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Cross-Border NGO Operations

Can a foreign NGO operate in Georgia without registering a branch?

A foreign NGO can conduct limited activities without a branch, but having a permanent establishment (branch) is recommended for hiring staff, opening bank accounts, and receiving local grants. Operating without registration may lead to tax complications (creating a "permanent establishment" for tax purposes anyway) and difficulties in signing contracts. We advise on the best structure based on your project duration.

What is "Reverse Charge VAT" and does it apply to NGOs?

Yes, NGOs are not exempt from Reverse Charge VAT. If a Georgian NGO purchases services from a non-resident entity (e.g., foreign consultants, software licenses), it must self-assess and pay 18% VAT to the Georgian budget, even if the NGO is not VAT registered. Failure to pay this is a common compliance issue we help resolve.

How do we handle taxes for international staff working in Georgia?

If international staff stay in Georgia for more than 183 days in a 12-month period, they become tax residents and their worldwide income (or Georgian-sourced income) becomes taxable here. NGOs must handle payroll taxes (20% income tax + 2% pension) correctly. Double Taxation Treaties may exempt short-term experts, which we analyze case-by-case.

Can we transfer grant funds to a partner organization abroad?

Yes, but this requires careful documentation to avoid it being treated as a taxable expense or profit distribution. You need a sub-grant agreement and proof that the funds are used for charitable purposes. Additionally, banking compliance (AML) will require detailed explanation of the cross-border transfer purpose.

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Cross-border NGO operations involve an organization operating in multiple jurisdictions simultaneously. This could be a Georgian NGO implementing a project abroad, or a foreign NGO conducting activities in Georgia without opening a full branch. In the context of globalization, humanitarian and human rights missions often cross borders, giving rise to complex legal conflicts: Which country's laws apply to employment contracts? Where does the organization pay taxes? How is the cross-border movement of funds regulated? Answering these questions requires deep knowledge of private international law and local regulations.

The cross-border operations service covers legal support for international activities. Specialists offer:

  • Legal planning for implementing projects abroad;
  • Tax analysis of cross-border grants and donations (considering Double Taxation Avoidance Treaties);
  • Managing customs procedures for the export/import of humanitarian cargo;
  • Establishing a representation or partner organization abroad;
  • Ensuring compliance with cross-border data transfer regulations;
  • Ensuring compliance with foreign laws through local partners.
This service ensures the smooth execution of your global mission.

The need for this service arises in many real scenarios. For example, a Georgian NGO sends volunteers to Ukraine for humanitarian aid. It is essential to insure them, properly document travel expenses, and clear cargo through customs to avoid issues at the border. Another example is a foreign foundation funding a conference in Tbilisi without a local office — it needs to sign service agreements with Georgian suppliers and handle taxes (reverse charge VAT). Also, organizations working with migrants often face data protection issues when sharing information with another country.

The legal framework relies on the "Law of Georgia on Private International Law," which determines the applicable law in cross-border relations. From a tax perspective, the "Tax Code of Georgia" and international Double Taxation Avoidance Treaties are crucial. Customs procedures are regulated by the "Customs Code of Georgia." Additionally, the host country's NGO legislation must be considered, which may restrict foreign funding or activities. A lawyer coordinates this multi-layered legal process.

The process begins with an analysis of the operation's geography and content. The lawyer creates a "roadmap": Where should the activity be registered? How to transfer funds with minimal loss? Then, bilingual agreements (travel, grant, service) are prepared. Engaging a specialist on Legal.ge helps you expand your scope of activities without violating the laws of either Georgia or the partner country.

Legal.ge is a platform for lawyers with a global vision. Cross-border activities require not only knowledge of the law but also an understanding of the international context. Manage your international projects professionally with Legal.ge.

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Specialists for this service

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