Individual Entrepreneur with Small Business Status — the complete guide.

Why this page exists#

The IE service page tells you what you get and how Happy Georgia handles the setup. This page is for the reader who wants the full picture before committing to a jurisdiction.

Forming a business in a country you have no prior link to is a real decision. The questions worth answering before you commit aren't "is the rate really 1%" — they're "how does the rate actually work, what could go wrong, what does this look like in year three." This page covers those.

If you arrived here directly from a search, you can also skip ahead to the IE service page for the short version and pricing.

The 1% offer in detail#

A Georgian Individual Entrepreneur with Small Business Status pays 1% tax on turnover up to 500,000 GEL per calendar year — roughly €159,000 at current rates. The rate is calculated on gross turnover, not net profit. There are no deductions, no expense calculations, no depreciation schedules. You invoice 100,000 GEL in a month, you pay 1,000 GEL in tax. That's it.

The structure has three other clean properties:

No personal income tax on top. Income earned through your IE is taxed at the IE level. There's no separate personal income tax on the same money flowing back to you — it's already yours.

Foreign-client work often falls outside Georgian VAT. Services to business clients abroad are often supplied outside Georgia for VAT purposes, so no Georgian VAT applies — depending on the service. We check how your sales count and handle VAT registration if you ever need it.

No corporate overhead. No shareholders, no board, no audit, no minimum capital, no annual returns to file beyond your monthly tax declarations. The structure is administrative-light by design.

A qualifying freelancer with €120,000 in eligible annual turnover could pay approximately €1,200 in Georgian Small Business Status tax. Happy Georgia helps assess eligibility, arrange registration and manage the process, including remote assistance through Power of Attorney where available. Your personal circumstances may affect the tax treatment — book a free consultation to discuss your options.

The 500,000 GEL ceiling — what actually happens#

The 1% rate applies on the first 500,000 GEL of turnover each calendar year. Above that, two things can happen depending on whether you cross the ceiling once or repeatedly.

Crossing once. If your turnover crosses 500,000 GEL mid-year — say in October — January through September stays at 1%. From the start of October — the month in which the 500,000 GEL limit is exceeded — 3% applies to your taxable income until the end of the year, not only to the amount above the limit (Tax Code Art. 90(2)). The following January, you reset to 1%. Crossing once is not a structural problem. The regime is designed to absorb a single year above the threshold.

Crossing two consecutive years. If you exceed 500,000 GEL in two calendar years in a row, Small Business Status is cancelled and you must restructure. This is the actual risk to the structure — not the single-year overage. If you're trending toward this, the conversation about converting to a Virtual Zone LLC or International Company should start well before you cross the second time. Forced restructuring under deadline pressure is harder than planned restructuring.

In practice: the 500,000 GEL threshold is a soft ceiling. Most foreign solo professionals operate well below it (at €120,000 a year, a freelancer sits comfortably below the roughly €159,000 ceiling). The reader who needs to think hard about the ceiling is the one who's been growing fast and is on track for €200k+ years sustained.

Who Small Business Status is for#

The 1% rate is designed for solo professional services delivered to foreign clients. If you check all three of these, the structure almost certainly fits:

• You bill your own clients directly under your name (or your IE name)
• Your clients are mostly outside Georgia
• You work alone or with subcontractors, not employees

If any of these doesn't fit, the structure may still work but the eligibility test gets harder. Specifically: if you have a single Georgian-domestic client paying you a steady monthly amount under what looks like an exclusive ongoing engagement, the Revenue Service may classify the activity as disguised employment rather than independent business. We cover this in detail under "Eligibility" below.

The three eligibility conditions#

Anyone can register an IE in Georgia. Small Business Status — the layer that gets you to 1% — has three conditions. We confirm all three before recommending the structure.

Eligible activity#

Most professional services qualify. Software development, IT consulting, design, marketing, writing, translation, training, advisory work — all eligible. The Georgian tax code excludes a defined list of activities from Small Business Status. The exclusions cluster in three groups:

Financial services. Currency exchange, financial intermediation, investment advisory in regulated forms, lending — these don't qualify.

Regulated professional services. Legal services, notarial services, audit and tax consulting (including independent tax advisory), medical and architectural services. The reasoning is that these have separate professional regulation; the small business regime is not the right tax framework for them.

Activities requiring special licences. Most licensed activities are out of scope, with narrow exceptions (taxi operations in Tbilisi being the well-known case). Gambling, excise-goods production, and similar are excluded.

