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Georgia lets a freelancer register as a sole trader and pay 1% tax on turnover up to GEL500,000 a year. It’s one of the lowest rates going, and one of the easiest to get wrong.
You’ll see the short version everywhere: fly to Tbilisi, register in a morning, pay almost nothing. The 1% is real, and plenty of remote developers and designers pay exactly that. But the marketing skips the parts that decide whether you keep the rate.
The word you write on your invoices can cost you the whole thing. A separate VAT line has nothing to do with the famous cap and catches people who never saw it coming. There’s a filing due every single month. And registering a business in Georgia is not the same as becoming a tax resident of Georgia, however many blog posts blur the two.
This guide covers all of it: what Small Business Status actually is, the 1% rate and the GEL500,000 cap, who qualifies and who’s shut out, how you register, what you owe each month, the VAT trap, and why the status alone won’t move your tax home.
Key Takeaways
- Register as an Individual Entrepreneur, qualify for Small Business Status, and you pay 1% on turnover up to GEL500,000 a year (about US$180,000). Above that, 3%.
- It’s a tax status, not a visa or residency. Registering doesn’t move your tax home to Georgia.
- Consulting is out. So are legal, notarial, medical, and architectural work, plus gambling and anything that needs a licence.
- Put “consulting” on your invoices and you drop to the standard 20% rate.
- You file every month through the Revenue Service portal, even in a month you earned nothing.
- VAT registration kicks in at GEL100,000 of turnover, but income from clients abroad usually sits outside Georgian VAT and doesn’t count toward it.
- Turn over under GEL30,000 a year and Micro Business Status charges you 0% instead.
What Small Business Status Is
Small Business Status is a tax break for sole traders: register as an Individual Entrepreneur, qualify, and you pay 1% on your turnover instead of the 20% income tax that would otherwise apply. It’s a tax status, not a company and not a visa.
Two things sit underneath it. The Individual Entrepreneur (IE) comes first. That’s a sole-trader registration, you trading under your own name, the local version of going self-employed rather than setting up a limited company. Small Business Status is the tax treatment you then apply for on top of that IE.
An IE isn’t a separate legal person from you. If the business owes money, you owe money, because you and it are the same thing in law. For a solo freelancer billing clients, that’s rarely a problem, and it’s the reason the whole setup is cheap and fast next to forming an LLC.
Good to Know: This isn’t the same as a Georgian LLC, where profit is taxed only when you pay it out to yourself. If you’re hiring people or carrying real expenses, the LLC route can beat the 1%, because the 1% is charged on everything you invoice with nothing deducted first.
The 1% Tax and the GEL500,000 Cap
The 1% rate applies to your gross turnover up to GEL500,000 a year, which is roughly US$180,000. Bill more than that inside a single year and the slice above the line is taxed at 3% for the rest of it. (Verified September 2026.) The tax lands on turnover, not profit, so it’s a percentage of what you invoice, full stop.
The figures here run on a rough rate of GEL2.7 to US$1. The lari drifts, so check today’s rate before you lean on any conversion.
That “no profit, just turnover” wording sounds like a technicality until you do the sums. You can’t knock off your laptop, your desk at the co-working space, or your software before the 1% bites. A freelancer with a phone and a text editor won’t feel it. Someone running real overheads will, and that’s usually the moment an LLC starts to look better.
The cap runs per calendar year. Cross GEL500,000 halfway through, pay 3% on the excess until December, and you’re back to 1% in January. You only lose the status if you blow past the cap two years running, in which case it’s revoked on 1 January of the third year and you’re on standard rates until you requalify. Guesthouses and agritourism get a higher GEL700,000 ceiling, which won’t matter to most freelancers but is worth a mental note if you rent rooms on the side.
Who Qualifies and Who Doesn’t
Small Business Status is open to genuinely self-employed people whose line of work isn’t on the banned list. That banned list is where most of the disappointment happens, so check it before you get attached to the idea.
These activities are shut out:
- Advisory and licensed professions: lawyers, notaries, doctors, and architects.
- Tax and audit work: accounting, auditing, and tax advice.
- Consulting of any kind: management and strategy advice, the single most common reason freelancers get turned down.
- Regulated and excise trades: gambling, currency exchange, and anything that needs a special licence.
- Staffing: supplying labour or personnel.
(Verified September 2026.)
