Representative Office Setup

Introduction: What is Representative Office Setup?

A Representative Office is a subdivision of a foreign company whose primary function is to represent the interests of the parent company, conduct market research, marketing, and establish contacts, without engaging in direct commercial (profit-generating) activities. In Georgia, there is no strict legal distinction between a "Branch" and a "Representative Office" at the registration level (both are registered as a branch of a foreign enterprise), but the functional and tax differences are significant. A Representative Office is ideal for companies that want to establish a physical presence in Georgia, have an office and staff, but do not plan to generate sales or revenue locally. This is a "preparatory stage" or auxiliary structure.

What Does This Service Cover?

Setting up a Representative Office requires a specific approach:

• Selection of Legal Form: Consulting on how to register the entity to best match the non-commercial nature of a "Representative Office."
• Registry Registration: Registering the branch of a foreign enterprise with specific clauses regarding the scope of activity.
• Determination of Tax Status: Communicating with the Revenue Service to determine whether the representative office constitutes a "Permanent Establishment" for corporate income tax purposes.
• Office and Staff Legalization: Registering a legal address and signing employment contracts with local staff.
• Account Opening: Opening a bank account to fund expenses.

Common Real-World Scenarios

The Representative Office format is chosen by:

• Airlines: A foreign airline opens an office for ticket booking and customer support, while main transactions occur abroad.
• International Donors and NGOs: Organizations engaged in grant-giving or project monitoring.
• Pharmaceutical Companies: Marketing offices that promote medicines to doctors but do not sell drugs (sales are handled by distributors).
• IT and R&D Centers: A group conducting research or programming for the head office (Cost Center model).

Georgian Legal Framework

Registration relies on the Law on Entrepreneurs. The main regulations come from the Tax Code. Specifically, the Code defines "Permanent Establishment." If the office performs only "preparatory or auxiliary" activities (e.g., storage of goods, information gathering), it may not be considered a Permanent Establishment and may not be subject to corporate income tax in Georgia (depending on the Double Taxation Treaty). Branches of non-entrepreneurial legal entities (NGOs) are registered in the respective registry.

Service Process

The Legal.ge team ensures a full cycle:

1. Analysis: Studying the nature of activities to assess tax risks.
2. Documentation: Legalization and translation of parent company documents.
3. Registration: Formal registration at the Public Registry.
4. Tax Consultation: Selecting the right tax regime (e.g., reverse charge VAT, payroll tax).

Why Use Legal.ge?

When opening a Representative Office, the key is not just the registration act, but the correct tax positioning. If you misdefine the activity, you may be liable for corporate income tax you didn't expect. Legal.ge lawyers and tax consultants will help you precisely draw the line between commercial and auxiliary activities so that your office functions efficiently and safely.