Registration of a virtual IT company in Georgia and opening a corporate account in the Bank of Georgia
Georgia has been paying much attention to creating an image of the country where it is possible and reasonable to spend a vacation and to make business successfully. As result of reformations take by the government, registration of new companies in the country became much easier; the tax system has become one of the most loyal worldwide, and red tape and corruption are almost eliminated. Considering a significant gap between other countries in the IT sector, Georgian authorities took a decision to provide special conditions for companies engaged in IT and computer industries. Starting from 2011, the country has introduced a special taxation regime for legal entities that deal with development of software, web sites, programming, and work in other IT directions. By obtaining the status of the “virtual person”, such companies are exempted from all taxes except tax on dividends. Therefore, non-residents may register an IT company in Georgia under extra favorable terms. The status of the “virtual person” is especially attractive for companies registered in jurisdictions with heavier tax burden. Now they can make business from Georgia under more comfortable terms that in homeland, due to minimized tax expenses.
Our company can help to register an IT company in Georgia and to open a corporate account in the leading local bank, the Bank of Georgia. By doing so, you may significantly reduce costs and increase profitability of business without breaching the international laws. The price for registration of a virtual IT company in Georgia with opening a corporate account in the Bank of Georgia is 7500 EUR (one time). Additionally, bookkeeping support of a legal entity should be paid – 500 EUR per month.
Taxation of a virtual IT company in Georgia
In early 2011 in Georgia the law “On information technological zones” came into force. This regulatory act provided an opportunity to significantly reduce tax burden on IT companies registered in Georgia. The scope of the new law covered legal entities that deal with IT activities. The latter includes research, support, development, design, production and implementation of computer information systems, result of which is occurrence of software products. Here we speak of legal entities that deal with web design, development of computer games, mobile applications, programs, and other trends of computer industry.
According to the law “On information technological zones”, such companies are not obliged to pay taxes to the state budget. An IT company, having obtained the status of the “virtual person” is exempted from:
- tax on income – 15%;
- VAT – 18%;
- tax on export.
Please remember that the mentioned taxes are not paid provided that an IT company does not trade with residents of Georgia, but sells its products abroad. Trade deals with Georgian companies are taxed at standard rates.
The only tax paid by virtual persons is tax on dividends in amount of 5%. Nevertheless, there are certain legal ways to avoid payment of this tax, e.g. within applicable agreements on avoidance of double taxation with other countries.
Besides, when hiring residents of Georgia, an IT company should also withdraw and transfer to state budget income tax from salaries of its employees, in amount of 20%, and 2% to the Pension Fund.
Learn more about benefits of registration of a company as a virtual zone person in Georgia.
Benefits of registration of a virtual company in Georgia
Apart from a very loyal taxation, registration of an IT company in Georgia is also recommended by the following reasons:
- simplicity of making business;
- minimum requirements at registration of a company: no limitations on authorized capital; founders can be residents or non-residents;
- Georgia does not exchange tax information with other countries within CRS;
- option of using a virtual office;
- loyal currency control;
- no obligations to hire residents.
Due to these conditions, making business in IT sector through a company registered in Georgia is extra lucrative. Moreover, such a legal entity can be managed remotely while being in other country. Distant cooperation for companies working in IT sector is not a novelty – most of them outsource employees for execution of projects.
Mandatory requirements to a virtual IT company in Georgia
It will be problematic to register an IT company in Georgia without assistance. To do this, one should know the local legislation and have a perfect command of Georgian language. Documents are filed in Georgian, just as all application, questionnaires and other blanks in state bodies. It should be noted that in general, there is no language barrier during communication, as most Georgians speak Russian, while English is very popular among young people.
Without speaking Georgian and knowing the local legislation, a non-resident will face certain problems when independently registering a virtual company in Georgia. Overcoming this obstacle can take much time, so it is better to ask for our assistance. Our experienced lawyers are native speakers of Georgian; they can register a legal entity quickly and considering all the requirements of the customer, therefore saving his time.
Absence of red-tape allows registering a company in Georgia just in 1 working day. Registration of a legal entity is made in Houses of Justice and costs 200 lari (approximately 72 USD), if documents are needed the next day – cost of registration is 100 lari (approximately 36 USD).
Although the Georgian legislation in the sphere of entrepreneurship is liberal, there are certain requirements that an IT company must fulfill:
- a company may not be registered without a verified legal address;
- virtual companies must file monthly reporting;
- mandatory presence of constitutive documents.
Our company will undertake these complexities. Besides, our customers obtain a virtual office absolutely free, while renting a real premise depends on many factors: location, area, availability of necessary utilities.
The price for bookkeeping support starts from 500 EUR per month (depending on number of payments).But having paid this sum, our customers save money and resources on studying tax and financial legislation of Georgia, as well as avoid risk of being charged for wrong calculation or late payment of taxes; customers neither have to hire a staff of bookkeepers.
Regarding preparation of constitutive documents, our lawyers can fully meet the requirements of customers. We execute the by-law upon client’s wish in English or Russian language. Texts of all constitutive documents: by-law, protocol of shareholders’ meetings, and power of attorney are always agreed with the customer. Only after obtaining of a notarized power of attorney for registration of an IT company, we present the full set of documents in the House of Justice.
Registration of a legal entity engaged in IT or computer sector does not instantly grant it a right for tax benefits. This requires obtaining a special status “subject of a virtual zone”, which is assigned by a special body authorized by the Georgian government.