The Consulting Trap
If your invoices say “consulting,” you can wave the 1% goodbye, because advisory work is excluded and gets taxed at the standard 20% instead. Ask anyone who’s set up in Tbilisi and this is the warning they lead with. The label on your contracts is what the Revenue Service reads, not the vibe of what you actually do all day.
A developer who writes “IT consulting” invites a reclassification. The same developer writing “software development” and “maintenance” doesn’t. Deliverables and technical execution are safe ground. Advice, strategy, and slide decks are not. If your work genuinely is advisory, this regime isn’t built for you, and dressing it up as something else is a fight you lose the moment anyone looks closely.
The Single-Client Problem
Working full-time for one client and billing them as a contractor is the other thing that draws attention. Georgia can treat that as disguised employment, a real job wearing a freelancer costume to skip payroll tax, the same way most countries do. Keep more than one client if you can, and write your contracts to read like service agreements rather than a job offer.
How to Register as an Individual Entrepreneur
Registering takes two steps, and neither one needs a residence permit. First you register the Individual Entrepreneur at a Public Service Hall (the House of Justice). Then you ask the Revenue Service for Small Business Status on top of it.
Step 1: Register the IE
You do this in person at a Public Service Hall, and it’s usually finished the same day. Bring your passport, a Georgian address for the business, and, if your passport isn’t already in Georgian or English, a notarised translation. The address is the part that snags people: it has to be a real one, and you need the owner’s consent to use it. A foreigner can register without living in Georgia or holding residency, which is exactly why nomads passing through can do it at all.
Step 2: Apply for Small Business Status
With the IE registered, you request Small Business Status from the Revenue Service, either at a desk or through the rs.ge portal once your taxpayer account is live. Since 2026 the status starts the day you file the request, rather than waiting until the first of the next month like it used to. (Verified September 2026.) That’s a small change with a real payoff if you’re registering mid-month and want the 1% running straight away.
Tip: Nail the address and the activity description at registration. Going back later to fix a wrong legal address, or an activity that reads as “consulting,” is far more painful than getting it right the first time.
Monthly Filing and Accounting
You file an income-tax declaration every month through your Revenue Service account, even in a month you earned nothing. It’s a monthly habit, not a once-a-year chore, and skipping it now bites back.
A 2026 change took away the old safety net. A missed monthly return no longer counts as a quiet zero. Stay silent in a slow month and it’s a missed filing, not an assumed “nothing to report,” so you actually have to log in and submit every time or risk a penalty.
The filing itself is dull once you’ve done a few: enter the month’s turnover, and the 1% falls out of it. The catch is that the portal runs in Georgian and the classification rules don’t forgive much, which is why a lot of freelancers just hand the whole thing to a local accountant. Reported fees sit somewhere around US$50 to US$150 a month depending on your volume and whether they’re watching your compliance too. Plenty of low-volume freelancers file it themselves after being walked through it once. The language barrier is the usual reason people decide to pay.
VAT: the GEL100,000 Surprise
VAT registration turns mandatory the moment your turnover passes GEL100,000 (about US$37,000) in any rolling twelve months, and Georgian VAT runs at 18%. (Verified September 2026.) This has nothing to do with the GEL500,000 Small Business cap, and mixing the two up is one of the most common mistakes people make with this regime.
Here’s what saves most remote freelancers from it. A service you sell to a business client sitting outside Georgia is treated as supplied where that client is, which puts it outside Georgian VAT entirely. Income like that doesn’t count toward the GEL100,000 line at all, so a developer invoicing companies in Berlin or New York can sail well past GEL100,000 and never register.
Two things stop that being a clean escape:
- Local clients still count. Invoice a Georgian business or a Georgian consumer and that turnover is domestic, and it does push you toward the VAT threshold.
- Reverse-charge VAT is its own trap. Buy services from foreign suppliers (Google or Meta ads, AWS, your SaaS stack) and Georgia can charge reverse-charge VAT on what you bought, whatever tax regime you’re on. It keys off what you spend, not what you earn, so it can leave you with a small VAT bill even when everything you sell is VAT-free.
Place-of-supply rules get technical fast. If you’re anywhere near either line, get your exact position from a Georgian accountant rather than a forum thread.
Micro Business Status: the 0% Alternative
Micro Business Status is a separate regime that charges 0% on turnover under GEL30,000 a year, roughly US$11,000. (Verified September 2026.) It’s built for very small sole traders rather than full-time freelancers, but it’s worth knowing the line is there.
