Armenia, Georgia, Hungary, Slovakia for company creation and bank accounts?

[DavidS]

If 1 EU citizen and 2 Russia citizens (non sanctioned) want to create a joint company in these jurisdictions:

1. Armenia
2. Georgia
3. Hungary
4. Slovakia

Which jurisdiction would be best?

Which one would allow creating bank accounts for such company?

What are the taxes for these?

These were recommended to me as Russia friendly jurisdictions, is this true?

 

[Don]

Better cross out Hungary and Slovakia - banking is not going to work in those countries.
Armenia and Georgia on the other hand are both great options.
Tax depends on your activities and turnover, but both jurisdictions offer various incentives and are relatively low tax.

 

[Marzio]

Better cross out Hungary and Slovakia - banking is not going to work in those countries.

Is it not going to work because shareholders are Russian or in general HU banks are difficult to deal with?

 

[TheCryptoAnt]

Is it not going to work because shareholders are Russian or in general HU banks are difficult to deal with?

yes

 

[Don]

Armenia

• if your turnover is under 240k USD/year, the CIT is 1.5%-5% or 18% over that
• IT startups can get 0% CIT + payroll tax reduction to 10% (which is normally 21%)
• 5% dividend tax on foreign income
• no limits on foreign currency transfers
• company formation takes less than 20 minutes
• no work permit is needed for Russian (and Belarussian citizens), only a valid social card, which you can get in 5 days
• direct connections to UAE, Cyprus, Russia, Qatar, and other EU countries
• member of the Eurasian Economic Union
• Armenian banking sector - 17 commercial banks, of which the market share of 5 largest banks (Ameriabank, Armbusinessbank, Ardshinbank, Acba bank and Converse bank) by total loan portfolio is 61%
• nominee services available, cheap substance facilities with a vast pool of talented labour

 

[Marzio]

Hey @Don what about Georgia?

 

[Samman Kaseeb Sleiman]

2 Russia citizens (non sanctioned)

You mean those 2 aren't Abramovich, nor any of the oligarchs, nor any of big bananas? Because from time to time Abramovich or other sхit will come here and ask for advice too.

It's nice that you've made it clear.

Armenia

• if your turnover is under 240k USD/year, the CIT is 1.5%-5% or 18% over that
• IT startups can get 0% CIT + payroll tax reduction to 10% (which is normally 21%)
• 5% dividend tax on foreign income
• no limits on foreign currency transfers
• company formation takes less than 20 minutes
• no work permit is needed for Russian (and Belarussian citizens), only a valid social card, which you can get in 5 days
• direct connections to UAE, Cyprus, Russia, Qatar, and other EU countries
• member of the Eurasian Economic Union
• Armenian banking sector - 17 commercial banks, of which the market share of 5 largest banks (Ameriabank, Armbusinessbank, Ardshinbank, Acba bank and Converse bank) by total loan portfolio is 61%
• nominee services available, cheap substance facilities with a vast pool of talented labour

But one would have to have a substance there such as a physical office. Huh?

 

[Don]

Hey @Don what about Georgia?

Georgia - business setup takes 24 hours. Allegedly 50k+ IT professionals from Russia have relocated there since sanctions, yet compared to Armenia the political relations with Russia and attitude towards Russians is worse.

Taxation:

• Corporate Profit Tax - 15%, payable only when the dividend is distributed. Zero tax possible when using Free Zone companies or Virtual Zones Companies.
• Import Tax - 0%, 5% or 12%
• Excise Tax - depends on the listed products
• Property Tax - up to 1%
• Double Tax Treaties Network - very broad, more than 50 DTTs signed
• Advance Rulings from tax authorities available
• VAT registration – voluntary, only obligatory if the turnover of activities subject to VAT exceeds GEL 100,000 per annum
• VAT rates - standard rate: 18%
• Social Security TAX - 0%

Main benefits of the jurisdiction:

• Located in a trade strategic area between Asia and Europe
• Has successfully adopted the DCFTA that results in having eliminated all customs duties for goods originating in Georgia being imported into the EU
• Free trade agreement (FTA) with China is effective which makes Georgia the second European country (after Switzerland) that has FTA with China
• Offers three industrial zones, created to cater the needs of specific business sectors and they are to be found in Poti, Kutaisi and Tbilisi.

Main tax incentives that Georgia offers are:

• STC licensed Georgian LLC: exemption from tax for trading performed outside Georgia
• IFC licensed Georgian LLC: exemption from tax for international financial services and holding companies selling shares of foreign entities
• VZC licensed Georgian LLC: exemption from tax for providing IT services outside Georgia
• Free Zone Companies: exemption from any corporate tax and withholding tax.

 

[Marzio]

STC licensed Georgian LLC: exemption from tax for trading performed outside Georgia

I never heard of this company type, do you have link that explains more? I only knew about virtual zone and international company incentives.

 

[khinkali]

For Georgia, if there is an existing IT company (>2 years old) then the new International Company might be more flexible than the Virtual Zone company.

The Georgian opposition are keen to make life harder for Russian citizens (calling for visa restrictions, etc) but I expect the government to hold the status quo. The social climate might be more welcoming in Armenia, but if the two Russian citizens have a negative view on the Russian government and can use English instead of Russian when talking to younger people then Georgia would be OK too.

Georgian and Armenian banks are extremely unfriendly to any crypto related activity for businesses. Georgian personal accounts can receive money from regulated crypto exchanges but it's worth discussing this with the bank first.

IFC licensed Georgian LLC: exemption from tax for international financial services and holding companies selling shares of foreign entities

Has anybody ever seen one of these in practice?

