How to Open a 1% Tax Business in Georgia (Country)

Georgia (the country between Europe and Asia) offers one of the world's most attractive tax regimes for freelancers and solo entrepreneurs. Register as an Individual Entrepreneur with Small Business Status, and you'll pay just 1% tax on your gross turnover - up to approximately $185,000 per year. No Georgian citizenship required. No minimum investment. Registration takes one day.

Quick Summary:

• Register as Individual Entrepreneur first, then apply for Small Business Status

• 1% tax applies to turnover under 500,000 GEL (~$185,000) annually

• Excluded activities include legal, medical, financial consulting, and gambling

• Monthly declarations due by the 15th - even for zero income months

• VAT registration recommended for most foreign-client businesses

Do You Qualify?

Before starting the registration process, confirm you meet these requirements:

• Your annual business turnover must stay under 500,000 GEL (approximately $185,000 USD). Exceed this for two consecutive years and you lose the status entirely.

• You must be the sole owner of the business. Partners and co-founders don't work under this structure - though you can hire employees and contractors.

• Your business activity cannot be on the excluded list. This includes legal services, medical practice, architecture, tax/audit consulting, financial advisory, gambling, currency exchange, real estate brokerage, and any activity requiring a special license.

• You do not need Georgian citizenship, residency, or even a visa. Citizens from 95+ countries can stay visa-free for up to 365 days while operating their business.

The 1% rate applies to gross turnover, not profit. If your business has high revenue but thin margins, the math might not work in your favor - consider an LLC structure instead.

Register as an Individual Entrepreneur in Georgia

Pay 1% Tax. Legally.

We handle registration, tax setup, and Small Business Status in 3 days. You walk out with a business certificate and start invoicing the same day.

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Registration Process

Opening your 1% tax business happens in two stages: first you register as an Individual Entrepreneur, then you apply for Small Business Status.

Stage 1: Individual Entrepreneur Registration

Visit the Public Service Hall in Tbilisi, Batumi, or any regional office. Bring your passport and a Georgian address for official correspondence.

If you don't own property, you'll need written consent from a property owner allowing you to register at their address. This can be a friend's apartment, your rental, or a virtual office service.

Fill out the application form with your name, address, business activity, and contact details. Pay the registration fee (20-75 GEL depending on processing speed). Standard processing takes one business day.

Can't come in person? Register remotely through a Power of Attorney. Have the POA notarized in your home country, translated to Georgian, and authorize a local representative to complete registration on your behalf.

Stage 2: Small Business Status Application

After your IE registration is complete, visit the Revenue Service office or apply through the rs.ge online portal.

Tell them your business activity. If it's something like IT services, marketing, design, or content creation, you'll receive approval on the spot. If you mention consulting or any excluded activity, your application gets denied.

The Revenue Service issues your Small Business Certificate the same day. Your 1% rate activates on the first day of the following month.

Timeline example: Register as IE on March 10th, apply for SBS on March 11th, your 1% status begins April 1st. Any income earned in March would be taxed at the standard 20% rate.

This timing matters. Register as early as possible - every month you delay while earning income in Georgia creates potential back-tax liability at 20%.

Costs

The registration itself is inexpensive:

• Individual Entrepreneur registration: 20-75 GEL ($7-28 USD) depending on processing speed.

• Small Business Status application: Free.

• Legal address (if needed): 300-750 GEL ($110-280 USD) annually for virtual office services.

• Professional assistance (optional): $300 USD for firms that handle the full registration process.

• Bank account opening: Free at most Georgian banks.

Banking Setup

You're not legally required to have a Georgian business bank account, but it simplifies everything.

Bank of Georgia and TBC Bank are the two main options. Both offer English-language online banking, mobile apps, and multi-currency accounts. Opening an account typically requires your passport, IE registration documents, and proof of address.

You can receive international payments via bank transfer, Wise, PayPal, Payoneer, or other platforms. All income - regardless of how you receive it - must be declared and taxed.

