If you're looking for low taxes, legal simplicity, and international flexibility, Georgia checks all the boxes. Its tax system is clear, friendly to small businesses, and built for people who want to operate internationally without drowning in paperwork.

Whether you're a digital nomad running a consulting firm, a startup founder building remotely, or a foreign investor testing new markets, you’ll find the business tax system in Georgia unusually welcoming.

And unlike most so-called low-tax destinations, Georgia is open to foreigners, stable, and fast to work with. You can open a company in one day. You can register as an Individual Entrepreneur (I.E.) and pay 1 percent tax. You can even apply for tax residency and stop paying taxes on your foreign income altogether.

This article breaks down how the tax system works. No fluff. Just the real numbers, real advantages, and the real rules behind Georgia’s corporate tax, personal tax, VAT, dividend tax, and more.

If you're serious about reducing your tax burden without going offshore, start here.

Corporate tax in Georgia: only when you take profits

Georgia runs a model called Estonian-style corporate taxation. Here’s how it works:

If your company earns revenue and reinvests it in the business, you don’t pay corporate income tax. Zero percent.

You only pay tax when you take out profits in the form of dividends or non-qualified expenses. That’s when the 15 percent tax kicks in.

So if your Georgian LLC makes $100,000 in revenue and reinvests everything in salaries, marketing, and infrastructure, your corporate tax bill is zero. But if you withdraw $20,000 as dividends, you pay 15 percent on that amount.

This system is rare. In most countries, corporate tax is triggered by net profit, not by distribution. Georgia’s model rewards founders who grow their companies instead of extracting cash.

Want to take a closer look at what counts as a distribution? Qualified business expenses, salaries, and reinvestments are tax-deductible. But if you use company funds for personal purchases or withdraw money without proper documentation, the Revenue Service treats it as a dividend.

Need help navigating this? Gegidze sets up your structure and helps you track what’s deductible before the tax office asks.

1 percent tax for I.E.s: the best-kept secret

If you’re a solo founder or freelancer, you don’t even need a company. Georgia lets individuals register as Individual Entrepreneurs (I.E.s) with Small Business Status and pay a flat 1 percent tax on revenue.

Yes, revenue. Not profit.

If you earn 80,000 GEL per year in consulting income, you’ll pay 800 GEL in tax. No additional VAT, no corporate tax, no dividend tax. Just one simple monthly declaration.

To qualify, you need to:

Register as an Individual Entrepreneur
Apply for Small Business Status (up to 500,000 GEL annual turnover)
Work in a field that’s eligible (some activities like gambling, law, and accounting are excluded)

You also need to keep clean invoices and make monthly declarations, even if you earned nothing that month.

If your annual income exceeds 500,000 GEL twice within three years, your status is revoked. You’ll then be taxed at the regular personal income tax rate of 20 percent.

But for most freelancers, consultants, and service providers, the 1 percent model is unbeatable. It’s legal. It’s simple. And it beats any offshore scheme that relies on loopholes.

You can find more details in our 1% tax article.

Personal income tax in Georgia: flat and fair

If you’re earning income through employment or as a non-registered freelancer, you pay a flat 20 percent personal income tax.

There are no tax brackets. No progressive scaling. Just a flat rate across the board.

This applies to:

Salaries
Contract work not registered under I.E.
Any personal income not categorized under business or dividends

If you’re employed by your own LLC and paying yourself a salary, your company withholds the 20 percent tax and remits it monthly to the Revenue Service. This is usually paired with a 2 percent pension fund contribution (we’ll get to that shortly).

If you’re registered as an I.E., your income isn’t taxed under the 20 percent rule. You pay under the Small Business Status (1 percent), or under general business tax if your turnover exceeds the threshold.

Want to know how personal income tax interacts with tax residency? This guide explains how residency can reduce your taxes.

VAT in Georgia: when you charge and when you don’t

Georgia’s standard VAT rate is 18 percent. But here’s the catch: most small businesses don’t need to register for VAT at all.

