Base Your IT or Maritime Team in Georgia: 5% Tax on Salaries

For a foreign company building out IT engineering capacity, technical operations, or maritime and logistics teams, the staffing decision typically comes down to where the labour cost economics work. Talent availability matters, but so does the total payroll burden — gross salaries plus employer-side social charges plus corporate-level tax on the distributed profits the operation generates. Georgia's International Company status framework, established under Ordinance No. 619 of October 8, 2020, provides a substantive answer for IT and Maritime sector operations.

Under International Company (IC) status, qualifying employees pay 5% personal income tax on their salaries — down from the standard 20% Georgian rate. Combined funded-pension contributions for covered employees run 4% total (2% from the employee, 2% from the employer), the same as under any Georgian employer. Employees not covered by the funded pension scheme pay only the 5% PIT; we confirm coverage for your staff. The corporate-level framework similarly favours IC-status companies — 5% Corporate Income Tax on distributed profits versus the standard Georgian rate, and 0% withholding tax on dividend distributions to shareholders versus the standard rate.

For a foreign company evaluating Georgia as a staffing base, the math is direct: total payroll-side tax and pension runs at 9% for covered employees (5% PIT + 4% pension) and 5% for employees outside the pension scheme, against 20% income tax on salaries under the standard Georgian regime. The corporate-level treatment delivers similar advantages for the parent company's distribution mechanics.

This article walks through what IC actually does for a staffing decision, who qualifies, the substance requirements, and the structural argument for basing IT or maritime/logistics operations in Georgia.

What IC status does for a staffing decision#

The substantive framework under Government Ordinance No. 619 of 8 October 2020 is consistent and well-documented in the Tax Code provisions implementing the regime. Three benefit layers attach to qualifying IC companies, all relevant to a staffing decision.

Salary tax — 5% PIT on qualifying employees. Personal income tax on salaries paid by an IC company to its employees runs at 5%, replacing the standard 20% rate that applies under ordinary Georgian employer arrangements. The 15-percentage-point reduction is the central staffing-decision lever. For a company hiring engineering, technical, or operational staff at salary levels typical of regional or international IT and maritime work, the differential compounds rapidly across a team.

Pension contributions — 4% combined for Georgian citizens and permanent residents. Pension contributions follow the standard Georgian framework regardless of IC status: 2% from the employee + 2% from the employer = 4% combined, for employees covered by the funded pension scheme. Employees outside the scheme do not trigger the contribution; we confirm coverage for your staff. This means total Georgian payroll tax and pension for an IC company is 9% for covered staff (5% PIT + 4% pension) and 5% for staff outside the scheme.

Corporate income tax — 5% on distributed profits. IC companies pay 5% CIT on profits distributed as dividends, against the standard Georgian rate. The 5% CIT is levied at the time of distribution, on the distribution divided by 0.95, so 5% of the profit paid out goes to tax. Profit retained in the business isn't taxed while it stays there. The same 5% applies to outflows the Tax Code treats like distributions, such as transactions with related parties at non-market prices, costs unrelated to the business, gratuitous transfers and representation costs above the limit.

Dividend withholding tax — 0% on distributions to shareholders. Dividends from an IC company are not subject to Georgian withholding tax and are not taxed again as the recipient's income, against the rate applicable under non-IC treatment. Compared with Virtual Zone, the difference is where the tax sits rather than how much: a VZ company pays no profit tax on qualifying export profit but withholds 5% from the dividend, while an IC company pays the 5% profit tax on the distribution and withholds nothing. For a parent-company structure where profits flow through to foreign shareholders, that means a single company-level tax and no withholding step on the dividend stream.

Property tax — 0% on property used for permitted activities. Property used to carry out the IC company's qualifying activities is exempt from Georgian property tax (except land). For a foreign company building out a Georgian operating footprint with offices, equipment, and operational infrastructure, the property tax exemption is a meaningful operating cost reduction.

