Georgia (Tbilisi) a good place to move as a company?

[Funal]

Good day,

Im living and also have a company in the EU. My turnover and revenue is, depending on the year, around 50.000€. I provide digital services and products, for games to international customers. Sort of SaaS.
I have upcoming projects that should increase my revenue but they are not guaranteed to bring a larger amount of profit. In the end the profit can also fall, but no less than 30.000€. I also trade some crypto (low volume), got stocks (dividends) and p2p loans. Those bring me a few thousands as well.

After seeing how my country is sliding down and the ridiculous amount of tax and health insurance I need to pay (of the 50.000€ in the end im left with 27.000€) , I thought why not try to move to a different country. Im young, so why not.

I see lots of different countries that might or might not be good.

• Bulgaria
• Cyprus
• Georgia
• UAE
• Romania
• and more

UAE falls flat because creating and maintaining a company is expensive and my business isnt large. Its also expensive to live there. Romania also had tax changes, getting more difficult. Cyprus and Bulgaria provide a good tax rate but Georgia has the best one out of them all with 1%.

Does anyone have experience with doing business in Georgia? On one hand I read its great, next to none tax, cheaper prices and ok quality of life. On the other hand I read its a sh*thole and neck breaking for businesses.
On the other hand it offers the cheapest setup out there with forming a company as a service costing no more than 200€, a bank account for 5€ a month and a airbnb stay for 500€ a month. So even if it sucks I do have a small lose.

 

[jafo]

@Don may be able to help you here. Reach out to him.

 

[myhand]

Portugal, Cyprus, Malta and Switzerland may work with you, the latter is expensive.

 

[FDS ADS]

As a Georgian experienced lawyer I can confirm that Georgia is one of the best option, based on the context you have mentioned.

 

[Don]

@Don may be able to help you here. Reach out to him.

Georgia 1% is indeed a great option for "cashing out" if you
move your tax residence there, but in practice not the best business structure so i would use it in combination with a company in more reputable jurisdiction with better banking.

One of the best countries for starting a small company is Estonia.
The corporate income tax system is cash based meaning you only pay tax when you pay out profits, and even then there are many exemptions, like profits from PE-s are not taxed, so even if you consider Bulgaria you would pay less tax (total 10%) by operating as a PE of an Estonian company.

Its low cost and following some structuring you can get tax down to 0%. You can avoid bulls**t like submitting annual financial statements and auditing, which will save you time and money.

E.g., its great option for SaaS as you can first of all use your ip as a capital contribution and be able to withdraw from your company tax free money up to the extent of the valuation of the contribution. Great banking and payment processing are available, and very easy to manage everything.

For tax free stock trading set up a PE in cyprus or bulgaria.

Loans - use Estonia as you can pay zero on interest income.

 

[blancmon229]

Georgia 1% is indeed a great option for "cashing out" if you
move your tax residence there, but in practice not the best business structure so i would use it in combination with a company in more reputable jurisdiction with better banking.

In a similar note, Armenia has no tax on capital gains for tax residents. That may help you out . Personally, I think you could achieve a better result as a Cyprus non dom.

One of the best countries for starting a small company is Estonia.
The corporate income tax system is cash based meaning you only pay tax when you pay out profits, and even then there are many exemptions, like profits from PE-s are not taxed, so even if you consider Bulgaria you would pay less tax (total 10%) by operating as a PE of an Estonian company.

Its low cost and following some structuring you can get tax down to 0%. You can avoid bulls**t like submitting annual financial statements and auditing, which will save you time and money.

How exactly would you combine a Cyprus LTD (as a non-dom resident) or Bulgarian EOOD (as a bulgarian resident) with an Estonian Company ? How would that benefit your tax situation?

E.g., its great option for SaaS as you can first of all use your ip as a capital contribution and be able to withdraw from your company tax free money up to the extent of the valuation of the contribution. Great banking and payment processing are available, and very easy to manage everything.

For tax free stock trading set up a PE in cyprus or bulgaria.

Loans - use Estonia as you can pay zero on interest income.

So your Estonian company loans money to your Cyprus LTD for example? In that way, the money is taken out of the Estonian company without triggering taxes as the profits technically were not withdrawn?

 

[Don]

In a similar note, Armenia has no tax on capital gains for tax residents. That may help you out . Personally, I think you could achieve a better result as a Cyprus non dom.

In Cyprus you would need a holding company or register a foreign company PE to trade stocks professionally and tax free. If you become tax resident in Cyprus and are the only person in your company they will expect to see some salaries which are highly taxed. You pay also GHS on your dividends 2.65% as cyprus tax resident.