You only need to register if:

Your annual turnover exceeds 100,000 GEL from VAT-eligible activities
You voluntarily register (for example, if you work with VAT-paying clients who want to deduct your invoices)

VAT applies to:

Domestic goods and services sold in Georgia
Imports
Digital services sold locally

VAT does not apply to:

Services exported abroad (i.e., your client is outside Georgia)
Foreign-sourced income
Passive income like dividends, royalties, or crypto gains

One important concept to understand is reverse charge VAT. If you receive services from abroad (for example, a subscription to a foreign SaaS product), you must declare the VAT yourself in Georgia. This doesn’t mean you pay more, it’s usually a paperwork exercise.

You can file monthly VAT returns through the RS portal, and if you have eligible expenses, you can deduct input VAT from what you owe. But if you’re operating a lean service business with no physical presence in Georgia, you may never need to register.

Looking for VAT help? Our banking compliance blog covers how to track your invoices, avoid flags, and report cleanly.

Dividend tax in Georgia: flat 5 percent

Once your company pays the 15 percent corporate tax on distributed profits, you’ll face one more layer: dividend tax.

Georgia taxes dividend payouts at a flat 5 percent. This applies to:

Georgian resident individuals
Foreign shareholders (unless a tax treaty says otherwise)

This tax is withheld at the source. That means your Georgian company deducts it before transferring the dividend to your personal account. It’s a final tax — you don’t pay anything additional when you file.

So if your LLC distributes 50,000 GEL, here’s what you pay:

15 percent corporate tax = 7,500 GEL
5 percent dividend tax = 2,125 GEL
You receive 40,375 GEL after tax

The combined effective tax on distributed profit is 20 percent, which is still lower than most EU or US systems.

If you’re using an I.E. or a Virtual Zone entity, dividends are treated differently. The I.E. model doesn’t involve dividend payouts, you just earn revenue directly. Virtual Zone entities may have lower tax obligations depending on how they qualify.

Next, we’ll go into social security, tax residency, and how you can avoid paying tax on your foreign income, all legally.

Social security in Georgia: how the pension fund works

Georgia’s social security system is minimal. There’s no heavy social tax like in many EU countries. Instead, Georgia operates a small pension contribution scheme.

Employees contribute 2 percent of their gross salary to the pension fund. Employers also contribute 2 percent. The state adds another 2 percent for Georgian citizens or legal residents.

For foreign entrepreneurs, participation is optional. If you're registered as an I.E. or working under an LLC structure without taking a formal salary, you don’t have to contribute. But if you hire Georgian employees, your company is obligated to make the 2 percent employer contribution.

This light-touch approach to social tax keeps payroll costs low. It’s one of the reasons startups and SMEs choose Georgia over jurisdictions with bloated labor taxes.

Tax residency and how it changes everything

Georgia’s tax code treats residents and non-residents differently. And in most cases, becoming a Georgian tax resident will save you money.

The most common way to qualify is by spending at least 183 days in Georgia during any 12-month period. Once you qualify, you can request an official tax residency certificate from the Revenue Service.

There’s also a second path. High Net Worth Individuals (HNWIs) can apply even without spending 183 days in Georgia if they meet wealth or income criteria:

Over 3 million GEL in assets or over 200,000 GEL in annual income (for 3 consecutive years)
Own property in Georgia worth at least $500,000
Earn at least 25,000 GEL from a Georgian source during the previous tax year

Why does tax residency matter?

Because Georgian tax residents don’t pay tax on most types of foreign-sourced income. That includes dividends from foreign companies, rental income abroad, or capital gains on foreign securities.

Even crypto gains are tax-exempt if the sale qualifies as non-Georgian source income. Georgia’s Ministry of Finance issued a public decision clarifying that in 2019.

So for remote workers, investors, and online business owners, becoming a tax resident of Georgia unlocks major advantages.

Read more in our full guide: Is a Georgian Tax Residency Right for You?

Double tax treaties and global tax planning

Georgia has signed over 55 double tax treaties with countries around the world, including most of Europe, Canada, China, and the UAE. These agreements are designed to prevent you from being taxed twice on the same income.

If you’re earning income from abroad and paying tax in your home country, becoming a tax resident in Georgia may allow you to legally shift your tax base here. You pay tax in Georgia only and not in the source country.

This is especially useful if your home country taxes worldwide income and doesn’t offer exemptions for digital nomads. With the right treaty and residency certificate, Georgia becomes your legal tax home.