Using foreign bank accounts isn't prohibited, but keeping your banking in Georgia helps establish your presence here and avoids complications with tax authorities in other countries.

Monthly Compliance

Small Business Status comes with ongoing obligations. Miss them and you risk penalties or losing your status.

What to File Monthly

By the 15th of each month, submit through the rs.ge portal:

• Income Tax Declaration - report all revenue from the previous month and pay 1% tax.

• Tax Withholding Declaration - only if you paid Georgian employees or contractors.

• Reverse VAT Declaration - required even if you're not VAT registered, whenever you purchase services from foreign vendors.

• VAT Declaration - only if you're VAT registered.

You must file even if you had zero income. A nil declaration is still mandatory.

Payment

Pay your 1% tax by the 15th via bank transfer to the Treasury. The rs.ge portal generates the payment details. Some international card payment options exist but can be unreliable.

Record Keeping

Maintain a General Journal (Book of Turnover) documenting all transactions. You don't submit this monthly, but it must be available if the Revenue Service audits you.

The Phone Number Issue

The rs.ge portal requires two-factor authentication via Georgian mobile number. If you travel frequently, either maintain international roaming on your Georgian SIM or hire an accountant who can file on your behalf.

VAT Considerations

Small Business Status and VAT are separate systems with different rules.

When VAT Registration Is Mandatory

If your taxable turnover exceeds 100,000 GEL in any rolling 12-month period, you must register for VAT (18%).

Why You Might Register Voluntarily

Most businesses serving foreign clients should consider voluntary VAT registration even below the threshold. Here's why:

• Reverse VAT recovery - When you buy services from vendors outside Georgia (software subscriptions, contractors, tools), you owe 18% reverse VAT on those purchases. If you're VAT registered, you can claim this back. If not, it's just an additional cost.

• Local VAT recovery - VAT registered businesses can reclaim the 18% VAT paid on Georgian purchases (office equipment, supplies, services) provided they have VATable income or export services.

• B2B exports are VAT exempt - If your clients are foreign businesses, you don't charge them VAT anyway. Registration lets you claim back VAT on expenses without increasing your prices.

• Residency qualification - To get a Georgian residence permit through the entrepreneur route, you need to demonstrate 50,000 GEL annual turnover. VAT registration makes this easier to document.

What Happens If You Exceed 500,000 GEL

Cross the threshold during a calendar year and your tax rate jumps to 3% from that month through December 31st. You keep your Small Business Status.

On January 1st, you reset to 1% - assuming you stay under the limit.

Exceed the threshold two years in a row and your status is automatically revoked on January 1st of year three. You'll then owe 20% income tax on net profit with full accounting requirements.

Tax Residency and International Considerations

Do You Need Georgian Tax Residency?

Not for registration. The Revenue Service grants Small Business Status without checking your residency.

But residency matters for avoiding double taxation. Without Georgian tax residency, your home country may tax the same income you already paid 1% on in Georgia.

You become a Georgian tax resident by spending 183+ days per year in the country or proving your main economic interests are here.

Stopping Taxes in Your Home Country

This varies dramatically by nationality.

US citizens must continue filing US taxes regardless of where they live. Options like the Foreign Earned Income Exclusion can reduce the burden, but you can't fully escape the IRS.

UK, German, and other EU residents can often exit their home tax systems by establishing Georgian residency and obtaining a tax residency certificate. Double taxation treaties help, though they rarely eliminate liability entirely.

Australian and New Zealand citizens face lengthy exit procedures that can take over a year, often requiring proof of permanent relocation (property ownership, legal residency).

If you've been traveling for years without a clear tax home, your situation may be more complicated than you realize. Country-hopping doesn't automatically mean you owe taxes nowhere.

Get advice from tax professionals in both Georgia and your home country before assuming you're in the clear.

2025 Updates

Several changes took effect in early 2025:

Construction services (building construction, civil engineering, specialized construction work) provided to Georgian recipients are no longer eligible for Small Business Status as of February 2025. These are now taxed at 20%.