We check your specific activity against the full list before recommending the structure. If your activity falls in an excluded category, the IE registration itself is still possible at the standard rate — but we wouldn't recommend the structure for that situation. There are usually better options.

Independent business, not disguised employment#

This is the condition most people underestimate. The Revenue Service looks at the substance of how you actually work, not just the legal form on paper.

The clearest pass: multiple clients, project-based engagements, real autonomy in how and when you work, your own equipment, your own infrastructure, invoicing each client separately. This is what "independent business" looks like. Most foreign IT contractors, designers, consultants, and freelancers fit cleanly.

The clearest fail: one client paying you a regular monthly amount on an exclusive basis for years, with the client controlling your hours, supplying your equipment, and treating you operationally as a member of staff. This looks like employment with a tax-optimisation wrapper, and the Revenue Service may reclassify it.

The grey area: one main client during a project's duration, while you build other relationships. This is acceptable as a transitional state. It becomes a problem only if it ossifies into the indefinite-exclusivity pattern above.

In practice, the substance test is rarely a barrier for genuine foreign freelancers. The pattern that flags is the consultant who's effectively a remote employee of one company, structured as an IE for tax purposes. We assess the substance honestly in your consultation. If your situation is in the grey area, we say so and discuss whether adjustments are needed.

Turnover within the regime#

1% applies on turnover up to 500,000 GEL per calendar year. The mechanics — what happens if you cross once, what happens if you cross twice — are covered above. For most foreign solo professionals this condition is comfortable; for high-billing professionals approaching the ceiling, the conversation about converting to Virtual Zone LLC or International Company should start before forced restructuring becomes the only option.

VAT for IE with Small Business Status#

The Georgian VAT system is one of the cleaner aspects of the regime for foreign-client professionals.

The threshold. VAT registration is mandatory once your VAT-taxable transactions exceed GEL 100,000 within 12 consecutive calendar months (Tax Code Art. 165(1)). Below that, registration generally isn't required, subject to special cases we check.

Services to foreign business clients. Under Art. 162¹, a service to a business customer is generally supplied where the customer is established, so many services to clients abroad are supplied outside Georgia for VAT purposes and carry no Georgian VAT. How they count toward the GEL 100,000 test depends on the service, and we check it for your case.

Services to private individuals. For services to private individuals, the place of supply generally follows the supplier's establishment unless a specific rule applies, so services to foreign consumers can be supplied in Georgia. We check how this applies to your services.

The Georgian-client case. Services to Georgian clients are often supplied in Georgia for VAT purposes, subject to the place-of-supply rules and any exemption, and then count as VAT-taxable transactions. Once VAT-taxable transactions exceed GEL 100,000 within 12 consecutive calendar months, registration is required and 18% VAT applies to taxable supplies (Art. 166).

For a foreign IE billing business clients abroad, Georgian VAT often doesn't arise, but we confirm it for your services and clients. We cover the registration mechanics in your setup briefing if your specific situation needs it.

How Happy Georgia handles the setup#

Setup runs in sequence: IE registration with the National Agency of Public Registry first, then the Small Business Status application with the Revenue Service. We handle both end-to-end, remotely via Power of Attorney.

Step 1 — Your documents. You send us a passport scan and any supporting documentation about your work. We prepare the Power of Attorney for your situation.

Step 2 — Power of Attorney. We arrange an online notary session for your Power of Attorney and passport copy, and the apostille. Where your situation needs a notary in your country instead, we coordinate that. How long this takes depends on the notary and apostille office; it is usually the longest part of the setup, so we plan it with you first. The PoA is what enables us to file everything on your behalf without you traveling to Georgia.

Step 3 — Courier to Georgia. We arrange standard courier shipping of the originals to Georgia; faster delivery can be arranged on request. While the documents are in transit, we prepare your Georgian legal address registration, the IE filing package, and the Small Business Status application.

Step 4 — Registration. Documents arrive and we file the IE registration at the National Agency of Public Registry. The registry's official term is one working day from filing, and registration includes your tax registration with the Revenue Service.

Step 5 — Small Business Status. Once your IE is registered, we file the Small Business Status application with the Revenue Service. Since March 2026, the status applies from the day the application is filed, so once it is granted, the 1% covers your turnover from that date.

