Expanding into new markets is a key growth strategy for many businesses, and Georgia has quickly emerged as a top destination for foreign investment. Located at the crossroads of Europe and Asia, Georgia offers a pro-business environment, low tax rates, minimal bureaucracy, and full foreign ownership rights. This makes it an attractive gateway for companies looking to tap into the Caucasus and Black Sea regions.
Setting up a subsidiary company in Georgia provides foreign companies with a fully independent legal entity that enjoys the same treatment as local businesses.
Key Takeaways
- 100% foreign ownership allowed
- Company registration 1–2 business days
- No minimum capital requirement for LLCs
- Simple tax regime with low CIT (15%)
- Access to Free Trade Agreements with the EU, China, and CIS countries
In this guide, we’ll walk you through everything you need to know about how to establish a subsidiary company in Georgia. Whether you’re a small business or a multinational corporation, you’ll find actionable insights here about how to form a subsidiary in Georgia.
What are the Types of Subsidiaries in Georgia?
There are several legal structures for foreign companies setting up a subsidiary company in Georgia. The key types of subsidiaries differ in terms of ownership, liability, and strategic collaboration. Below are the types of subsidiaries available in Georgia:
Wholly-Owned Subsidiary
A wholly-owned subsidiary in Georgia is typically established as a Limited Liability Company (LLC). This structure allows the parent company to own 100% of the shares, providing full managerial and operational control.
Key Characteristics:
- Separate Legal Entity: The subsidiary is distinct from the parent company, meaning debts and liabilities do not transfer.
- Liability: Shareholders are liable only up to the amount of their contributions.
- Popular Use Case: Ideal for companies that want full control without local partners.
Joint Venture Subsidiary
In a joint venture subsidiary, a foreign company collaborates with one or more local Georgian partners. The company is usually registered as an LLC or Joint Stock Company (JSC), depending on scale and intent.
Key Characteristics:
- Shared Ownership and Control: Ownership is divided based on investment proportions or mutual agreement.
- Defined Roles: Typically governed by a joint venture agreement outlining partner responsibilities, profit-sharing, and decision-making authority.
- Popular Use Case: Ideal for companies seeking to share risk, access local market knowledge, or meet specific industry partnership requirements.
Joint Stock Company (JSC)
A JSC is a company where capital is divided into shares, which may be publicly or privately traded. This structure is suitable for subsidiaries planning future capital raising or public listing.
Key Characteristics:
- Flexible Share Structure: Easily transferable shares and multiple classes of shareholders.
- Board of Directors: Mandatory governance structure for decision-making.
- Popular Use Case: Suitable for large-scale operations or long-term investment in Georgia.
Step-by-Step Guide to Setting Up a Subsidiary in Georgia
Understanding how to create a subsidiary in Georgia is a relatively quick and straightforward process. Most registrations are completed within a few business days. Here are the steps to follow when setting up a subsidiary company in Georgia:
Step 1: Choose the Legal Structure
The first step in establishing a subsidiary in Georgia is selecting the appropriate legal structure. Foreign investors typically choose between a Limited Liability Company (LLC), a Joint Venture, or a Joint Stock Company (JSC). Among these, the LLC is the most popular due to its simple formation process, minimal capital requirements, and operational flexibility.
Step 2: Reserve the Company Name
Before registration, you must ensure your chosen business name is available and compliant with Georgian naming regulations. You can check the availability and reserve the name through the National Agency of Public Registry (NAPR)’s online portal. The name must be unique within Georgia and not infringe upon existing trademarks or resemble names of other registered entities.
Step 3: Prepare Incorporation Documents
To formally register your subsidiary, several documents must be prepared and submitted. These include the Articles of Association (also known as the Charter), a founders’ resolution or decision to establish the company, and identification documents of shareholders and directors. If a third party is registering the company on your behalf, a Power of Attorneyis also required.
Step 4: Register the Company with NAPR
Once all documents are prepared, you must submit your application either in person at a Public Service Hall or online via the NAPR website. A state registration fee is payable, and you may choose between standard or expedited service. In most cases, the company registration is completed within 1 to 2 business days.
Step 5: Register for Tax
Following registration with NAPR, your company is automatically registered with the Revenue Service of Georgia, and a Tax Identification Number (TIN) is issued. This registration enables your company to fulfil all tax obligations. Depending on your business activities, you may also need to register for Value-Added Tax (VAT) or other sector-specific taxes.
