How do I open a brokerage account in Georgia? And what kind of income can I expect from bonds?

Citizens of any country are welcome to invest in Georgian companies. Expect a corporate bond yield of up to 10% in USD.

The United States Department of State recently published a report on Georgia’s investment climate for 2024 lauding the country’s consistently high transparency, competitiveness, and economic freedom and a business climate that continues to outstrip regional peers.

Simply put: you can rest assured your investment – and there are plenty of different options – is protected by law, regardless of where you’re from. We have already written about the most obvious: real estate (just a single day is needed to draw up documents). But securities – whether conservative debt instruments or growth stocks – are also worth a look.

Which brokers work with foreign nationals?

There are seven brokers registered in Georgia to provide investment services. The largest, and therefore most reliable, are Galt & Taggart Investment Bank, a subsidiary of Bank Of Georgia, and TBC Capital, the investment banking arm of TBC Bank.

Both work with foreign nationals, there are few restrictions (we’ll talk about them below), and they provide access to the Georgian Stock Exchange and major stock markets around the Globe:

• New York Stock Exchange (NYSE) and NASDAQ
• London Stock Exchange
• Tokyo Stock Exchange
• Hong Kong Exchanges and Clearing
• Euronext (Amsterdam, Brussels, Lisbon, Paris, Milan) and NASDAQ OMX (Copenhagen, Helsinki, Stockholm)

To name a few. TBC Capital promotional material makes mention of 60 exchanges from 20 countries. Galt & Taggart mentions 36 markets, including the hard-to-reach regional markets of Azerbaijan, Uzbekistan, Kazakhstan, and Turkey.

Investing with TBC Capital

Clearstream, Euroclear, Saxo, and Citibank provide depositary services (i.e. the bank that holds your securities) for this broker. Make transactions through TBC Capital in two ways:

1. The Infront Finance trading terminal, available in the browser and mobile application. Place orders to buy and sell securities or engage in speculative trading with futures and options. Accessible 24/7
2. Contact the broker at Brokerage@tbccapital.ge or TradingDesk@tbccapital.ge. Better for long-term investments. Applications are accepted during business hours: from 10:00 to 19:00. Specify the ticker symbol, the number of securities you want to buy or sell, the lot value, and type (limit or market)

Commissions for transactions differ by exchange. One of the lowest is for US stocks: USD 0.02 per security (minimum USD 4). There is also a commission for keeping securities in the depository: 0.12% of the market value of the investment portfolio per year. For more information on commissions, please see FAQs on the broker’s website or this PDF.

TBC Capital has no minimum threshold. You’re welcome to open an account even if you plan to invest less than USD 100. There is no charge for opening a brokerage account.

Investing with Galt & Taggart

Galt & Taggart has been working with Danish Saxo Bank trading infrastructure since 2015, and its key depositary is Clearstream. Like TBC Capital, the broker allows for transactions in two ways:

1. Orders by email or phone with access to stocks, bonds, exchange traded funds (ETFs) and mutual funds as well as structured products
2. Or the trader.ge platform for online transactions with additional access to futures and options, contracts for difference (CFDs), the Forex currency market, and commodity exchanges

Commissions are slightly higher with Galt & Taggart than TBC. For example, although the USD 0.02 per security when buying American shares is the same, the minimum is USD 5. On the other hand, storage fees are more flexible: 0.005% per month for Georgian bonds and 0.015% per month for foreign securities. Check out the tariffs here and here (very end of the document).

There is no fee for opening a brokerage account with Galt & Taggart, but there is an entry threshold of USD1,000.

Brokers and cryptocurrency

Georgia is moving quickly to legalize cryptocurrency. Since 2023, the National Bank has created a separate register and begun issuing licenses to companies working with digital assets. It is possible that brokers will have access to cryptocurrency exchanges in the future, but for now – no dice. 

There is good news, however: in early 2024, the U.S. Securities and Exchange Commission (SEC) allowed access to organized trading for the first ever bitcoin-focused spot investment funds (ETFs):

• VanEck Bitcoin Trust (HODL)
• Grayscale Bitcoin Trust (GBTC)
• BlackRock’s iShares Bitcoin Trust (IBIT)
• Fidelity Wise Origin Bitcoin Fund (FBTC)
• Ark/21 Shares Bitcoin Trust

And there are a few others. So clients of Galt & Taggart and TBC Capital can purchase spot bitcoin ETFs on the NYSE and NASDAQ exchanges.

