How to obtain a Forex license in Georgia?

Georgia is an increasingly attractive jurisdiction to open an international financial brokerage services company. While such companies are not very popular In the country, due to the small population and low income levels, however, if you use them to conduct business in Europe or the CIS, then the attractiveness for the businesses in this sector significantly grows, particularly given the tax optimization opportunities. So, let us explore the opportunities that a Forex license in Georgia provides and the benefits it offers for international business.

What is Forex License?

Forex are abbreviated words of Foreign Exchange. Today, the word “Forex” means a virtual market where they trade currency, precious metals, payment documents in foreign currency, as well as perform turnover of capital.

This area is very attractive for investment, as it enables businesses to make decent earnings. The essence of work in the Forex market is that the broker company attracts money from investors (individuals and legal entities) with the aim of managing them. The broker agrees to share part of the profit to investors and keeps a part of it as a commission for services.

There are two types of financial instruments that are managed by brokerage companies in the market:

• Contracts for Difference (CFD) – the margin between the transfer of the asset price at the time of purchase and the time of sale;
• Binary Options (BO) – an option that may or may not generate profit, depending on the fulfillment of certain conditions.

The performance of a brokerage company, like any other, is measured by the level of income received. Therefore, often Forex entrepreneurs are looking for ways to reduce costs to increase their profits. And Georgian jurisdiction is an optimal option for achieving such cost-cutting. After all, here the brokerage entities are completely exempted from paying corporate income tax. For this reason, Georgia is of interest to investors who wish to obtain a Forex license.

Learn about all the benefits of jurisdiction and how to register a company in Georgia.

Forex Market in Georgia: key features

Until relatively recently, no license was required for carrying out activities in the Georgian Forex market. However, due to the increasing cases of abuse and violation, as well as to ensure the protection of the rights of clients of brokerage companies, the Georgian government in early 2018 obliged all participants in the Forex market to undergo compulsory licensing at the National Bank. And from April 11, 2018, companies can not attract customers, or advertise their services without having obtained a Forex license in Georgia.

Today, this market is regulated by the following regulatory acts: Law “On the Securities Market”, Law “On Licenses and Permits”, the Tax Code, the order of the NBG “Procedure for licensing a brokerage company …”, as well as other orders and laws.

So, if you have decided to establish a brokerage company and want to get a Forex license in Georgia, the first thing you need to pay attention to is the Law on Licenses and Permissions, Art. 6 of which clearly indicates all types of activities that require licensing, in particular:

• dealing in securities;
• depository services;
• brokerage activity;
• stock exchange;
• asset management .

This means that if you are planning to provide brokerage services it is necessary not only to register a legal entity in Georgia, but also to obtain an appropriate license.

What does a Forex license in Georgia provide?

Regarding the range of capacities that a company with a Forex license provides, all of them are described in detail in Art. 23 of the law “On the securities market.” Having this certificate, a legal entity can carry out operations with:

• shares in capital;
• securities;
• currency.

Furthermore:

• Provide consultations to potential investors;
• conduct market research;
• advise issuers on the issue of securities and market operations;
• carry out operations with securities on its own behalf or on behalf of customers, including guaranteed and non-guaranteed placement of securities;
• manage the investment portfolio of clients, including pension funds.

Without a Forex license, any brokerage services in Georgia are prohibited.

Grounds for revoking a Forex License in Georgia

The regulatory authority may revoke the company’s license for brokerage services on the following grounds:

• the broker does not comply with the conditions stipulated for this type of activity and violates the law;
• the broker does not eliminate the shortcomings highlighted in connection with the activities;
• in case of liquidation of a brokerage company.

The decision to revoke the license is taken by the Central Bank of Georgia within 30 days. Thus, the certificate must be returned to the National Bank in 3 days after the decision has been made.

Why Forex license in Georgia is an interesting option?

Brokerage services in Georgia are not very popular, given the low solvency of the population. However, it is interesting to establish a brokerage company and obtain a Forex license to provide such services abroad, especially after receiving the status of an international financial company. Upon availability of such status, the broker receives significant tax benefits :

• profits tax will be as low as 5%;
• salaries of company employees are not subject to income tax at the source of payment;
• the salary of a foreigner who is a resident of Georgia is not subject to income tax;
• dividends are not taxed at the source of payment and are not included in the gross income of the recipient;
• exemption from property tax (with the exception of land).

Owing to the above, obtaining a Forex license and a certificate of an international financial company in Georgia is becoming increasingly more attractive for foreign entrepreneurs, especially considering the ease and simplicity of doing business in this country, as well as the lack of pressure from the regulatory authorities, and absence of out-of-the-blue inspections in the country. If you are providing brokerage services and are looking to reduce the tax burden, write to us: [email protected] and we will help you improve the efficiency of your business.