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What happened with Georgia?
We’ve already talked about Georgia, and the opportunities available in this country.
We’ve also talked about unofficial citizenship by investment in this country.
Unfortunately, Georgia is not a good place to do business anymore. We will try to explain why.
Banking and offshore companies in Georgia
We’ve banked in Georgia for many many years. We started setting up there in 2014.
TBC and Bank of Georgia used to be our favorite places to bank. Back at the time, we were able to open bank accounts for offshore companies, which was awesome.
Online banking was easy and modern, customer service was amazing.
We had a good time working with these banks, as everything was going smoothly.
At one point they stopped accepting offshore companies. The only way you could do it was through wealth management accounts.
This was still not a deal-breaker, because we were able to operate with companies formed in Georgia.
We would do it with free trade zone companies, which were zero tax.
They were quite expensive to form and maintain, but it was worth it.
The tax system was modified and quite appealing for setting up a company.
They have similar tax rules to Estonia, in terms of how they tax distributions vs profits.
There were possibilities of getting much lower taxes. Georgia was never a blacklisted country, which is a very good thing that could save you from many problems.
There were many other benefits of doing business here and we used to love it.
So, what happened?
Georgia is one of the few countries that didn’t sign on CRS – common reporting standard, while still having good banking, became a very appealing place for many bad people to run their money through.
As a general rule, if a country is too easy to set up with, it will become a hub for money launderers and criminals. This is a very bad thing if you’re legit and you will want to get away from that place.
This happened in many other countries already such as Cyprus or Latvia, and now it came to Georgia.
How did Georgia respond to all this?
Well, in the last year they made things extremely difficult. Now it’s close to impossible to set up as a foreigner.
The first thing that happened, free zone companies had an extremely hard time setting up bank accounts. You couldn’t bank with these companies anywhere. They weren’t even accepted in Macedonia.
I wasn’t a big fan of free zone companies anyway, so this wasn’t a deal-breaker for me.
However, the next thing that happened banks started getting visits from various authorities who were giving them warning signs about their clients.
Naturally, banks became much more risk-averse and things started to close down.
What remains today?
If you’re not a Georgian resident you will have a very hard time opening a bank account for a company.
The new rule they introduced was that you need to have operations in Georgia, which many people didn’t mind.
Setting up an office and hiring locals aren’t expensive at all, so this wasn’t an issue.
But then they got even tougher, and even if you had a local company that was operating in Georgia, but you are not a Georgian resident and you didn’t have a Georgian resident director you wouldn’t be able to bank with ease.
If you have a company in Georgia it is still possible to open a bank account in a few other places – Poland, Bulgaria, you can use EMIs or Transfer wise.
However, this is not as appealing as it used to be.
What we used to love about Georgia were mainly these three things:
- In Georgia, they did a great job of eliminating bureaucracy. Forming companies was quick and easy.
- The tax system was good. It wasn’t necessarily zero tax, but you could have a good degree of tax efficiency.
- Awesome banking- this is unfortunately not the case anymore
We had a conversation with a bank recently. They told us- because you have a local presence (office and employees) we will let you do the banking but we will only allow you to do dementing Georgian transfers. So, we could only transfer business to people in the country.
Well, for people doing business internationally, this is simply not viable.
Bottom line is, Georgia is not an appealing place to set up a company unless you live there. It got so hard, and you’d need to jump through many hoops for things to work for you.
You might as well set up somewhere else – Labuan, UAE, Hong Kong, etc.
If you have a Georgian company and are struggling with banking reach out to us. We might be able to help you.