Georgia’s Dividend, Withholding, and Property Taxes: What Businesses Should Know
- Tinatin Tolordava
- May 1
- 8 min read
Table of contents
Introduction: What Taxes Matter Most for Businesses in Georgia?
Most people know Georgia for its 1% tax regime for freelancers, the ease of opening a company, and its minimal bureaucracy. But once you move beyond the basics and start running a profitable company, it’s time to talk about what happens after you earn income, specifically, how your profits are taxed when distributed as dividends, how cross-border payments are treated, and what to expect if your business owns property.
The dividend tax Georgia applies to almost all companies that distribute profits. For small and medium enterprises, withholding taxes and property taxes might not apply at first, but as your operations grow, understanding these additional layers becomes essential.
In this guide, we break down how Georgia taxes company profits, when dividend and withholding taxes apply, and how to plan for these obligations. Whether you’re an investor, a startup founder, or an international business owner, understanding these details will protect your income and help you manage your tax exposure more effectively.
Corporate Tax Structure Overview in Georgia
Georgia offers one of the most business-friendly tax systems in the region, particularly for LLCs. The headline feature? There is no tax on retained earnings. You only pay corporate income tax when profits are distributed.
The corporate tax in Georgia is 15% on distributed profit. If your company keeps its profits in the bank or reinvests them into new services, salaries, or growth, no corporate tax is due.
This tax model is based on the Estonian model, where taxation is tied to cash flow rather than accounting profit. That means businesses aren’t punished for reinvesting. It also makes filing a bit simpler.
Key highlights of Georgia’s corporate tax structure:
The 15% corporate tax rate applies only to distributed profits
No advance or estimated payments required
Reinvested profits are not taxed
No capital gains tax for companies
No payroll tax from the employer side unless salaries exceed certain thresholds
When starting a business in Georgia country, most foreign entrepreneurs opt for an LLC. The process for company formation in Georgia is simple, fast, and affordable. Most of the compliance burden is tied to tax filing after profit distribution, making it easy to operate lean during the early stages.
Dividend Tax Georgia: What You Actually Pay
Once your company makes a profit and decides to distribute that profit to shareholders, the dividend tax in Georgia kicks in.
Here’s how it works:
After a company pays 15% corporate tax on distributed profits, a 5% dividend tax applies to the shareholder who receives that distribution.
If you're a foreign shareholder, the dividend tax is withheld at the source before the funds reach you.
This means your total tax burden is 19.25% of the distributed amount.
Let’s walk through an example:
Your company makes 100,000 GEL in net profit.
You decide to distribute the full profit.
First, 15% corporate tax = 15,000 GEL → Remaining: 85,000 GEL
Then, 5% dividend tax on that 85,000 = 4,250 GEL
Net payout to shareholder = 80,750 GEL
Total taxes paid = 19,250 GEL (19.25% of the original 100,000 GEL)
This combined taxation is still lower than what most Western companies pay when factoring in corporate taxes plus dividend or capital gains taxes.
Double taxation agreements (DTAs) can lower the dividend tax for residents of treaty countries. However, you must provide documentation of your tax residency and claim the treaty rate during the tax return process.
Withholding Taxes in Georgia: Do They Apply to You?
Withholding taxes come into play when your company in Georgia pays certain types of income to non-residents or foreign entities. These include payments for royalties, interest, and service fees.
Here’s the general breakdown under the Georgia tax system:
Interest payments to non-residents: 5%
Royalty payments: 5%
Service fees paid to foreign providers: 10%
Dividends to non-residents: 5% (as outlined above)
However, these rates may be reduced or eliminated under double tax treaties between Georgia and your country of tax residency. Georgia has over 50 such treaties, including with Germany, the UK, Italy, France, the UAE, and others.
How it works in practice: If you are paying a service provider in Germany, and there’s a DTT between Georgia and Germany, the withholding tax may be 0% or reduced to 5%. But you’ll need to obtain and submit a certificate of tax residency for the service provider, usually to the Georgian Revenue Service.
When does this matter?
If you’re:
Operating a Georgian company with foreign contractors
Paying interest on shareholder loans
Licensing IP and paying royalties
Distributing dividends abroad
Then you’ll need to consider withholding obligations before finalizing cross-border transactions.
Property Tax in Georgia: When Businesses Should Care
Property tax is simple in Georgia, but it can be overlooked when planning long-term operations.
Businesses only pay property tax on real estate they own in Georgia. There is no property tax on movable goods (vehicles, office equipment) or digital assets.
How it works:
Local municipalities levy taxes
Typically ranges from 0.1% to 1% of the cadastral (declared) property value
Paid annually by the business entity that owns the property
Let’s say your company owns a small office in Tbilisi worth 300,000 GEL (as per the land registry). If the municipal property tax rate is 0.5%, your annual tax would be 1,500 GEL.
When does this apply to your business?
