Registration of
offshore companies
IT company in a virtual zone in Georgia

Georgia: opening an IT company in a virtual zone

24. 02. 2023

Opening a company in the virtual zone of Georgia is nothing but getting a special tax status for software developers and some other firms that work in the IT sphere. The company that gets it has the right not to pay corporate tax, VAT. The benefits affect only goods/services provided to foreigners outside the country.

Advantages of a virtual zone

Georgia is interested in foreign investment, so it creates favorable conditions for IT companies that will work inside the country. In order to stimulate the economy, the government carried out a number of reforms, which put Georgia on the list of the best countries in terms of ease of doing business.

Among the interesting projects is the registration of an IT company in the virtual zone. The advantages:

  • The corporate fee is 0%. If the company works with Georgian clients and receives incomes from inside the country, only the incomes from the local sources are taxed: the corporate tax is 15% and VAT is 18%.
  • VAT is 0%. Requirements include withholding and payment of income tax from the salaries of Georgian employees.
  • Tax on distributed dividends is 5%.

Who can register in the virtual zone

Previously, freelancers, as well as companies involved in IT consulting, Internet marketing, e-commerce, and cryptocurrency could get the status. Now the rules have been tightened up, and the status is mostly given to software developers. This clause is not in the requirements, but in practice applications from other spheres of IT-business are often rejected. They are better to obtain the status of an international company (ICS), which also provides many benefits.

Thus, an IT-company that is engaged in software development can register in the virtual zone. It must meet these requirements:

  • Open a limited liability company in Georgia.
  • It must be able to work with clients located outside the country. It is allowed to work with local clients, but the taxes will be at the regular rates.
  • Rent a physical office where Georgian employees must work.
  • Have a Georgian phone number and a local bank account.

Although Georgia laws do not require hiring local staff, the application will be rejected if there are no local IT people on the team. The same goes for a physical office. There is no requirement for its presence, but you will not get the status if there is no headquarters in the country. Not only that, the office must have the equipment necessary to carry out IT activities.

How to apply for status

You can apply for registration in the virtual zone immediately after the registration of the LLC. This firm of activity is advantageous in that it has no capital requirements and no annual fees. Registering a company in Georgia in 2023 is fast - no more than a week if all the documents are prepared correctly.

Important: All documents must be in Georgian language. Any mistake can be a reason for refusal, so it is important to fill out the paperwork correctly. In order to reduce the risk of mistakes, it is recommended to contact our specialists.

You can apply for the status online. The regulator considers the task for about a month. Then it may ask to provide additional evidence of your activities, explain the company's tasks, its features, show contracts with local staff, etc. Consideration of additional documents may also take a month.

How to open a business in a virtual zone fast

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