enjoy 0% Corporate Income Tax (CIT), 0% VAT, and 5% dividends tax, an IT company must sell its services to foreign clients outside Georgia.
What Is The Georgian Virtual Zone?
To improve Georgia’s IT technologies sector and the attractiveness of its economy, Georgia promotes the Virtual Zone (VZ).
This special status allows a Georgian Limited Liability Company related to the IT sector to enjoy huge tax exemptions.
The Virtual Zone is a license allowing you to create and sell your IT products and software-based services worldwide in a tax-free regime.
- 0% Corporate Income Tax
- 0% VAT
- 5% Dividends Tax.
The only rule is to provide and sell its IT services to clients outside Georgia. (to foreign non-Georgian and non-resident clients and companies).
Definition Of The Virtual Zone Status
According to Georgian legislation, the VZ company’s activities shall result in « the use, creation, and development of IT software and products: development, support, design, research development, production, implementation and deployment of computer information systems and related technologies, the result of which is the emergence of software products » and when development work is performed, partially or totally, in Georgia.
Main Tax Benefits Of Virtual Zone Company Georgia
The Virtual Zone status allows a Georgian Limited Liability Company, whose activity is related to the IT sector, to benefit from huge tax exemptions.
Virtual Zone Company Corporate Income Tax : 0%
- Corporate Income Tax 0% (Instead of 15%)
- Suppose the Virtual Zone company provides IT services to Georgian clients. In that case, this Georgian-source income will be taxed. Corporate Income Tax 15% + VAT 18%.
Virtual Zone Company : 0% Value Added Tax
- Pay 0% VAT on business income.
- You can also voluntarily register as a VAT taxpayer at the Revenue Service of Georgia. You can claim back VAT (18%) when purchasing from other VAT taxpayers registered in Georgia.
Virtual Zone Export Tax: 0%
- Exporting IT products outside Georgia territory is not subject to customs duties.
Virtual Zone Dividends Tax: 5%
- 5% tax on distributed dividends
- No matter if they are distributed to an individual or a legal entity, resident or non-resident.
- Virtual Zone Company Dividends not distributed are not taxed.
- When Distributing dividends to non-resident shareholders, the country of their tax residency should be considered carefully. To avoid double taxation, Georgia signed double taxation avoidance treaties. You can check all the participating countries
Virtual Zone Management
The Virtual Zone Company director can be either a Georgian or a Foreign person who can be physically located either in Georgia or abroad.
- A foreigner living abroad can perfectly obtain the Virtual Zone Company status.
- You can manage this VZ from anywhere.
Virtual Zone Staff
- Your staff can be based anywhere, not just in Georgia.
- If you hire a Georgian employee or tax resident in Georgia, a 20% tax on gross salary + 4% social security contributions apply.
How To Apply For Virtual Zone Georgia?
- Register your business in Georgia through an LLC Legal Entity. It takes to 2 working days.
- Register your LLC with the Revenue Service. It takes one working day.
- Submit your Virtual Zone Company Application to the Ministry of Finance. It takes between 30 to 45 working days for application processing.
Please note that during this Virtual Zone application process, you and the Georgian administration shall set up a follow-up. If the Ministry of Economy asks, we shall provide additional proof and clarification of the LLC business model, services/products, local employee contracts, and more.
Remote Virtual Zone Company Registration & Remote Business Bank Account Opening
Would you like to open your Virtual Zone company in Georgia remotely? It’s easy. Thanks to Power of Attorney, your physical presence is not required.
We offer a simple procedure to open your VZ Company Remotely with Power of Attorney (PoA) without visiting Georgia. We will be able to carry out all the necessary steps for the Virtual Zone company registration on your behalf.
Similarly, you can open a Remote Business Bank Account for your VZ Company Georgia. Thanks to a Power of Attorney, your physical presence in Georgia is not required. If you wish to open a remote bank account for your Virtual Zone, we can carry out this service on your behalf,
How Can We Help You?
Registering your LLC is relatively easy in Georgia.
There are very interesting tax advantages if you qualify for the VZ Company. The application process can be tricky and must be prepared correctly.
Suppose you are not familiar with the intricacies of the Georgian administration and how to present an application to obtain Virtual Zone status properly. In that case, errors during the application process are common. Therefore rejections are common too, especially if you don’t speak Georgian.
To make the process as simple as possible and to avoid the frequent errors that can lead to the rejection of your Virtual Zone Company application, Happy Georgia will help you save time and make the process pain-free.
We recommend getting a consultation about the VZ Company Status with one of our advisers to check that your business project meets the Virtual Zone requirements.
FAQs About the virtual zone company
- Be an IT company. Typically connected to software development.
- Have registered your business, a Limited Liability Company (LLC), in Georgia.
- Remember that the Virtual Zone Tax benefits apply to providing and selling IT products and services to foreign, non-Georgian, and non-resident clients outside Georgia’s territory.
No. Furthermore, your company does not have to generate minimum turnover before applying to Virtual Zone.
Otherwise, the Virtual Zone license is free. You don’t have to renew it annually like in a Free Industrial Zone.
No. You can manage your VZ company remotely without residing in Georgia. But, according to your specific situation, it is worth analyzing if it would be good for you to be a tax resident in Georgia.
But suppose you are a tax resident elsewhere. In that case, you may owe additional taxes in that country on any income earned from your Georgian VZ Company.
Open a Georgian Bank account for your Virtual Zone to Revenue Service (RS) purposes and tax declaration. Indeed, RS request a Georgian bank account for the payments of taxes.
Suppose your IT company has at least two years of experience in the IT sector. The new International Company Status may offer even better tax breaks than the Virtual Zone. With International Company Status, you get 5% Corporate Income tax, 0% Dividends, 0% VAT on B2B services provided to foreign clients, and only 5% tax on employee salary (instead of 20%).
1% tax rate up to 180 000$ of turnover. Depending on your turnover, IT entrepreneurs, such as solo digital entrepreneurs, can trade as Individual Entrepreneurs (IE). A self-employed individual in IT can also consider the IE Small Business Status a good option.