Trading with the European Union is a priority for Georgian businesses, but it requires thorough knowledge of European tax regulations, especially VAT rules. Although Georgia is not an EU member, the Association Agreement and economic integration oblige businesses to consider European directives. This is particularly relevant for digital services, e-commerce, and the export-import of goods. Recently, regulations on the supply of digital services (VAT OSS - One Stop Shop) have tightened, meaning Georgian companies providing services to European consumers may incur VAT liabilities within the EU. Ignoring these rules can lead to serious penalties and restricted access to the European market. Our platform helps you find specialists who ensure your business complies with European tax standards.
The service covers key tax aspects of dealing with the EU:
- Cross-Border VAT Analysis: Determining the place of supply for goods and services and establishing where tax must be paid.
- Reverse Charge Mechanism: Applying reverse charge rules in B2B (Business-to-Business) transactions, simplifying tax administration.
- VAT OSS (One Stop Shop) Registration: Consulting on the need for VAT registration in the EU for digital services or distance sales.
- Export Taxation: Documenting VAT exemption (zero rating) when exporting goods from Georgia to the EU.
- Import from EU: Customs clearance of goods imported from Europe, payment, and credit of import VAT.
- Taxation of Digital Platforms: Tax aspects of selling apps, software, and other digital products to European consumers.
Practical examples demonstrate the necessity of this service. For instance, a Georgian IT company develops a mobile app and sells it to individuals in Germany, France, and Italy. Under EU law, VAT must be paid based on the customer's location; the company needs advice on how to register for OSS (via an intermediary) or how to utilize platforms (Google, Apple) as tax agents. Another case is a Georgian enterprise exporting wine to Poland; it needs confirmation that the export is tax-exempt and how to reclaim input VAT paid in Georgia. A third scenario involves a consulting firm providing services to a European business; here, it is critical to know that these services are generally not subject to VAT in Georgia.
The legal framework includes the Tax Code of Georgia (specifically the VAT chapter) and the Association Agreement between Georgia and the EU. Also important is the EU VAT Directive, whose principles are increasingly reflected in Georgian legislation. Experts use rules for determining the "place of supply of services," which is often a subject of complex interpretation. Additionally, Orders of the Minister of Finance on tax invoicing and declaring are utilized.
The process begins with an audit of the client's business model: who are the clients (B2B or B2C), what type of product (goods or services), and where delivery occurs. The specialist determines if the company has an obligation to register for VAT in any EU country. In the case of exports, customs declarations and accompanying documents are checked to ensure the right to VAT refund. For digital services, sales channels are analyzed to minimize tax risks.
Legal.ge gives you access to experts who understand both Georgian and European tax systems. Entering the European market is a huge opportunity, but it requires knowing the "rules of the game." Specialists on our platform will help ensure your business is fully compliant with European regulations, avoiding penalties and smoothly developing your activities on the international stage.
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