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Corporate Tax Structuring

Why establish a holding company in Georgia?

A Georgian holding company is an efficient vehicle for managing regional assets. Dividends received by a Georgian company from foreign subsidiaries are generally exempt from corporate tax. Additionally, Georgia's lack of capital gains tax on the sale of shares (if held for >2 years) makes it an attractive jurisdiction for exit strategies. The extensive DTA network further minimizes withholding taxes on incoming flows.

What are "Substance" requirements for Georgian companies?

To benefit from international tax treaties and avoid being classified as a "shell company," a Georgian entity must have economic substance. This means having a physical office, qualified employees, local operating expenses, and decision-making taking place within Georgia. We help structure your operations to meet these substance requirements, satisfying both Georgian and foreign tax authorities.

How does Transfer Pricing affect inter-company transactions?

If your Georgian company trades with related foreign entities, prices must be set at "arm's length" (market value). The Revenue Service closely monitors these transactions to prevent profit shifting. Proper documentation (Master File/Local File) is required to justify your pricing methodology. We assist in designing a compliant transfer pricing policy as part of your corporate structure.

Can I repatriate dividends without withholding tax?

Standard dividend tax in Georgia is 5%. However, if the shareholder is resident in a country with a favorable Double Taxation Treaty (DTA) with Georgia (e.g., UAE, Singapore, many EU states), this rate can often be reduced to 0%. Structuring your ownership through such jurisdictions can significantly improve the group's overall tax efficiency.

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Corporate tax structuring is a strategic process aimed at optimizing the legal and operational model of a business group or company to achieve tax efficiency. This service goes beyond standard tax planning, focusing on the architecture of holding structures, subsidiaries, and branches to minimize tax leakage during cash flow movements. Georgia's liberal tax regime and extensive network of international treaties offer unique opportunities for creating regional hubs. However, with tightening international regulations against BEPS (Base Erosion and Profit Shifting), structuring must be not only effective but also transparent and substantiated by economic substance.

This service includes a complete diagnostic and reconstruction of the business structure. Specialists offer:

  • Designing holding structures to optimize taxation of dividends, interest, and royalties;
  • Developing merger, demerger, and reorganization schemes based on tax neutrality principles;
  • Creating separate structures for asset management (real estate, intellectual property);
  • Analyzing cross-border operations considering the "Beneficial Owner" concept;
  • Integrating special tax regimes (International Company, Free Industrial Zone) into the group structure;
  • Tax planning for Exit strategies (sale of business).
This service ensures your business is financially sustainable and attractive for investment.

Tax structuring is necessary in many practical scenarios. For example, a Georgian company plans to expand into Europe and needs to establish a holding in a jurisdiction where dividend repatriation is most favorable. Another example is a developer group wanting to separate construction and sales divisions for risk diversification and VAT optimization. Also, IT companies often create a separate entity to manage intellectual property to benefit from the 5% "International Company" rate. An incorrectly chosen structure can lead to double taxation and increased administrative costs.

The legal framework relies on the "Tax Code of Georgia," international tax treaties, and the "Law on Entrepreneurs." "Transfer Pricing" rules, which regulate prices for transactions between group members, are of crucial importance. The MLI (Multilateral Convention), which limits treaty abuse, must also be considered. A lawyer ensures that the chosen structure meets "Substance" requirements.

The process begins with an audit of the existing corporate scheme and defining goals. The lawyer prepares a restructuring plan ("Step Plan"), detailing the legal and tax consequences of each step. Then, new companies are registered, assets are transferred, and contracts are signed. With the help of a specialist on Legal.ge, you will create a solid foundation for your business's global growth.

Legal.ge is a platform giving you access to highly qualified tax architects. The right structure is an invisible but decisive factor in business success. Plan your future with Legal.ge.

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