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NNLE in Georgia

Irakli

RegHub Georgia Specialist

A non-profit organisation in Georgia can use the NNLE form when the project is not intended to distribute profit to founders, members, managers or donors. Georgian law still allows the entity to earn income and carry on auxiliary entrepreneurial activity within statutory limits. Charitable and educational projects can adopt the form, as can other initiatives serving a public or non-commercial purpose.

Formation calls for a constitutional document package, a legal address and registration through the National Agency of Public Registry (NAPR) under the Civil Code rules. After establishment, separate questions arise around governance and assets. Tax treatment, foreign funding and disclosure obligations also require their own analysis, together with the rules governing liquidation.

Legal status and non-distribution rules

A non-profit organisation in Georgia using this form falls within the Civil Code's category of private-law legal persons. The English text of the Code names the form Non-Entrepreneurial (Non-Commercial) Legal Person. NAPR uses the related label Non-Entrepreneurial (Non-Commercial) Legal Entity. Georgian materials refer to არასამეწარმეო (არაკომერციული) იურიდიული პირი, commonly abbreviated ა(ა)იპ. Legal capacity starts with registration and ceases when the registry records completion of liquidation.

Georgian law does not create a foundation or association as separate NNLE legal forms. The constitutional documents determine whether the entity is membership-based, corporately organised or structured without membership, while each arrangement retains NNLE status.

Contributed assets become property of the organisation itself. In its own name, the NNLE enters transactions, acquires rights and incurs obligations; it may also bring or defend proceedings. NNLE liabilities remain with the entity. A founder or member incurs no personal liability solely by holding that status; the same rule applies to a manager or representative. Conversely, the organisation does not assume the separate personal obligations of any of those persons.

Entrepreneurial income is compatible with the form only on a non-distribution basis. The NNLE may conduct auxiliary entrepreneurial activity, but the resulting profit must be used to achieve its organisational objectives. No distribution may be made to founders or members. The prohibition also extends to donors and to anyone acting as manager or representative. A business entity, by contrast, may be established to generate a return for its owners or participants.

NNLE registration in Georgia: filing materials, address and fees

NAPR, an agency of the Ministry of Justice of Georgia, maintains the Register of Non-Entrepreneurial (Non-Commercial) Legal Entities. A Public Service Hall can receive the registration materials. The new legal person obtains legal capacity only upon registration.

An application must be accompanied by the founders’/members’ agreement. Articles of association identify the object of activity. If the NNLE has members, the same document sets the procedures for admission and voluntary withdrawal; it must address exclusion as well. Authority over reorganisation or liquidation must be allocated, together with the decision procedure. Those documents also state how management is appointed and how long managerial authority lasts.

Evidence of the legal address must correspond to the right under which the premises are used. Where the owner's approval is the basis, the applicant files duly certified consent. A lease or other document evidencing lawful use may serve instead where applicable. Notarisation is not the sole method for signature certification. The registration authority or another authorised person may certify the signatures; a permitted electronic signature can also satisfy the filing rules.

A sole founder may establish the NNLE, and formation carries no minimum capital requirement. NAPR currently charges GEL 200 for service completed within one working day; processing on the filing day costs GEL 400. The published tariff uses the same two amounts for a range of amendments to registered NNLE data.

Registry extracts follow a separate fee schedule: GEL 20 for the one-working-day service and GEL 75 when issued on the request day. For an electronic request, the corresponding fees are GEL 13 and GEL 52. Preparation of an English-language extract adds GEL 26 to the selected underlying service. Applicants choose the available processing period when lodging the request.

Founder details and the legal address must match across the registration materials. Management information must likewise be consistent with the persons authorised to act for the entity. When applicants register an NNLE in Georgia, those filing particulars must remain aligned; the articles of association separately determine the organisation's internal structure and the competence of its bodies after registration.

Governance, assets and the entrepreneurial-activity boundary

The Civil Code does not impose a single management architecture. One person may receive exclusive managerial authority, or a founder or member may provide for joint management and/or representation by two or more persons. Managerial authority concerns decisions taken for the NNLE within the manager's competence. Representative authority governs acts performed for the entity in relations with third parties. Unless the registration documents provide a different allocation, management also carries representation.

For an NNLE in Georgia, the constitutional documents identify both the internal decision-maker and the persons who can bind the entity externally. This allocation determines who may execute contracts, open accounts or deal with public bodies. An individual director can hold signing authority, or the documents can require two representatives to act jointly.

A property contribution does not give the founder an LLC-style participation interest. Ownership transfers to the NNLE itself. The organisation may later transfer an asset where the transaction serves its activities or organisational development, advances its stated objectives, or is made for charity. Separate Civil Code rules govern property left when liquidation is completed.

Managers must conduct the organisation's affairs in good faith. A breach that causes loss creates an obligation to compensate the NNLE. Creditors look to the organisation and its property for NNLE liabilities, subject to the applicable law.

