Published on and written by Cyril Jarnias
Georgia, a small country in the Caucasus, has established itself in recent years as a top destination for entrepreneurs worldwide. With its pro-business environment, attractive tax system, and simplified procedures, Georgia offers numerous advantages for starting and growing a business. In this article, we will explore in detail why and how to establish a company in Georgia, as well as the opportunities offered by this rapidly expanding market.
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Why Georgia is the New Entrepreneur’s Paradise
Georgia has undertaken major economic reforms since the early 2000s, radically transforming its business environment. Today, the country regularly ranks among the world’s best destinations for doing business. Here are the main reasons that make Georgia a smart choice for entrepreneurs:
An ultra-competitive tax environment: Georgia offers one of the most advantageous tax systems in Europe. With a corporate tax rate of only 15% and numerous possible exemptions, the country provides an ideal framework for optimizing corporate taxation.
Simplified administrative procedures: Starting a business in Georgia is a quick and inexpensive process. On average, it takes only 1 to 2 days to register a company, compared to several weeks in many European countries.
Strategic market access: Located at the crossroads of Europe and Asia, Georgia benefits from an advantageous geographical position. The country has signed free trade agreements with the European Union, China, and several countries in the region, providing privileged access to a market of over 2.3 billion consumers.
Skilled and competitive workforce: Georgia has a young and educated population with a good level of English proficiency. Labor costs remain very competitive compared to Western Europe.
A business-friendly regulatory framework: The Georgian government has implemented numerous measures to attract foreign investors, including special economic zones offering additional tax benefits.
Good to know:
Georgia ranks 7th in the World Bank’s 2020 Doing Business report, ahead of many developed countries. The country notably achieved first place worldwide for ease of starting a business.
Ideal Legal Structures for Your Business in Georgia
Georgian legislation offers several options for starting a business. Here are the main legal structures available:
Limited Liability Company (LLC): This is the most popular legal form in Georgia, equivalent to the French SARL. It offers great flexibility and limited liability to the contributions of partners. The LLC can be created with a single partner and does not require minimum capital.
Joint Stock Company (JSC): Similar to a public limited company, this structure is suitable for large companies and publicly traded corporations. It requires a minimum capital of 50,000 GEL (approximately €15,000).
Individual Entrepreneur (IE): This legal form is ideal for freelancers and small businesses. It offers very advantageous taxation with a tax rate of only 1% on turnover up to 500,000 GEL (approximately €150,000) per year.
Branch Office: Foreign companies can also open a branch in Georgia, which does not have separate legal personality from the parent company but can conduct commercial activities.
Each structure has its advantages and disadvantages in terms of liability, taxation, and management. It is crucial to choose the legal form best suited to your project and objectives.
Good to know:
The LLC is the most flexible and most used structure by foreign entrepreneurs in Georgia. It can be created online in just 24 hours and does not require minimum capital.
Attractive Taxation That Boosts Your Profitability
One of Georgia’s main assets for entrepreneurs is its extremely competitive tax system. Here are the key points to remember:
Corporate tax: The standard rate is 15%, but there is a so-called “Estonian profit” regime that allows tax to be paid only on distributed profits. Reinvested profits are therefore tax-exempt.
VAT: The standard rate is 18%, but many activities are exempt, including exports and certain services provided abroad.
Personal income tax: A flat rate of 20% applies, with possible exemptions for certain types of income.
Special regime for small businesses: Companies with turnover below 500,000 GEL can opt for a simplified regime with a tax rate of only 1% on turnover.
Tax treaties: Georgia has signed double taxation avoidance agreements with more than 50 countries, facilitating international operations.
Additionally, Georgia offers specific tax incentives for certain strategic sectors such as information technology, tourism, or agriculture.
Good to know:
Thanks to the “Estonian profit” regime, a Georgian company that reinvests all its profits could theoretically pay no corporate tax, which is a significant advantage for startups in the growth phase.
Setting Up Your Company in Georgia: A Simple and Quick Process
Starting a business in Georgia is a remarkably simple and quick process. Here are the main steps to follow:
1. Choose a name for your company: Check name availability with the Georgian Public Registry.
- Passport or ID of the founders
- Company statutes
- Power of attorney if using a local representative
3. Register with the Public Registry: This step can be done online or in person. The cost is about 100 GEL (€30) for a standard procedure.
4. Obtain a tax identification number: This number is automatically assigned when the company is registered.
5. Open a corporate bank account: You can do this at any Georgian bank, often on the same day as company registration.
6. Register for VAT: Mandatory if your turnover exceeds 100,000 GEL over 12 consecutive months.
The entire process can be completed in 1 to 2 business days, making Georgia one of the fastest countries in the world to start a business.
Good to know:
It is possible to set up a company in Georgia remotely, without having to travel to the country. Many law firms and consultants offer this service to foreign entrepreneurs.
Georgia vs Other Offshore Jurisdictions: An Enlightening Comparison
Compared to other popular offshore jurisdictions, Georgia offers several distinctive advantages:
Transparency and reputation: Unlike some tax havens, Georgia is recognized as a transparent and cooperative jurisdiction by the OECD. This reduces the risk of regulatory or reputational problems for your business.