Step 6 — Operational. You can begin invoicing clients as soon as the IE is registered. We deliver your bank account file to your chosen bank. Once your original documents are in Georgia, the bank step typically takes two to three days, subject to the bank's own review, and you can invoice and collect to your existing accounts in the meantime.

If you'd rather come to Tbilisi for the setup, we adjust the timeline. PoA notarisation in Georgia is faster and cheaper than the foreign-apostille route, and you also get the practical benefit of meeting our team and visiting the bank in person. Either way, the result is the same — IE registered, Small Business Status active, Georgian banking ready.

What you'll need from your side#

The full document checklist depends on your jurisdiction and your activity, but the core list is short:

• Passport (we use a high-resolution scan; original sent later for the PoA)
• Power of Attorney, which we prepare and have notarised online and apostilled (or notarised in your country where needed)
• A short description of your business activity
• Information about your typical clients (geography, type of business, contract structure)
• Your home-country tax residency situation (we use this to flag any treaty considerations)

Apostille turnaround depends on your country's issuing authority, and it varies widely between countries. We check your specific country's process and give you a realistic timeline before you commit.

Common mistakes and how we prevent them#

A few points worth getting right from the start:

Treating SBS as automatic. It isn't. An IE can be registered without SBS being applied for separately, or SBS can be refused when the application doesn't address eligibility cleanly. The result is an IE paying the standard rate while believing it's at 1%. We check your situation before recommending SBS, and if approved we confirm the rate is active before considering setup complete.

The single-client substance problem. An eligibility point to check early. Contractors who've structured themselves as a sole contractor for one previous employer don't always realise the structure looks like disguised employment to the Revenue Service. We assess this honestly. If the situation needs adjusting before SBS is viable, we say so before any money is spent on filing.

Mixing personal and business funds in one account. Legally permitted for IE, but operationally messy and a frequent source of bank questions later. We recommend a separate account from day one and prepare the bank file accordingly.

Ignoring the home-country tax position. The Georgian 1% rate doesn't override your home-country tax residency rules. If you remain tax-resident in your home country, that country's authorities may still consider your worldwide income (including Georgian-source income) taxable. Treaty provisions usually mitigate this but rarely eliminate it. We flag the question in every consultation; clients who need a clean answer typically combine the IE setup with Georgian tax residency or the HNW programme.

Falling into the prohibited-activity trap on a sub-activity. You might have a primary activity that qualifies (say, software development) but provide a secondary service that doesn't (say, regulated tax consulting). The mixed-activity pattern can complicate the SBS file. We check the full activity scope before recommending the structure.

IE with SBS or Virtual Zone LLC?#

The two structures most foreign solo professionals consider, and the comparison is worth being clear about.

IE with Small Business Status is right for solo work. 1% on eligible turnover, simplest setup, no corporate overhead, no Georgian team requirement. If you're a freelancer, consultant, or contractor billing clients yourself, this is almost always the right answer.

Virtual Zone LLC is right for software product companies with a real Georgian team. 0% corporate income tax on qualifying IT income from foreign clients, but the VZ status approval since 2022 effectively requires Georgian-based IT employees. Before you apply, we check whether your team and activity meet the Virtual Zone requirements; for a solo operator, IE with Small Business Status is often the better fit. The structure is designed for software businesses building product, not for individual contractors.

The decision usually maps cleanly: solo professional → IE with SBS; software product company with team → Virtual Zone LLC. The grey case is the solo developer who plans to build a Georgian team in year two or three. For that reader, we usually recommend starting with IE + SBS for year one (1% on eligible turnover, simplest setup, no Georgian-employee burden) and converting to a VZ LLC structure once the team is real. We handle the conversion when the time comes.

For a deeper comparison across all four structures (IE+SBS, Virtual Zone LLC, International Company, FIZ), see Compare structures.

Banking, residency, and tax residency#

The three adjacent topics that come up in nearly every IE consultation.

Banking#

A Georgian personal bank account in your own name is legally permitted for IE income — there's no requirement to open a separate business account. Most foreign IE clients use their personal account for IE turnover, which keeps the setup clean. If you prefer separation for record-keeping, we can open a second personal account or a dedicated business account at the bank. See Personal account for the banking offer.

The bank file is part of every IE setup. The clarity of your operating narrative (what you do, who your clients are, where the money comes from) directly affects the smoothness of the account opening. We prepare the file alongside the IE registration so the account is ready when the company is.

