Substance for a company in Georgia

Georgia does not participate in the system of automatic exchange of information between tax bodies of different countries. Owing to this many non-residents, especially from neighbor countries, began to consider this jurisdiction as another option for their cash flows. Interest in Georgia has increased even more after toughening of the bank policy regarding non-residents among banks of the Baltic countries. When financial institutions of Lithuania, Estonia and Latvia began blocking bank accounts without a notice and denied to service non-residents, motivating their decision by the available suspicions in money laundering, many businessmen from CIS countries had transferred their cash flows particularly in Georgia. This country was the one that provided a high level of confidentiality of bank operations, while the presence of free industrial zones allowed significantly saving on taxes. Meanwhile, Georgia had never entered and is not currently on the blacklist of offshore countries.

Nevertheless, the pro-European course of the country makes the government of Georgia adhering rules of international organizations, especially financial rules, which presume fight against money laundering, financing of terrorism and tax evasion. As result Georgian banks, so that not to lose an access to international financial resources, must follow the requirements of these organizations. One of requirements is to observe the principle “know your customer”. It means that banks, before starting cooperation with a new customer, must thoroughly study his/her reputation. Such an approach of Georgian banks greatly complicated the activity of companies registered in FIZ. Now their account can be blocked or they can be denied in services in a slight suspicion of false business. Besides, opening corporate accounts had also complicated for new companies in FIZ, if non-residents are among founders. Georgian banks can at least for a week verify the reputation of a potential customer before opening his/her account.

Our company can help to avoid hardships and obstacles that may appear during making business in Georgia. We have a wide experience in organization of a substance for legal entities, and therefore we guarantee to our clients that cooperation will help to keep business in Georgia highly efficient even for companies registered in Free industrial zones.

The price of our service on organization of a substance depends on multiple factors, including type of a company, the number of hired employees, their working regime, and parameters of an office. Therefore, the final cost of our services can only be established after a personal meeting with a customer.

Substance for companies in Georgia – what is it for?

Substance or organization of a personal presence became an answer of businessmen to toughening of tax optimization on the part of tax bodies. Due to valid signs that verify the actual economical activity of a company, it can avoid extra attention on the part of different regulatory authorities.

Organization of a substance lets a Georgian company further obtaining all benefits of taxation in the Free industrial zone, while making business on a global scale.

Let us remind that companies registered in Georgian FIZ are exempted from all taxes, provided that their products are sold abroad. In other words, they do not pay:

• corporate tax on income – 15%;
• VAT – 18%;
• tax on dividends – 5%;
• tax on property – 1%.

This allows significantly saving money.

What Georgian banks pay attention to when analyzing the real presence of a company:

• owned or rented office or production premises available;
• presence of a corporate phone, website;
• presence of a complete staff of employees (director, secretary, hired employees) with proper qualification;
• salary regularly paid to card accounts, payment of taxes and other budget payments;
• regular payments to different counteragents;
• regular submission of reports to regulatory authorities.

Fulfillment of these terms means that a company actually performs economic activity in the territory of Georgia, so there will be no sanctions on the part of bank institutions.

Learn more about top investment trends for small businesses in Georgia.

Realization of a substance: general requirements to Georgian companies

Establishment and functioning of legal entities in Georgia is regulated by the law “On entrepreneurship”. Subject to this regulatory act, a company can be registered in Georgian in form of:

• company with solidary responsibility;
• commandite company;
• limited liability company;
• joint stock company;
• cooperative.

Moreover, it is allowed to operate as a sole proprietor. This form of business is the most popular in Georgia. As of 1 May 2019, 97 587 sole proprietors were registered in the country, which makes 52,83% of all active persons making business. The second popular form of business is limited liability company. As of 1 May 2019, there are 78 065 such companies (42,26%) in Georgia.