 

[Forester]

If 1 EU citizen and 2 Russia citizens (non sanctioned) want to create a joint company in these jurisdictions:

1. Armenia
2. Georgia
3. Hungary
4. Slovakia

These were recommended to me as Russia friendly jurisdictions, is this true?

As for Slovakia – definitely not; as for Hungaria – perhaps remarkably better than any other EU member state but I would not call it “Russian friendly“; as for Armenia and Georgia see above.

Better cross out Hungary and Slovakia - banking is not going to work in those countries.

Is it not going to work because shareholders are Russian

Yes, exactly.

or in general HU banks are difficult to deal with?

I cannot say for sure.

A general remark: If taxing is an important concern, it is recommendable to consider UAE, too. The company setup is more complicated than in Armenia or Georgia and banking setup is very complicated – both is definitely recommendable to perform with a professional support – but it can be advantageous in some cases, taxing is really friendly there. (It is a solution very commonly used nowadays by Russian citizens.) If you are interested, you can contact @Fred (here at forum); he is able to give you a deeper information, and offer a help, too.

 

[Don]

For Georgia, if there is an existing IT company (>2 years old) then the new International Company might be more flexible than the Virtual Zone company.

The Georgian opposition are keen to make life harder for Russian citizens (calling for visa restrictions, etc) but I expect the government to hold the status quo. The social climate might be more welcoming in Armenia, but if the two Russian citizens have a negative view on the Russian government and can use English instead of Russian when talking to younger people then Georgia would be OK too.

Georgian and Armenian banks are extremely unfriendly to any crypto related activity for businesses. Georgian personal accounts can receive money from regulated crypto exchanges but it's worth discussing this with the bank first.



Has anybody ever seen one of these in practice?

I should have edited the initial post.

IFC license doesn't exist anymore. Now there is a somewhat similar International Company license, but you first need a local license which is not so easy to get (and worth it if you ask me).

Freezone licenses can be great for marketing as they can write almost anything to the license based on your request.

 

[khinkali]

Now there is a somewhat similar International Company license, but you first need a local license which is not so easy to get (and worth it if you ask me).

And the business needs to be 2 years old?

 

[Marzio]

Yes, that’s the downside of the International Company.

IFC license doesn't exist anymore.

Hey @Don what about STC license?

 

[Don]

Yes, that’s the downside of the International Company.



Hey @Don what about STC license?

STC (Special Trade Company)

• STC regime is designed for Georgian companies dealing with international trade. The company is structured in the same way as the local LLC and the STC license issued by the Revenue Service. The condition of obtaining the STC certificate is trading outside Georgia.
• Example: company established in Georgia buying goods from China and selling them to Germany.
• Taxation: exemption from corporate income tax in Georgia.

IC (International company)

• IC regime is designed for Georgian companies dealing with IT services and/or commercial and maintenance services by a shipowner and/or services related to ship ownership. The company is structured in the same way as the local LLC and the IC license issued by the Revenue Service. The condition of obtaining the IC certificate for the LLC is having at least two years of experience in carrying out the permitted activities or which is a representative of a non-resident enterprise in Georgia if it has at least two years of relevant experience or more than 50% of shares are owned by partner enterprises that possess at least two years of relevant experience.
• Example: company established in Georgia performing IT or vessel maintenance services
• Taxation: exemption from Dividend tax, VAT and property tax; Reduced tax for CIT and PIT in Georgia.

For IT you can consider VZ certificate instead but difference is that IC owners will have a reduced personal income tax paid for salaries (from 20% to 5%). Basically if the company will have less than 5 employees for IT it can have a VZ certificate but if more than 5 - than its better to go for IC. In both of the cases GE llc has to serve international clients for getting the benefits

You mean those 2 aren't Abramovich, nor any of the oligarchs, nor any of big bananas? Because from time to time Abramovich or other sхit will come here and ask for advice too.

It's nice that you've made it clear.



But one would have to have a substance there such as a physical office. Huh?

Yes, without substance, it's not possible anymore. Since the inflow of thousands of Russians, they made things more complicated, while about a year ago, you could set up everything remotely in Armenia.

 

[DavidS]

Thanks for all the great replies. So Armenia seems to be one of the best choices?
Or is Georgia better? The company wouldn't have office there, it would be remote.

 

[khinkali]

The company wouldn't have office there, it would be remote.

Then half of the discussion is irrelevant.

Just go for UAE with a fake substance provider. Simple.

 

[Forester]

The company wouldn't have office there, it would be remote.

Then half of the discussion is irrelevant.

Yes, exactly. @DavidS, note the @Don's comment below.

Yes, without substance, it's not possible anymore. Since the inflow of thousands of Russians, they made things more complicated, while about a year ago, you could set up everything remotely in Armenia.

Just go for UAE with a fake substance provider. Simple.

Perhaps I would not call for “a fake substance provider", just for a substance provider
Anyway, you can get it easily as a part of a professional support for the company setup that is, in fact, necessary.

Or, as I heard, Kazakhstan is used, too – but I do not know whether the substance there is demanded.

 

[khinkali]

Perhaps I would not call for “a fake substance provider", just for a substance provider

Maybe our definition of substance is a little different. I guess it depends on the business activity. If you have some kind of shell company then "company administration" is the only substance it needs. Judging from the text I quoted, the actual substance is somewhere else.

Kazakhstan is an option, but it looks like money from there goes through Georgia anyway.

 

[Forester]

Maybe our definition of substance is a little different. I guess it depends on the business activity. If you have some kind of shell company then "company administration" is the only substance it needs. Judging from the text I quoted, the actual substance is somewhere else.

Well phrased. I agree, of course.