Premium Formation: Special Status or Complex Structuring

For most formations the standard LLC with the Estonian model is the right choice. Two things argue against it — and they are different things. Either the tax rate is the issue: then the route runs through a special status, and the work sits in the application. Or the matter itself is the issue: several shareholders, several countries, crypto inflows, a fixed start date. Then no status lowers anything, and the work sits in setting the structure up and evidencing it so that it holds in both countries.

Two packages, one entry price

Both packages start at EUR 9,990, and that is no coincidence: the effort is comparable, it simply falls in a different place. What separates them is not the scope but the question they answer.

Criterion	Special tax status	Complex matters
What it would otherwise fail on	The tax rate — a standard LLC taxes your model higher than necessary	The matter — a standard formation simply does not map it
Typical case	Team in Georgia, IT export, trade or production	Several shareholders, several countries, crypto inflows, fixed date
Core of the work	Eligibility check, substance build-up, status application	Fact-finding, scoping, charter, documentation
Outcome	A status granted in writing and a rate between 0 and 5%	A structure you can evidence to two tax authorities
Counterpart	Revenue Service or zone administration	Revenue Service, the bank in KYC, National Bank where relevant
What it does not do Both together is possible — see below	Does not untangle a foreign entanglement	Does not by itself lower any tax rate
Entry price	from EUR 9,990	from EUR 9,990

Both together does happen. A team in Georgia and two shareholders in two countries are not mutually exclusive. In that case we do not add the packages up: the structuring runs in the second package, the status application is added as a module, and you receive the full calculation in writing before engagement.

Package 1: Special tax status

Besides the standard LLC, Georgia offers three special regimes. They differ not only in the tax rate but above all in the substance and prior experience they demand:

	Free Industrial Zone	International Company	Virtual Zone (IT)	Standard LLC
Corporate tax	0% inside the zone	5%	0% on foreign IT revenue	15% on distribution only
Dividend withholding tax	0%	0%	5%	5%
Payroll tax (employees) standard = 20%	standard	5%	20%	20%
Property tax	0%	0%	standard	standard
Activity focus	Trade, production, warehousing in the zone	IT & maritime (Decree 619)	Software development/maintenance for foreign clients	any
Entry requirement	Presence in the zone (lease/space)	2 years of relevant experience; max. 2% non-qualifying income	VZP certificate	Incorporation is enough
Substance requirement	Zone presence mandatory	Genuine substance and employees mandatory	Rising — local development increasingly expected	None specific

International Company Status is in practice the most robust regime as soon as you employ a team: 5% corporate tax, 0% dividend withholding tax and above all 5% instead of 20% payroll tax on salaries. On a payroll of EUR 100,000 a year that is roughly EUR 15,000 in difference — the package pays for itself in the first year.

Virtual Zone is the right choice for small, purely exporting development teams without a meaningful local payroll. Free Industrial Zone pays off when physical goods move — trade, production, warehousing.

1. 01

   Eligibility check (2 weeks)

   We test your activity, revenue structure, planned payroll and prior experience against all three regimes — and tell you honestly if none of them holds up.

2. 02

   Incorporation and substance build-up

   Registration at the Public Service Hall, in parallel the build-up of substance: premises, local management, first hires.

3. 03

   Status application

   Filing with the Revenue Service or the zone administration, including evidence of prior experience and the scoping of qualifying income.

4. 04

   Approval and go-live

   Once granted, we align bookkeeping and payroll with the regime — you operate at the reduced rate from the first month.

Package 2: Complex matters

Some plans do not fail on the tax rate. They fail because a standard formation does not map them at all — because several shareholders are involved, because the money comes from crypto assets, because two or three countries have a say, or because a date is fixed by which the company must exist. In those cases there is no status to apply for. There is a set of facts to record, to scope and to evidence.

That is what this package is built for. It lowers no tax rate and does not claim to. What it delivers is a structure that withstands two reviews: the Georgian one and the one in your shareholders’ country of residence.

• More than one shareholder — particularly on an equal split The charter decides what happens in a deadlock. A provision restricting share transfers can later only be changed with the consent of every shareholder it affects.
• Inflows from crypto assets Unproblematic for Georgian tax, the most common cause of rejection at the bank. What decides the account opening is the source-of-funds trail, not the amount.
• Shareholders, management or clients in more than one country Residence and permanent establishment become the preliminary question — and it arises in every country involved, not only in Georgia.
• Transactions between your own companies From here the arm's length principle under Art. 126 to 129 of the Tax Code applies, regardless of size. Only the annual report has a threshold.
• A start date that is already fixed Where a date hangs on a contract, a closing or a deadline, it changes the order of the work — power of attorney and apostille move to the front.
• A restructuring meant to follow later Holding, share transfer, additional shareholders joining. What should be possible in two years belongs in today’s charter.