Armenia has 5% tax on foreign dividends so I guess as Armenian tax resident you could run your BVI or other tax free company and pay just 5% total tax.

How exactly would you combine a Cyprus LTD (as a non-dom resident) or Bulgarian EOOD (as a bulgarian resident) with an Estonian Company ? How would that benefit your tax situation?

This gets quite complex, and a lot depends on your personal tax residency, but the point is that if Estonian company has a Bulgarian branch(PE), then Bulgarian branch pays 10% CIT and there is no withholding tax on neither Bulgarian or Estonian level, which would otherwise be the case with a Bulgarian company.

When a dividend is accrued from a Bulgarian company to a non-resident company or an individual (both resident and foreign), it is subject to WHT at a rate of 5%, unless the rate is reduced by an applicable DTT.

So your Estonian company loans money to your Cyprus LTD for example? In that way, the money is taken out of the Estonian company without triggering taxes as the profits technically were not withdrawn?

Estonian company is great option for a "group treasury", as interest earned is not immediately taxable. Tax is only payable when the company withdraws profits.
Some types of legal entities allow even to lend out money directly to directors or owners.

You can also "withdraw profits" by lending money to your Estonian company (you want to check what's the tax on that). There is no WHT on interest payments to non-residents. Interest payments to resident individuals are subject to a 20% WHT rate, but those can be indefinitely deferred.


For OP there are many factors to consider when deciding which jurisdiction is best from personal perspective and for the business.
I would derive some sort of five-year plan for the development, and see which approach helps to grow the capital the most without sacrificing too much personally.

 

[blancmon229]

Estonian company is great option for a "group treasury", as interest earned is not immediately taxable. Tax is only payable when the company withdraws profits.

What exactly classifies as withdrawing profits and is taxable? Does paying out a large salary count?

 

[Don]

What exactly classifies as withdrawing profits and is taxable? Does paying out a large salary count?

Non-resident salaries for work performed outside Estonia are not taxed in Estonia.
Estonia levies a CIT on profits that are distributed as:

1. dividends,
2. share buy-backs, capital reductions, liquidation proceeds (that are above the declared contributions)
3. or deemed profit distributions

 

[blancmon229]

Non-resident salaries for work performed outside Estonia are not taxed in Estonia.
Estonia levies a CIT on profits that are distributed as:

1. dividends,
2. share buy-backs, capital reductions, liquidation proceeds (that are above the declared contributions)
3. or deemed profit distributions

Thanks

 

[legaltalk]

I can suggest Bulgaria, here is a list why:

1. Low Corporate Tax Rates: Bulgaria has one of the lowest corporate tax rates in the European Union., the corporate income tax rate is a flat 10%, which can be very advantageous for businesses.
2. Flat Personal Income Tax: Bulgaria also has a flat personal income tax rate of 10%, which can be beneficial for both business owners and employees.
3. Low Operating Costs: The cost of living and doing business in Bulgaria is generally lower than in many Western European countries. This can lead to reduced operational expenses for businesses.
4. Skilled Workforce: Bulgaria has a well-educated and skilled workforce, particularly in the fields of technology, engineering, and languages.

 

[Asmodeus]

Bulgaria has nice benefits.
But the country is total garbage for lifestyle reasons and product availability.
The only city where you can live some what decently is only sofia.

 

[yngmind]

Cyprus can be a good option, but you will have to pay 12.5 corporate tax, and gesy 2.65%.

Georgia sucks a lot in terms of lifestyle, people, in general you will feel bad there.

 

[Clearsky Network]

Tbilisi is a great place to move
Food - amazing
People - amazing
Nightlife - Average
Healthcare - Average
Costs - Average
Driving - horrible
But very easy to do business and attractive taxes.
Good luck!

 

[Don]

Cyprus can be a good option, but you will have to pay 12.5 corporate tax, and gesy 2.65%.

Georgia sucks a lot in terms of lifestyle, people, in general you will feel bad there.

This is why using a foreign company like Estonia and running its PE in Cyprus is often better than using only a Cyprus company.
Estonia does not tax the profits of its foreign PE, and there are no withholding taxes on the Estonian level.
This way, you can avoid GHS. With the proper structure, even auditing can be avoided in Cyprus, which is quite a cool feature for a small business.
Cyprus lawyers and other professionals can charge you 200-500 EUR/h, so as odd as it might be you could actually reduce bureaucracy and save money by using a two-jurisdiction business structure not even accounting for the tax planning benefits and relevant savings of leveraging the strengths of 2 jurisdictions while minimizing the weaknesses.
That being said, no sane Cypriot professional would want to recommend something like this that reduces their fees, so you can only expect to hear reasons why it's not a good choice.

