Georgia's Finance Minister Lasha Khutsishvili has issued a public ruling clarifying the tax treatment of asset transfers in exchange for company shares, as well as distributions made to partners during company liquidation, capital reduction, or share buybacks. The decision, dated June 30, 2026, provides guidance on the interpretation of the Tax Code and entered into force upon publication.
Under the ruling, transferring assets to a legal entity in exchange for a 50% or greater ownership stake will not be treated as a taxable supply of assets. The ministry explains that such transactions do not constitute a genuine disposal, as the contributor retains a substantial economic interest through ownership of the company. The same rule applies both when an investor initially acquires a controlling stake and when an existing majority shareholder contributes additional assets.
The decision also clarifies that multiple related transactions may be assessed as a single operation if they form part of a common economic objective. In qualifying cases, the transferred asset retains its existing tax value, while transfers made in exchange for less than a 50% stake fall outside the exemption and are valued at market price for tax purposes.
The ruling further defines the tax treatment of distributions made during company liquidation or capital reduction. Property or cash returned to a partner up to the value of their original capital contribution will not be treated as a dividend, while any excess will be taxed as dividend income. In addition, a personal income tax exemption may apply to gains from the transfer of real estate received during liquidation, provided the shareholder has held the ownership interest for more than two years. The exemption applies only to immovable property.