One of these is enough. Where several apply, the order of the decisions matters more than any single one of them — and that order is what we plan first.

Crypto inflows: the tax is the easy half

Gains of a private individual from crypto assets are not subject to income tax in Georgia, and the exchange is not subject to VAT. That does not extend to the company — there the Estonian model applies, with 15% corporate tax on distribution and 5% dividend withholding tax. That is the easy half, and it is set out in detail in Crypto in Georgia.

The hard half is the bank. Bank of Georgia and TBC work more pragmatically with documented crypto provenance than most EU institutions, but KYC and source-of-funds evidence are mandatory: acquisition, custody and disposal must be available as an unbroken chain. Anyone reconstructing that chain after the first query is already negotiating from the back foot. We build it before the account is opened.

On top of that comes a distinction that belongs before the formation rather than after it: anyone dealing with crypto assets commercially — exchange, custody or transfer for third parties — falls under the supervision of the National Bank and needs a VASP registration. Holding and selling privately does not. And the order between relocation and sale decides which country gets to tax the gain at all; that is the subject of Crypto cash-out in Georgia.

Several shareholders: what you leave open now, you cannot close alone

A Georgian LLC can be founded by two, three or any other constellation; the law knows no minimum shareholding, and no statutory pre-emption right over existing shares either. Transferring is therefore easy — and that is exactly where the question belongs that has to be settled before registration.

Because restricting is hard. Under the entrepreneurial law, a resolution that restricts, prohibits or makes share transfers subject to consent is passed only with the consent of every shareholder affected by the restriction. A majority is not enough. What you leave open at formation can later only be closed unanimously — and unanimity is the first thing to disappear in a falling-out. On an equal split both coincide: each shareholder can block every resolution, and the provision that would resolve it should have been in the charter.

So we draft the charter with the dispute in mind, not the normal case — and plan the shareholdings against what you intend to do later. The registry details are set out in Share transfer in a Georgian LLC.

Several countries: what decides is where it is managed

As soon as shareholders, management and clients are not in the same country, two questions come before all others: where is the company resident, and where does it create a permanent establishment? Neither is answered by the shareholder’s place of residence but by where the business is actually managed and where contracts are actually concluded. The scoping belongs before the formation — afterwards it is a defence, beforehand it is a decision. The article Holding & director structure works this through in detail.

Then there is the transparency side. Georgia has exchanged account data under the common reporting standard since 2024; anyone who remains tax resident abroad while holding accounts in Georgia is reported there. That is not an argument against the structure — it is an argument for building it so that the report surfaces nothing that is not already declared.

Transfer pricing: 30 days after the letter is too late

As soon as your Georgian company transacts with a related foreign enterprise, the arm’s length principle under Art. 126 to 129 of the Tax Code applies. Related means holding more than 50 percent — or actually controlling the business decisions, and that second criterion works without any shareholding at all. Purely Georgian transactions do not fall under it.

Two duties have to be kept apart, and confusing them is the most common mistake:

Duty	Annual report	Documentation
When	With the March reporting period, Annex 4 to the return	Only upon written request by the Revenue Service
Threshold	Previous year's controlled foreign operations above GEL 500,000	None — the arm's length principle applies from the first transaction
Deadline	A fixed annual date	30 calendar days from receipt of the request
Language	Georgian	Georgian or English — a translation demanded is paid for by the Georgian company

The second point is where structures come apart. A transfer pricing file is a functional analysis, a benchmarking study and a reasoned choice of method — and that does not come together in 30 calendar days alongside day-to-day business. So we create it while the structure is being set up and keep it current, rather than inventing it under pressure. The details are set out in Transfer pricing in Georgia.

1. 01

   Fact-finding (1–2 weeks)

   Everyone involved, every country touched, every source of inflow and the intended end state — in writing. What comes out of it is the order of the decisions, not just a list of them.

2. 02

   Draft structure and coordination

   Charter, shareholdings and voting arrangements, scoping of residence and permanent establishment, transfer pricing method. We coordinate the draft with your adviser in your country of residence before anything is registered.

3. 03

   Formation to your target date

   Planned backwards from your date: power of attorney and apostille or the online notary, registration at the Public Service Hall, account opening with the source-of-funds file already prepared.

4. 04

   Documentation and ongoing operation

   Transfer pricing file created and kept current, bookkeeping configured for the matter at hand, a reporting calendar with every deadline — and a named contact for the questions that will come.

The two packages in detail

Frequently asked questions about premium formation

How do I know which of the two packages I need?

By asking what your plan would otherwise fail on. If the tax rate is the issue — you employ a team in Georgia or export IT services — then a special status is the answer, and the first package runs the application. If the structure is the issue — several shareholders, several countries, crypto inflows, a fixed start date — then no status helps; what helps is clean scoping and its documentation, and that is what the second package is for. Both together do occur: in that case the structuring runs in the second package and the status application is added as a module, rather than adding up two packages. Which case applies to you is something we tell you in the pre-check, before you have to choose.

