VAT and Reverse-Charge VAT in Tbilisi, Georgia

TaxAdvisory.ge · Assio Lex and Associates LLC

VAT becomes manageable when every invoice has a clear treatment. We help businesses in Tbilisi and across Georgia establish when to register, how to invoice customers and what to do with purchases from abroad.

Watch the rolling threshold, not just the calendar year

The general compulsory registration threshold is 100,000 GEL of relevant VAT-taxable transactions during any consecutive twelve months. When a transaction takes the total above the threshold, registration is required within two business days and the triggering transaction is included in the VAT obligation.

Keep a rolling turnover schedule and classify the supplies before adding them together. For a business approaching the threshold, an important practical question is whether the customer price is quoted with VAT included or with VAT added on top.

For international services, establish where the supply belongs

Identify whether the customer is a business or a consumer, what service is supplied and which place-of-supply rule applies. A service involving property, an event or another specific category may use a different rule from a general business-to-business service.

Keep evidence of the customer’s identity and business status, the contract, the invoice and the work delivered. An international invoice should tell a consistent story across the sales records and the VAT return.

Review foreign purchases before the monthly return

Foreign advertising, software subscriptions and professional services can create reverse-charge VAT. This question also arises for businesses below the ordinary registration threshold. Identify the supplier, the service, its place of supply and the person responsible for accounting for the VAT.

Where 1,000 GEL of a foreign service is subject to 18% reverse-charge VAT, the VAT calculation is 180 GEL. Record the liability and examine the deduction entitlement separately, using the registration position, business use and supporting documents.

Make the return reconcile with the accounts

Separate local taxable sales, transactions with a different VAT treatment, imports and reverse-charge purchases. Reconcile output VAT, deduction documents, payments and corrections. For mixed activities, allocate purchases consistently and retain the calculation with the monthly file.

When an earlier month needs correction

Start with the original invoice and the return already submitted. Identify the period, the reason for the difference and the effect on both liability and deductions. A short reconciliation makes the correction understandable to the owner and to a future reviewer.

Use one VAT schedule for sales and purchases

A VAT working paper should let another accountant reproduce the return. Identify each material class of supply, the rate or treatment applied, the deduction document and the period. Keep any allocation for mixed activities beside the underlying invoices.

Review a business model change before the next invoice

A new customer type, a consumer subscription, a property-related service or a new supplier country can change the VAT analysis. Notify the accounting team when the commercial model changes. That is much easier than rewriting a series of invoices after the return has been submitted.

Legal basis: Tax Code of Georgia, including Article 165 on compulsory VAT registration and the applicable place-of-supply and reverse-charge provisions.