Georgia's Tax Advantages: 1%, 0%, 5% and More

Georgia's best-known tax rates are genuine, and each one applies to a different tax. The 1% is a tax on an individual's business turnover, the 0% is a company's corporate income tax on qualifying profit, and the 5% under International Company status applies to distributed profit and to eligible salaries. None of them is automatic: each depends on your activity and on meeting the regime's conditions.

This article sets out what each regime taxes, who qualifies and how Happy Georgia helps you choose, set up and maintain the right one.

The three headline regimes at a glance#

Dividends follow each regime's own rules, explained below. The rates should never be added together or read as one effective rate.

1%: Individual Entrepreneur with Small Business Status#

For eligible freelancers, consultants and developers, an Individual Entrepreneur with Small Business Status pays 1% of turnover up to GEL 500,000 in a calendar year. There is no deduction for expenses.

If turnover exceeds GEL 500,000, 3% applies to qualifying turnover from the beginning of the month in which the threshold is exceeded through the end of that calendar year. The following year's rate depends on retaining Small Business Status under the applicable rules. Exceeding the limit in two consecutive years ends the status.

Most independent professional work qualifies, but certain regulated professional services, financial services and most licensed activities are excluded. We check your activity before you register, file the status application and handle the monthly declarations through our monthly accounting service.

Registering an IE does not make you a Georgian tax resident, and the 1% does not settle what your country of residence taxes. We assess the Georgian position and identify what needs confirmation with an adviser in your country of residence. The detail is in our Small Business Status guide.

0%: Virtual Zone status for software companies#

A Georgian LLC with Virtual Zone status pays 0% corporate income tax on qualifying profit from software products and services it creates and supplies to non-resident clients outside Georgia. Profit from clients in Georgia does not qualify.

When profit is paid out, 5% is withheld on dividends to individual or non-resident shareholders.

Not all software work qualifies. The status is granted on application, and the development must genuinely take place in Georgia. We assess your activity, help establish the Georgian development operation and prepare the application. Our Virtual Zone guide explains the conditions.

5%: International Company status#

International Company status is available to companies carrying out qualifying IT or maritime activities listed under Government Ordinance No. 619. It requires the necessary experience in the activity and real substance in Georgia, with qualified staff and operating costs here.

An International Company pays 5% profit tax when it distributes profit, calculated on the distribution grossed up by dividing by 0.95. The same 5% applies to certain outflows the Tax Code treats like distributions. Dividends then carry 0% withholding. Eligible employees pay 5% personal income tax on their salaries, and property used for the permitted activities is exempt from property tax, land excepted.

Status is granted by the Government and is never automatic. Our International Company staffing guide covers the salary side in detail.

Other opportunities#

Free Industrial Zone. For physical-goods operations inside a zone, a Free Industrial Zone company can benefit from 0% corporate income tax, 0% VAT, 0% import duties and 0% property tax inside the zone, and its dividends carry no Georgian withholding tax.

HNW tax residency. For qualifying individuals, High Net Worth tax residency grants Georgian tax residency without 183 qualifying days in Georgia. It requires substantial wealth or income, assets in Georgia worth at least USD 500,000, and Georgian-source income of at least GEL 25,000 or a Georgian residence permit. For qualifying applicants, Happy Georgia handles the application and renewals under Power of Attorney, without a visit to Georgia for those procedures. For a Georgian tax resident, foreign-source income is generally not taxed in Georgia, while Georgian-source income is.

Personal investment income. Georgia generally does not tax individuals on qualifying gains from foreign securities, including investments held through a Georgian brokerage account. Happy Georgia assists with brokerage-account applications, subject to institutional approval, and helps clients assess the Georgian tax position. If you remain tax-resident elsewhere, your home country may also tax those gains.

When no special regime fits#

An ordinary LLC can still be the right vehicle, for example as a holding company or before a later status application. Its rules are standard: 15% profit tax when profit is distributed, calculated on the grossed-up amount, and on certain other payments and outflows the Tax Code treats in the same way. Dividends paid to individuals or non-residents carry 5% withholding, and salaries are taxed at the general 20% personal income tax rate. We recommend it only after checking whether a qualifying regime fits better.

What stays with your home country#

Georgian status does not end your tax obligations elsewhere. If you remain tax-resident in another country, it may tax your worldwide income, and some countries tax citizens wherever they live. An applicable treaty or domestic rule may allow a foreign tax credit for Georgian tax; whether it does depends on the treaty and your country's law. Our cross-border planning review identifies the questions to confirm in your country.

How Happy Georgia helps#

We assess your activity, clients and residence, recommend the regime that fits, set up the structure under Power of Attorney, prepare any status application and keep the company or IE compliant through monthly accounting. For a regime decision on its own, our tax consultation covers the Georgian side, and the company comparison shows the structures side by side.

Book a free consultation. Tell us what you do, where your clients are and where you live, and we will confirm which Georgian regime you qualify for, which tax it covers and what we set up and maintain for you.