If you genuinely turn over less than GEL30,000 in a year, Micro Business Status means you pay nothing, though the activity restrictions look much the same and the monthly-declaration discipline still applies. Most working freelancers outgrow it inside a few months, which is why the 1% gets all the airtime. The two do connect at the edges. Ask for Small Business Status within 15 days of losing Micro Business Status and the new one counts from the day the old one ended, so you don’t drop into a gap.
Small Business Status vs Tax Residency
Registering an Individual Entrepreneur does not make you a Georgian tax resident, and untangling those two is the single most useful thing you can do before you rely on any of this. They’re separate statuses with separate rules and separate paperwork.
You become a Georgian tax resident by spending 183 days or more in the country across any rolling twelve months, or through the high-net-worth route that grants residency on an economic basis without the day count. The 1% status doesn’t care either way. A registered IE gets it whether they ever hit 183 days or not.
Why the distinction matters comes down to how Georgia taxes people. It runs a territorial system, so it doesn’t tax the foreign income of individuals, and that’s the part that can get you to 0% on money earned outside the country. But anything you bill through your Georgian IE is Georgian-source turnover, which is precisely what the 1% is charged on. So the two perks answer two different questions:
- The 1% Small Business Status covers the income you push through your Georgian sole-trader registration.
- Tax residency plus the territorial system decides whether Georgia taxes your other, non-Georgian income, and that needs the 183 days or the high-net-worth route, not just an IE.
People get burned treating the IE as a shortcut to a new tax home, especially when their old country still counts them as resident there. If your plan is to stop being tax resident somewhere else, the IE on its own won’t do it.
Costs
Setting this up and running it is cheap by any measure, and the monthly accountant is the only fee you’ll really feel. The table below is the usual outlay for a solo freelancer.
| Item | Typical cost | Notes |
|---|---|---|
| IE registration at the Public Service Hall | Nominal (under GEL100 / about US$35) | Same-day; paying for express service costs more |
| Notarised passport translation | GEL50 to GEL150 (about US$20 to US$55) | Only if your passport isn’t in Georgian or English |
| Small Business Status application | Free | Filed with the Revenue Service |
| Monthly accountant | About US$50 to US$150 a month | Optional; range reported by expats |
| The tax itself | 1% of turnover | 3% on turnover above GEL500,000 in a year |
Against a rate that would otherwise be 20%, even the pricey end of the accountant fee pays for itself the moment your turnover is worth anything.
Read more:
Frequently Asked Questions
Can I get the 1% tax without living in Georgia?
You can register the IE and get Small Business Status without being a resident, since neither step asks for a residence permit. But it only makes sense if you’re genuinely running income through the Georgian registration. Lean on it while you’re living and being taxed somewhere else and you can walk straight into a fight with your home tax authority.
Does freelance income from foreign clients qualify for the 1%?
Yes. Anything you invoice through your Georgian IE is taxed at 1% under Small Business Status, wherever your clients happen to be. Foreign-client income is what most people on the regime are billing, and it’s usually outside Georgian VAT into the bargain.
What happens if I go over GEL500,000?
The turnover above GEL500,000 is taxed at 3% for the rest of that calendar year, then the 1% resets in January. You only lose the status if you cross the cap two years in a row, and even then it’s revoked on 1 January of the third year, not the day you go over.
Do I really have to file every month?
Yes, a declaration is due every month through the Revenue Service portal, including the months you earned nothing. Since a 2026 change, a missed filing no longer counts as an automatic zero, so silence can now cost you a penalty.
Is “consulting” really excluded?
Yes. Advisory and consulting work is on the excluded list and gets taxed at the standard 20%, not 1%. What your contracts and invoices call your work is what the Revenue Service goes on, so real technical or creative execution qualifies where advice doesn’t.
Should I use an accountant or file myself?
Either works. The monthly filing is simple once someone’s shown you, but the portal is in Georgian and the rules are fussy, so a lot of freelancers pay a local accountant US$50 to US$150 a month and stop thinking about it. If your income is low-volume and all from foreign clients, you’re the most likely to be fine doing it yourself.
Sources Cited
- Georgia Revenue Service (rs.ge): administers Small Business Status, the monthly declaration process, and VAT registration.
- Public Service Hall (House of Justice): registers the Individual Entrepreneur.
- Tax Code of Georgia (Legislative Herald): the statutory basis for the 1% and 3% rates, the GEL500,000 threshold, and the consecutive-year revocation rule.
- PwC Worldwide Tax Summaries: Georgia: VAT rate and registration threshold.
