0% corporate tax for software companies.

What you get#

A Georgian Virtual Zone LLC pays 0% corporate income tax on qualifying IT income earned from foreign clients. When profits are distributed to shareholders, a 5% withholding tax applies — and where one of Georgia's double-tax treaties applies, your country of residence may give a foreign tax credit for that 5% against the tax it charges on the dividend. The treaty network covers most of the EU, the UK, the UAE, Israel, India, China, and Japan.

The structure has three other clean properties:

Foreign-client services often fall outside Georgian VAT. Services to business customers abroad are often supplied outside Georgia for VAT purposes, so no Georgian VAT applies to them — depending on the customer and the service. We check how your sales count toward the GEL 100,000 registration test and handle VAT registration if you ever need it.

No physical zone, no office requirement built into the status. Despite the name, "Virtual Zone" is a tax status applied to a Georgian LLC — there's no designated geographical zone you operate from. The company can be based anywhere in Georgia.

Estonian-style distribution mechanic. Tax is triggered when profits are distributed to shareholders, not on retained earnings. A VZ company that reinvests its profits into the business pays no corporate tax at all until distribution.

The combined effect: a software company earning revenue from foreign clients pays no corporate tax in Georgia until profits are distributed. At distribution, 5% Georgian withholding applies — and in your country of residence, the applicable treaty and your home country's rules decide whether that 5% earns a foreign tax credit against the tax due there.

If you become Georgian tax-resident yourself — through the 183-day rule or the HNW programme — the picture gets cleaner still. The corporate side stays at 0%, the 5% withholding still applies at distribution, and Georgia adds no personal income tax on the dividend on top. If no other country still taxes you as a resident or citizen, 5% is then the whole tax on that distributed profit.

What we do#

We handle the full setup end-to-end, remotely. You send us a passport scan. We prepare your Power of Attorney and arrange its online notarisation together with your passport copy, the apostille and standard courier shipping of the originals to Georgia (a notary in your country can be arranged instead where needed). We register your Georgian LLC with the National Agency of Public Registry, prepare the Virtual Zone status application to the Financial-Analytical Service of the Ministry of Finance, set up your Georgian legal address, and handle the bank account file.

Registering the LLC takes one working day once we file. We then file the VZ status application electronically. The law sets a 10-working-day period for the status decision, with the electronic certificate issued within two working days of the grant; a request for more detail on your IT activity can add a round. Once approved, the 0% rate applies to qualifying income from that point forward.

Virtual Zone status depends on genuine software development carried out in Georgia. Before we file, we assess your activity and your development arrangements — a local hire, a planned hire or your own work in Georgia — and prepare the supporting documentation, before or after the LLC is registered.

What's included#

• Eligibility check — we confirm your activity qualifies and that your development arrangements can support the application before recommending the structure
• LLC formation with the National Agency of Public Registry
• Bilingual charter and all founding documents
• Notarisation coordination and remote PoA support
• Virtual Zone status application to the Financial-Analytical Service of the Ministry of Finance
• Document coordination through the commission review, including responses to any requests for additional information
• Georgian legal address for your registration
• Bank account file preparation and onboarding support
• A briefing on what to file, when, and how to stay compliant — including the income-separation rules for any Georgian-domestic revenue

What you'll need to qualify#

Three things. We confirm all three before recommending the structure.

Your activity creates software products. Virtual Zone is designed for companies that create or substantially develop software — not for IT consulting, digital marketing, eCommerce, or general digital services. Custom software development, SaaS products, platform engineering, IT engineering services where the deliverable is code or a software system — all qualify cleanly. The cleaner and more specific your activity description and supporting evidence (code repositories, product documentation, contracts naming software deliverables), the stronger the application.

Your clients are mostly outside Georgia. The 0% rate applies to qualifying income from non-Georgian clients only. Mixed income — some foreign, some Georgian — is permissible but requires clean accounting separation. Profit from Georgian-source revenue falls under the standard regime (15% profit tax when it is distributed; 18% VAT once taxable supplies pass 100,000 GEL in 12 months). For most foreign-founded VZ companies, the entire client base is outside Georgia and the separation question never arises.

Software development in Georgia. The development behind your qualifying income needs to take place in Georgia. Common ways clients set this up:

• You hire a local Georgian developer. We can help you set up the hire.
• You do the development yourself in Georgia. If you're the founder or director with the relevant IT skills, your own development work in Georgia can support the application. This pairs naturally with Georgian tax residency or the HNW programme.
• You plan a hire. If the developer isn't in place yet, we prepare the application around the planned hire — including the developer's CV where helpful — and confirm the best approach for your case.

We work through all three options in the consultation and recommend the path that fits your situation.

How distributions are taxed#

The 5% Georgian withholding on dividends is the only Georgian-side tax that qualifying VZ income pays before reaching you. What happens in your country of residence depends on your residency status there, your home country's rules, and the specific double-tax treaty.

