VAT in Georgia: Rates, Registration & What You Need to Know

Moving to Georgia or starting a business here?

VAT is one of the first tax questions you'll face - and getting it wrong can mean unexpected bills or lost deductions.

Georgia keeps things simple with a flat 18% rate and a clear registration threshold, but the rules around Small Business Status, foreign income, and exemptions trip up plenty of newcomers.

This guide breaks down exactly what you need to know.

Quick Summary:

• Georgia's standard VAT rate is 18% with no reduced rates

• Registration is required when turnover exceeds 100,000 GEL in any 12-month period

• Small Business Status (1% tax) holders don't pay VAT unless they cross the threshold

• Services provided to foreign clients are generally exempt from Georgian VAT

• Monthly VAT declarations are due by the 15th of the following month

What is VAT in Georgia?

VAT (Value Added Tax) is an incremental tax applied at each stage of production and sale. When a business buys raw materials, improves them, and sells the finished product, VAT is charged only on the value added - not the total price.

In Georgia, VAT accounts for roughly 37% of total tax revenues, making it the largest single source of government income. The current system was implemented in 2000 and underwent major reforms in 2021 to align with EU VAT directives under the Association Agreement. These changes updated how the place of supply is determined for services and introduced new rules for digital service providers.

Current VAT Rate in Georgia

Georgia applies a single standard VAT rate of 18% on most goods and services. This rate has remained unchanged since 2004.

There are no reduced VAT rates in Georgia. Unlike many European countries that apply lower rates to essentials like food or books, Georgia keeps it straightforward - you either pay 18%, qualify for a 0% rate on exports, or your transaction is exempt entirely.

The 0% rate (zero-rated) applies to exports of goods from Georgia. This means exporters don't charge VAT but can still claim back input VAT on their business purchases - a key distinction from exempt supplies.

Who Needs to Register for VAT?

You must register for VAT in Georgia if:

• Your taxable turnover exceeds 100,000 GEL in any rolling 12-month period

• You import goods into Georgia (regardless of turnover)

• You deal in excisable products like alcohol, tobacco, or fuel

• You're a foreign company providing digital services to Georgian consumers (B2C)

Since 2024, a new rule applies to business owners with multiple companies. If you own several Georgian entities, their turnover is calculated together. Once the combined total exceeds 100,000 GEL, each company must register for VAT. This closed a loophole where owners would split operations across several businesses to stay under the threshold.

You have two business days from crossing the 100,000 GEL threshold to apply for VAT registration. If the tax authority discovers you should have registered but didn't, they'll register you retroactively - and you'll owe VAT from the date you should have registered, plus penalties.

Voluntary registration is also possible. Smaller businesses sometimes choose to register even below the threshold so they can reclaim VAT on purchases.

Small Business Status and VAT

Here's the part most freelancers and digital nomads care about: if you have Small Business Status, you likely don't need to worry about VAT at all.

Individual Entrepreneurs with Small Business Status pay just 1% tax on turnover up to 500,000 GEL annually (roughly $180,000 USD). This special regime does not require VAT registration unless you cross the separate 100,000 GEL VAT threshold.

The key point many people miss: services provided to foreign clients don't count toward the 100,000 GEL VAT threshold. If you're a freelancer working with clients in the US, UK, or elsewhere outside Georgia, those transactions aren't subject to Georgian VAT and aren't included when calculating whether you've hit the registration limit.

This is why the Small Business Status works so well for remote workers. You can earn up to 500,000 GEL from foreign clients, pay just 1% tax, and never deal with VAT registration or filings.

However, once you do register for VAT - whether voluntarily or because you crossed the threshold - you lose the 1% regime. You'll then need to comply with standard VAT and income tax rules, which means 20% personal income tax instead of 1%.

Micro Business Status (for those earning under 30,000 GEL annually) is also exempt from VAT and pays 0% income tax - though you can't have employees under this status.

VAT Registration Process

Registering for VAT in Georgia is done online through the Revenue Service portal at rs.ge. The process is straightforward compared to many countries.

Documents you'll need:

• Business registration certificate

• Tax Identification Number (TIN)

• Description of your business activities

• Director's ID or passport

The timeline is quick - most registrations are processed within the same day or a few business days. Once registered, all your business activities fall under the VAT registration, even if some are quite different from others.

Foreign companies providing digital services to Georgian consumers can register through a simplified scheme. This applies to SaaS providers, streaming platforms, hosting services, online advertising, and similar digital offerings.

VAT Exemptions in Georgia

Certain goods and services are exempt from VAT in Georgia. Exempt transactions fall into two categories: those with the right to deduct input VAT and those without.

Exempt with the right to deduct (you don't charge VAT but can reclaim it on purchases):

• Exports of goods

• International transportation services

• Services to organizations operating under international agreements

Exempt without the right to deduct (you don't charge VAT and can't reclaim it):

• Financial services including loans, interest, and banking operations

• Medical services from licensed institutions

• Educational services from accredited schools and universities

• Insurance and reinsurance

• Certain real estate transactions

B2B services provided to non-residents are also outside the scope of Georgian VAT. If your Georgian company provides consulting, design, development, or similar services to a foreign business, you don't charge VAT on those transactions.

Filing and Payment Deadlines

VAT-registered businesses in Georgia must file monthly returns, due by the 15th of the month following the reporting period. If you're registered, you must file even if you had no taxable transactions that month - zero returns are mandatory.

All invoices must be uploaded to the Revenue Service portal within 30 days. Without proper invoices in the system, your clients can't claim VAT deductions on what they paid you.