A legal entity may file an application for obtaining a virtual status only after its registration at a fiscal body. The latter is mandatory, as using a personal account in the tax department allows perform accounting, calculation and payment of taxes; it is also possible to view payment history, to control timelines of mandatory payments using a tax calendar. Only after obtaining a login and a password from tax cabinet a company may address a special body for issuance of a license of virtual person.
We help our customers to quickly come through stages of registration of a full-scale legal entity in a virtual zone in the shortest time, 2-3 days maximum. Meanwhile, according to the law “On information technological zones” this procedure presumes 10 working days.
Learn more about basic services for companies in Georgia.
Basic differences between a Free industrial zone and a virtual IT zone in Georgia
Apart from a virtual zone, Georgia offers another beneficial regime of taxation – registration of a company in a Free industrial zone. There are free such zones in Georgia, but actually only 4 are operating: Tbilisi, Poti, Kutaisi and Kutaisi Hualing.
General similarities and differences between a virtual company and a company from FIZ:
|Company from Free industrial zone||Company from virtual IT zone|
|Corporate tax on income||0%||0%|
|Tax on dividends||0%||5%|
|Income tax on salary||20% (hired employees are liable for its calculation and payment)||20%|
|Reporting||not required||submitted according to the legislation|
|Types of activity||any permitted type of activity||activity in IT sector|
Corporate account in the Bank of Georgia for IT companies from virtual zone of Georgia
To let you operate on all levels as a legal entity in Georgia, our company helps to open a corporate account in the leading Georgian bank, Bank of Georgia. This financial institution takes the second position after the TBC Bank by the amount of net profit obtained for 2018. The net profit of the Bank of Georgia makes around 30% of the entire bank system of Georgia; every third deposit is opened in this bank, approximately 2 million customers belong here, and the bank has the widest branch network of ATMs and offices in the country.
Stability and global recognition of the bank are also verified by the fact that its shares are quoted at the London stock exchange.
Bank of Georgia is a universal financial institution. It offers a wide range of bank services for legal entities and natural persons as well as entrepreneurs. Moreover, Bank of Georgia is one of few banks where a non-resident can open a corporate account remotely.
In Bank of Georgia customers may:
- open multi-currency operating account, while customer obtains a possibility to keep money in different currencies on account with one number. Availability of wide range of currencies (more than 30) is very important for IT companies working at a global level, as they do not have to lose their profit when converting currency;
- issue corporate cards of payment systems MasterCard, Visa and American Express. Meanwhile, in the Caucasian region American Express cards may only be issued in the Bank of Georgia. All payment cards of the bank have a high limit on daily cash withdrawal, limit on operations on POS terminals – up to 100 000 lari. No limits on operations in branches of Bank of Georgia. Availability of international payment cards allows owner of company having continuous access to the account. Using the account, the owner may at any time withdraw cash at ATM, even when being abroad;
- issue credit cards American Express with a beneficiary period up to 36 days. Using this payment card, one may have benefits when paying in shops and malls, where card holder obtains points and bonuses. Effective interest rate on credit limit – from 19,3% yearly;
- obtain continuous access to one’s corporate account regardless of location using various banking systems. Bank’s customers have Internet, phone, mobile, and SMS banking. They also may use services of automatic payments and direct debit.
Apart from the mentioned services, virtual IT companies may use credit and deposit programs, leasing, services on management of assets and liabilities, and broker services.
Procedure of registration of a virtual IT company in Georgia with corporate account in the Bank of Georgia
If you work in the sector of IT or computer technologies and wish to reduce your tax burden significantly, please contact us at: firstname.lastname@example.org. Employees of our company will get back to you ASAP to clarify all the important details regarding registration of IT company and obtaining the status of the virtual zone person.
Upon negotiations and agreement of the list of required services, we will send you an invoice for services of assistance from professional lawyers. Payment can be made using any applicable means: payment card, PayPal, WebMoney, or Western Union. The price for service of registration of a virtual company in Georgia and opening a corporate account in the Bank of Georgia – 7500 EUR. For additional payment, we can help to organize bookkeeping support of a company — 500 EUR per month.
Upon payment, our employees execute constitutive documents and a power of attorney. Texts of documents will be agreed with you at every stage. Having obtained signed documents, our employees will start registration of a company, obtaining the status of the virtual zone person and opening a corporate account in the Bank of Georgia.
Documents necessary for registration of IT company in Georgia and opening corporate account in Bank of Georgia
List of documents necessary for registration of a virtual company is standard. If a founder of a legal entity is a natural person – non-resident, he/she should provide international passport, as well as international passports of persons who will execute duties of managers or founders.
For legal entities-founders the list of documents is the following:
- constitutive documents: by-law, protocol of meetings, extract from the register of legal entities;
- international passports of shareholders, directors, and decrees on assignment;
- information on final owner of a legal entity.
Please keep in mind that if legal entities are among founders of a virtual IT company, the price of registration increases for 1000 EUR.
If you need to provide high confidentiality of your business, we recommend to use the nominal service, because public registers of legal entities in Georgia are open to everybody and information can be easily obtained when needed.
Having obtained from you all documents, we will prepare the text of the power of attorney that you need to apostille (for CIS countries notary is enough) and send to us.
If you are interested in establishing a virtual IT company in Georgia with a corporate account in the Bank of Georgia, feel free to contact us at: email@example.com. We will instantly reply with answers to all your questions and will start working on registration of an IT company.
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