Register Individual Entrepreneur Georgia
What are the benefits?
- Tax regimes of 1% or even 0%
- No restrictions on citizenship or residency status
- Simple setup and administration
- Remote formation is an option
- Easier access to banking services
Sole proprietorship (SP), or Individual Entrepreneurship (IE) is the simplest and easiest form of business form available in Georgia. It is especially attractive for freelancers and expats, as tax benefits available for Small Business Status companies are solely granted to IEs, and no extra covenants are derived from this status.
Essentially, IE status is just allowing a person the opportunity to do business. IEs can engage in whatever type and quantity of operations they want, recruit workers, and even operate under a name different than the owner’s.
The one important downside of this business is that the personal assets of an individual entrepreneur are not separated from his or her business. Another drawback is that ownership of the business cannot be shared, and no formal directors can be appointed.
Furthermore, and crucially, IE can be from anywhere; citizenship and residence status are not a limitation in this welcoming country.
Simply put, registering IE in Georgia provides the following benefits:
- Procedures for registration that are even simpler and lighter (Compared to LLC)
- Reduced administrative, bureaucratic, and tax-reporting burden (Including bookkeeping and external reporting)
- No restrictions on the quantity or type of business operations (Except a couple of specific sectors, given below)
- Access to Micro Business Status (annual revenue of 30,000) – A 0% income tax rate (This status comes with limitations, such as the inability to recruit staff)
- Access to Small Business Status (annual revenue of 500,000 GEL) – A 1% tax rate (rather than 20%)
- A far more simply accessible Georgian bank account is another benefit of registering as an IE – While the chances of opening an account and successfully passing KYC questions are never 100%, for IEs, these chances are close to that. Fintech solutions that are available to LLCs are also available to IEs. More information about bank accounts may be found here.
- Easy liquidation – Even losing your IE status is simple. All you need to do is submit documentation for terminating IE status to the Public Service Hall, and if no creditors are present, the revenue service will conduct a swift tax audit, and the registration will be canceled within one working day.
Opening bank accounts for IEs, especially in case of non-residents is easier (Compared to LLCs, not on an absolute scale). Having a bank account is not mandatory for IE if he or she is not required to register as a VAT taxpayer (effectively meaning annual turnover over 100,000). In any regard, having a bank account is preferable for paying taxes and maintaining daily comfort.
With merely a Power of Attorney, we can create a company and a bank account within a week.
With our assistance, opening an individual entrepreneur (IE) remotely in Georgia has become incredibly easy and beneficial. You no longer need to ask yourself questions like “how to open an IE in Georgia for a non-resident” or “what is required for an IE in Georgia for foreigners.” We offer a complete support package for those who want to register an IE in Georgia.
Open an IE in Georgia
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How to Register as an Individual Entrepreneur in Georgia?
The registration procedure is simple. It must be completed at Public Service Hall and normally takes one business day. The application must be filed in Georgian (with any translations being legally translated) and must include:
- Name
- A person’s identification number (Non-resident of Georgia will be assigned a nine digit number)
- Date
- Georgian phone number
- Email address
- A legal address (If the applicant does not own a property in Georgia, a notarial consent from an owner is required to register at a certain address)
The registration can be completed remotely using a power of attorney. In this situation, extra documents will be necessary, including a notarized copy of the passport and the power of attorney itself (Legally translated).
After registering as an IE, you have to apply for Small Business Status at the Revenue Service office or through their online portal.
If you are only visiting Georgia for registration purposes, you should plan on staying for 2-3 days.
Individual Entrepreneur Registration in Georgia is Easy
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Small Business Status
According to our experience, the key advantage of registering an IE in Georgia is the low tax rate of 1% coming with the status of Small business (SBS). Before getting into the specifics of this regime, it should be emphasized that it is not available to certain businesses (Since they are either part of their own tax regimes or are not deemed commercial activity for Georgian tax purposes).
It has to be noted that in the absence of Small Business Status (SBS), the legal form of Individual Entrepreneur (IE) loses much of its appeal, as the so-called Estonian model of taxation, which defers profit taxes until they are distributed as dividends, is not applicable to IEs. Instead, IEs are required to pay 20% of their profits each year, along with any necessary advances. Consequently, if SBS is not available to a business, the benefits of the IE legal form are significantly diminished, with the exception of the convenience of opening a bank account. As a result, the Limited Liability Company (LLC) emerges as the clear winner for such businesses.
IEs can obtain SBS certificates for specific activities while also engaging in regular non-SBS activities. It is even possible for an IE to have two SBS certificates, although it should be noted that the turnover from both SBS activities is combined and counted against a single yearly limit of 500,000 GEL.
As a result, the following activities are not available for IE with SBS:
- Beauty salons
- Art
- Vehicle repair services
- Medical services
- Architectural services
- Legal assistance, advocacy
- Notary and auditory services
- Agricultural or forestry activity
- Financial services
- Tax and legal consulting
- FOREX transactions
- Gambling
- Activities requiring special license
- Manufacturing of excise goods
Small business status can be obtained on the same day as registration; however, the tax regime becomes effective on the first day of the month following registration.
SBS can be terminated if an entrepreneur requests it, or if yearly income surpasses 500,000 in two consecutive years functioning with SBS status.
The taxes procedure is simple: the company submits monthly statements until the 15th of the month and pays a 1% rate on turnover (Not on profits). If yearly turnover surpasses 500,000, the tax rate rises to 3% from the month the limit was surpassed until the end of the year. From the next year (if the condition of not exceeding the 500,000 limit for two consecutive years is not broken) – the tax rate returns to 1%.
IE with SBS still pays additional taxes, such as 20% income tax on employee salary and 18% VAT. To be more specific, VAT will be paid if:
- The company is VAT Registered (either willingly or mandatorily by surpassing VATable turnover of 100,000 GEL per year)
- And the company has VATable revenue – typically sales derived on Georgian territory (Excluding Free Zones). More information on VAT may be found here. * Please keep in mind that exports and services to overseas firms are not VATable turnover, whereas services to foreign persons are (with limited exclusions).
It is important to remember that a person’s specific types of income are not regarded a tax base for IE/SBS purposes (as they are taxed on their own), and they neither give rise to the 1% rate, and nor alter the 500,000-turnover limit. These are the types:
- Salary
- Income from property leasing
- Interest or income from loans
- Royalties
- Dividends
- Gifts
- Profit from gambling
- Earnings from selling capital assets, such as property, vehicles, securities or partner shares.
- Inheritance
- Debt forgiveness
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