Published by Bookkeeping.ge — Assio Lex and Associates LLC
Updated
International tax and business in Georgia
Paying an overseas supplier, lender or shareholder can involve withholding tax, treaty relief and reverse-charge VAT. Bookkeeping.ge helps Georgian businesses calculate the payment correctly and connect the contract, bank transfer and tax declaration.
Review a cross-border payment
Review the payment before sending it
Begin with the transaction itself. Identify the recipient, the work or rights supplied, where the income arises and whether a Georgian permanent establishment is involved. A transfer to a foreign account is not automatically taxable withholding income, and the word “service” on an invoice is not a complete tax classification.
Build a payment register with the counterparty’s country, invoice currency, gross contractual amount, proposed transfer date and any tax to be withheld. This is particularly useful for subscriptions, management fees, group loans and regular contractor payments.
Main Georgian withholding-tax categories
| Payment category | Ordinary domestic rate | What the review should cover |
|---|---|---|
| Dividends | Generally 5% | Recipient, statutory exemptions and treaty entitlement |
| Interest | Generally 5% | Lender, financing terms and any special treatment |
| Royalties | 5% | Actual intellectual-property rights and the treaty definition |
| International telecommunications and international transport payments covered by the rule | 10% | Service category and applicable treaty article |
| Other covered Georgian-source income | 10% | Source, income classification and treaty relief |
Special rules can change the result. Certain interest, royalty and other covered payments to persons in preferential-tax jurisdictions are subject to 15%. This is not a general 15% rate on every payment to those jurisdictions. Employment remuneration and income attributable to a Georgian permanent establishment need their own treatment.
Apply treaty relief to the right payment
A double taxation treaty may reduce withholding or allocate the income differently. Establish that the recipient qualifies, obtain the residence evidence and identify the correct income article. Where the domestic rate is lower than the treaty ceiling, the ceiling does not increase the domestic tax.
For example, a contract for software access may raise a different question from a contract transferring rights to reproduce or exploit software. Read the licence terms and describe what the customer can actually do. The same review should explain any treatment of a business-service payment under a treaty.
Use our double taxation treaty guide for certificates, relief at source and refunds. Keep the evidence with the payment file so the tax declaration follows the same analysis.
Reverse-charge VAT on services from abroad
Withholding tax and VAT are different calculations. A qualifying service purchased from a non-resident can trigger 18% reverse-charge VAT in Georgia. Review the place-of-supply rules and the type of customer and service before deciding the VAT treatment.
Reverse-charge obligations can arise for a Georgian business that is not registered as an ordinary VAT payer. The GEL 100,000 turnover threshold for ordinary VAT registration is not a general exemption from reverse-charge VAT. For a VAT-registered customer, any input deduction depends on the normal deduction conditions and use of the service.
| Question | Focus | Typical records |
|---|---|---|
| Withholding tax | Income paid to the non-resident | Contract, source analysis and tax calculation |
| Reverse-charge VAT | VAT treatment of the purchased service | Invoice, place-of-supply review and VAT working paper |
| Treaty relief | Entitlement to an income-tax benefit | Residence certificate, recipient information and relevant forms |
A foreign supplier’s B2C digital-services VAT registration is another arrangement. Do not assume that every online purchase is handled identically. Record whether your business supplied its tax details and how the supplier invoiced the transaction.
Gross and net contractual amounts
Clarify whether the agreed fee is a gross amount from which tax is withheld or a net amount the supplier expects to receive. The difference affects the business’s cost and the payment instruction.
Illustration: if a covered payment must leave a supplier with GEL 1,000 after 10% withholding, the gross amount is GEL 1,111.11 and withholding is GEL 111.11, after rounding. If the contract instead fixes GEL 1,000 gross, the supplier receives GEL 900 and tax is GEL 100. This example illustrates withholding arithmetic only; VAT and treaty relief are separate calculations.
A practical overseas-payment checklist
- Identify the legal recipient and whether it is related to your business.
- Describe the service, goods, funding or rights and review the income source.
- Check the contract’s gross/net wording and payment currency.
- Consider domestic withholding, treaty relief and reverse-charge VAT separately.
- Collect the residence certificate and other evidence supporting relief.
- Reconcile the invoice, tax calculation, declaration and bank payment.
- Retain the filing confirmation and follow up any missing supplier documents.
For related-party charges, also review transfer pricing and controlled transaction reporting. A group payment policy should connect all these checks rather than treating the bank transfer as the final accounting record.
Cross-border payment accounting in Georgia
Bookkeeping.ge supports supplier-payment reviews, withholding calculations, treaty documentation and VAT reporting. Our team can build a recurring payment register so the next month’s invoices arrive with the information needed for accounting and tax reporting.
Send us a description of the payment, the recipient’s country and the relevant agreement or invoice. For ongoing support, compare our monthly packages. For a past payment, include its date and any tax already declared so the team can review the recorded position.
Payments abroad: common questions
Is every foreign supplier invoice subject to 10% withholding?
No. Source, income category, recipient status and treaty treatment determine the answer. Classify the payment before applying a rate.
Can both withholding tax and reverse-charge VAT apply?
They address different taxes and can both be relevant. Keep separate calculations and explain how each was treated.
Can we review payments already made?
Yes. Start with the agreement, invoice, bank payment and declarations already submitted. These records allow the review to identify any adjustment needed.