An investment company is a fairly popular way to increase capital among entrepreneurs. Experienced and successful businessmen prefer profitable money invested to generate income. But the requirements for such organizations from the state are much greater due to the risk of fraud. Foreign investment companies or funds are checked especially carefully. Therefore, the registration of an investment company in Georgia is suitable for professionals who have some experience in the stock market. In this article, we will analyze in detail the registration process and taxation features applicable to investment companies in this country.
Investment company registration process in Georgia
By registering an investment company in Georgia, you will begin to profitably manage your money and will be able to attract funds from partners or even third-party investors. It makes sense to use Georgian jurisdiction to increase investment opportunities and to avoid difficulties associated with currency control. In addition, investment companies and funds in Georgia have a number of tax advantages in accordance with Article 23.1 of the Tax Code of Georgia.
The main problems that foreigners face when setting up an investment company in Georgia are the overestimated requirements for key figures in the company and maintenance costs when compared with ordinary companies.
The registration of an investment company itself consists of the following stages:
- Registration of a legal entity in one of the acceptable forms, namely: joint stock company (JSC) or limited liability company (LLC). When registering, you need to take into account the fact that you need to obtain a special license;
- Raising a sufficient amount of funds established by law for your field of activity;
- Hiring the necessary qualified highly qualified specialists in the staff;
- Collecting the necessary documents for obtaining a license;
- Licensing procedure.
Investment companies in Georgia are allowed to conduct absolutely legally:
- Dealer activity, which consists in the sale or purchase of equity securities for their own funds;
- Management of authorized securities;
- Brokerage, which consists in the sale and purchase of securities under an agreement with a client;
- Depository professional activities, registers of owners of registered securities and other work.
Classification of companies
Investment companies are mainly divided by purpose:
- Accumulation of funds that belong to clients for subsequent profitable investment in successful enterprises in order to make a profit;
- Investment of existing funds in various assets in order to diversify risks.
Obtaining a license
An investment license is required for an investment company to conduct permitted activities on the territory of Georgia.
Licenses can be:
- professional participant of the securities market;
- to carry out brokerage, dealer activities;
- securities management activities;
- depository activities.
If you have a license, you can:
- Be a financial advisor;
- Charge commissions for operations with securities;
- Accumulate cash by managing other people’s assets.
To obtain a license, you need to prepare the following:
- Company official name and abbreviation;
- Desired form of legal entity;
- Legal address;
- Information on the amount of the authorized capital and shares;
- Detailed information about the founders;
- Registered scheme of company management.
Taxes and incentives for investment companies in Georgia
The taxation of your company will directly depend on the chosen form of legal entity and tax benefits applied in accordance with Article 23.1 of the Tax Code of Georgia.
LLC taxes in Georgia:
- Value Added Tax – 18%;
- * On the income of the organization – 15%;
- * Income tax – 20%;
- * For dividends – 5%;
- * Withholding tax – from 10 to 15%.
Taxes for JSCs in Georgia:
- * Income tax – 15%;
- * Income tax – 20%;
- VAT – 0-18%.
* Dividends paid by an investment company to individuals or non-resident enterprises are not subject to withholding tax and are not included in the total income of the recipient of income.
* And also the distribution of profits by an investment company to a non-resident or an individual is exempt from income tax if the income from which dividends are paid:
- does not apply to income received from a source in Georgia;
- refer to income from the sale of equity securities issued by a resident legal entity through a public offer in Georgia and admitted to trading on an organized market recognized by the National Bank of Georgia;
- refer to income from the sale of borrowed securities issued by a resident legal entity through a public offer in Georgia and admitted to trading on an organized market recognized by the National Bank of Georgia, or income received as a percentage of these securities;
- refer to excess income from the sale of borrowed securities issued by the Government of Georgia or an international financial institution, or income received as a percentage of these securities or a deposit placed with a commercial bank.
Income received from the following are exempt from income tax and income tax:
- from the sale of an investment fund unit issued through a public offer in Georgia and admitted to trading on an organized market recognized by the National Bank of Georgia;
- from the sale of an investment fund unit or by repurchasing an investment fund unit, if the investment fund invests only in deposits placed with commercial banks of Georgia, or in securities issued by the Government of Georgia and / or an international financial institution, or in debt securities issued by a resident legal entity through a public offer in Georgia and admitted to trading on an organized market recognized by the National Bank of Georgia.
The easiest way to register an investment company in Georgia
Going through all the stages of registering an investment company in Georgia on your own without knowing the features of the legislation applicable specifically to your case is quite problematic, especially at the stage of obtaining a license. To avoid unforeseen difficulties and the likelihood of a license refusal, it is better to seek professional advice. Jara Accounting lawyers will assist you in obtaining a license and will accompany you throughout the entire registration process. Leave a request to get a free consultation on all your questions.