Residency#

An active Georgian IE with real activity supports certain residency permit applications. The IE itself is not designed primarily as a residency vehicle, but it is a relevant component for readers planning a longer-term setup in Georgia. One possible sequence: IE established → tax residence after 183 days in Georgia → a residence permit where a pathway fits.

Work for foreign clients can fall under the exemption in Article 1(4)(k) of the Law on Labour Migration. The implementing rules exclude an IE who needs a residence permit to stay in Georgia lawfully, so the work-permit position depends on your residence situation as well as your clients. See Residency and Work Permit for the detail.

Tax residency#

This is the question many foreign clients underestimate. Your Georgian IE pays 1% in Georgia. What you owe in your country of residence depends on that country's rules and its tax treaty with Georgia.

Two clean paths exist for foreign clients who want clarity:

Reach 183 or more qualifying days within any continuous 12-month period ending in the tax year. That makes you a Georgian tax resident under the standard rule. Combined with the 1% IE rate, this can produce a very clean overall position depending on your home-country exit rules.

Apply through the HNW programme. Georgian tax residency without the 183-day requirement, available to readers who meet its wealth, Georgian-asset and Georgian-connection conditions (for example, a Georgian residence permit or qualifying Georgian-source income). Often the cleaner path for readers who want Georgian tax-residency status while continuing to live across multiple countries.

The right path depends on your specific situation. We discuss it in your consultation alongside the IE setup.

Frequently asked questions#

Can I run an IE while living outside Georgia?#

Yes. We set up the IE for you via Power of Attorney, monthly tax filings are digital (and our accounting team can file them for you), and there's no minimum stay in Georgia required to maintain the structure. Most of our IE clients live in Western Europe, Israel, the UK, or Asia and visit Georgia occasionally or not at all.

How long until I can invoice?#

As soon as your IE is registered, and registration takes one working day once we file. The time before filing is mostly your Power of Attorney being notarised, apostilled and couriered to Georgia, which depends on your country. We file for Small Business Status straight after registration, and once granted, the 1% applies from the day we applied.

Can I have employees as an IE?#

No. The IE structure is for solo work. If you need to hire, the cleanest path is a Virtual Zone LLC if you qualify, or an International Company structure. We handle the conversion when your situation requires it.

What if I cross 500,000 GEL?#

Crossing once mid-year: 1% until the month you cross, then 3% on your taxable income from the start of that month to year-end; reset to 1% the following January. Crossing in two consecutive years: SBS is cancelled, you must restructure. We monitor turnover with you and start the restructure conversation before forced timing.

Can I have Georgian-domestic clients?#

Yes. There's no rule against Georgian-domestic clients for IE with SBS. The eligibility test is on activity type and substance, not on client geography. If you take Georgian clients, the 100,000 GEL VAT threshold becomes relevant for those revenues; how your foreign-client revenues count depends on where those services are supplied for VAT purposes, which we check.

What about my home-country tax?#

Your Georgian IE pays 1% in Georgia. What you owe in your country of residence depends on your country's rules and its tax treaty with Georgia. Most foreign clients structure their lives so their main tax residence is somewhere with clean treatment of foreign business income — sometimes Georgia itself, via tax residency or the HNW programme.

Does my IE help with Georgian residency?#

It can. An active Georgian IE supports certain residency applications. Whether you also need the right to work depends on your clients and on whether you need a residence permit to stay in Georgia. See Residency and Work Permit.

What activities are excluded from Small Business Status?#

Financial services (currency exchange, financial intermediation, regulated investment advisory), regulated professional services (legal, notarial, medical, architectural, audit, tax consulting), and most licensed activities. We check your specific activity against the full list before recommending the structure.

Can I apply for SBS later if I don't qualify now?#

Possibly. If your situation today doesn't pass the substance test (e.g. one main client looking like employment), the structure may become viable later as your client base diversifies. We assess your current position and tell you honestly when the structure becomes a fit.

How does monthly tax filing work?#

Declarations are filed electronically each month by the 15th of the following month, through the Revenue Service portal. With our monthly accounting service, our team files them for you through delegated access to your Revenue Service account, so you don't log in, track form changes or watch deadlines. The tax itself is paid from your own account.

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Ready to set up?#

A free consultation tells us whether IE with Small Business Status is the right structure for your situation. If it is, we move to setup. If something else fits better — Virtual Zone LLC, International Company, or a different jurisdiction entirely — we tell you.

Book a free consultation · Back to the IE service page