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SaaS Compliance

Do I need Virtual Zone status?

If you export IT services from Georgia, this status allows you to pay 0% Corporate Income Tax, which is highly beneficial.

How to handle VAT for EU customers?

SaaS sales to EU consumers usually require VAT registration in the EU (via OSS scheme). B2B sales often use the reverse charge mechanism.

Are click-wrap agreements legal?

Yes, clicking "I Agree" is legally binding in Georgia and internationally, provided the terms were reasonably accessible.

Who owns the code written by freelancers?

Unless stated otherwise in a contract, the freelancer might retain moral rights. You need a robust Work for Hire agreement to ensure full transfer.

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SaaS (Software as a Service) business is becoming increasingly popular in Georgia, driven by favorable tax regimes (e.g., "Virtual Zone Person" or "International Company" status). However, SaaS companies have specific legal needs as they operate in a global market and process large amounts of data. Compliance involves not only local legislation but also international standards (such as GDPR in Europe or CCPA in the US). A typical SaaS product requires clear Terms of Service, a Privacy Policy, a Service Level Agreement (SLA), and intellectual property protection. Any flaw in these documents can mean disputes with clients, data breach fines, or loss of investors.

What does the SaaS Compliance service cover?

Our service ensures full legal setup for SaaS businesses:

  • Tax Optimization: Obtaining and maintaining "Virtual Zone Person" or "International Company" status (0% corporate tax, 5% dividend tax).
  • Legal Documentation: Drafting EULA (End User License Agreement), Terms of Service, Privacy Policy, and SLA.
  • Data Protection (GDPR Compliance): Auditing and preparing documentation to serve European clients, considering GDPR requirements.
  • Intellectual Property: Registering copyright on code and signing IP transfer agreements with developers.
  • Payments and Subscription Model: Legally regulating recurring payments and subscription terms.

Common Scenarios and Needs

SaaS companies often face these issues: Global Sales: A company from Georgia sells software in Europe. Need to clarify VAT issues in EU countries (MOSS). Data Localization: Servers are in the US, clients in Europe. How to comply with cross-border data transfer rules? Code Ownership: A freelancer wrote part of the code and now claims rights to it. Downtime: A client demands damages due to server outage. The SLA must protect the company from excessive liability.

Georgian Legislation and Regulations

SaaS business is regulated by the Civil Code of Georgia (contract law), the Tax Code (special statuses), and the Law on Personal Data Protection. Regarding intellectual property, the Law on Copyright and Related Rights applies. When entering the international market, the EU's GDPR (General Data Protection Regulation) is crucial.

Step-by-Step Process

The process begins with obtaining tax status (if eligible). Lawyers then create the site/app legal package (Terms, Privacy). Special attention is paid to the user registration process (Click-wrap agreements). Concurrently, contracts with developers are revised to ensure the code fully belongs to the company.

Why Legal.ge?

IT law is specific and requires technology knowledge. Legal.ge offers lawyers who understand the SaaS business model, Cloud technologies, and global regulations. We will help you leverage Georgia's tax incentives and safely sell your product worldwide. Build a global startup with Legal.ge.

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