For non-resident digital service providers, the schedule is different:

• Quarterly VAT returns due by the 20th of the month after each quarter ends

• Payment deadline is the last day of the month following the quarter

• Payments can be made in USD, EUR, or GEL

Keep your records for at least three years after the end of the year in which the service was provided. The tax authority can audit within this period.

VAT Refunds in Georgia

If your input VAT (what you pay on purchases) exceeds your output VAT (what you collect on sales), you can claim a refund.

Refund requests are submitted through the RS portal. Once approved, the overpaid amount is either refunded to your bank account or offset against future tax obligations.

To qualify for a VAT deduction or refund, you need:

• Valid VAT invoices or customs declarations

• Proof that purchases were used for VAT-taxable business activities

• Proper documentation maintained in your records

Businesses that export goods frequently end up in a refund position since exports are zero-rated but input VAT on materials and services is still deductible.

Reverse Charge Mechanism

When a Georgian business buys services from a foreign company, the reverse charge mechanism applies. Instead of the foreign supplier charging Georgian VAT, the Georgian recipient calculates and pays the 18% VAT themselves.

If you're VAT-registered in Georgia, you can typically deduct this reverse charge VAT in the same reporting period - so it's often a wash. You declare the VAT owed, then immediately claim it back as input VAT.

If you're not VAT-registered but buy services from foreign companies, you still need to declare and pay the reverse charge VAT monthly. This catches many Individual Entrepreneurs off guard when they subscribe to foreign software or services.

Common services subject to reverse charge include SaaS subscriptions, hosting, consulting from foreign firms, and any professional services delivered remotely from abroad.

Penalties for Non-Compliance

Georgia takes VAT compliance seriously. Here's what you risk if you miss deadlines or underreport:

Late filing penalties:

• Up to 2 months late: 5% of the tax due (capped at 30% total)

• More than 2 months late: 10% of the tax due

Understating taxes:

• 10% penalty if the understatement resulted from the tax authority changing the timing of your liability

• Up to 50% penalty for other understatements

Tax evasion over 100,000 GEL is considered a criminal offense under Georgian law, with penalties determined by the criminal code rather than tax regulations.

Failing to register when required also triggers penalties, plus you'll owe VAT retroactively from when you should have registered.

FAQ

What is the VAT rate in Georgia?

Georgia has a single standard VAT rate of 18%, which applies to most goods and services. There are no reduced rates like you'd find in EU countries. Exports are zero-rated, meaning no VAT is charged but input VAT can still be reclaimed. This rate has been consistent since 2004.

Do I need to register for VAT if I'm a freelancer with Small Business Status?

Not unless your taxable turnover exceeds 100,000 GEL in a 12-month period. Most freelancers with Small Business Status work with foreign clients, and those transactions don't count toward the VAT threshold. You can earn up to 500,000 GEL under the 1% regime without VAT registration if your clients are abroad.

How do I register for VAT in Georgia?

Registration is done online through the Revenue Service portal at rs.ge. You'll need your business registration certificate, TIN, a description of your activities, and your ID or passport. The process typically takes one business day. You must register within two days of crossing the 100,000 GEL threshold.

When are VAT returns due in Georgia?

Monthly VAT returns are due by the 15th of the following month. Non-resident digital service providers file quarterly, with returns due by the 20th of the month after each quarter ends. Zero returns are required even if you had no taxable transactions.

Are digital services subject to VAT in Georgia?

Yes. Since October 2021, foreign companies providing digital services to Georgian consumers must register for VAT and charge 18%. This includes SaaS, streaming, hosting, and online advertising. B2B digital services use the reverse charge mechanism instead, where the Georgian business recipient pays the VAT.

Can I get a VAT refund in Georgia?

Yes, if your input VAT exceeds your output VAT. Submit a refund request through the RS portal with proper documentation. Approved amounts are either deposited to your bank account or credited against future tax obligations. Exporters commonly qualify for refunds since exports are zero-rated.

What happens if I exceed the 100,000 GEL threshold?

You must register for VAT within two business days. Once registered, you'll charge 18% VAT on taxable supplies and file monthly returns. If you had Small Business Status, you'll lose the 1% tax rate and switch to standard 20% income tax rules. The tax authority can register you retroactively if you fail to do so yourself.

Do I pay VAT on services provided to foreign clients?

Generally no. B2B services provided to non-residents are outside the scope of Georgian VAT. The place of supply for B2B services is where the recipient is located - so if your client is in Germany, the service isn't considered supplied in Georgia. This income also doesn't count toward your VAT registration threshold.

What is the reverse charge mechanism in Georgia?

It's a rule that shifts VAT responsibility from the foreign seller to the Georgian buyer. When you purchase services from a company outside Georgia, you calculate and pay the 18% VAT yourself. VAT-registered businesses can deduct this amount in the same period. Non-registered businesses must still declare and pay it monthly.

Can I voluntarily register for VAT below the threshold?

Yes. Some businesses choose voluntary registration to reclaim VAT on purchases, especially if they have large startup costs or capital expenditures. However, once registered, you must comply with all VAT obligations including monthly filings and charging VAT on taxable supplies. For Small Business Status holders, this means losing the 1% rate.

Conclusion

Georgia's VAT system is refreshingly simple - one rate of 18%, a clear 100,000 GEL threshold, and generous exemptions for those serving foreign clients. Most freelancers and small business owners working remotely can legally avoid VAT entirely while benefiting from the 1% Small Business Status regime. If your situation is more complex or you're approaching the threshold, consulting a local tax advisor is worth the investment to avoid costly mistakes.