Georgia is an interesting country for nomads due to its free economy mindset (despite being relatively poor country) low taxes, simple regulations, low bureaucracy and easy to set up things, especially banking.
The Small Business legal figure in Georgia apparently applies 1% income corporate taxes for the first $171k profit, and then 3% for the exceeding profit, which sounds too great to be true.
After talking with a lawyer in Georgia, it seems Small Business cannot provide certain types of services, such as consulting, which is what would make it very interesting for nomads that provide different consulting digital services to foreign companies and get paid through this legal figure in Georgia with a very low tax burden.
Iām curious if anyone here knows someone, local or expat, operating with a Small Business structure from Georgia providing services to foreign companies.
For nomads, I found this site to be quite useful about taxes across countries:
It said that itās 1% for micro-businesses, and those are the ones that do not make more than 30k GEL (10.4k USD) a year.
Small business pays 3-5% and their threshold is 100k GEL.
Hi. There are various legal arrangements possible in Georgia. a) One is registration of your Georgian company in a Tax Free Zone. The result is 100% corporate tax free for all income earned outside Georgia. Tax free to the Georgian resident shareholder as well. b) Virtual Person Status from Ministry fo Finance. 100% tax free for foreign sourced income generated from ICT related activities. Tax free to the shareholder as well. I have not looked into it but many sites say Georgia is territorial taxation and so all foreign sourced income is simply tax exempt. So obtaining a special tax free status or registration in a Free Zone may simply not be necessary. Beware the Revenue Service simply deducting tax from your Georgian corporate bank account as Revenue staff have little knowledge of tax free company status, and will deduct tax when they think it is due. For example, if your account receives a payment from a foreign buyer then the Revenue might deduct what they think is the applicable tax (as if it was a local business and not tax exempt). Yes, in Georgia the Revenue Service has full access to your bank accounts.
An example of a company offering to help set up in a Georgia free zone, but I can connect direct to the Free Zone we use if you are a serious candidate for free zone registration. https://www.freetradezone.ge
Hey, I see your user name includes āCoderā. What kind of coding do you do? Also, Georgia offers an alternative 100% tax free arrangement for companies doing ICT for export. Its like a virtual tax free zone status. You do not need to go to the expense of registering your company in a tax free zone to be awarded the virtual zone status.
tab Tom, yes we are set up in Georgia but not under the small business model. we operate free zone companies with Virtual IT Zone status. One comment based on experience: It is not easy to get an accurate answer to any business structure, tax or residency related question without going direct to the applicable government agency and then making certain the person you are talking with there understands your question correctly and checks they are offering you the correct answer. I have found very few law or accounting professionals in Georgia that understand all the law and rules as they apply to foreign persons setting up in Georgia under special tax arrangements. This is simply because that is outside the scope of their day to day practice. Similarly, often advice from advocates of relocating to Georgia based on short visits can be found to be superficial. Its easy to say a Virtual Zone Status company is 100% tax free, but then when you look deeper there is 5% withholding tax. Since setting up here 3 years ago we find its best to go direct to the relevant agency with your questions, accompanied by a native Georgian speaker who understands what you are seeking to know or confirm, and then you can expect clear answers based on your circumstances. It is my opinion that Georgia will increasingly demand proof of substance in Georgia to maintain company tax residency and business banking accounts. This is happening everywhere now. Georgia remains a great option for those who are willing to put the substance in place in Georgia.
Iāve had two consultations with local law/tax agencies and have very mixed feelings about the āSmall Businessā status.
The main concern Iāve heard from the first advisor I had a call with, was that my current contract with the employer is having the words āConsultantā in them. On the other hand the second advisor said as long as I invoice every month with a specific title on the invoice that follows my āsoftware developerā contractor reality I should be fine.
The other unknown Iām still exploring is running the small business after leaving the country. I only plan to stay there half a year at most and would love to keep the tax residency and pay the 1% tax there. The first advisor said itās categorically not possible as the business has to be conducted form Georgia the other one saw no problem of keeping paying 1% tax while working from outside Georgia.
Nevertheless, I plan to move to Tbilisi in last May or so and explore the countries offerings first hand. Would love to know if anybody has a reliable local tax lawyer and accountant to talk through tax residency/taxation concerns
We operate a software business out of Georgia for more than 3 years. We use Free Zone and Virtual IT Zone status. I am not sure if I can give the name of our accountant here in this group - but she is very good. You can PM me for her details. She has extensive experience supporting foreigners in Georgia.
Hi naz,
I am wondering if you did move to Georgia in May and how that is coming along. I am also interested in the 1% Small Business option for the translation services I provide my client, and also as a gateway to my investments, if that doesnāt clash with the company requirements. Thanks in advance if you can find the time to give me some feedback.
Miguel
You can check out the website of expathub in ge - they offer a first free phone consultation and have free informative articles on their website about the small business options and the rules to qualify in Georgia. Most georgia programs have specific requirements that are sometimes not obvious but advisors like expathub cover the essentials quite clearly.
Wouldnāt the UAE be preferable to Georgia? Nothing against Georgia; Andrew Henderson, the āNomad Capitalistā, often recommends the country. But it seems the UAE would offer more certainties about what you can expect with regards to taxation.
After more than 25 years in multiple countries living the so called āoffshoreā life and working in all of them, these days I have very low to zero confidence in most of the offshore experts you can quickly find online promoting this country or that country they visited briefly or intermittently. The truth about any country as a viable option for any specific individual is far more complex and requires guidance from locally based people who really have lived and worked out of that jurisdiction for at least several years preferably doing what you want to do there work wise. After about 4 years full time living in Georgia, and after having a fully active company here for 6 years, now I would feel I have had enough real experience and earned the right to offer some guidance about Georgia ā¦ but not before going through all that in-depth learning experience. Sorry for the rambling, but just some background about my personal views :).
Itās easy to find the basic differences between UAE and Georgia online like environment (desert and high rises vs forests and lower key lower development and much lower costs), etc.
Georgia is quite certain from a tax perspective as long as you play it conservatively with your business, follow the rules, have an accountant who is very experienced supporting foreigners, and as long as you are not investing heavily locally like buying properties etc. Nothing new in those commentsā¦ its pretty much standard advice for anyone who is thinking about working in any jurisdiction that they do not know really well themselves.
I would say Georgia is great if you can work with a light footprint in Georgia, if you first get solid advice based on many years real experience on how to operate here conservatively within their rules, and if your business can be pretty easily relocated (for example if it is ecommerce based), if the desire or need every arose. That scenario matches many digital nomads and small business ecommerce operators. If on the other hand you need to develop a larger footprint in your chosen country then that is a far more risky undertaking in any country you do not know personally very well, and I would suggest other countries would be more reliable than Georgia for that kind of heavier, longer term and more immoveable investment.