Step 6: Open a Business Bank Account
With registration and tax identification complete, the next step is to open a business bank account in Georgia. This process typically requires submission of all corporate documents, as well as identification documents of directors and beneficial owners.
Step 7: Hire Local Staff and Register with the Revenue Service
If your subsidiary plans to employ staff locally, you must first sign employment contracts that comply with Georgia’s Labour Code. All employees must be registered with the Revenue Service, and the company is responsible for making social contributions and payroll tax payments. It is also essential to follow Georgian labour standards, including minimum wage regulations, maximum working hours, paid leave, and termination procedures.
Key Benefits of Establishing a Subsidiary in Georgia
Want to learn how to set up a parent company with subsidiaries in Georgia? Well, it has become an attractive destination for foreign businesses due to its business-friendly climate, competitive taxation, and strategic location. Here are the benefits:
- Access to regional and international markets: Georgia is located at the crossroads of Europe and Asia. The country has Free Trade Agreements (FTAs) with the EU, China, Turkey, CIS countries, and EFTA, giving businesses access to over 2.3 billion consumers.
- Ease of doing business: Georgia ranks highly in international indices for starting a business, property registration, investor protections and enforcing contracts. Most administrative procedures can be done online or through one-stop Public Service Halls.
- Favourable Tax Environment: Georgia employs the Estonian Corporate Tax Model, meaning profits are not taxed until distributed, and the effective tax on reinvested profits is 0%. The standard corporate income tax rate is 15%, applicable only when dividends are paid. Free Industrial Zones (FIZs) are there in Tbilisi, Poti, and Kutaisi offer near-zero taxation on certain activities.
- Legal and Investment Protections: Georgia is a signatory to international conventions like the ICSID and New York Convention.Foreign investors are protected under multiple Bilateral Investment Treaties (BITs) and local laws guarantee equal treatment for foreign and local investors.
- Full Foreign Ownership Permitted: There are no requirements for local shareholders or directors in most sectors. Foreign nationals can freely own 100% of the shares in Georgian companies.
Essential Documents for Registering a Subsidiary in Georgia
You should prepare certain documents when setting up a subsidiary company in Georgia. Make sure that you have the following documents ready during the registration process:
Corporate Documents
- Articles of Association (Charter) – Governing rules of the subsidiary
- Founders’ Resolution or Board Decision – Approval from the parent company
- Extract from Commercial Register – Confirming legal existence of the parent company (apostilled)
Identification Documents
- Passports or ID Cards of directors and shareholders
- Power of Attorney – For authorised representatives handling the registration process
Legal Address Documentation
- Lease agreement or ownership document of the office in Georgia
Tax and Compliance Documentation
- Tax Registration Form – Usually included in the NAPR process
- Signature Sample Card – Signed before a notary by the director(s)
All foreign documents must be:
- Apostilled or legalised, depending on the country of origin
- Translated into Georgian by a certified translator
Legal Structures Available for Subsidiaries in Georgia
When setting up a subsidiary in Georgia, foreign businesses can choose from a few common legal forms, with the Limited Liability Company (LLC) being the most popular due to its simplicity and flexibility. Here is more about the available legal structures in detail:
1. Limited Liability Company (LLC) – “შპს (Saqartvelos Shesadzleblobebi)”
The Limited Liability Company (შპს) is the most popular structure for foreign-owned subsidiaries in Georgia due to its simplicity, flexibility, and investor-friendly features. It allows for full foreign ownership, and shareholders can be individuals or legal entities, regardless of nationality. There is no statutory minimum capital requirement, making it accessible for businesses of all sizes.
2. Joint Stock Company (JSC) – “ა(ა)წ”
A Joint Stock Company (ა(ა)წ) is better suited for larger or capital-intensive ventures, especially those planning to raise funds publicly or issue shares. Shares in a JSC are freely transferable and may be listed on a stock exchange, offering greater liquidity and investor appeal. The governance structure is more formal, requiring both a supervisory board and a directorate to oversee strategic and operational decisions.
3. Branch Office vs. Subsidiary
A branch office is legally considered an extension of the foreign parent company and is not a separate legal entity. This means the parent company is fully liable for the branch’s obligations and debts. In contrast, a subsidiary has independent legal status and limited liability, protecting the parent from local risks.
