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Dividends payed out only in local currency? Here: GEL - Georgia

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curiousmarv

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Dec 6, 2017
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#1
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Just heard from my Georgian accountant that dividends from a Georgian LLC can only be payed out in GEL.

It is not allowed (by Georgian law) to pay out in other currencies.

Is this true or someone has different experiences?

Just don't like the pointless double conversions to get USD or EUR again out at the end but if it's the law it's the law and I will go along with it :/
 
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#3
Actually you don't need to convert into GEL. As long as you are non-resident, you can get income in any currency. I've researched that and pretty sure that its not mandatory. Will post exact clarifications later.

P.s. where ppl on this forum find Georgian law firms. so many biased information is posted about Georgia every other day!
 
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#6
I've got now information from 3 different sources. All say dividends need to be payed in GEL. Banks in Georgia block also dividends payed in other currencies (tried it myself by accident).
One source told me the reason for that is the national bank in Georgia which forbids dividends in other currencies.

So it's still unclear if it is okay to pay dividends in other currencies on bank accounts outside of Georgia. Inside in Georgia it is definitely forbidden by national restrictions!
 
#8
therealmarv said:
I've got now information from 3 different sources. All say dividends need to be payed in GEL. Banks in Georgia block also dividends payed in other currencies (tried it myself by accident).
One source told me the reason for that is the national bank in Georgia which forbids dividends in other currencies.

So it's still unclear if it is okay to pay dividends in other currencies on bank accounts outside of Georgia. Inside in Georgia it is definitely forbidden by national restrictions!
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Just curious, how does the bank know that the transfer is dividends?
 
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#9
fshore said:
Just curious, how does the bank know that the transfer is dividends?
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That's a really good question which I would like answered to? Does it mean you will have to provide the bank with information about each transfer you do like invoices, prove of source and lots of other documents to be able to bank in Georgia?
 
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#10
fshore said:
Just curious, how does the bank know that the transfer is dividends?
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You don't play games with banks, also not in Georgia. I have nothing to hide and you tell banks what kind of transfers you do (like reason for transfer etc) also sometimes attach invoices for transfers etc. to have a good relationship with the bank.
If you hide dividends payout in the bank your accountant will still tell you that's wrong, so it does not solve anything.
 
#11
Some clarifications on this:

Here's a law that regulates foreign currency transactions in Georgia. It's in Georgian but google tranlate translates good the part that we need.

https://matsne.gov.ge/ka/document/view/1279467?publication=0
Please check article 11. Part 2.

It says that nonresident legal entities and individuals may transfer income from enterprenual activity abroad in foreign currency.

So it is possible to pay dividends in foreign currency only in case you have foreign personal bank accout, where you send money.

Georgian lawyers are partially right.
 
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#12
It's a bit off-topic but if anyone is looking for a reliable law firm to set up a company in Georgia, open a bank account and get all the needed support afterwards @Jonny Cage is the person to go to. I've personally met him in Tbilisi a few weeks ago and we did everything within a few days. He clearly knows what he's doing and his prices are very reasonable. Huge vouch for @Jonny Cage and his law firm (not sure if I can mention the company name here?)
 
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#13
Wow, thanks @Jonny Cage you seem like the expert we needed. So much thanks for clarification on that!

After reading the article I'm only worried about Section 11 Part 7:

"If the amount of the transfer operation in foreign currency is increased by GEL 3,000 or equivalent in another currency, the bank shall additionally require from the paying entrepreneur the copies of the documents proving the basis for the transfer. The Bank shall keep copies of the documents submitted pursuant to this paragraph. Copies can be saved in electronic copy."

I'm betting that TBC bank will make problems with big foreign currency transfers because maybe they don't know the law so well in this special case and I wonder how I should prove the basis of the transfer... I'm the owner so I'm allowed to?! haha
 
#15
marzio said:
Well, why not? If the service is worthy in your opinion it might help others too.
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It's PB Services. While searching for the right partners I have emailed almost all Georgian law firms from the first 5 google search pages and kept communicating with them for a few weeks regarding different matters. PB seemed like the best choice and I wasn't wrong.
 
#16
So my accountant in Georgia also confirmed (without any sources unfortunately):

It is possible to pay dividends in foreign currency with a Georgian company if you have an account for resident company abroad (which means outside Georgia).

So far I've seen it is possible to create accounts for a Georgian company on this fintechs:
- Transferwise
- Paysera
 
#17
BTW @Jonny Cage TBC bank informed me that law paper you mentioned is outdated and new one is here

Decree №8/04 of the President of the National Bank of Georgia of 22 January 2015 “On Approval of the Procedure for Performing Payment Operations”.
https://www.nbg.gov.ge/uploads/sagadaxdo/legalacts2018/gadaxdis_wesi.pdf

but they also confirmed me too that restrictions to GEL currency do not apply to transfer of funds to a non-resident person in a foreign country (Article 23 (part1) Paragraph (b)
 
#18
therealmarv said:
BTW @Jonny Cage TBC bank informed me that law paper you mentioned is outdated and new one is here

Decree №8/04 of the President of the National Bank of Georgia of 22 January 2015 “On Approval of the Procedure for Performing Payment Operations”.
https://www.nbg.gov.ge/uploads/sagadaxdo/legalacts2018/gadaxdis_wesi.pdf

but they also confirmed me too that restrictions to GEL currency do not apply to transfer of funds to a non-resident person in a foreign country (Article 23 (part1) Paragraph (b)
Click to expand...
thanks for that. basically it says the same but in more broad way. not just company profit (like it was in previous version), but any transaction is possible.
 
#19
therealmarv said:
BTW @Jonny Cage TBC bank informed me that law paper you mentioned is outdated and new one is here

Decree №8/04 of the President of the National Bank of Georgia of 22 January 2015 “On Approval of the Procedure for Performing Payment Operations”.
https://www.nbg.gov.ge/uploads/sagadaxdo/legalacts2018/gadaxdis_wesi.pdf

but they also confirmed me too that restrictions to GEL currency do not apply to transfer of funds to a non-resident person in a foreign country (Article 23 (part1) Paragraph (b)
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Does banks in Germany, France and Latvia have restrictions to receive payments from Georgia banks like TBC Bank ?
 
#20
AMD said:
Does banks in Germany, France and Latvia have restrictions to receive payments from Georgia banks like TBC Bank ?
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I don't think so. that in fact is one of the reasons why Ge banks were used by Russians as a mediator with EU.
 
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