UK LLP + Georgia tax 1%?

hastes

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Feb 8, 2025
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#1
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Hi everyone, I need advice on structuring my taxes. Here’s my situation:
  • Personal Status:
    • Physically and tax resident in Georgia (183+ days).
    • Registered as a Small Business Individual Entrepreneur (IE) in Georgia (1% tax on turnover for IT services).
  • Business Structure:
    • UK LLP (95% partner) – contracts with clients (e.g., Google) are under the LLP.
    • Income is received into the LLP’s UK account (Payoneer/Wise).
    • The LLP and IE in Georgia are both used for the same IT activities (software dev).
Key Questions:
  1. Declaring LLP Income in Georgia:
    • If I keep profits in the LLP (UK account), do I need to declare/pay taxes in Georgia?
    • Georgia has no CFC rules, but I’m a tax resident. Does "management from Georgia" trigger any tax liability for undistributed profits?
  2. Withdrawing Funds to Georgia:
    • Option 1: Transfer profits from LLP to my personal account as "profit distribution" → 20% PIT?
    • Option 2: Invoice the LLP from my Georgian IE for services (e.g., subcontracting) → 1% turnover tax.
      • Will this trigger scrutiny if the IE and LLP share the same clients/activities?
  3. Risks:
    • Could the Georgian tax agency reclassify LLP profits as IE income if activities overlap?
    • Any experience with audits for similar setups?
Context:
  • The LLP has no office/staff in Georgia. Only me.
  • All clients are non-Georgian, USA Google.
  • Goal: Legally minimize taxes while complying with Georgian/UK laws.
Thanks!
 
#2
If you operate a tax-transparent LLP in UK, you have to pay taxes in the country of your residence. The LLP is a discarded entity and all money belongs to you personally. There is no such thing as "undistributed profits", it is just personal income not remitted to Georgia.

The main question is whether you must register your UK LLP in Georgia, respectively the branch there, or if you can simply declare all income as self-employment (IE) income in Georgia. You may want to go with the Option 2 and invoice all profit to your IE in Georgia to limit possibilities of discussion.
 
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#3
I’d prefer to partially withdraw the profits for personal use and partially allocate them for business expenses. I believe it should be enough to simply declare this profit and that’s it. But not sure.
 
#4
hastes said:
I’d prefer to partially withdraw the profits for personal use and partially allocate them for business expenses. I believe it should be enough to simply declare this profit and that’s it. But not sure.
Click to expand...
Yes, you can. But a tax-transparent entity passes all profit onto the owners as personal income. You can leave it in the company, after you paid taxes on them. That's how a LLP works.

Otherwise, you need to resort to Estonian or Latvian companies etc. There, you can keep profits in the company without paying taxes on it.
 
#5
daniels27 said:
you need to resort to Estonian or Latvian companies etc. There, you can keep profits in the company without paying taxes on it.
Click to expand...

Georgian LLC works the same way, they are taxed only upon distribution at 15%.

If you are into software dev look into international company status, if what you do is a permitted activity then you'll be paying 5% total tax which is not 1% but you are doing things by the book and there's no income threshold like for the individual entrepreneur.
 
#6
My turnover is still relatively small, so it’s easier and less stressful to just pay the 1% tax and keep things simple. It’s still an extremely low rate. Also I think Estonian or Latvian companies will bad for me because of passport.
 
#8
Georgia has no CFC rules, but I’m a tax resident. Does "management from Georgia" trigger any tax liability for undistributed profits?
Click to expand...
Hi. If it was a foreign LLC, it would become Georgian resident in your case - to be taxed just as a usual Georgian company. Not sure about LLP.

You will have serious difficulties opening local bank accounts for a Georgian LLC. IE may work.

Cheers.
 
#15
orangekangaroo said:
i asked this same question 4 years ago to a Georgian lawyer. I wanted to use the 1% as freelancer but with us LLC or UK LLP for legal protection. It did not fly and it was the end of me looking at Georgia for a low tax alternative.
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What response did you get from the lawyer? I'm hesitant to consult lawyers because the local legislation is not well-developed, and each lawyer will interpret the law as they see fit, especially considering that the issue falls under international law, not just local law.

I'm thinking of reaching out to the tax authorities directly to get their opinion.
 
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