Paying Yourself from a Georgian LLC: Salary, Dividends, or Both
The company has made money and the founder wants some of it. A salary is taxed one way, a dividend another, and the Georgian profit tax model changes the arithmetic that founders bring from other countries. What each route costs, what it needs in place first, and why the usual answer is a modest salary plus dividends.
Founders arriving from countries where corporate tax is charged on profit as it is earned tend to plan their pay around avoiding a second layer of tax. Georgia's model is different: the company pays no profit tax until it distributes, so the question is not whether to take money out but how, and when. Salary and dividends are taxed under different rules, carry different obligations, and serve different purposes. Most founders end up using both.
| Taken as salary | Taken as dividend | |
|---|---|---|
| Tax on the company | None: salary is an expense, not a distribution | Profit tax at 15% on the amount distributed, computed so that 15 GEL of tax accompanies 85 GEL of dividend |
| Tax on the founder | Personal income tax at 20%, withheld by the company | Dividend tax at 5%, withheld by the company |
| Pension contributions | None where the founder is outside the scheme, which covers Georgian citizens and foreigners with a permanent residence permit; 2% employee and 2% employer where the founder is a scheme participant | None |
| Cash the founder receives | 80 GEL after income tax outside the pension scheme; inside it about 77 GEL, plus about 4 GEL paid into the founder's own pension account | About 81 GEL after both layers |
| Paperwork | Payroll registration, monthly return and payment through rs.ge | Shareholders' resolution, monthly return through rs.ge |
How a salary is taxed
A director's or employee's salary is subject to personal income tax at a flat 20%, which the company withholds and pays monthly. Where the founder participates in the funded pension scheme, which under the Law on Funded Pension covers Georgian citizens and foreign nationals who hold a permanent residence permit and, as we read the Law at the time of writing, offers no route in for other foreigners, the company also withholds the employee's 2% and adds its own 2%. The salary is a deductible expense for the company, which matters little under a model that does not tax undistributed profit, but it establishes something the tax authorities and banks both look for: a person visibly running the business and being paid for it.
How a dividend is taxed
A dividend is a distribution of profit, and a distribution is the event that triggers Georgian profit tax. The company pays 15% on the amount distributed, calculated on a grossed-up basis, and withholds 5% dividend tax from the shareholder's share. The combined cost is close to the 20% a salary carries, but there are no pension contributions, no monthly payroll, and the timing is the shareholders' choice: profit left in the company is not taxed until it leaves.
Dividends can only be paid out of profit the company has actually made, on the basis of accounts and a shareholders' resolution. A transfer to the founder's personal account with no resolution behind it is not a dividend; the Revenue Service may treat it as a distribution in disguise, taxed the same way but without the paperwork that proves it, or as an interest-free loan with its own consequences.
Why most founders use both
- A salary shows that a real person manages the company, which is what banks ask about when they review substance and what the residence-permit rules assume for a founder who lives in Georgia.
- A modest salary covers living costs on a monthly rhythm; dividends move larger amounts when the accounts and the cash position support it.
- The pension contribution on a salary builds an entitlement for founders in the scheme who will stay; founders who will not can often keep the salary modest and take the rest as dividends.
- The combined effective rates are close enough that the decision is usually driven by substance, cash timing and personal residence, not by the arithmetic alone.
Before you pay yourself anything
- 1
Confirm your own tax position: a founder who is tax resident elsewhere may owe tax at home on Georgian salary or dividends, with treaty relief for the Georgian tax already paid.
- 2
For a foreign founder who lives and works in Georgia, confirm whether the work authorisation rules introduced in 2026 apply to your role before a salary is paid; a director employed by their own company is within their scope in many cases.
- 3
Register the company for payroll with the Revenue Service and set up monthly withholding before the first salary, not after.
- 4
For dividends, close the accounts to the distribution date, resolve the dividend in writing, transfer the 5% dividend tax when the dividend is paid, as the Tax Code words it, and pay the profit tax in the return for the month of payment.
- 5
Keep the bank's expectations in mind: a company that pays its director nothing for a year while sending the founder large transfers invites questions that a salary would have answered.
The consultant who took everything as dividends
A sole founder runs a consulting LLC with a comfortable profit and pays herself nothing but quarterly dividends, reasoning that the 5% dividend rate is the cheapest route out of the company.
- 1Each distribution carries 15% profit tax at the company level plus the 5% withholding, so the real cost is close to a salary's 20%, not 5%.
- 2Her bank's periodic review asks who manages the company and how they are paid; regular dividends and no salary leave the question awkwardly open.
- 3Her residence permit renewal, which assumes an economic activity she performs, is easier to evidence with a payroll record than with resolutions.
- 4She moves to a monthly salary at a sensible level and keeps dividends for the surplus, changing her total tax cost very little and her paperwork position considerably.
The two routes cost roughly the same in tax; they differ in what they prove. A founder who lives in Georgia and runs the company is usually best served by a salary that reflects that, with dividends for the rest.
Illustrative; rates, pension participation rules and work-authorisation requirements should be confirmed for your circumstances.
Next step
Set up payroll and distributions properly
Our monthly accounting plan runs payroll withholding, dividend resolutions and the returns behind both, so paying yourself is a decision you make with your accountant rather than a form you discover afterwards.
See the monthly planGeneral information, not tax advice. Personal income tax, profit tax on distributions, dividend withholding, pension participation and work-authorisation rules are set by Georgian legislation and change; the figures here reflect the position at the time of writing.