It’s important to document this properly. Gegidze can help you file the necessary forms and request tax residency confirmation that aligns with treaty rules.

Monthly filing and reporting in Georgia

Once you’re registered — either as an LLC or I.E. — you need to file monthly tax declarations. These are submitted through the Revenue Service portal (rs.ge). They’re straightforward but require accuracy.

Each month, you or your accountant will submit:

Revenue tax (1 percent for Small Business Status or 20 percent otherwise)
VAT declaration (if registered for VAT)
Salary tax and pension contributions (if you have employees)
Income received from abroad (if taxable)

The deadline is typically the 15th or 20th of the following month. If you miss it, you may face late fees and interest, though Georgia’s penalties are much lighter than in most Western countries.

Most small business owners hire a local accountant. Gegidze can connect you with one who handles your declarations in both Georgian and English, and who knows how to avoid common compliance mistakes.

Want a full overview of what needs to be filed? See our Monthly Tax Filing Timeline in Georgia.

Compared to the West: how Georgia keeps things lean

In many Western countries, businesses face multi-layered tax systems, national and municipal rates, hidden surcharges, and complex compliance.

Georgia is the opposite. There are no local taxes. No city tax. No state-level bureaucracy. Just a flat national system that’s transparent and enforced through a single online platform.

Here’s how it stacks up:

Georgia: 1% tax for small business turnover, 15% on company profit only when distributed
Germany: up to 45% personal income tax, 30%+ corporate tax, 19% VAT, plus trade license tax
United States: federal and state taxes, self-employment tax, compliance burden, double filing for citizens abroad

Even countries like Portugal or Spain that offer “digital nomad” incentives still require careful structuring and offer benefits that expire. Georgia doesn’t rely on special programs. Its default tax model is already competitive.

This makes it more stable and more predictable for long-term planning.

How Gegidze helps you get it right

At Gegidze, we’ve worked with hundreds of clients, from solo freelancers to multi-country startups, helping them set up tax-compliant, low-cost businesses in Georgia.

We do more than register companies. We:

Help you decide between LLC and I.E. based on your income type and country of residence
Guide you through the Small Business Status process
Connect you with English-speaking accountants who file your taxes properly
Register you for tax residency and submit documents to Revenue Service
Review your monthly income flow to avoid compliance issues or bank flags
Help you open business bank accounts and structure transfers cleanly

Most foreigners get stuck because they treat Georgia like the West. They over-complicate, or under-comply. With us, you get clarity and results.

Final thoughts

If you're tired of bloated tax systems, unclear rules, or worrying whether your income is being taxed twice, Georgia offers a better way.

You can legally reduce your tax burden. You can stay compliant without spending hours per week on forms. And you can grow your business knowing the system rewards you for reinvesting, not penalizes you for success.

The business tax system in Georgia is one of the best-kept secrets in international entrepreneurship. But only if it’s done right.

Want help setting up your business, registering as an I.E., or planning your tax strategy?

Book a free consultation with Gegidze today.

We’ll walk you through the process, tailor a plan to your goals, and get everything filed and running smoothly.

Frequently asked questions (FAQ)

What is the corporate tax rate in Georgia?

Corporate tax in Georgia is 15 percent, but only on distributed profits. If you reinvest earnings, your company pays nothing until dividends are paid out.

How much tax do Individual Entrepreneurs (I.E.s) pay in Georgia?

If you register as an I.E. with Small Business Status, you pay just 1 percent on turnover up to 500,000 GEL per year. It’s one of the lowest legal tax rates in the world.

Do I need to pay VAT as a freelancer or digital nomad in Georgia?

Not necessarily. If your clients are abroad and your turnover is below 100,000 GEL, you’re usually exempt from VAT. VAT mainly applies to domestic transactions.

Are foreign income and crypto gains taxed in Georgia?

If you’re a Georgian tax resident, most foreign income is tax-free. Crypto gains from non-Georgian sources are also exempt under current Ministry of Finance rulings.

How can Gegidze help with business tax in Georgia?

Gegidze helps you choose the right structure, register your company or I.E., apply for tax residency, and file all monthly declarations. We make sure you're 100 percent compliant and paying the lowest legal tax.