Mandatory attributes of every legal entity in Georgia are:

• authorized capital — regarding such an important parameter for every legal entity as the amount of the authorized capital, it should be noted that in Georgia it is not limited. Shareholders’ contributions define the amount of the authorized capital as they find applicable. It should be noted that the authorized capital does not have to be verified when registering a company;
• shareholders – founders of a company in Georgia can be natural persons or legal entities, residents or non-residents. Just 1 founder is enough to establish a Georgian company;
• legal address – subject to the Georgian legislation, a company can only be registered with a verified legal address. During visit to the House of Justice, it is necessary to supply, together with application on registration, the document verifying the ownership right for an office or rental agreement with the consent of the owner for lease;
• director and hired employees – the Georgian legislation allows having multiple directors in the corporate staff. Meanwhile, residents or non-residents can take managerial positions. Still, in Georgia it is recommended to attract a resident to a director’s position, this will help to solve various issues in state and regulatory bodies, as well as in banks. Regarding hired employees, in Georgia there is no obligation to hire people to a company, but nominally this better to be done to avoid extra questions from the department of financial monitoring of the servicing bank;
• tax accounting and financial reporting – Georgian companies must submit monthly and annual reports, except legal entities registered in FIZ. The latter do not have to file reporting, even the income in the form of salary is declared by hired employees independently;
• payments to counteragents – routine economic activity of a company presumes differentiation between suppliers of raw materials and parts, as well as buyers of the finished products. Presence of only one supplier or buyer arises suspicions in compliance services of a bank;
• shareholders’ meetings – an important part of company operation, as they directly influence the further development. To verify the actual activity of a legal entity it is necessary that meetings of shareholders were held in the territory of Georgia.

To realize a substance of a Georgian legal entity, our company may offer to use both real or nominal directors and shareholders. The latter allows even more increasing the level of business confidentiality. Registers of legal entities in Georgia are open, so everyone can obtain the information on shareholders and management of a legal entity.

To increase the level of confidentiality and to protect your business, you may use the nominal service in Georgia.

The price of a substance service in Georgia

A substance provides an entire set of services aimed at creation of a real presence of a company in the Georgian jurisdiction. Price list for basic services:

• registration: company in FIZ – 3800 EUR, in virtual zone for IT company – 2800 EUR, standard company – 1900 EUR;
• opening corporate account – 2800 EUR;
• virtual office – free, except FIZ Kutaisi Hualing (2300 EUR per year) and FIZ Poti (3600 EUR per year);
• real office rent – depends of parameters of an office (area, location, available utilities, office equipment);
• preparation of a full set of constitutive documents with apostle – 950 EUR;
• bookkeeping support of a Georgian company – from 500 EUR per month;
• courier delivery of documents anywhere worldwide – 200 EUR.

To increase the effectiveness of global activity in the sphere of computer and IT, you may use an option of remote registration of a full-scale IT company in Georgia.

Substance in Georgia: how to use

To organize real presence of a company in the Georgian jurisdiction is especially important for companies registered in FIZ. By doing this, businessmen can keep a beneficial regime of taxation for making business on a global level and to avoid sanctions on the part of banks.

Ordering the service is simple; just contact us at: [email protected]. Afterwards, our expert will get in touch with you to obtain the necessary information on your company.

Then we will agree on contents of the substance and cost of services, which you can pay by any suitable means: Webmoney, Western Union, or PayPal.

Upon receiving the payment, we will start to realize the substance for the Georgian company: preparing constitutive documents, renting office, hiring employees (real or nominal), developing website, and providing bookkeeping support.

To prepare constitutive documents, we need:

• international passport of the natural person – founder;
• for legal entities – by-law, statement from the register of legal entities, protocol of meetings of shareholders, decrees on assignment of the director, and his/her passport.

If you are interested in the service of the substance for the Georgian company, please contact us at [email protected]. We will help you to organize real presence in the Georgian jurisdiction while keeping the beneficial regime of taxation (valid for companies in FIZ).