Taxation Rules and Incentives for Subsidiaries in Georgia
Georgia has a pro-investment tax regime that encourages business formation and reinvestment. These taxation rules are essential to know when setting up a subsidiary company in Georgia:
Corporate Income Tax
- 15% corporate tax, but only on distributed profits.
- Retained earnings are tax-free; this is known as the Estonian model of taxation.
- Dividend withholding tax: 5% when profits are distributed to non-residents.
Value-Added Tax (VAT)
- Standard rate: 18%.
- Mandatory registration if annual turnover exceeds GEL 100,000.
- Businesses may voluntarily register to recover input VAT.
Personal Income Tax
- 20% flat rate on salaries paid to employees.
- Employers must withhold and remit this monthly.
Other Taxes
- Import duties vary by product type (some goods are duty-free).
- No capital gains tax, no wealth tax, and no social security contributions (only a minor pension contribution of 2%).
Incentives and Special Zones
- Free Industrial Zones (FIZs): Located in Tbilisi, Kutaisi, and Poti.
- 0% tax on profit, dividend, VAT, property, and import/export for eligible businesses.
- Tourism, tech, and agricultural sectors may qualify for additional incentives or grants via Enterprise Georgia programs.
These tax rules are essential to understand whether you want to understand how to set up a parent company with subsidiaries in Georgia or a subsidiary.
Regulatory and Compliance Requirements
After registration, subsidiaries must comply with various ongoing obligations under Georgian law. Here is more about the regulatory and compliance requirements when setting up a subsidiary company in Georgia:
Annual Financial Reporting
- All companies must submit annual financial statements to the Revenue Service.
- Depending on size, some companies may require auditing (mandatory for JSCs or companies exceeding certain thresholds).
Tax Filings
- Monthly reporting of income tax, VAT, and salary taxes.
- Electronic filing via the Revenue Service portal is mandatory.
Corporate Maintenance
- Keep updated corporate records, including changes to directors or shareholders.
- Maintain a registered address and notify authorities of any changes.
Labor and Payroll Compliance
- All employees must be registered with the Revenue Service.
- Employment contracts must be compliant with the Labour Code of Georgia.
- Maintain proper payroll records and pay monthly income taxes.
Data Protection
- Businesses handling personal data must comply with Georgia’s Law on Personal Data Protection.
- Registration with the Personal Data Protection Office may be required in certain sectors.
Do You Need a Physical Address for a Subsidiary in Georgia?
Yes, a registered office is required. Every subsidiary must have a registered legal address in Georgia at incorporation. This address will be listed in the Entrepreneurial Registry and used for official communications and tax registration.
Options for Foreign Businesses:
- Leased Office Space: A Common option for operational subsidiaries.
- Virtual Office: Accepted for initial registration and non-operational entities, provided the address is valid and accessible.
- Law Firm or Service Provider Address: Many foreign companies use the address of their local legal or business service provider as their registered office.
Operational Setup for a Subsidiary in Georgia
Once the subsidiary is registered, you’ll need to set up operations to comply with legal standards and prepare for business activity. Here is how to start operations when setting up a subsidiary company in Georgia:
Hiring Employees
- No quotas or restrictions on hiring foreign nationals (with proper permits).
- Local staff can be easily hired through job platforms or agencies.
- Employment contracts must specify wages, duties, working hours, and termination clauses.
Office Setup
- Office space is affordable and widely available in Tbilisi, Batumi, and Kutaisi.
- You can lease coworking spaces (e.g., Terminal, Impact Hub) for early-stage operations or dedicated offices for long-term use.
- Utilities and the internet are reliable and inexpensive.
Technology and Banking
- Georgian banks support multi-currency accounts and online banking in English.
- Common accounting and payroll software includes Balance, Apex, or local platforms integrated with the Revenue Service.
- The internet and telecom infrastructure are well-developed.
Business Services
- Many local firms offer outsourced accounting, HR, and compliance support.
- Legal and notary services are accessible and relatively affordable compared to EU standards.
How to Open a Business Bank Account for a Subsidiary in Georgia?
