Foreign companies entering Georgia through a structured legal presence must decide early between three registration forms: a branch, a subsidiary, or a representative office. Under Georgian law, this choice is not merely administrative. It determines the entity's tax exposure, whether head-office liability extends to Georgian operations, which commercial activities are permitted, and — critically — whether the structure can qualify under the Free Industrial Zone regime introduced by the Law on Free Industrial Zones (2007). This checklist supports that decision for legal advisers and in-house counsel working on inbound mandates.
The first checkpoint is operational: what will the entity actually do in Georgia?
A representative office is authorised to carry out preparatory and auxiliary functions only — market research, liaison, promotion — but not revenue-generating commercial activities in its own name. It cannot enter into commercial contracts as principal or issue invoices for the supply of goods or services. Where the foreign parent wishes to maintain a promotional or scouting presence only, the representative office is the appropriate form and registration is correspondingly straightforward.
A branch carries out commercial activities in Georgia in the name and on behalf of the head office. It has no separate legal personality from the parent company. Income generated by the branch is attributed to the head office; the parent bears unlimited liability for obligations the branch incurs in Georgia. Georgian commercial contracts are entered into by the branch, but the contracting party is, in substance, the foreign parent.
A subsidiary — typically registered as a Limited Liability Company (LLC) under Georgian company law — is a separate legal entity. It enters into Georgian-law contracts in its own name, holds assets in its own name, and is liable for its own obligations. The parent's liability is limited to the registered share capital, subject to the usual piercing rules under Georgian civil law.
Note: A representative office cannot conduct revenue-generating activity. If the entity invoices for services or supplies goods to Georgian customers under its own name, it is treated as carrying on commercial activity regardless of how it is registered. Operating beyond the permitted scope of a representative office can trigger recharacterisation by the Georgian Revenue Service and attendant tax liabilities.
[CTA: If your planned activities include commercial contracts with Georgian counterparties — make an enquiry: info@vetrovpartners.com | WhatsApp/Telegram: +7 (983) 510-38-76]
The Law on Free Industrial Zones (2007) created a category of enterprise — the FIZ company — that is available only to entities incorporated within a designated Free Industrial Zone (such as the Poti or Kutaisi FIZ). The FIZ regime confers significant tax advantages: FIZ companies are generally exempt from corporate income tax on profits derived from permitted FIZ activities, from VAT on FIZ transactions, and from import duties on production inputs. Property tax exemptions also apply within designated zones.
The FIZ company is a distinct form of Georgian legal entity. It is not a variant of the branch, subsidiary, or representative office — it is an additional structure available in parallel. However, the practical interaction with the three standard forms is as follows.
A subsidiary (LLC or joint-stock company) incorporated within a FIZ by a foreign parent can be structured as a FIZ company, giving the foreign investor access to the FIZ tax regime through a separate-legal-personality vehicle with limited liability at the parent level. This is the most common inbound structure for manufacturing, logistics, and re-export operations.
A branch of a foreign company may, in principle, carry out activities within a FIZ, but it does not hold FIZ company status as a registered legal entity in its own right — the FIZ registration attaches to the entity, and a branch is not an entity distinct from the head office. The regulatory treatment of foreign branches operating within FIZs has, in practice, been less clearly settled than the subsidiary route; legal advice specific to the zone authority's current registration policy should be obtained before proceeding.
A representative office cannot qualify for FIZ company status and cannot carry on commercial activities within a FIZ in its own name for the same reasons that apply outside any FIZ context.
Note: The FIZ regime involves zone-specific administrative requirements, including compliance with the zone operator's regulations and, in some zones, minimum investment thresholds. These requirements change periodically. Confirming current threshold and activity eligibility with the relevant zone authority before committing to a FIZ structure is essential.
Tax treatment differs materially across the three forms, and the distinction is not limited to the FIZ regime.