Reduced taxable amount for Georgian costs. Where the IC company incurs costs in Georgia listed by Government ordinance — salaries of employees who are Georgian citizens resident in Georgia, and research, design and development services within its permitted activities — it can reduce the distributed profit subject to the 5% by those costs, under the Ministry of Finance procedure (Tax Code Article 23(12)). This further lowers the profit tax on distributions from a Georgian-staffed operation.

Who qualifies under Ordinance No. 619#

IC status is sector-restricted and substance-gated. Ordinance No. 619 limits the regime to companies operating in specifically-enumerated activities; the activity scope is narrower than general IT or general logistics work.

Qualifying IT activities. The Ordinance's IT scope covers software publishing (including games and applications), software development services, IT services in defined categories, and adjacent technology activities specifically listed in the Government's enumeration. General IT consulting without a software-creation component, internet marketing, e-commerce operations, and other broadly-described "IT-adjacent" activities are not within IC's qualifying scope unless the activity falls within the specifically-listed categories.

Qualifying Maritime activities. The Ordinance's Maritime scope covers shipping, vessel operation, crewing, ship management, and related maritime-services activities specifically listed in the Government's enumeration. The framework reflects Georgia's positioning at the Caspian-Black Sea logistics corridor and the policy intent of attracting maritime operations to Georgian-flag and Georgian-managed vessels.

Logistics scope. Logistics activities falling within the Maritime sector enumeration qualify; broader logistics operations (warehousing, last-mile delivery, freight forwarding without maritime component) may not be within scope unless they connect to the qualifying maritime activities. For a foreign company evaluating IC status for logistics staff, the activity scope test is the gating question — confirm that the specific operational activities fall within Ordinance No. 619's enumeration before structuring the application around IC.

Two-year experience requirement. Applicants must demonstrate at least 2 years of experience in the qualifying sector. The two years relate to the activity, not to the age of the Georgian company. Ordinance No. 619 sets out three alternative forms:

• The Georgian enterprise itself has 2+ years of experience in the qualifying activity, OR
• The Georgian enterprise represents a foreign (non-resident) enterprise with 2+ years of experience in the sector, OR
• More than 50% of the Georgian enterprise is held by enterprises (Georgian or foreign) that each have 2+ years of experience in the same permitted activity

For a foreign company with 2+ years of established operations in IT or Maritime sectors, the third form typically applies — incorporate a Georgian subsidiary, the parent's experience counts, and the IC status application proceeds. Beyond these routes, in our assessment a newly formed Georgian LLC may also qualify through the eligible experience of its shareholder or director, subject to review — we check this in a free consultation.

Substance requirements. The Georgian enterprise must demonstrate physical substance in Georgia. The Ordinance language requires the company to "carry out basic income-generating activities in Georgia and have adequate human resources to carry out such activities, with the necessary qualifications." In practice, this means a real operating footprint — Georgian premises (office space, operational facilities), Georgian-based staff actually performing the work, and operational reality consistent with the activity description.

Cannot be in a Free Industrial Zone. IC status and FIZ are mutually exclusive; a Georgian company cannot operate under both regimes simultaneously.

For a foreign company evaluating IC status for IT or maritime/logistics staffing, the substance requirements are the substantive entry cost. IC status is not a pure tax wrapper for offshore operations — the regime is designed to attract genuine operating activity to Georgia, and the application succeeds when the company genuinely builds operating capability in Georgia. The Ordinance also expects the company to incur the corresponding operating costs in Georgia.

How the staffing math works#

For a foreign company evaluating Georgia as a staffing base, the practical comparison runs as follows on a representative staffing scenario.

A foreign company employs 10 software engineers at gross salary of EUR 60,000 per year per engineer (typical regional senior-engineer band). The total annual salary cost is EUR 600,000 in gross compensation.

