Published by Bookkeeping.ge — Assio Lex and Associates LLC
Updated
International tax and business in Georgia
A foreign company can develop a Georgian tax presence through its premises, people or activities. Bookkeeping.ge helps overseas businesses review permanent establishment questions and organise the accounting needed for a branch, local operation or cross-border team.
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What is a permanent establishment?
A permanent establishment, often called a PE, is a tax concept connecting a foreign business with activities in a country. The domestic Georgian test and any applicable double taxation treaty should both be considered. Tax registration is important, but the review also needs the actual operation.
Begin with a factual map: premises, employees, managers, agents, projects, contracting arrangements and decision-making. A company can have a meaningful local operation before it has labelled it a “branch” internally. Conversely, ownership of a Georgian subsidiary alone does not establish the parent’s PE.
Activities that deserve a closer review
| Arrangement | Questions to examine | Evidence |
|---|---|---|
| Office or other premises | Who uses the space, for how long and for which business functions? | Lease, access arrangements and description of activities |
| Local employee or home office | What work is performed and how is the location used by the foreign business? | Employment terms, duties and working arrangements |
| Agent or local representative | What authority is exercised and how are customer contracts concluded? | Agency agreement, approval process and contract history |
| Construction or installation project | What is the project duration and which domestic or treaty threshold applies? | Project calendar, contracts and linked assignments |
| Management in Georgia | Where are significant business decisions actually made? | Management responsibilities, meeting records and decision process |
A home office should be assessed from its facts rather than treated as an automatic PE or an automatic exemption. Likewise, the address on an invoice does not describe who negotiates, approves and performs the underlying work.
Domestic rules and treaty protection
Georgia’s domestic permanent establishment rules sit alongside the applicable treaty. Treaty definitions, project-duration tests and exclusions can differ. There is no single “six months” or “183 days” rule that resolves every foreign company’s position.
Review the relevant agreement for the income and period involved, including applicable treaty modifications. A short project may require a different analysis from a fixed office or dependent-agent arrangement. Read our double taxation treaty guide for the related residence and relief questions.
Branch, subsidiary or direct overseas activity?
| Arrangement | Business structure | Accounting focus |
|---|---|---|
| Georgian subsidiary | A separate Georgian legal entity owned by the foreign shareholder | Local accounts, company reporting and related-party dealings |
| Registered branch | A local branch of the overseas legal entity | Local records, head-office transactions and relevant tax reporting |
| Direct foreign-company activity | The overseas entity operates without a local subsidiary | Whether the actual activities create registration and tax obligations |
The choice affects contracts, responsibility, banking and reporting as well as tax. Start with the commercial plan: who signs customer agreements, employs staff, owns assets and funds the work? The accounting structure should reflect those answers.
Profit attribution and head-office charges
Where a PE is identified, the next question is which income and expenses belong to its activities. Keep local revenue, staff costs, operating expenses and head-office allocations traceable. A simple transfer of cash from headquarters does not explain the local financial result.
Prepare an allocation schedule showing the service or resource received, the cost base, the reason for the allocation and the local accounting entries. International controlled dealings may also need a transfer pricing and 2026 reporting review.
A useful year-end file connects the local ledger to the group accounts and explains differences in currency, period and presentation. This gives both the overseas finance team and Georgian accountant a shared basis for reporting.
PE, VAT, payroll and company residence
A PE assessment does not replace a VAT review. VAT registration, fixed-establishment questions and reverse-charge treatment follow their own rules. An income-tax treaty does not automatically remove VAT obligations.
Local staff can also create payroll and work-authorisation questions. The company’s management location may raise a separate corporate-residence issue. Review these matters together so that resolving one question does not leave another outside the accounting process.
For associated work, see VAT registration and reporting, payroll services and 2026 foreign employee and entrepreneur rules.
Documents for a permanent establishment review
- Group structure and details of the foreign legal entity.
- Customer, agency, employment and subcontractor agreements.
- Locations used in Georgia and the dates of local activities.
- Project schedules, site visits and travel records.
- A description of who negotiates, approves and signs contracts.
- Local income, costs, assets and head-office transactions.
- Existing registrations, residence certificates and earlier advice.
For a new operation, prepare the review before signing a long-term lease or hiring the first local team. For an established operation, include the history of how the activity grew, since the position may have changed over time.
Accounting and tax support for foreign companies
Bookkeeping.ge can coordinate the Georgian accounting and tax review with the tax lawyers of Assio Lex and Associates LLC. We help translate the operating model into local records, reporting responsibilities and a practical document workflow.
Tell us how your business plans to work in Georgia, where its people will be based and who will contract with customers. Once the operating arrangement is established, our accounting packages and calculator can help plan the recurring bookkeeping workload.
Permanent establishment questions
Does a Georgian subsidiary automatically create a PE for its parent?
No. Ownership alone does not establish the parent’s PE. The parent’s own activities and relationships still need to be examined.
Can a remote employee create a tax presence?
The employee’s role, location, authority and working arrangements matter. Review the facts rather than relying only on the word “remote”.
Is a PE review useful before entering Georgia?
Yes. It helps connect the planned contracts, staffing and premises with the accounting and tax structure from the beginning.