Branch. Georgia taxes income on a source basis and, for residents, on a worldwide basis. A branch of a foreign company is taxed as a Georgian-source taxpayer on income attributable to its Georgian activities. Because a branch has no separate legal personality, profit repatriation to the head office does not trigger Georgian withholding tax in the same manner as a dividend from a subsidiary; however, the absence of a legal separation means the parent's worldwide assets are, in principle, available to satisfy Georgian creditors of the branch.
Subsidiary (LLC or JSC). A Georgian-registered company is a Georgian tax resident and subject to Georgian corporate income tax, VAT (where turnover thresholds are met), and other applicable taxes. Dividends distributed to a foreign parent shareholder are subject to withholding tax in Georgia at the standard rate, subject to any applicable double-taxation treaty between Georgia and the parent's home jurisdiction. Georgia has concluded double-taxation agreements with a significant number of countries; the specific treaty rate and conditions should be verified for the parent company's jurisdiction of incorporation.
Representative office. A representative office does not generate taxable income in Georgia directly (it should not, per Item 1 above). Its registered employees are subject to Georgian personal income tax and social contributions. The office must register with the Georgian Revenue Service for this purpose, even though it does not have a corporate income tax obligation of its own.
Note: Georgia operates a distributed profit tax model for corporate entities: corporate income tax is not levied on retained profits but on distributions and deemed distributions. This model applies to resident companies (subsidiaries) and has no direct analogue in the branch context, where the attribution of profit to the head office follows different rules. Advisers accustomed to conventional accrual-based corporate tax should verify the current application of Georgia's distributed-profit model before making rate comparisons.
[CTA: For in-house counsel assessing whether a Georgian subsidiary structure will achieve the desired withholding tax position — request our practice review: info@vetrovpartners.com | WhatsApp/Telegram: +7 (983) 510-38-76]
The registration formalities, documentation requirements, and ongoing compliance burden vary across the three forms.
Representative office. Registration is carried out with the National Agency of Public Registry (NAPR). The required documentation typically includes a decision of the foreign parent to establish the representative office, an extract from the parent's home-jurisdiction commercial register, the charter (constituent documents) of the parent, and the appointment document for the head of the representative office. The process is generally the most straightforward of the three forms and can be completed within a short period once documentation is in order.
Branch. Registration with NAPR requires similar documentation to the representative office plus evidence of the head office's authorisation for the branch to operate in Georgia. The scope of the branch's authority should be clearly defined in the authorisation instrument, as Georgian courts will look to that document when assessing the branch's authority to bind the head office. Ongoing compliance includes filing tax returns as a Georgian tax registrant, maintaining accounting records attributable to Georgian activities, and — where applicable — satisfying Georgian statutory audit requirements.
Subsidiary (LLC). Registration of a Georgian LLC requires the preparation of a Georgian-law charter, registration of the founding decision, and payment of registered share capital (Georgian law sets a nominal minimum, but commercial and financing considerations typically dictate a higher amount). The subsidiary must maintain its own accounting records, file standalone tax returns, hold annual general meetings, and comply with all Georgian corporate governance requirements applicable to resident companies. Where the subsidiary operates within a FIZ, additional zone-registration and compliance obligations apply in parallel with NAPR registration.
Note: Georgian law requires that certain categories of activity — including financial services, insurance, telecommunications, and energy — are subject to sector-specific licensing regardless of the form of presence chosen. The applicable licensing authority and conditions differ by sector. Confirming licensing requirements before finalising the structural choice is a prerequisite, not a post-registration step.
For foreign investors with existing operations in CIS or EAEU jurisdictions — including Russia — the Georgian presence is frequently conceived as one component of a multi-jurisdictional structure rather than a standalone entity. This dimension affects the structural choice.
A subsidiary offers the greatest structural flexibility for multi-jurisdictional arrangements: it can hold Georgian-situs assets, enter into intercompany agreements with affiliates in other jurisdictions, and be positioned within a holding structure. Georgian law does not restrict foreign ownership of Georgian LLCs or JSCs, and there is no general prior-approval requirement for foreign direct investment in most sectors (sector-specific restrictions apply in the areas noted under Item 4 above).