Opening a corporate bank account in Georgia is straightforward but may vary slightly depending on the bank. Leading banks include TBC Bank, Bank of Georgia, Liberty Bank, and Terabank. Below are the steps to open a business bank account:
- Choose a bank based on fees, services, and language support.
- Schedule an appointment or walk into a branch.
- Submit required documentation, including notarised and translated documents if applicable.
- Fulfil Know Your Customer (KYC) procedures.
- Open the account; most accounts are activated within 1–3 business days.
Required Documents:
- Company registration certificate from the National Agency of Public Registry (NAPR)
- Charter or Articles of Association
- Extract from the parent company’s registry (apostilled and translated)
- Passport copies of directors and shareholders
- Power of Attorney if opening the account through a representative
- Georgian Tax Identification Number (assigned upon registration)
Is an Operating Agreement Necessary for a Subsidiary?
An Operating Agreement is not legally mandatory for Limited Liability Companies (LLCs) in Georgia. However, it is highly recommended, especially for subsidiaries with more than one shareholder or specific operational needs. Here’s why it is important:
- Defines ownership structure and capital contributions
- Sets rules for management roles, decision-making, and voting rights
- Outlines profit distribution mechanisms
- Reduces internal disputes and supports long-term governance
Opening a Branch vs. a Subsidiary: What’s the Difference?
A subsidiary, as compared to a branch office, offers more legal protection and operational autonomy, and is the preferred structure for long-term investments in Georgia. Here is a more detailed look at the two structures:
| Feature | Branch Office | Subsidiary (LLC or JSC) |
| Legal Status | Extension of parent company | Independent legal entity |
| Ownership | 100% parent-owned | Can be wholly owned or a joint venture |
| Liability | Parent is fully liable | Liability limited to the subsidiary |
| Taxation | Considered part of the foreign parent | Taxed as a Georgian entity |
| Registration | Slightly simpler process | More documentation required |
| Market Presence | Limited autonomy | Greater credibility and access to incentives |
| Repatriation | Direct to parent | Subject to dividend tax |
How Commenda Can Help You Expand in Georgia
Commenda makes a subsidiary setup in Georgia fast, compliant, and stress-free. Whether you’re launching a new venture or expanding an established business, Commenda supports every step. Here’s how we can help:
- Advises on the optimal legal structure based on your business model
- Manages business incorporation, translations, and document submission to NAPR
- Assists with opening corporate bank accounts and navigating KYC procedures
- Provides local registered office services and representation if needed
- Ensures post-setup compliance with tax and regulatory filings
- Offers ongoing support for HR, payroll, and financial reporting
Commenda combines deep local knowledge with global expertise to make market entry into Georgia efficient and reliable. Book a free demo to get started!
FAQs
Q. How much does it cost to set up a subsidiary in Georgia?
The cost to set up a subsidiary in Georgia can vary significantly. This will depend on factors such as the specific business structure, the complexity of the subsidiary, and any unique requirements.
Q. How long does it take to register a subsidiary in Georgia?
- Standard registration: 1 week
- Expedited registration: Available same day for an additional fee
Q. Can a foreigner fully own a subsidiary in Georgia?
Yes. Georgia allows 100 percent foreign ownership of subsidiaries without restrictions, making it an ideal spot for international business expansion.
Q. What are the common challenges when opening a subsidiary in Georgia?
- Apostilling and translating foreign documents
- Bank KYC processes can be time-consuming
- Understanding compliance requirements without local support
Q. Do subsidiaries in Georgia need a local director or representative?
No. There is no legal requirement for a Georgian resident director. However, a local registered address is mandatory, and some banks may prefer a local point of contact.
Q. What are the annual compliance requirements for subsidiaries in Georgia?
- Annual submission of financial statements
- Monthly reporting and payment of taxes (income tax, VAT, payroll)
- Maintaining updated company records with NAPR
- Proper employee registration and pension contributions
Q. Can a subsidiary hire employees directly in Georgia?
Yes. Subsidiaries can hire both Georgian and foreign employees, sign employment contracts in accordance with local law, and handle payroll and tax reporting via the Revenue Service.
Q. What happens if a subsidiary fails to meet compliance rules in Georgia?
- Fines and penalties for late or incorrect tax filings
- Risk of frozen bank accounts in case of tax arrears
- Potential director liability in cases of fraud or persistent violations
- The risk of the company being struck off if non-compliant for an extended period