Under treaties built on the OECD model, your country of residence relieves double taxation with a foreign tax credit for the Georgian 5% against its own tax on the dividend, capped at the tax it charges on that income — so the two don't simply stack. Some countries exempt the dividend instead. The exact treatment depends on the treaty and your home country's domestic rules; we settle the specifics in the consultation alongside the structure recommendation.

If you become Georgian tax-resident, the calculation simplifies. The 5% Georgian withholding becomes the entire tax on the distribution — no further dividend tax claimed by Georgia, and depending on your prior residency exit rules, no other country in scope either. For founders building toward Georgia as their primary base, 5% across both corporate and personal layers is the realistic end-state.

When VZ LLC is the right structure#

Virtual Zone LLC fits readers who:

• Build software products, SaaS, or technical platforms
• Sell mostly to clients outside Georgia
• Can show genuine software development in Georgia — your own work or a team member's
• Are running a real company, not solo contracting

If you're a solo developer working alone and billing your own clients, IE with Small Business Status at 1% on turnover up to 500,000 GEL per year is usually the better fit — simpler to set up, simpler to maintain, and taxed at 1% of eligible turnover. The Virtual Zone path makes sense once the operation has the substance of a software company: a team (even a small one), product development, contracts that describe software deliverables.

Where the company brings the required experience in qualifying IT activity — which a newly formed LLC can sometimes meet — International Company status is the third option — 5% corporate tax when profit is distributed, with 0% dividend withholding and a 5% salary tax. More restrictive than VZ; its edge is mainly on payroll, since on qualifying profit paid out the Georgian tax is 5% under both. See International Company for the comparison.

Why Happy Georgia#

Independent advisory. No tied banks, no referral fees, no hidden product placement. We recommend what fits your situation, not what pays us a kickback.

Foreign clients only. Our entire practice is foreigners setting up in Georgia. Every engagement starts from your own situation: where you live and pay tax, who your clients are, and what you plan to do in Georgia.

Fixed pricing. We quote in EUR, we honor the quote, no surprises later.

Frequently asked questions#

Can I run a VZ LLC while living outside Georgia?#

Yes. The director and shareholders can live anywhere. What matters is the company's operational substance — genuine development activity in Georgia — not your personal location. Most foreign founders manage the company remotely and visit Georgia only as needed.

How long does the full setup take?#

Registering the LLC takes one working day once we file, after your Power of Attorney and documents reach Georgia. The VZ status decision has a 10-working-day period set by law, and the certificate follows within two working days of the grant; questions about your IT activity can add a round. Your engagement letter sets out the timeline for your setup. We don't recommend structuring client contracts around VZ tax treatment until the certificate is in hand.

Can I get VZ status before hiring the developer?#

It can be. We prepare the application around the planned hire, including the intended developer's CV, and confirm the best timing for your case in the consultation.

What if I'm the developer myself?#

If you have the relevant IT skills and carry out the development yourself in Georgia, your own work can support the application. This is a clean path for solo founders moving to Georgia — the structure becomes self-staffed. We handle the residency side alongside the company setup. See Tax Residency and the HNW programme.

What about Georgian-domestic clients?#

The standard regime applies: 15% profit tax when profit from that income is distributed, and 18% VAT once taxable supplies pass 100,000 GEL in 12 months. Georgian-source income must be tracked separately from foreign-source VZ-qualifying income — mixed-revenue companies need clean accounting separation. For foreign-founded VZ companies whose entire client base is outside Georgia, this is rarely an operational concern.

Can VZ status be revoked?#

Yes, if the company's activity changes materially or stops meeting the qualification criteria. Activity drift can put the status at risk — a company that registered as a software developer gradually taking on consulting or marketing work where the deliverable is no longer software. We brief you on the documentation discipline that keeps the status clean over time.

How does VZ compare to International Company status?#

Both reduce tax on qualifying IT income, structured differently. VZ is 0% corporate tax + 5% dividend withholding, with development carried out in Georgia. IC is 5% corporate tax on distributed profit + 0% dividend withholding + 5% personal income tax for qualifying employees, requiring relevant experience in the qualifying activity. Neither taxes profit kept in the business, and on qualifying profit paid out the Georgian tax is 5% under both, collected at a different level. The comparison depends on your team setup, your operating history and how your home country treats each. We compare both paths in the consultation. See International Company.

What about my home-country tax on VZ profits?#

Your VZ company pays 0% in Georgia on qualifying foreign-client income. The 5% Georgian withholding applies when profits distribute to shareholders. What you owe in your country of residence depends on that country's rules and its tax treaty with Georgia, where one applies. Whether your home country gives a foreign tax credit for that 5% depends on the treaty and its domestic rules. We discuss this in your consultation.

Does VZ help with Georgian residency?#

It can. An active VZ LLC supports residency permit applications. On the work-permit side, directors of Category I, II or III companies are exempt under Article 1(4)(l) of the Law on Labour Migration; directors of smaller companies need another ground or the right to work. See Residency.

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Ready to set up?#

We assess whether VZ fits your situation in a free consultation, confirm the eligibility criteria, plan the developer-requirement path, and quote a fixed price. No surprises later.