For any entrepreneur deciding to open an IT business abroad, the first thing to consider is the location for registering the future company. There are many countries worldwide offering attractive conditions for conducting business in the field of information technology. In recent years, one of the comfortable places for those wishing to open an IT company is Georgia. Situated at the crossroads of East and West, this country actively practices a policy of attracting foreign investors to develop the IT sector in the local economy. Special economic zones have been established in its territory, ensuring dynamic business growth and innovative potential. But most importantly, registering an IT company in Georgia allows you to benefit from low tax rates and attractive incentives.

 

Lawrange Attorneys Association offers to open a company in this jurisdiction with the support of experienced lawyers. With our assistance, you will be able to save a significant amount of your own time. We can register an IT company on your behalf under a power of attorney in a short time frame. Our lawyers are well acquainted with the specifics of local legislation and the nuances of the registration process. If you want to register an IT company in Georgia and avoid paperwork, bureaucratic hurdles, unforeseen “pitfalls,” and unnecessary worries, then the professional assistance of Lawrange AA will be extremely beneficial.

 

Ways to Develop IT Business in Georgia

In this country, special industrial, virtual zones, and the status of an international company serve as important tools for supporting and developing any business activity.

 

Territorial Free Industrial Zones (FIZ)

In Georgia, several FIZs operate, providing optimal conditions for entrepreneurship. Registration in a free economic zone allows companies to benefit from special preferential regimes as well as tax, customs, and other advantages. For example, lower electricity tariffs are set here, there are no restrictions on foreign ownership of the company, and so on. Thanks to territorial FIZs, the local government stimulates investments, develops the economy, and creates jobs.

 

FIZs are equipped with modern infrastructure, significantly facilitating business operations, including information technology. In such zones, there is a simplified registration regime; you can create a company literally within 1-2 days from the submission of the relevant application. For IT companies, access to innovations and technologies is critical. Therefore, by registering a company in a Georgian FIZ, an entrepreneur can take a strategically important step towards the successful establishment of their business.

 

Virtual IT Zones

The updated format of FIZ was created specifically for the development of IT businesses. It allows companies to work remotely without being tied to any specific territory (but a physical office in Georgia is required). In other words, if you decide to register an IT company in the Virtual Zone of Georgia, it will ultimately receive a special status as a virtual zone entity (VZP). With this status, the company will be exempt from corporate income tax for those types of IT activities specified in the legislation. In particular, this refers to the creation of software products. Companies should ensure that corporate payments have foreign origins to qualify for tax exemptions.

 

International Company Status

Foreign enterprises engaged in permitted types of IT activities (the list is more extensive than for VZP) can apply for this status. For example, a company can engage not only in software development but also in:

 

  • Computer programming.
  • Consulting and related activities.
  • Website development.
  • Web hosting.
  • Remote software maintenance, etc.

 

One of the conditions for obtaining international company status is having at least 2 years of IT experience and a physical presence in Georgia.

 

Features and Advantages of Georgia for IT Business

While this country is not a global IT hub, it is successfully moving in that direction. Each year, the number of new startups increases, prestigious competitions are held, and Georgian developers are actively recruited by large enterprises, including international IT companies. This, along with an open migration policy and free access to the global IT market, confirms that Georgia indeed provides excellent conditions for conducting business in information technology. Additionally, several other significant advantages can be highlighted.

 

Ease of Registration

Opening an IT company in Georgia can be done within a day in some cases or even on the day of application. If an international company is registered, the process may take around 10 days, which, by global standards, is considered quite efficient. The application fee for registration is around $65. This fact has allowed Georgia to rank 2nd in the world for ease of registration and doing business (according to the Doing Business rating).

 

Minimal Requirements for IT Companies

To establish a legal entity, it is sufficient to pay a minimum share capital of 1 lari and:

 

  • Prepare a minimum set of documents.
  • Register the business remotely.

 

At the same time, it is not necessary to have residents of Georgia on the company’s staff.

 

Opportunity to Reduce Tax Burden

This is facilitated by the leniency of the Georgian tax system, which operates on the “Estonian model,” allowing for savings on corporate income tax. Georgia is also attractive to entrepreneurs due to the availability of various tax statuses that can successfully optimize the tax burden, including Virtual Zone Entities and International Companies. Additionally, tax audits are conducted here as planned, without suddenness, and without pressure from the Regulator.