Is it worth it compared with the standard formation?

For the special tax status it pays off as soon as you employ staff in Georgia: International Company Status cuts payroll tax from 20% to 5%. On a payroll of EUR 100,000 that is around EUR 15,000 per year. For the complex matters package the yardstick is a different one, because it lowers no tax rate — it costs less than repairing a structure that surfaces in year three. A charter provision between shareholders who have fallen out can only be changed unanimously, and a transfer pricing file cannot be invented within 30 days of a request. Without a local team, without cross-border entanglement and without meaningful distributions, the standard LLC with the Estonian model remains the better and cheaper choice.

Can you complete the formation on a fixed date?

Registration at the Public Service Hall normally takes 1–3 business days, faster under the express procedure. But a fixed date is not made plannable by the authority — it is made plannable by what comes before it: a notarised and apostilled power of attorney, an agreed charter, a cleared company name. So we plan backwards from your target date and give you the latest date by which the documents must reach us. What we cannot promise are the turnaround times of the notary and the apostille office in your home country — which is why the online notary stands next to it as an alternative that replaces that route entirely.

We want to found it jointly, half each. Does that work?

From a registry perspective, without difficulty — a Georgian LLC has no minimum shareholding. The question is not the entry, it is the case in which you disagree. And here Georgian entrepreneurial law has a peculiarity: a resolution that restricts, prohibits or makes share transfers subject to consent is passed only with the consent of every shareholder affected by the restriction. A majority is not enough. Whatever you leave open at formation can later only be closed unanimously — and unanimity is the first thing missing in a falling-out. That is why the question belongs before registration, not into the first dispute.

What about crypto inflows — for tax and in practice?

Those are two separate questions. For tax, gains of a private individual from crypto assets are not subject to income tax in Georgia, and the exchange is not subject to VAT; for the company the Estonian model applies instead — 15% corporate tax on distribution plus 5% dividend withholding tax. In practice, however, the decision is made by the bank, not by the tax code: without an unbroken source-of-funds trail covering acquisition, custody and disposal, the money does not reach the account. We build that trail before the account is opened. And a third distinction belongs before the formation: anyone dealing with crypto assets commercially — exchange, custody or transfer for third parties — falls under the supervision of the National Bank and needs a VASP registration; holding and selling privately does not.

From when must I document transfer pricing?

The arm's length principle under Art. 126 to 129 of the Tax Code applies to cross-border transactions between related enterprises. Related means holding more than 50 percent — or actually controlling the business decisions, and that second criterion works without any shareholding at all. Two thresholds then have to be kept apart: the annual report via Annex 4 to the return applies where the previous year's controlled foreign operations together exceed GEL 500,000. The documentation itself is not filed but called in — and must then be submitted within 30 calendar days of a written request. That is precisely why we create it while the structure is being set up, and not after the letter arrives.

Do you also advise on the tax law of my country of residence?

No. We are a corporate service provider in Georgia and assess the Georgian part under Georgian law: residence, permanent establishment, transfer pricing, reporting and registration duties. Exit taxation, controlled foreign company rules and how the structure is treated where you live belong to a licensed professional there — we are not German, Austrian or Swiss tax advisers or lawyers, and we do not present ourselves as such. What we take on is the groundwork and the coordination: your adviser receives the Georgian facts evidenced rather than asserted, and before the structure is registered rather than after. If you do not yet have anyone there, we tell you which questions to put to them.

How long does it take until the status is granted?

The incorporation itself is done in 1–3 business days. Depending on the regime and the completeness of your evidence, the status application typically takes several weeks to a few months. We work in parallel: you are operational before the status arrives.

What happens if the status is not granted?

Your company continues as a regular Georgian LLC under the Estonian model — you do not lose the structure, only the special rate. That is precisely why the eligibility check comes first: we do not file for a status whose requirements your model clearly cannot meet.

Is a registration address enough as substance?

No. International Company Status requires real premises and actually employed staff, and even for the Virtual Zone the Revenue Service increasingly expects demonstrable local value creation. For a cross-border structure without a special status the same question arises from the other direction: there, substance is part of what decides whether the company is recognised as standing on its own in the shareholders country of residence. That is why we plan it into both packages from the outset — through our Registered Address & Substance service, up to a dedicated office floor.

Can we convert an existing LLC later on?

Yes, in both directions. An already registered Georgian company can file for the status later, provided it meets the requirements; we review the existing structure, close gaps in substance and activity scoping and run the application. And a company that has moved into a more complex position through crypto inflows, new shareholders or foreign business goes through the same fact-finding as a new formation — the process is the same in each case, just without the registration part.