I continue my review of traveling to the countries of the former socialist bloc in search of a convenient country for business relocation. For 2022, Georgia is one of the most attractive countries for optimizing business processes for both remote work and other forms of business.
The most popular form of business and work legalization on the territory of Georgia is the registration of a foreign citizen in the legal form of an individual entrepreneur.
Favorable factors for doing business in Georgia:
7th place in the world ranking of ease of doing business (Doing Business);
0% for turnover up to 100 thousand GEL (microbusiness status)
1% for turnover up to 500 thousand GEL per year (small business status)
There are several ways to obtain IP status in Georgia:
Remote – the simplest and most expensive. In Georgia, you can open an account and an individual entrepreneur through a trustee. There are very few countries left where something serious can be done remotely. You need to find a helping company that provides legal services, pay for its work (usually the amount is from 1000-1500 USD for a turnkey application, or ask a friend from Georgia. For remote opening, you will need a notarized copy of the international passport and a power of attorney for the process of registering you in as an individual entrepreneur.
Almost independent – simple and not very expensive. You need to be in Georgia and, with the help of a law firm or a private legal assistant, complete the registration procedure. The cost in this case is from 400USD.
Doing it yourself is easy and inexpensive.
If in the first two cases only documents and little participation are required, then in the third one you need to understand the registration process in more detail.
To open a sole proprietorship in Georgia, the following documents are required:
legal address in Georgia (issued with the owner of the rental property, according to the law, the legal address of the IP registration must match the address of your residence).
Georgian SIM card, email address not in the .ru zone
Features of the status of “small business”:
turnover or revenue up to 500 thousand GEL per year. If an individual entrepreneur’s income exceeds 500,000 GEL per year, this is not a legal basis for deprivation of the status of “small business”, provided that the income threshold of 500,000 is not exceeded for 2 consecutive years.
it is better to register by the end of the calendar month, the status of a small business begins to operate from the 1st day of the next month.
the tax period for the status of a small business is one month, the filing of a declaration and payment of tax is made monthly.
there are restrictions on the types of activities, the permitted types of activities are indicated in the Decree of the Government of Georgia No. 415 (https://matsne.gov.ge/ka/document/view/1164635?publication=0). In general terms, the status of a small business cannot be issued for the following types of entrepreneurship:
Activities requiring a license or permit.
Activities, the implementation of which requires significant capital investments (production of excisable goods).
Carrying out foreign exchange transactions.
Medical, architectural, legal or notarial, auditing, consulting (including tax) activities.
Production of excisable goods.
Registration at the House of Justice
real estate owner providing a legal address
the amount in GEL, depends on the design option.
local sim card, email address outside the .ru zone
For registration, you should arrive at the House of Justice in Tbilisi or Batumi, preferably in the morning.
It is better to arrange the provision of a legal address with the owner of the property that you rent for living, usually it costs 50-80 GEL (his personal presence is required when submitting documents).
If there is no registration address in Georgia, then the “helpers” near the House of Justice will offer help, as well as fill out the necessary paperwork. It costs about 150-200 GEL.
Then we get a coupon and pay a registration fee of about 60 GEL for registration in the usual mode, i.e. The next day and about 110 GEL, if you want to do it urgently, on the same day.
If necessary, there may be additional fees, for example, a certificate in English costs 25 GEL.
It is better to visit the House of Justice with an assistant who provides the registration address and speaks Georgian, the operators accepting documents speak English, some in Russian.
After accepting the documents for registration of IP, you should receive an SMS message about the result. The message contains the TIN and the password for access to the personal account, where there is a certificate of registration in Georgian and English. It contains the name and surname of the applicant, ID, legal address, date of registration, passport number and personal number, date of birth.
Choice of activity code
This point should be taken very seriously. During registration, no one will ask to prove the type of activity, however, during a possible check, all documents on income will be requested and analyzed.
Under Georgian law, the tax authorities have the right to challenge the “small business” status and charge taxes at a general rate of 20%. This is usually possible with a different understanding of the meaning of the codes by the entrepreneur and the tax service.
For example, an entrepreneur has chosen an IT service code, but in reality he consults clients on IT (consulting activities do not fall under the status of “small business”). In this case, the tax audit may decide to deprive the status of “small business”, as well as the accrual of fines and taxes.
Also, “work for hire” does not fall under the preferential status. All details of the relationship between an individual entrepreneur and his clients must be clearly spelled out in contracts and other documents. The actual statute of limitations for tax audits in Georgia is 3 years and 11 months.
Registration in the tax
amount about 20 GEL preferably in cash
phone with SMS from the House of Justice
After receiving SMS from the House of Justice, you need to visit the tax office. Before the visit, you should decide on the main type of activity. Codes should be looked up in the directory of international codes.
Further, you can first register on eservices.rs.ge, and then activate your account and apply for the status of a small business (the fee is about 20 GEL in cash). The regime will take effect for funds received after the 1st day of the next month from the moment of registration.
Simply put, if you register on the 20th, then only from the 1st of the next month a preferential tax of 1% will begin to operate, before that you will need to pay 20%.
Open an account for an individual entrepreneur in a bank of Georgia
Opening a bank account for an individual entrepreneur is similar to the procedure for opening an account with a bank in Georgia for an individual. The only difference is that the account is assigned the status of “business”. Optionally, you can assign the status of “business” to an account that you already have, you can open a new one.
If it is convenient, to control expenses, you can use a personal and business account, but this is not important, government agencies see the movements in all your accounts, the main thing is to pay taxes correctly and on time.
The peculiarity is that the tax base is automatically formed from all funds received on the IP business account. With third-party receipts for personal physical. the account may have questions from the tax authorities. You can receive personal payments to a personal account so that they are not included in the amount for tax purposes.
Accounting, taxes, declarations.
Reporting and payment of tax is carried out via the Internet. If you are a mixed business, you should bring in an accountant for the first filing, or if you received income prior to becoming a small business.
In the case when the receipt of income is stable from a legal point of view, you can take the advice of an accountant who will show you how to fill out monthly declarations and pay taxes. If you speak English, you can figure it out yourself.
The filing of a tax return is carried out on the website of the tax office in your personal account. Payment of tax in the application of your bank or from the site of the tax. Declaration and payment of tax by the 15th day of the next month after the reporting month.
In case of downtime and lack of cash receipts, you can check the temporary suspension of activities, but a zero declaration is submitted as usual.
More on the topic:
How to open a sole proprietorship and LLC in Armenia in 2022?