 

Other Advantages

  • Availability of a special environment for the more comfortable development of IT businesses.
  • Government support for entrepreneurs operating in the IT sector, including access to free consultations from government agencies.
  • Inexpensive banking services, full cooperation of banks with the Paypal system.
  • Absence of currency control, the ability to quickly conduct transactions in all major world currencies.
  • No need to obtain a license to carry out IT activities.

 

International auditors note the high stability of Georgia’s tax and corporate legislation and give optimistic forecasts regarding the sovereign rating of this country, which increases the global community’s trust in this jurisdiction, making it more attractive to foreign investors.

 

Note! Georgia does not participate in the automatic data exchange system between tax authorities of different countries. For this reason, local banks can ensure the highest level of confidentiality for their clients.

 

Features and Benefits of Preferential Regimes

In Georgia, IT companies can choose between two preferential regimes: VZP or International Company. Each entails certain preferences and the opportunity to use specific conditions for successful business development in information technology.

 

Features of VZP

The virtual zone entity regime can only be applied to IT businesses exporting services and products beyond Georgia’s borders. The main legislative document regulating such activities is the “Law on Information Technology.” Thus, obtaining VZP is most beneficial for entrepreneurs who plan to acquire clients internationally or already have an established customer base abroad.

 

Regarding VZP, the following taxes do not apply:

 

  • Corporate income tax.
  • VAT.
  • Export duties.

 

At the same time, virtual zone entities are required to pay into the Georgian treasury:

 

  • Dividend tax to shareholders – 5%.
  • Payroll taxes and contributions to the Pension Fund (if there are resident Georgian employees).

 

In addition to the requirement to carry out specific types of activities, VZP demands that companies demonstrate economic presence in Georgia (substance) by providing the Regulator with documents confirming office leases and staffing schedules.

 

Important! A nominal address, director, and development team located outside the country are considered serious violations of the law. At a minimum, the entrepreneur risks losing VZP status. Moreover, to obtain and maintain it, it is necessary to demonstrate that employees have the relevant experience.

 

Features of an International Company

The status of an international company allows for conducting IT business in a wide range of directions (more extensive than for VZP). Government Resolution No. 619 of 2020 defines the full list of permitted activities. Additionally, an international company can engage in unrelated activities, but in such cases, the income obtained should not exceed 2% of the enterprise’s total annual profit.

 

The main feature distinguishing the status of an international company from a virtual zone entity is the requirement to have a minimum of 2 years of experience in the IT field. Government Resolution No. 619 of 2020 specifies that this requirement applies to:

Order a consultation

 

  • A Georgian company.
  • Corporate shareholders owning at least 50% of the company’s shares.
  • A branch – a representative of a non-resident company.

 

Proof of experience in the IT field includes recommendation letters, copies of contracts, and data from the company’s website. An international company is also required to have a physical presence in Georgia. Moreover, its activities are subject to corporate income tax.

 

Application for the Desired Status for Your IT Company

Registering a company in Georgia is generally characterized by simplicity and promptness. However, this process varies slightly depending on whether you intend to register the enterprise as a VZE or an international company. The common stages of registration include:

 

  • Choosing the legal form of organization – among the most popular legal forms in Georgia for foreigners are LLC (equivalent to LLC) and JSC (equivalent to JSC).
  • Choosing a name – it is important to ensure uniqueness and relevance to the company’s activities.
  • Collecting a set of documents – passport details of the founders, copies of founding documents, certificate of office registration, and other documents confirming the legality of the activities.

 

Registration of VZP Status

The application for obtaining the status of a Virtual Zone Person (VZP) is submitted online through the Revenue Service. The request must be submitted in Georgian. All necessary documents must be attached to the application. The assignment of VZP status is carried out within 10 days from the date of application submission. Within 2 days, a Certificate of Assignment of the corresponding status is issued online. However, its validity is limited.

 

Registration of an International Company

The application for registration should also be submitted to the Revenue Service. However, the process of consideration and approval is somewhat more complex than in the previous case. The Revenue Service examines the application within 10 days. Upon its approval, the application undergoes a review stage by the Ministry of Finance, which can take up to 3 months. Once the Ministry of Finance issues a positive verdict on your application, the Government of Georgia issues a decree assigning the status of an International Company to your enterprise.