A branch, because it lacks separate legal personality, cannot be positioned within an intercompany structure in the conventional sense — it is the head office operating in Georgia, and intercompany arrangements between the head office and its own branch are not legally or commercially meaningful in Georgian law terms. Where the long-term intention is to transfer Georgian assets to a separate vehicle or to bring in a Georgian joint-venture partner, the branch structure creates unnecessary friction.
A representative office has no asset-holding capacity and is not appropriate for any structuring objective beyond maintaining a local presence for liaison purposes.
For investors relocating from jurisdictions facing increased cross-border uncertainty — including those managing Russian-origin assets or considering Georgia as an intermediary jurisdiction in a cross-border restructuring — the subsidiary's structural flexibility is typically the determinative factor, with FIZ eligibility then assessed as a secondary optimisation.
[CTA: For firms advising clients on multi-jurisdictional structures involving Georgian entities — make an enquiry: info@vetrovpartners.com | WhatsApp/Telegram: +7 (983) 510-38-76]
Q: What is the main practical difference between a branch and a subsidiary for a foreign company entering Georgia? A: The fundamental difference is legal personality and liability. A branch has no separate legal personality — it is the head office conducting business in Georgia, and the parent company is directly and unlimitedly liable for the branch's Georgian obligations. A subsidiary is a separate Georgian legal entity; the parent's liability is limited to its capital contribution, subject to standard piercing rules. This distinction determines not only the liability profile but also the entity's capacity to hold assets, enter into intercompany arrangements, and qualify for the FIZ regime under the Law on Free Industrial Zones (2007).
Q: Can a representative office be converted into a subsidiary or branch at a later stage? A: Georgian law does not provide a direct conversion mechanism. In practice, foreign companies that have registered a representative office and subsequently wish to carry on commercial activities must register a new entity — a branch or a Georgian-law company — separately and transfer operational arrangements accordingly. The representative office registration is then typically closed. Early-stage structural planning that anticipates the future commercial trajectory of the Georgian presence can avoid the cost and administrative disruption of this process.
Q: Does the Free Industrial Zone regime under the Law on Free Industrial Zones (2007) apply automatically to any company operating within a FIZ? A: No. FIZ company status must be applied for and granted by the relevant zone authority. The entity must meet the zone's eligibility requirements, which include registration within the designated zone, compliance with permitted activity categories, and — in some zones — minimum investment criteria. Operating within the geographical boundaries of a FIZ without FIZ company registration does not confer the associated tax advantages. Foreign investors should confirm current eligibility conditions with the zone authority and obtain specific legal advice before structuring a transaction around the FIZ regime.
Vetrov & Partners is a boutique law firm established in 2009 and recognised by Pravo-300 — Russia's principal legal directory — for eight consecutive years. The firm advises foreign companies, creditors, and private clients on cross-border legal matters, including inbound investment structuring into CIS and Caucasus jurisdictions.
The firm's Market Entry & Company Formation practice supports foreign investors on jurisdiction selection, structure analysis, and registration across the region, working with trusted local counsel in each jurisdiction. With over 1,000 matters handled since inception, the team provides partner-direct advice on every engagement.
Nino Beridze is a contributing regional analyst specialising in Georgian business relocation, company formation, and tax structuring, and advises on inbound mandates into Georgia in collaboration with the firm.
Enquiries: info@vetrovpartners.com | WhatsApp / Telegram: +7 (983) 510-38-76 | t.me/vitvetcom
— Nino Beridze Contributing Regional Analyst — Georgia, Business Relocation & Tax Structuring vetrovpartners.com/contributions/
This publication is provided for informational purposes only and does not constitute legal advice under Georgian or any other applicable law. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Vetrov & Partners is a Russian-qualified law firm. For matters governed by foreign law or requiring local admission in another jurisdiction, we collaborate with trusted counsel in the relevant jurisdiction. For advice regarding your particular situation, please contact info@vetrovpartners.com.