You purchase a commercial office, apartment, or other real estate
You register a property under the name of your LLC
You operate from a property that you own rather than rent
Foreigners and foreign-owned companies can directly own property in Georgia (except agricultural land, which is restricted). Once registered, the property becomes subject to annual local tax.
You’ll receive a tax notice or can proactively file your Georgia tax return for property tax through the Revenue Service portal.
Important tip: If you're not actively using the property (e.g., it's rented out), you may also need to report rental income, which carries its own tax obligations.
Dividend and Tax Planning for Foreign-Owned Companies
If you’re a foreigner running a company in Georgia or investing in one, you should have a dividend strategy that balances tax optimization with operational liquidity.
Dividend tax in Georgia applies to you even if you're not a tax resident. Your 5% tax will be withheld before payment, unless you apply a tax treaty.
Here’s what smart dividend planning looks like:
Avoid unnecessary distributions: If your company doesn’t need to pay out profits right away, keep funds inside the business. Reinvest in marketing, hiring, or infrastructure. Georgia only taxes profits when distributed, so this can defer your tax burden.
Align distributions with tax residency strategy: If you become a tax resident of Georgia (spending 183+ days in a year), your global income may become taxable in Georgia, but the tax residency Georgia certificate helps you claim relief in your home country. Timing your dividend distribution while you are officially a Georgian tax resident may offer treaty benefits.
Use holding companies (if advanced planning is needed): Some businesses structure a Georgian LLC owned by a holding company in a treaty-friendly jurisdiction. This can help minimize dividend withholding tax or simplify the flow of profits to investors. (Professional structuring is needed here.)
Declare all dividends properly: Even if your Georgian company didn’t make a distribution, you must file your annual Georgia tax return properly. Undeclared dividends can lead to the reclassification of personal withdrawals as income.
Plan currency movements: Georgia allows businesses to hold and distribute dividends in foreign currencies (USD, EUR). Choose a currency that minimizes transfer fees and FX losses when sending dividends to shareholders abroad.
For companies with long-term growth goals, balancing reinvestment and distributions is essential. Don’t default to withdrawing everything; consult an advisor to optimize timing and minimize taxes.
How These Taxes Impact Freelancers vs Companies
Georgia’s tax system is not one-size-fits-all. The way dividend tax, withholding rules, and property taxes apply will vary greatly depending on whether you’re operating as a freelancer under the Individual Entrepreneur (IE) model or as a formal company (LLC).
For freelancers (Individual Entrepreneurs):
No dividend tax applies because there are no dividends. You are taxed as an individual based on turnover, not profit.
With Small Business Status, you pay 1% on gross revenue up to 500,000 GEL annually.
There’s no separation between you and your business, so income earned is yours directly, with no additional layers of corporate or dividend tax.
You file monthly turnover declarations and an annual tax return (Form 500).
You do not need to worry about withholding taxes on payments unless you're paying foreign contractors as part of subcontracted work.
Property taxes only apply if you own real estate in your personal name, not through your business structure.
In short, freelancers enjoy a simpler tax setup. But they also have fewer legal protections, cannot issue dividends, and don’t benefit from deferred profit taxation.
For LLCs and companies:
Profits are taxed at 15% when distributed.
Once distributed, they are subject to a 5% dividend tax, regardless of the shareholder’s tax residency (unless reduced by treaty).
Cross-border payments to foreign contractors, licensors, or lenders can trigger withholding taxes ranging from 5% to 10%.
Property owned by the business is subject to annual property tax, payable to the local municipality.
LLCs allow you to retain profits and delay taxes until distribution, freelancers don’t have this option.
If you plan to scale, raise investment, or bring on partners, moving from freelancer status to an LLC may make sense. But with that comes increased compliance, tax planning, and formal obligations.
Conclusion: Know the Full Picture Before You Withdraw Profits
Georgia’s tax system is clear, modern, and well-suited to entrepreneurs, whether you’re just starting out as a solo consultant or running a profitable company.
But knowing the details makes all the difference.
The dividend tax Georgia applies only when profits are distributed, which gives LLCs a strategic advantage when it comes to reinvesting. However, once you take those profits out, expect to pay both corporate and dividend taxes unless you have a strategy in place. Similarly, withholding taxes can impact cross-border operations and vendor relationships, and property tax should be factored in for companies that own real estate in Georgia.
If you’re a freelancer, the system is simple: you likely won’t deal with dividends or withholding, but you also won’t benefit from reinvestment tax deferrals.
If you’re running an LLC, knowing when to distribute, how to apply tax treaties, and how to structure payments gives you a serious edge.
Georgia is tax-friendly, but it rewards those who are informed. And that’s where we come in.
Need help navigating Georgia’s business taxes? Gegidze supports companies and entrepreneurs with everything from registration and compliance to dividend planning and tax residency. We’ll make sure you’re fully compliant and never overpay.
Frequently asked questions (FAQ)
What is the corporate tax rate in Georgia for companies?
Georgia applies a 15% corporate tax only when profits are distributed. Retained or reinvested earnings are tax-free until paid out.
