A practical guide to recognition of trusts and foundations in Georgia under the Law on Free Industrial Zones (2007)

Foreign private wealth holders who hold assets in Russia, Central Asia, or the South Caucasus have turned to Georgia's Free Industrial Zone regime with increasing regularity as a structuring tool since the mid-2010s. The question that consistently arises from family offices and their advisers is whether the Law on Free Industrial Zones (2007) accommodates trusts, foundations, or analogous arrangements – and, if so, what practical steps are required to deploy those structures effectively. This guide addresses that question directly. It does not promise more than Georgian law delivers: the FIZ statute does not transplant common-law trust recognition into Georgian private law, but it creates a legally distinct envelope within which foundation-type vehicles and contractual trust arrangements can be deployed with meaningful tax and regulatory advantages.

What to prepare before taking any steps

Before instructing counsel in Georgia, a wealth holder or family office adviser should assemble the following:

• Constitutional document of the existing trust, foundation, or holding structure (trust deed, foundation charter, or equivalent), together with a certified translation into Georgian or English
• Evidence of the settlor's or founder's tax residency position in all relevant jurisdictions
• A summary of the assets intended to be held within or transferred to the FIZ structure (categories, not precise valuations at this stage)
• Details of existing cross-border arrangements touching Georgia – including any Russian assets, CIS-based holdings, or agreements that may require Georgian regulatory clearance on transfer
• Identification documents for all beneficial owners, settlors, and protectors to satisfy Georgian AML/KYC requirements on FIZ registration
• A preliminary view from home-jurisdiction counsel on the tax treatment of an outbound transfer into a Georgian FIZ entity (this step frequently causes delay when overlooked)

Engaging Georgia-qualified counsel at the outset – rather than after entity formation – reduces the risk of structural choices that cannot be reversed without triggering adverse tax events.

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The Law on Free Industrial Zones (2007) establishes a discrete regulatory and tax environment for entities registered within one of Georgia's designated Free Industrial Zones – principally Kutaisi FIZ, Poti FIZ, and Tbilisi FIZ. The statute does not create a trust law or a foundation law in the civil-law sense. What it does is permit a broad range of legal entity types to be registered within the FIZ and to operate under a simplified regulatory framework, subject to Georgian FIZ Authority oversight.

The practical relevance for wealth structuring is twofold. First, FIZ-registered limited liability companies and, in certain configurations, non-commercial legal entities can replicate several functions of a foundation – in particular, the separation of assets from the personal estate of the founder, the appointment of an independent management body, and the embedding of distribution rules in the constitutional documents. Second, the FIZ tax envelope – which in its standard form exempts FIZ entities from Georgian corporate income tax on permitted activities – makes such structures materially more efficient for asset holding and succession planning than equivalent vehicles registered under the Georgian Civil Code alone.

What the statute does not do is recognise a foreign trust as a legal person or confer Georgian legal personality on a common-law trust. A trust deed governed by English law, Jersey law, or any other common-law system remains effective as a matter of contract between its parties, but Georgian courts will treat the FIZ-registered entity – not the trust itself – as the legal owner of Georgian-situs assets. This distinction matters for succession planning: the trust instrument may direct distributions, but enforcement of those directions against a Georgian entity requires either contractual embedding in the FIZ entity's constitutional documents or the appointment of a trustee as the registered director of the FIZ entity.

Georgian law provides for non-commercial legal entities (NCLEs) under the Civil Code, which function broadly analogously to foundations in civil-law systems. An NCLE may hold assets, employ personnel, and make distributions in accordance with its charter. When registered within a FIZ, an NCLE benefits from the FIZ tax envelope for qualifying activities. This is the closest approximation to a civil-law foundation available within the Georgian legal system.

For common-law trust users, the typical approach is to establish a FIZ-registered LLC whose sole or controlling shareholder is a common-law trust (settled offshore). The LLC holds the Georgian-situs and CIS-adjacent assets; the trust holds the economic interest in the LLC. This layered structure allows the trust instrument to govern economic entitlement and succession, while the LLC provides Georgian legal personality and access to the FIZ regime.

The choice between an NCLE and an LLC within the FIZ turns on four factors:

• Whether distributions to named beneficiaries are a structural requirement (NCLE charters can embed beneficiary schedules; LLC operating agreements are more flexible but less bespoke)
• Whether the structure needs to hold immovable property in Georgia (NCLEs face restrictions in certain property categories; FIZ-registered LLCs generally do not)
• Whether the client's home-jurisdiction tax treatment differs between a foundation-type vehicle and a corporate vehicle (a point requiring home-jurisdiction tax advice, which is outside the scope of Georgian counsel)
• Whether the client requires confidentiality in the register: FIZ entity registration is maintained by the FIZ Authority and is not fully integrated with the Georgian National Agency of Public Registry, which provides a degree of additional confidentiality compared to standard Georgian LLC registration

Counsel should be instructed to map these four factors against the client's specific asset profile before entity selection is finalised.

