Georgian Lari (GEL)

Overview and History

The Georgian Lari (GEL, currency code 981, symbol ₾) was introduced in October 1995 by the National Bank of Georgia (NBG), replacing the provisional coupon currency. The word lari is an ancient Georgian term denoting a hoard or property. Subdivided into 100 tetri, the currency operates under a floating exchange rate regime, with the NBG intervening periodically to smooth out extreme exchange rate volatility.

Regulatory Framework and Legal Tender Laws

Under Article 30 of the Organic Law on the National Bank of Georgia and civil law regulations, the GEL is the mandatory currency for legal tender and financial settlements within the jurisdiction of Georgia. Payments made between resident entities or individuals inside the country for goods, services, and real estate must technically be settled in GEL. While real estate marketing materials frequently quote prices in United States Dollars (USD) or Euros (EUR) due to historical dollarization, official invoicing, tax reporting, and public registration documentation must reflect equivalent amounts in GEL.

GEL in Real Estate Transactions

In property transactions, developer contracts and secondary market agreements often include foreign currency indexation clauses. However, actual bank transfers within Georgian banking institutions are processed in GEL or converted at the agreed rate on the transfer date. Key aspects of GEL usage in real estate include:

• Price Quotation vs. Settlement: Developers advertise in USD/m² for foreign buyer convenience, but bank transfers executed between domestic accounts are settled in GEL based on the NBG exchange rate of the day.
• National Agency of Public Registry (NAPR): All registration fees, administrative charges, and official property sale deeds filed with NAPR state values in GEL.
• Tax Obligations: Income tax on rental yields, property tax assessments, and Capital Gains Tax (CGT) are calculated and payable exclusively in GEL to the Revenue Service of Georgia.
• Value Added Tax (VAT): Commercial property transactions or sales by developers subject to the standard 18% VAT must report and submit VAT payments in GEL. The advertised price from developers is legally required to include this 18% VAT.

Currency Dollarization and Mortgage Regulations

Georgia has experienced high levels of financial dollarization. To mitigate foreign exchange (FX) risk for consumer borrowers, the NBG introduced regulatory limits on foreign currency lending. Mortgages below a specific regulatory threshold must be issued in GEL, regardless of the borrower's currency preference. Investors earning rental income in GEL while holding foreign currency obligations face FX conversion exposure, making dynamic currency risk management essential for institutional and private buyers.

A buyer purchases an apartment in Tbilisi for an advertised price of $100,000 USD (which includes the standard 18% VAT charged by developers). To satisfy Georgian domestic currency settlement regulations, the purchase agreement stipulates payment in GEL based on the official National Bank of Georgia (NBG) exchange rate on the transfer date (e.g., 1 USD = {{data:gel_usd_rate}} GEL). The buyer transfers $100,000 USD from an international bank account to their Georgian multi-currency bank account, converts the sum to {{data:gel_equivalent}} GEL, and executes a local bank transfer to the developer. The developer registers the transaction with the National Agency of Public Registry and reports the 18% VAT portion to the tax revenue service in GEL.