 

[yngmind]

This is why using a foreign company like Estonia and running its PE in Cyprus is often better than using only a Cyprus company.
Estonia does not tax the profits of its foreign PE, and there are no withholding taxes on the Estonian level.
This way, you can avoid GHS. With the proper structure, even auditing can be avoided in Cyprus, which is quite a cool feature for a small business.
Cyprus lawyers and other professionals can charge you 200-500 EUR/h, so as odd as it might be you could actually reduce bureaucracy and save money by using a two-jurisdiction business structure not even accounting for the tax planning benefits and relevant savings of leveraging the strengths of 2 jurisdictions while minimizing the weaknesses.
That being said, no sane Cypriot professional would want to recommend something like this that reduces their fees, so you can only expect to hear reasons why it's not a good choice.

Sounds interesting. I wanted to move to Cyprus and was exploring different options on how to structure there correctly.

But if the Estonian company is managed from Cyprus, isn't it liable for a corporate tax in Cyprus?

 

[Don]

Sounds interesting. I wanted to move to Cyprus and was exploring different options on how to structure there correctly.

But if the Estonian company is managed from Cyprus, isn't it liable for a corporate tax in Cyprus?

Yes, that is precisely what PE means.
The PE of the Estonian company would pay 12.5% CIT in Cyprus.
Estonia will not tax this profit.
At the same time, you can have some operations structured in Estonia at 0% tax until distribution.
Likewise, you could set up a (PE) branch in UAE with 9% corporate income tax.
Pay yourself a branch director salary at 0% tax (as UAE or Estonian tax resident).

 

[yngmind]

Yes, that is precisely what PE means.
The PE of the Estonian company would pay 12.5% CIT in Cyprus.
Estonia will not tax this profit.
At the same time, you can have some operations structured in Estonia at 0% tax until distribution.
Likewise, you could set up a (PE) branch in UAE with 9% corporate income tax.
Pay yourself a branch director salary at 0% tax (as UAE or Estonian tax resident).

I don't see much value in managing a foreign company from Cyprus. It's probably easier to have Cyprus LTD.

It's also interesting how they treat the US LLC. It's not a corporation but a partnership. How it's going to be taxed in Cyprus? Probably on a personal level, and the personal income tax should be paid in Cyprus.

 

[Don]

I don't see much value in managing a foreign company from Cyprus. It's probably easier to have Cyprus LTD.

It's also interesting how they treat the US LLC. It's not a corporation but a partnership. How it's going to be taxed in Cyprus? Probably on a personal level, and the personal income tax should be paid in Cyprus.

If you are living full-time in Cyprus and are a tax resident there, then having a local company could be easier indeed.

 

[blancmon229]

Yes, that is precisely what PE means.
The PE of the Estonian company would pay 12.5% CIT in Cyprus.
Estonia will not tax this profit.
At the same time, you can have some operations structured in Estonia at 0% tax until distribution.
Likewise, you could set up a (PE) branch in UAE with 9% corporate income tax.
Pay yourself a branch director salary at 0% tax (as UAE or Estonian tax resident).

If the PE is anyways in Cyprus and you regardless will be paying the 12.5% CT then why have an Estonian company and not just a local Cy LTD? Is it just to avoid GESY and extra filing requirements? If I'm not mistaken the 2.65% GESY is capped anyways.

I understand the benefit of a multi jurisdiction structure. Do you have any recommended lawyers that can set up this 2 jurisdiction structure? Please pm.

Cyprus can be a good option, but you will have to pay 12.5 corporate tax, and gesy 2.65%.

Georgia sucks a lot in terms of lifestyle, people, in general you will feel bad there.

Agreed. I do not like Georgia at all. Bulgaria on the other hand is one of my favorite places. Great taxes, nice people, good quality produce, and nice nature.

If you are living full-time in Cyprus and are a tax resident there, then having a local company could be easier indeed.

Please clarify this too: If i have an Estonian company with a Bulgarian branch, the effective tax is 10%. Bulgaria also has a 5% dividend tax however if the Bulgarian company sends the profits to the Estonian company. the Est company can redistribute this to shareholders tax-free? So I would in essence avoid the 5% dividend tax?

Also, Capital gains from trade in listed securities (shares, tradable rights) on regulated markets in the EU and equivalent markets specified in the legislation are not subject to taxation. For that to be true, would I need to set up the brokerage account with the Estonian entity or the Bulgarian branch?