Branch Registration: Two Layers of Regulation
A foreign company’s branch in Georgia is two things at once: a registry object whose formation is governed by the Georgian law on entrepreneurs, and a tax presence whose decisive consequences come from the Georgian Tax Code. This page describes the second, tax layer: registering a branch is a choice in favour of a permanent establishment, and that choice directly determines the tax regime.
Note the only corporate-law difference between a branch and a representative office is drawn by the law on entrepreneurs — a branch conducts trading operations, a representative office does not. In tax terms the result is identical: the Tax Code treats both as a permanent establishment.
Permanent Establishment: the Branch as Tax Activation
Under Article 29 of the Tax Code, a permanent establishment of a foreign enterprise in Georgia is a defined place through which the enterprise carries on economic activity in Georgia, in whole or in part. A permanent establishment is equated with the place of management of the foreign enterprise, its branch, representative office, division, bureau, office, agency, workshop, mine, quarry or any other place of its activity — opening a branch thus directly creates a permanent establishment.
The same article equates a construction site, installation or assembly object and related supervisory activity, and a rig or vessel used for the exploration of natural resources, with a permanent establishment; a permanent base through which a non-resident individual carries on economic activity is likewise equated with a permanent establishment. In addition, the management of the enterprise by another person in its name for more than 3 months is also deemed a permanent establishment, subject to statutory exceptions. A permanent establishment is considered to arise from the moment of its registration, the delegation of relevant powers to it, or the commencement of its representative activity.
The negative list matters as well: mere ownership of securities, capital shares or immovable property in Georgia, mere control, or the secondment of employees to another enterprise does not create a permanent establishment. Nor does an establishment used solely for the storage, display or stocking of goods, for purchasing goods or collecting information, or for preparatory or auxiliary activity. A portfolio investor does not need a branch for tax purposes; an operating business does.
A separate carve-out concerns the oil and gas sector: the provisions of the first and second parts of Article 29 do not apply to the provision of services by non-resident sub-contractors during operations defined by the Law of Georgia on Oil and Gas, so the tax standing of a sub-contractor serving that segment is not assessed under the general test. The exclusive-use list is equally specific: an establishment used solely for the preparation or signing of contracts connected with loans, the supply of goods or technical maintenance does not belong to a permanent establishment, and any combination of the listed activity types remains in the same regime.