Tax and charitable status after non-profit organisation registration in Georgia

NNLE status does not itself remove tax liabilities; applicable treatment depends on receipts, expenditure, owned assets and transactions. Under the Tax Code, an NNLE is an organisation, with additional provisions applying where an organisation conducts economic activity.

Profit tax is charged at 15% when the relevant taxable object arises. For an organisation, that object is not derived simply by taking 15% of accounting profit. Article 97 can bring expenditure or other payments into the tax base when they have no connection with economic activity or the organisation's objectives. Spending outside grant conditions can therefore have tax consequences. The provision also captures specified gratuitous transfers outside organisational objectives and entertainment expenditure above the statutory limit.

Older descriptions of the regime may refer to an exemption for grants, membership dues and donations received by an organisation. That express exemption disappeared from the Tax Code with effect from 1 January 2019. Under the current expenditure-based model, receipt of a grant, dues or a donation is not in itself an Article 97(2) disbursement event. Later use of the funds outside organisational objectives or contrary to grant terms can nevertheless produce profit-tax exposure. For a non-profit organisation in Georgia, the receipt and the subsequent application of funding must therefore be considered separately.

Salary payments generally attract personal income tax at 20%, subject to statutory exceptions. An organisation may also incur annual property tax on taxable assets, at a rate of up to 1% within the statutory framework.

Charitable-organisation status is distinct from NNLE registration. The Head of the Revenue Service grants that status under the Tax Code procedure. A qualifying organisation must already be registered and must show at least one year of charitable activity. Conducting auxiliary economic activity in service of the principal charitable objectives does not, by itself, prevent the organisation from qualifying.

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Foreign funding for an NNLE in Georgia

Foreign funding may require three different legal tests. Law of Georgia on Grants regulates consent for certain grants from foreign donors. A separate income-origin threshold appears in Law of Georgia on Transparency of Foreign Influence. Foreign Agents Registration Act addresses relationships with a foreign principal and specified conduct undertaken for or in that principal's interests. The regimes can overlap on the same facts, but each retains its own trigger and procedure.

Consent for foreign grants

A grant that falls within the foreign-donor consent regime requires prior approval from the Georgian government or a body authorised by it. The recipient cannot accept the grant without that approval. Where the statutory purpose requirement is breached, the Grants Law treats the grant as having been issued without consent.

Who submits the consent request depends on the recipient category. Ordinarily, the foreign donor files the draft written agreement. In the categories for which the statute assigns that role to the receiving side, the recipient files instead. The competent authority may seek additional documents before deciding whether to give consent.

Article 6⁴ does not impose a double-grant administrative fine on every NNLE that receives an unapproved foreign grant. Its wording confines that particular fine to the specified Georgian-registered representation, branch or department of a foreign legal entity, subject to the stated exception. Other violations remain subject to the wider liability provisions of the Grants Law, including criminal sanctions where the statutory conditions are satisfied.

Several categories fall outside the consent procedure. One exclusion applies to grants from specified international associations, federations and committees in the sports sector. Qualifying financial assistance to individuals for general or higher education and for scientific work outside Georgia is also excluded. Horizon Europe and Erasmus+ are expressly listed. DAAD and Creative Europe also fall within the exceptions. Further exclusions apply to the specified financial and credit institutions and to grants to or from the Georgia Red Cross organisation.

Foreign-power income above the 20% threshold

The transparency law calculates the foreign-power share of total income for the calendar year, subject to its exclusions and calculation rules. An NNLE within the statute's scope becomes an organisation pursuing the interests of a foreign power once that share is greater than 20%. The calculation is based on where the income originates rather than on the entity's profit. This threshold is therefore a separate compliance test for an NNLE in Georgia.

An entity that meets the test must apply for registration in January of the following calendar year and complete the registration statement under the statutory procedure. Once registered, it must file an annual financial declaration in January of each subsequent year. The registration statement and the application are public; after registration, the current statute or other incorporation instruments and the latest Public Registry extract are also made publicly available. Since 15 May 2026, the State Audit Office of Georgia has exercised the functions assigned under the amended transparency law.

Administrative penalties include:

• GEL 25,000 for avoiding mandatory registration or, in the case specified by law, not lodging the annual financial declaration;

• GEL 10,000 for the specified procedural defaults, including certain filing failures or failure to correct a deficiency;

• GEL 20,000 when the relevant breach continues after the preceding administrative penalty in the circumstances stated by law;

• GEL 5,000 for not supplying information requested under the statute.

Foreign principal and specified activities

Foreign Agents Registration Act uses a relationship-and-activity test rather than the transparency law's income percentage. Subject to the Act's definitions and exemptions, a foreign-principal relationship can trigger the regime when the entity performs specified conduct for or in the interests of that principal. Political activity is one category. Another category covers acting as a public relations counsel, publicity agent, information-service employee or political consultant. The specified conduct also includes solicitation, collection or disbursement of funds and other assets of value, as well as representation before state agencies or officials. No direct more-than-20% income test applies under this regime.