Standard Georgian employer treatment. PIT at 20% on EUR 600,000 = EUR 120,000 PIT. Pension contributions at 4% combined for covered employees = EUR 24,000. Total Georgian tax and pension on payroll = EUR 144,000, or 24% of gross salary (income tax and the employee's pension share are withheld from gross pay; the employer's pension share is paid on top).

IC-qualifying Georgian company. PIT at 5% on EUR 600,000 = EUR 30,000. Pension contributions at 4% combined = EUR 24,000. Total Georgian tax and pension on payroll = EUR 54,000, or 9% of gross salary.

Differential. EUR 90,000 saved annually on the same staff at the same gross compensation. Across 10 engineers, the annual saving is a meaningful operating advantage. Across multi-year operations, it compounds to substantial cumulative cost reduction.

The math is more favourable still for engineers not covered by the pension scheme — the pension contribution doesn't apply, leaving 5% total payroll tax versus 20% standard. The differential expands to 15 percentage points, with EUR 90,000 saved on the same scenario.

If the Georgian operation distributes profit to its parent, IC status means 5% profit tax at company level and no Georgian withholding: on EUR 100,000 of profit paid out, EUR 5,000 goes to profit tax (the EUR 95,000 dividend divided by 0.95, taxed at 5%) and EUR 95,000 reaches the parent, before any reduction for Georgian costs.

For a foreign company building substantial Georgian operating activity — 20+ engineers, multi-year horizon, with profits flowing to foreign shareholders — the payroll and profit-tax differences of IC status grow with headcount and distributions; we model them for your plan.

Application and operations#

The IC status application runs through the Revenue Service of Georgia under the framework established by Ordinance No. 619 and supplementary Government implementing procedures.

Pre-application — Georgian enterprise formation. The Georgian operating entity must be registered as a Georgian LLC under the Law on Entrepreneurs before the IC status application proceeds. Standard Georgian company registration runs through the National Agency of Public Registry within one working day of a complete application, executable remotely through Power of Attorney. The Georgian LLC is established first; IC status is applied for separately.

Application submission. The application package includes documentation of the qualifying activity (operational descriptions, project history, contracts), evidence of the two years' eligible experience (the Georgian company's, a qualifying parent's or, subject to review, a shareholder's or director's), and substance documentation (Georgian premises lease, employee structures, operational infrastructure). The Revenue Service reviews against Ordinance No. 619 criteria.

Decision timeline. The Revenue Service checks the application against the Ordinance within 10 days of submission. The file then goes through the Ministry of Finance to the Government, which grants the status by decree; that final step has no fixed deadline. Incomplete applications or substance questions extend the timeline through clarifying rounds.

Approval and ongoing compliance. Once granted, IC status applies to the company indefinitely subject to ongoing compliance with the activity, substance and eligibility requirements. The Revenue Service can revoke status if the company drifts outside the framework — ceasing the qualifying activity, losing substantive Georgian footprint, or generating substantial revenue from non-qualifying activities. Continuing compliance is the operating cost; routine annual reporting and ongoing accounting, which our team provides, handle the day-to-day compliance.

Payroll operations. IC-status companies operate Georgian payroll through standard Revenue Service-integrated payroll systems. Monthly salary payments, PIT withholding at 5%, pension contribution withholding for qualifying employees, and the corresponding monthly tax declarations all run through the standard Georgian payroll framework. The 5% PIT applies at the source (the company withholds 5% from each paycheck and remits to Revenue Service); employees receive net salary equivalent to 95% of gross.

Banking infrastructure. The Georgian operating company opens a corporate bank account at one of the major Georgian commercial banks for payroll, supplier payments, and operational banking. The corporate banking framework runs alongside the company's parent-company financial relationship and the broader cross-border payment infrastructure.

When IC status is the right answer#

IC status is structurally efficient when several conditions hold simultaneously.