 

Opening a Corporate Account

Working with local banks will enable your business to function fully and legally. When choosing a suitable banking institution, the following factors should be taken into account:

 

  • Bank specialization: It is recommended to choose institutions that have experience in serving IT enterprises. Typically, they have a full set of useful tools specifically for businesses in the field of information technology.
  • Range of virtual services provided: You should have access to efficient, user-friendly online services that allow you to manage your account and financial transactions remotely.
  • Minimum balance requirements: Pay attention to this fact to avoid problems with maintaining the necessary balance in the future.
  • Tariffs, commission fees for account maintenance, and conducting transactions.
  • Ability to use international transfer functionality.

 

It is worth noting that Georgian banks willingly practice opening accounts for non-residents while ensuring a high level of confidentiality. To open an account, you need to provide a small package of documents:

 

  • Charter, protocol on the establishment of the enterprise, and other founding documents.
  • Information about beneficiaries.
  • Business plan.

 

In most cases, it is possible to open an account in Georgia remotely; however, be prepared because the chosen bank may require the applicant’s personal presence. Overall, the procedure may take up to 5-7 days.

 

Important! Establishing a VZP enterprise does not require the mandatory presence of a resident director and local staff in Georgia.

 

Financial Reporting for IT Companies

In the case of registration in a special virtual zone, the enterprise is obligated to maintain financial reporting according to special requirements (due to the absence of corporate income tax and VAT):

 

  • Providing financial statements – this includes information on the balance sheet, movement of financial funds, etc.
  • Compliance with international reporting standards.
  • Regular submission of reports to tax authorities.

 

The specificity of tax and accounting conditions in special zones can pose a significant challenge for unprepared entrepreneurs. To avoid any tax risks, it is recommended that entrepreneurs use the services of professionals in the fields of law and accounting.

 

Why Choose Lawrange

It is worth seeking our support to open an IT firm in Georgia smoothly and with minimal time investment. A professional approach to resolving issues related to company registration and obtaining the necessary status will help avoid unnecessary errors and associated additional costs. Our team’s multi-year experience will allow you to successfully navigate the entire registration process, ensuring that the start of your IT business in Georgia is quick and easy.

 

Lawyers and legal experts at Lawrange, as part of working on your project, will help:

 

  • Choose the most suitable organizational and legal form and preferential status.
  • Conduct analysis and collect necessary documents.
  • Prepare documentation in proper form in accordance with local legislation.
  • Open a corporate account.
  • Arrange work visas and tax registration for your company’s employees.
  • Draft employment contracts in accordance with applicable laws, etc.

 

If you are interested in ensuring the successful development of your IT business in Georgia, then entrust the registration process to the professionals at Lawrange. We are ready to answer all your questions; just contact us in a way that is convenient for you.

 

Conclusions

Georgia is doing everything necessary to consistently and steadily attract foreign investors to the local IT sector. Ideal conditions are created here for foreign entrepreneurs, where IT businesses can comfortably thrive and bring good profits to their owners. You can register an IT company in the virtual zone of Georgia or in the Special Industrial Zone or take advantage of the opportunity to obtain the status of an international company. Regardless of the chosen business registration method, you will enjoy many benefits and advantages. The main thing is to ensure compliance with all local legislation requirements during the company registration process. The experts at Lawrange have all the knowledge and experience necessary for the successful registration of your IT business in Georgia. Our professional legal assistance covers all aspects of the registration process. We provide a full range of legal services, including turnkey solutions.

 

FAQ

Is the physical presence of the business founder required in Georgia?

Most legally significant procedures within the registration process can occur without the personal involvement of the founder. It is necessary to issue a power of attorney to our lawyers for this purpose. In some situations, the personal involvement of the owner may be required when opening a bank account, but this matter is resolved strictly on a case-by-case basis.

 

Can a Georgian company open an account in a foreign bank?

Yes, it is possible in traditional banking institutions and online banks such as Wise, Montify, Pioneer, and others.

 

What important nuances should be considered first when registering an IT company?

The application and all documents must be submitted in Georgian. Additionally, it is important to ensure that your company has a legal address. These and other aspects can be clarified during consultations with the experts at Lawrange AA.

ORDER A REGISTRATION OF AN IT COMPANY IN GEORGIA telegram-icon Telegram bot for quick communication with us