Setup and maintenance costs: The registration and management fees for a company in Georgia are significantly lower than in jurisdictions like Hong Kong, Singapore, or the Cayman Islands.
Access to the European market: Thanks to its free trade agreement with the EU, Georgia offers privileged access to the European market, which most classic offshore jurisdictions do not provide.
Quality of life: Georgia offers a pleasant living environment and a very affordable cost of living, making it an attractive destination for entrepreneurs looking to relocate.
Political and economic stability: Although less established than some historical offshore jurisdictions, Georgia has shown remarkable stability in recent years, with sustained economic growth.
Good to know:
Georgia combines the tax advantages of classic offshore jurisdictions with better international reputation and facilitated access to European and Asian markets.
Social Obligations in Georgia: A Flexible Framework for Employers
Georgian labor law is known for its flexibility, offering employers great freedom in managing their human resources. Here are the main points to know:
Employment contracts: Contracts can be fixed-term or indefinite. There is no maximum duration for fixed-term contracts.
Working hours: The standard work week is 40 hours, with a maximum of 48 hours including overtime.
Paid leave: Employees are entitled to a minimum of 24 days of paid leave per year.
Social security: Social security contributions are relatively low. The employer must contribute 2% of gross salary for retirement pension, while the employee contributes 2% as well.
Termination: Dismissal procedures are simplified compared to many European countries, with limited severance payments.
It is important to note that despite this flexibility, employers must respect basic health and safety standards at work.
Good to know:
The flexibility of Georgian labor law allows businesses to quickly adapt to market changes, which is particularly advantageous for startups and rapidly growing companies.
Opening a Corporate Bank Account in Georgia: Simple and Quick
Opening a corporate bank account in Georgia is a relatively simple and quick process. Here are the steps to follow:
1. Choose a bank: The main Georgian banks are Bank of Georgia, TBC Bank, and Liberty Bank. All offer services in English.
- Company registration certificate
- Company statutes
- Passports of directors and shareholders
- Proof of company address
3. Submit the application: You can generally start the process online, but an in-person visit to the bank will be necessary to finalize the account opening.
4. KYC verification (Know Your Customer): The bank will perform standard checks on the company and its beneficial owners.
5. Account activation: Once the verifications are complete, your account will be activated and you will receive your online banking credentials.
The complete process typically takes between 1 and 3 business days. Georgian banks offer modern banking services, including efficient online and mobile banking platforms.
Good to know:
Some Georgian banks offer multi-currency account services, which can be very useful for companies with international activities.
Future Sectors in Georgia: Where to Invest for Success
Georgia offers numerous investment opportunities in rapidly growing sectors. Here are some particularly promising areas:
Information technology: The Georgian government has made developing the IT sector a national priority. Specific tax incentives are offered to technology companies.
Tourism: With its varied landscapes, rich cultural heritage, and renowned cuisine, Georgia is experiencing rapid growth in its tourism sector. Investments in hospitality and tourism services are particularly encouraged.
Renewable energy: Georgia has significant potential in hydroelectric and wind energy. The government offers incentives for investments in this sector.
Agriculture and food processing: With its favorable climate conditions and fertile lands, Georgia offers excellent opportunities in organic farming and food processing.
Financial services: Georgia’s banking and financial sector is expanding rapidly, with opportunities in fintech and innovative financial services.
Logistics and transportation: Georgia’s strategic position makes it a natural logistics hub between Europe and Asia, offering opportunities in transportation and logistics.
Good to know:
The Georgian government has established special economic zones offering additional tax benefits for investments in certain priority sectors.
Recruiting in Georgia: How to Build a High-Performing Team
Recruiting in Georgia can be a major asset for your business, thanks to a skilled workforce and competitive salary costs. Here are some tips for effective recruitment:
Use local recruitment platforms: Sites like Jobs.ge or HR.ge are very popular in Georgia and will allow you to reach a wide pool of talent.
Use specialized recruitment agencies: Several international agencies are present in Georgia and can help you find the profiles you’re looking for.
Leverage professional social networks: LinkedIn is increasingly used in Georgia, especially for qualified profiles and executive positions.
Participate in job fairs: Events like the Tbilisi Job Fair are excellent opportunities to meet potential candidates.
Collaborate with local universities: Georgian universities train many qualified graduates each year. Establishing partnerships can give you access to promising young talent.
Consider remote work: Georgia has good internet infrastructure, making it possible to consider recruiting remote workers.
Remember that English proficiency is quite widespread in Georgia, especially among young graduates, which facilitates communication within international teams.
Good to know:
The average salary in Georgia is significantly lower than in Western Europe, which can allow significant savings on personnel costs while offering attractive salaries locally.
Georgia offers a dynamic and favorable business environment for international entrepreneurs. With its attractive taxation, simplified procedures, and strategic positioning, the country presents many assets for creating and developing a business. Whether you’re looking to optimize your taxation, access new markets, or benefit from a skilled workforce at competitive costs, Georgia certainly deserves your attention.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