The company brings at least 2 years of eligible experience in IT or Maritime activities within Ordinance No. 619's qualifying scope — in the Georgian company itself, through a foreign enterprise it represents or majority holders with that experience, or, in our assessment and subject to review, through its shareholder or director. Where no qualifying experience exists yet, the company operates under standard Georgian LLC treatment (or Virtual Zone, if it qualifies) until the threshold is met, then transitions.

The foreign company is willing to build genuine Georgian operating substance — Georgian premises, Georgian-based staff actually performing the work, real operational footprint. Companies looking for a thin tax wrapper without substantive Georgian operations are not the target audience for IC; the substance conditions are part of the application.

The staffing scale is meaningful — typically 5+ engineers or operational staff justifies the structuring overhead and produces saving levels that materially exceed setup and ongoing operating costs. For very small teams, the operational complexity of cross-border employment, payroll, and IC compliance may exceed the net tax saving on the limited headcount.

The foreign company plans dividend distributions to foreign shareholders or anticipates corporate distribution events. For companies retaining all profits indefinitely, the 5% profit tax applies only when profit is distributed or on outflows treated like distributions, and the 0% withholding matters only for dividends — so the salary rate is what IC delivers.

For companies meeting these conditions, IC status is structurally attractive and the math typically produces substantial annual savings. For companies not fitting — companies without qualifying experience, companies unwilling to build Georgian substance, very small teams, no distribution plans — IC status is the wrong tool, and either standard Georgian LLC treatment, Virtual Zone status (for software-creation IT companies in earlier operating years), or operations in alternative jurisdictions are the correct answers.

Practical considerations#

Three operational realities for a foreign company considering IC status for IT or maritime/logistics staffing.

Substance is enforced. The Ordinance's substance requirements are not perfunctory. The Revenue Service evaluates Georgian operating reality during application and on subsequent compliance review. A Georgian entity with no real operations, nominal staff, and all work performed abroad may be refused the status, or lose it on review. Plan the operational footprint as part of the structuring decision — Georgian office space, Georgian-based hires, operational reality consistent with the activity description — not as an afterthought.

Activity scope tracks the Ordinance's specific enumeration. IC status is not "any IT activity" or "any logistics activity" — Ordinance No. 619's qualifying activities are specifically enumerated. Verify that the company's specific operational activities fall within the enumeration before structuring around IC. Activities that fall outside the enumeration may still benefit from Virtual Zone status (for software creation specifically) or standard Georgian LLC treatment with the broader framework's advantages, but cannot use IC.

Coordination with home-jurisdiction tax framework. The IC framework optimizes the Georgian-side tax position; the foreign parent company remains subject to home-jurisdiction tax rules on the consolidated operation. Permanent establishment risk, transfer pricing requirements, controlled foreign company rules, and other home-jurisdiction provisions apply alongside the Georgian framework. Coordinated structuring with home-jurisdiction tax advisors at the design stage produces materially better outcomes than treating the Georgian side in isolation. We handle the Georgian side and can review the cross-border position in a cross-border planning review.

Talent availability and operational reality. Georgia has a growing IT engineering workforce, particularly in Tbilisi, with mature universities producing qualified graduates and an established ecosystem of IT companies. Maritime and logistics talent is more concentrated in coastal cities (Batumi, Poti) and tied to the operational infrastructure of Georgian ports and shipping. The talent pool depth and specific skill availability vary; building a substantial Georgian team typically involves a combination of local hires, regional hires, and international hires depending on the role and seniority required.

For a foreign company in IT or Maritime/logistics with established operations and willingness to build genuine Georgian operating capacity, IC status is a structurally attractive staffing-base framework. The combined payroll and corporate-level advantages produce material operating cost reduction; the application framework is professional and the framework has been operationally stable since its 2020 introduction. For most foreign companies meeting the qualifying conditions, the structural argument produces meaningful savings that compound over multi-year operations.

Read more about International Company setup on the Company Setup pillar.

See LLC formation service details.

See Virtual Zone LLC service details for software-creation IT alternatives.

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