Registration of a legal entity within a Georgian FIZ is a distinct process from Georgian company formation under the general Civil Code. The procedural steps are as follows:

• Obtain a licence to operate within the chosen FIZ from the FIZ Authority. The licence application requires identification of the intended activities (for wealth-holding and succession structures, this is typically "financial holding" or "investment activities" depending on FIZ-specific rules).
• Execute the constitutional documents (charter for an LLC or NCLE) in accordance with FIZ Authority template requirements. Constitutional documents must be in Georgian; a parallel English translation is strongly advisable for foreign beneficial owners.
• Register the entity with the FIZ Authority. Registration is separate from – and precedes – any registration with the Georgian National Agency of Public Registry. For FIZ entities, the FIZ Authority registration is the operative step for legal personality.
• Open a Georgian bank account for the FIZ entity. In practice, this step requires KYC documentation for all beneficial owners and source-of-funds evidence. For structures involving Russian or CIS-sourced assets, Georgian banks will require additional documentation and, typically, a longer review period.
• Transfer assets to the FIZ entity in accordance with the approved charter and any applicable transfer documentation. Where the transferor is a common-law trust, the trustee executes the transfer as legal owner.
• If a common-law trust sits above the FIZ entity, register the trust's interest in the LLC by recording the trustee as the registered shareholder and embedding any nominee arrangement in the trust deed and the LLC's shareholder register.

The standard timeline from instruction to operational FIZ entity is four to eight weeks where documentation is complete at the outset. Where source-of-funds queries arise at the banking stage – which is common for first-time clients from Russia and Central Asia – the timeline should be extended to three to four months in planning assumptions.

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The FIZ regime is designed primarily for commercial and manufacturing activities. Wealth-holding and succession-planning uses are permissible but require careful characterisation of the entity's activities in the licence application and constitutional documents. Immovable property located outside a FIZ zone cannot be directly registered in the name of a FIZ entity in all configurations; holding through a subsidiary outside the FIZ is the standard solution for Georgian real property. Securities, bank deposits, intellectual property rights, and receivables are generally held without structural restriction.

For cross-border portfolios that include Russian assets, additional considerations arise. Transfers of assets from Russian-based entities or individuals to a Georgian FIZ structure are subject to Russian currency control and capital movement rules, independent of Georgian law. Georgian counsel cannot advise on those Russian-law constraints; Russian-qualified counsel must be involved in the outbound transfer analysis before any Georgian structuring steps are taken.

For foreign nationals who hold FIZ entities, Georgian private international law principles generally apply the law of the decedent's domicile to succession in movable property and Georgian law to immovable property situated in Georgia. The FIZ registration does not alter these private international law rules. However, structuring the economic interest in the FIZ entity through a common-law trust or a civil-law foundation established in a separate jurisdiction means that, on the settlor's or founder's death, the succession to the economic interest is governed by the trust or foundation instrument – not by Georgian inheritance law. This is the principal succession-planning advantage of the layered approach described in Step 2.

Where an NCLE is used as the primary vehicle (without a foreign trust layer), the charter should set out distribution and succession rules explicitly. Georgian courts have generally given effect to well-drafted NCLE charters on these points, though the body of case law is not extensive and counsel should not treat this as settled doctrine.

Q: Does Georgia recognise a common-law trust as a legal person under the Law on Free Industrial Zones (2007)?

A: No. The Law on Free Industrial Zones (2007) does not confer Georgian legal personality on a common-law trust. A trust remains a contractual arrangement among its parties and is not registered as a legal entity in Georgia. The practical approach for common-law trust users is to hold a FIZ-registered Georgian LLC through the trust, so that the Georgian legal entity – not the trust itself – is the registered owner of Georgian-situs assets. The trust instrument governs the economic interest in the LLC and succession to that interest in accordance with its governing law.

Q: What documents does a foreign trust or foundation need to produce to establish a FIZ entity in Georgia?

A: The FIZ Authority and Georgian banks require the constitutional document of the foreign structure (trust deed or foundation charter), certified translations, beneficial owner identification for all settlors, protectors, and beneficiaries with a significant interest, and source-of-funds documentation for the initial capitalisation. The precise requirements vary by FIZ Authority and by the banking institution selected. Engaging Georgia-qualified counsel before preparing documents avoids the common error of submitting documentation in formats that the FIZ Authority does not accept, which restarts the review period.

Q: How long does FIZ registration take for a wealth-holding or succession-planning structure?

A: Where documentation is complete and the client's source-of-funds position is straightforward, registration typically takes four to eight weeks. For structures involving transferors from Russia, CIS jurisdictions, or sanctioned-territory asset pools, the banking KYC stage routinely extends the overall timeline to three to four months. These are planning estimates; individual timelines vary. Counsel should be instructed early enough to allow for delays at the banking stage before any time-sensitive asset transfer is executed.

• [Georgia as a structuring jurisdiction: an overview for private wealth clients](/jurisdictions/georgia/private-wealth/)
• [Succession planning structures available in Georgia: what foreign nationals need to know](/jurisdictions/georgia/succession/)
• [Tax residency and relocation to Georgia: a practical guide](/jurisdictions/georgia/tax-residency/)

Vetrov & Partners is a Russian boutique law firm established in 2009, recognised by Pravo-300 for eight consecutive years. The firm advises foreign nationals, family offices, and institutional investors on cross-border structuring matters involving Russian and CIS assets, including outbound planning into Georgia and other South Caucasus jurisdictions.

For Georgia-specific mandates, the firm works with trusted Georgia-qualified counsel and contributing regional analysts. We are a Russian-qualified law firm; for matters governed by Georgian law, we co-ordinate with local counsel in Tbilisi.

Enquiries: info@vetrovpartners.com | WhatsApp / Telegram: +7 (983) 510-38-76 | t.me/vitvetcom

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This publication is provided for informational purposes only and does not constitute legal advice under Russian 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.

— Nino Beridze Contributing Regional Analyst — Georgia, Vetrov & Partners vetrovpartners.com/contributions/