For Georgian businesses operating on the European Union market, the central tax questions concern value added tax: where a service is treated as supplied, when the obligation to register for VAT arises, and how a taxable person of an EU member state recovers VAT paid in Georgia. The Georgian Tax Code regulates these matters with precise norms, and it is these norms — not the EU's own One Stop Shop regimes, which serve here only as a contrast — that form the legal backbone for aligning Georgian operations with European requirements. The decisive answer always comes from the Georgian statute.
Place of Supply of Services
The Tax Code norm on the place of supply of services determines where a service is treated as supplied: if a service is supplied on the territory of Georgia, it is not treated as supplied in another country, and vice versa. The basic rule is this: where the recipient is a taxable person, the place of supply is the place where the recipient is established; where the recipient is not a taxable person, it is the place where the supplier is established. Separate rules distinguish services connected with immovable property, transport, restaurant and catering services, events and others. For instance, telecommunications, broadcasting, electronic, advertising, consulting, engineering, legal, accounting and data-processing services supplied to a non-taxable person are treated as supplied where that person is established, has a permanent address or usually resides. These definitions decide whether an operation falls under Georgian VAT at all.
VAT Registration
Article 165 of the Tax Code establishes the registration obligation: a taxable person must apply to the tax authority for VAT registration where the aggregate amount of VAT-taxable operations carried out during any 12 consecutive calendar months exceeds 100 000 GEL — within no later than 2 working days from the day of exceeding. The obligation to account for and pay VAT arises from the moment of the operation by which the aggregate exceeded the threshold. A person manufacturing excise goods applies before the first supply; on reorganization the deadline is 10 days from completion; voluntary registration is possible at any time. When determining the aggregate amount, VAT-exempt operations are not counted, except financial and immovable-property operations carried out as main activity and exports. A person with a fixed establishment in Georgia applies by the last day of the reporting period of the operation.
VAT Refund for an EU Taxable Person
The Tax Code grants a taxable person of an EU member state the right to recover the VAT paid on the acquisition of goods or on import in Georgia. For this, the person must simultaneously satisfy the conditions: have no fixed establishment, place of activity or permanent residence in Georgia; use the acquired or imported goods in VAT-taxable operations; and be in a position where a person registered in Georgia for a similar operation would be entitled to credit the VAT paid. For the refund the person must appoint an authorised representative who bears the taxpayer's obligations, while the refund procedure and conditions are defined by the Minister of Finance.
The Practical Contour of Operating on the European Market
For Georgian businesses, EU requirements are often associated with the single-market registration mechanisms that simplify distance selling. For operations outgoing from Georgia, however, the decisive norms are Georgian: the place of supply determines the taxing jurisdiction, and the VAT registration threshold determines the moment payment to the Georgian budget begins. Managing both together is the foundation of a correct tax calendar.
The place-of-supply rules are detailed. Services connected with immovable property — including the services of an expert and agent of immovable property and site control and supervision — are treated as supplied where the property is located. Admission to cultural, artistic, scientific, sporting and similar events is taxed where the event actually takes place. Passenger transport is apportioned proportionally to the distance travelled; the short-term hire of a vehicle is treated as supplied where the vehicle is actually placed at the consumer's disposal. For a non-taxable person, telecommunications, radio and television broadcasting, electronic, advertising, consulting, engineering, legal, accounting, banking, financial and insurance services, staffing and the rental of movable property are treated as supplied at the recipient's place of establishment, permanent address or habitual residence. This list is the reference material by which cross-border operations on the European market are taxed.
Frequently Asked Questions
The questions raised most often in trade with the EU concern the registration threshold, the place of supply and the refund procedure.
When do I become a VAT payer?
When the aggregate of VAT-taxable operations over any 12 consecutive calendar months exceeds 100 000 GEL. The application must be made within 2 working days of the day of exceeding.
Where is a service treated as supplied?
For a taxable recipient — where the recipient is established; for a non-taxable recipient — where the supplier is established. Separate rules cover immovable property, transport, events and electronic services.
Can an EU person recover VAT?
Yes, if it has no establishment in Georgia, uses the goods in VAT-taxable operations and appoints an authorised representative.
Where is a service treated as supplied to a taxable recipient?
At the place where the recipient is established; where the service goes to its fixed establishment — at the place of that establishment.
How We Help on Legal.ge
The Legal.ge team analyses the tax calendar operation by operation: we determine the place of supply, the registration obligation and the refund possibilities. Get qualified assistance with VAT decisions on Legal.ge.