Documents to open an account

Having a regular bank account in Georgia will make it easier to deposit money into a brokerage account. So, we would recommend first becoming a client of Bank of Georgia, its premium SOLO, or TBC Bank before approaching a broker. Accounts are available in four currencies: Georgian lari, US dollars, euros, and pounds sterling.

Open an account in person at one of their many branches or remotely by power of attorney. The documents you’ll need are pretty standard:

• A passport (residence permit not required)
• An application form (KYC) with your personal information and your e-mail address 
• The bank may request more information about the origin of the funds. Any certificates and statements confirming the source will do: a real estate sale agreement, employment contract, bank documents, and so on
• If you plan to open an account remotely, you will need a notarized power of attorney in the name of your representative

The documents you’ll need to open a brokerage account are pretty much the same. Again: you don’t need to open a regular bank account first, but it will simplify things later on.

Important clarification for citizens of Russia and Belarus

Since all brokers in Georgia use European infrastructure, they are obliged to comply with sanctions. This means that citizens of the Russian Federation and the Republic of Belarus without a residence permit in an EU country cannot make transactions with US and EU securities. Difficulties with access to online terminals may also arise.

Citizens of Russian and Belarus can still open an account with Galt & Taggart and TBC Capital, place orders by e-mail or phone, and invest in Georgian companies or a number of other regional markets.

There are interesting returns in US dollars and euros to be had with this option, and it is precisely for the sake of access to the local Georgian market that many investors open a brokerage account in Georgia.

Typical Georgian Stock Market returns

The Georgian Stock Exchange opened in 1999. It is relatively young, but it is developing fast. As of the beginning of September 2024, 28 local companies were represented on the exchange for a total capitalization of GEL 6.04 billion (approximately USD 2.25 billion), twice what it was a year ago.

The greatest interest in this market is not shares (there are very few of them), but corporate bonds denominated in lari, dollars, and euros.

You can estimate the approximate yield:

• Tegeta Motors Holding, which distributes and services automobiles, is offering a GEL 1,000 bond maturing at the end of 2025 and quarterly coupons at TIBR3M+3.5%. It is floater linked to the Tbilisi Interbank Interest Rate index, almost the same as the key rate of the National Bank of Georgia. At the time of writing this post, the average annual yield of the very liquid, A level Tegeta Motors bond was 11.58% in GEL
• For comparison, microfinance organization MFO Crystal JSC’s securities with annual yield in national currency – TIBR6M+4.75% (about 13.05%) are B
• Silk Real Estate developer offers a coupon yield of 9.25% in USD. The nominal value of the bond is USD 1,000, matures in September 2026, and coupons are paid twice a year
• Silk Real Estate’s Eurobonds yield 7% per annum

For context, the annual yield on a typical bank deposit in Georgia is just above 9% in Georgian lari, 1.5% in USD, and only 0.5% in European currency (for TBC and Bank of Georgia). Even US Treasury bonds with a duration of 3 months yield only 5% per annum in dollars, in comparison to the 3.7% for two-year treasuries, half the yield of Georgian foreign currency bonds.
The debt market in Georgia has grown by an average of 31% per year over the last five years. Brokers keep their clients informed about new corporate bond issues, so don’t miss out on a favorable offer.

What’s the tax on investment?

• Income from investment in foreign (non-Georgian) shares and all related payments (dividends, coupons) are recognized as income outside Georgia and not subject to income tax
• The tax rate is 20% on the difference between the purchase and the sale price in local securities sold for a profit. However, you are exempt for tax if the securities have been in your possession for more than two years according to Article 82 of the Tax Code of Georgia
• Careful, though: You should know that if you profit from Georgian bonds in Georgia, income from foreign bonds (coupon or profit from their sale) is not taxed according to the same principle under Article 82, and income from Georgian bonds is also exempt from tax under the same article (Article 82, f1)

There is only one condition to qualify for the listed tax rates (some of the lowest in the world!): you must become a tax resident of Georgia. To do this, you need to:

• Live in Georgia for more than 183 days per year
• Or become a resident under the HNWI program, a good choice for wealthy individuals, and one not requiring you to visit Georgia at all