In Georgia there are many different types of business structures; one of the most popular is an LLC, largely due to the lower risk of having limited liability. Compared to a sole proprietorship, operating an LLC is less risky and compared to other types of corporations, it is easier to set up and manage.
- Limited Liability means you will not be personally liable for debts if the company goes bankrupt or is sued.
- Zero capital investment required to open an LLC.
- One or more directors can own an LLC.
- Directors do not have to be Georgian residents or even visit Georgia to open an LLC.
- Employees can be from Georgia or elsewhere.
- Company profits are not taxed until they are distributed to shareholders (and not taxed at all when distributed to a Georgian entity which is a parent company of the LLC).
- Some IT sector LLCs can qualify for the virtual zone (0% VAT, 0% Corporate Tax, 5% Dividend Withholding Tax).
- You won’t qualify for a special tax status like the Small Business Status (1% tax on gross turnover).
- Accounting / bookkeeping requirements are slightly more complicated than for Individual Entrepreneurs with Small Business Status.
- 0% Corporate Income Tax on profits that are reinvested or remain in the company
- 15% Corporate Income Tax – at time of distribution of profits
- 5% Personal Dividend Tax – at time of distribution of profits
- 0% Dividend Tax when distributed to other legal entities in Georgia
- 20% tax on employee salaries (If employees are Georgian permanent residents or citizens, additional 2%+2% for pensions)
- 18% VAT if gross VATable turnover exceeds 100,000 GEL in any 12 month period