Agro and wine tourism businesses now have a higher threshold of 700,000 GEL (up from 500,000 GEL).

Monthly declarations require more detailed income breakdowns - you must specify whether income came via cash register, POS terminal, bank transfer, or payment platforms like PayPal and Wise.

Common Mistakes to Avoid

Delaying registration while earning income. Every month you work in Georgia without Small Business Status, you potentially owe 20% back taxes. Register immediately upon arrival.

• Misclassifying your activity. Calling yourself a "consultant" when your actual work is marketing or IT services can trigger unnecessary complications. Be specific and accurate about what you do.

• Forgetting monthly declarations. Even zero-income months require filing. Skipping declarations creates compliance issues.

• Ignoring reverse VAT. Buying services from foreign vendors without accounting for the 18% reverse VAT obligation catches many entrepreneurs off guard.

• Assuming 1% solves everything internationally. Georgian taxes are just one piece. Your home country's rules still apply until you properly exit their tax system.

FAQ

How long does the full registration process take?

In-person registration completes in 1-3 business days. Remote registration via Power of Attorney takes approximately 3-5 business days. If you already have a Georgian Tax ID from a previous visit, merging accounts can add up to 10 days.

Can I register completely online without visiting Georgia?

Yes. With a notarized Power of Attorney, a representative can complete both IE registration and Small Business Status application on your behalf. You'll also need someone to open your bank account, which some banks allow via POA.

What counts as "consulting" that's excluded?

Tax consulting, audit services, financial advisory, and legal consulting are explicitly excluded. General business consulting is a gray area - the Revenue Service looks at the actual nature of your work, not just the label. Marketing strategy, IT consulting, and similar services typically qualify, but pure advisory work may not.

Can I have multiple income streams under one IE?

Yes, as long as all activities qualify for Small Business Status. You report total combined income on your monthly declaration. If any income comes from excluded activities, that portion gets taxed at 20% separately.

What if I only work a few months per year in Georgia?

You only owe Georgian tax on income earned while physically present in Georgia (Georgian-source income). If you spend three months here and nine months elsewhere, you'd report and pay 1% only on the three months of Georgian-source income. Your other income may be taxable wherever you were located.

Do I need an accountant?

Not strictly required, but recommended. Monthly declarations are straightforward if you understand the system, but mistakes create problems. An accountant costs roughly $50-150/month and handles all filings, which is especially useful if you travel and can't access the rs.ge portal yourself.

Can I switch from LLC to Individual Entrepreneur?

These are separate structures. You'd need to close the LLC and register fresh as an IE. The processes don't convert or merge.

What happens if I want to stop my business?

Deregister through the Public Registry and file a final tax return with the Revenue Service. Failing to properly close your IE can create ongoing filing obligations and potential penalties.

Is cryptocurrency income taxed?

Cryptocurrency profits are currently not taxed in Georgia. However, rules can change, and how you receive payment (crypto vs. converted to fiat) may affect reporting requirements. Keep records regardless.

Can my spouse also register for Small Business Status?

Yes. Each individual can register their own IE with Small Business Status. This is actually a common strategy for couples where both partners work - effectively doubling the 500,000 GEL threshold between two businesses.

How do I prove my income for residency applications?

VAT registration helps because all transactions are documented in the system. Bank statements showing regular deposits also work. The Revenue Service can issue income verification letters based on your filed declarations.

Next Steps

The registration process is straightforward, but timing matters. Every month you delay while earning income in Georgia creates potential tax liability at 20% instead of 1%.

If you qualify for Small Business Status, register as soon as possible. Gather your documents, visit the Public Service Hall, and get your IE registration started. Apply for Small Business Status immediately after, and your 1% rate kicks in the first day of the following month.

For those who can't visit Georgia or prefer professional assistance, local law firms and service providers handle the entire process remotely for $150-300 USD.