The Sole Proprietorship in the country of Georgia is one of the best options for digital nomads. Traveling and managing an online business at the same time can be challenging, and some countries make it particularly hard.
Luckily, the Republic of Georgia aims to attract both capital and entrepreneurs and offers a particularly helpful solution. Here are eight reasons why the sole proprietorship in the country of Georgia is one of the best structures for digital nomads. At the end of the article I mention four points which few Georgian incorporators will warn you about.
1. It is very easy and quick to open
If you are in Georgia, it takes just one day to create a sole proprietorship and receive the digital incorporation certificate.
2. Very low taxes
Instead of taxing your profits, Georgia bases taxes on turnover for this structure. So this is not an appropriate structure for low margin businesses.
On up to 500,000 GEL of turnover (about $150,000 as today’s exchange rate), you pay a 1% tax on turnover, and thereafter the rate climbs to 3%. Bear in mind that you will lose access to the 1% regime if you exceed the GEL 500,000 threshold two years in a row, after which you will be taxed at 20% of profits.
Additionally, you will only pay taxes on Georgian-sourced income. So if you live abroad and your clients are from outside of Georgia, you are not liable to pay tax. However if you are a consultant and performed that work while you were in Georgia, even if your customers were abroad, then you would be liable as the tax authorities deem that the work itself was performed in Georgia.
3. Access to great banking is one of the key reasons why the sole proprietorship in the country of Georgia is one of the best structures for digital nomads
The reality is that opening an offshore company is easy. You simply pay an incorporator you found online to create a Seychelles or Belize offshore company, and inshallah you will get your incorporation documents.
Getting good banking services afterwards is a different story – good luck finding affordable and attentive banking at some precarious, overpriced Caribbean bank.
Having a Georgian structure enables you to open a business bank account in Georgia. Banks in Georgia offer great online banking, no capital controls, and if you deposit enough money a private banker as well.
4. Access to good fintech
When running a business remotely, access to good fintech is important. Georgia offers access to Paypal Business, and WIse. If you need Stripe, then Georgia is not yet an option for you. If you can do without, then it’s fine.
5. It’s possible to remotely open a sole proprietorship in Georgia
The legal team in Georgia I work with can help you open a sole proprietorship in Georgia from afar. Price start from €1000 if done remotely. You can find out more details here.
6. Generally well-accepted invoices
If you send an invoice to an EU customer with a Seychelles company, chances are your client will face obstacles to paying you. Georgian sole proprietorships generally do not have such issues. In any case, always ask your key customers before incorporating whether they, and their accountants, are comfortable with your new structure.
7. Georgia is a beautiful country
If you ever need to go to Georgia, for whatever reason, you’ll have the added benefit of being in a beautiful country with mountains, skiing, seaside, delicious food and award-winning wine. It’s also a great place to get residency. I wrote an article on the matter: “9 reasons to get residency in Georgia.“
What most online incorporators will NOT tell you about the sole-proprietorship in Georgia
- You don’t need to pay anyone for help
This point goes against my own interest, but the reality is that you do not need to use an agent to help you with any of this. You can take a flight to Georgia and do it yourself, which will cost you a few dollars. All the paperwork will be in Georgian, and you’ll need to sort out a registered address, but if you have the time, patience, and don’t mind a bit of ambiguity, you’ll be able to figure it out yourself and maybe save money in the process if you low-cost the trip.
Using my legal partners in Georgia is great for those who lack the required time and patience, or are unable to travel to Georgia. Ultimately, time is money.
2. It does not provide you with limited liability
Secondly, while the sole proprietorship in the country of Georgia is one of the best structures for digital nomads, it DOES NOT provide you with limited liability. In the event that someone wants to sue you, this structure will not shield your personal assets. This is a very important point to keep in mind. If you want liability protection, you can create a Georgian LLC (details here)
3. It does not negate your other tax obligations
I am a not a tax expert, but I must point out that paying only 1% tax in Georgia does not mean that that’s all you are supposed to pay. In most countries, if you are a tax resident there, you are expected to declare that income as well. So always speak to a professional, especially in your country of tax residency, before creating a new structure.
4. There is a 2% retirement provision on turnover
Good luck finding this information online, as barely anyone mentions it, but the reality is that on top of the taxes, you are supposed to set aside 2% of your turnover into an individual pension account as a retirement provision. This applies to Georgian residents only.
So if you are not a Georgian resident, you won’t have to deal with this. But if you ever choose to become a resident of Georgia, it will apply to you.
If you have questions, check out this page for more details and feel free to get in touch with me.
If you want to discuss your structure and all the tax implications before making a move, you can tap into my network of international tax experts. Click here to find out more about their services.
Other articles on Georgia:
- The Pros and Cons of opening a Bank Account in Tbilisi, Georgia
- The Real Estate Investment Market in Tbilisi, Georgia
- 9 Reasons to get Residency in the Republic of Georgia
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