Germany
Georgia
Germany and Georgia have a tax treaty dating from 2006, updated in 2014, and Georgian company law treats a German owner like any other. The German question is the Außensteuergesetz, the controlled foreign company rules, and Georgia's distribution model meets them head-on: a Georgian company that reinvests pays nothing, which is always "low taxed" in German terms.
This guide sets out what the treaty gives, why the German test turns entirely on the type of income, and how dividends are taxed in a GmbH and in a founder's hands.
What Georgia asks of a German founder
- One shareholder and one director, German or otherwise.
- No minimum capital for a limited liability company.
- An apostilled power of attorney with a Georgian translation; for a German parent, an apostilled Handelsregister extract and articles.
- A legal address in Georgia.
The steps are in how to register a company in Georgia.
The treaty, as Georgia lists it
The treaty was signed on 1 June 2006. A protocol signed in Tbilisi on 11 March 2014 rewrote the exchange of information article and added collection assistance, applying from 2015. Georgia's Ministry of Finance lists the rates as follows.
| Income from Georgia to Germany | Treaty | Georgian domestic rate | What applies |
|---|---|---|---|
| Dividends | 0%, 5% or 10%, depending on Article 10 conditions | 5% | 5% at most |
| Interest | 0% | 5% | 0% |
| Royalties | 0% | 5% | 0% |
| Permanent establishment period listed | 6 months |
We did not read the conditions attached to the 0% and 5% dividend rates. Since Georgia's own withholding is 5%, the practical rate is 5% or lower.
Tax estimate
How much tax could you save?Three questions, then the yearly difference between your current rate and three jurisdictions.
The AStG test: why Georgia is always "low taxed"
German CFC rules attribute a foreign company's passive, low-taxed income to its German shareholders, whether or not it is distributed.
- 11. ControlMore than half of votes, capital or profit rights, alone or with related persons
- 22. Tax burden below 15%A Georgian company that reinvests pays 0%: below the line
- 33. Passive income?Outside the active list: e.g. services or trading routed through the German shareholder, licensing, financing
- 44. Substance defenceOnly for EU and EEA companies: not available for Georgia
- 55. AttributionPassive income taxed in Germany, with credit for Georgian tax
Why the rate test always fails. Section 8 defines low taxation as a burden below 15%, measured on income recomputed under German rules and on tax actually levied. Under Georgia's distribution model, a company that keeps its profit pays no profit tax that year. Even in a distribution year, the burden depends on how much is paid out. Treat a Georgian company as low taxed and move straight to the income test.
What keeps you outside. Active income is not attributed, whatever the rate.
- Production and genuine trading run by the Georgian company itself.
- Services the Georgian company performs with its own resources, not routed through the German shareholder or related parties.
- A de minimis: passive income of up to one third of total income and no more than EUR 100,000 is disregarded.
What brings you inside. A Georgian company that invoices clients for work done by the German founder or the German GmbH, holds licences, or lends money.
| Georgian company profile | Rate test | Income test | Outcome |
|---|---|---|---|
| Software house with Georgian staff, foreign clients | Low taxed | Active | Not attributed |
| Sales company buying from the German parent | Low taxed | Passive unless it runs the business itself | At risk |
| Invoicing company for the German founder's work | Low taxed | Passive | Attributed |
| IP or financing company | Low taxed | Passive | Attributed |
Dividends to a German GmbH
A dividend from the Georgian company is left out of the GmbH's income under section 8b of the Corporation Tax Act, except 5% treated as non-deductible expenses.
| Step on 100 of Georgian profit | Amount |
|---|---|
| Georgian distribution tax, 15% of the grossed-up base | 15.00 |
| Dividend paid | 85.00 |
| Georgian withholding at 5% at most | 4.25 |
| German corporation tax, 15% on 5% of 85 | 0.64 |
| Total, before trade tax and solidarity surcharge | 19.89 |
- A 10% holding at the start of the calendar year is required; 15% to keep the dividend out of trade tax too.
- German corporation tax is 15% up to 2027, then falls one point a year to 10% from 2032.
- The Georgian withholding is not credited in practice, since the dividend is mostly exempt.
Dividends to a founder personally
A German resident individual pays the 25% flat tax on the dividend, plus solidarity surcharge, with a credit for the Georgian withholding of up to 25% of the dividend. The Georgian company's 15% distribution tax is not credited.
If you move to Georgia
A founder who gives up German residence leaves the AStG behind for new income, but German exit taxation of shareholdings and the extended limited tax liability can follow for years. The Georgian side is in the tax guide for non-residents. Plan the move with a German adviser before it happens.
The bottom line
The 2006 treaty is generous on interest and royalties and caps dividends at Georgia's own 5% or less. The AStG is the real test: a Georgian company is always low taxed, so its income must be active, earned by the Georgian company with its own people. A real Georgian business owned by a GmbH ends up at about 20% total tax on distributed profit; an invoicing vehicle for German work is attributed.
corpsec registers the Georgian company and provides its registered office. See the Georgia formation service, or read how Georgian profit tax works.
Frequently asked questions
Is there a tax treaty between Germany and Georgia?
Yes. It was signed on 1 June 2006 and amended by a protocol of 11 March 2014. Georgia lists 0% on interest and royalties and 0%, 5% or 10% on dividends.
Is a Georgian company low taxed under the German AStG?
In practice, yes. A Georgian company that reinvests pays no profit tax that year, below the 15% line. Whether its income is attributed to German shareholders then depends on whether it is active or passive.
Can a German GmbH own a Georgian subsidiary?
Yes. Dividends are 95% exempt under section 8b with a 10% holding. The subsidiary should earn active income with its own resources to stay outside CFC attribution.
Does the substance defence protect a Georgian company?
No. The AStG substance defence is reserved for companies in the EU or EEA. A Georgian company relies on its income being active.
How is a Georgian dividend taxed for a German individual?
At the 25% flat tax plus solidarity surcharge, with credit for Georgian withholding up to 25% of the dividend.
Sources
- Ministry of Finance of Georgia, treaty table: Germany, permanent establishment after 6 months, dividends 0%, 5% or 10%, interest 0%, royalties 0%
- Bundestag, Drucksache 18/2661: protocol signed in Tbilisi on 11 March 2014 amending the treaty of 1 June 2006 on exchange of information (Article 26) and collection assistance (Article 26a)
- Aussensteuergesetz, section 8: the list of active income, the substance defence limited to EU and EEA companies, and low taxation defined as an income tax burden below 15%
- Koerperschaftsteuergesetz, section 8b: dividends left out of a company's income, 5% treated as non-deductible expenses, 10% minimum holding at the start of the calendar year
- Tax Code of Georgia (consolidated 15 October 2026): no tax on retained profit, 15% on distribution with a base divided by 0.85, 5% dividend withholding
Official, read on 26 October 2026: the treaty table of the Ministry of Finance of Georgia and the Georgian Tax Code. Read on 5 October 2026 for this series: the Aussensteuergesetz, Koerperschaftsteuergesetz and Einkommensteuergesetz on gesetze-im-internet.de. Secondary: the 2014 protocol as described in the Bundestag document and tax press. The conditions attached to the 0% and 5% dividend rates in Article 10 of the treaty were not read; Georgia's domestic 5% applies where it is lower. Applying the German low-taxation test to a company under Georgia's distribution model is our reading of section 8, not a published position; confirm with a German adviser. This is not legal or tax advice.