Georgia Virtual Zone Tax Benefits Explained: 0% Corporate Income and VAT
- Tinatin Tolordava
- Aug 21
- 11 min read
Table of contents
Why Everyone Talks About Georgia’s Virtual Zone
If you run a software company, a SaaS startup, or even a one-person IT consultancy, you know how quickly taxes can eat up profits.
In Germany or the US, losing 20–30% of revenue to corporate tax and VAT is just part of the game.
But what if you could legally pay 0% corporate income tax and 0% VAT?
That’s exactly what Georgia’s Virtual Zone offers. It’s one of the simplest, most founder-friendly tax programs in Europe.
No hidden catches, no endless paperwork, no need to rent an office you’ll never use. Just a clear set of rules: if your IT business earns money abroad, Georgia won’t touch it.
Sounds too good to be true? Let’s break it down.
What is a Virtual Zone in Georgia?
The Virtual Zone isn’t a physical place with offices or land. It’s a special tax status created to attract digital businesses.
Once your company is registered as a Virtual Zone entity, your foreign income is tax-free in Georgia.
Think of it as Georgia rolling out the red carpet for developers, IT consultants, SaaS founders, and blockchain teams who sell their services abroad.
Who qualifies
Software development companies building apps or enterprise tools.
SaaS providers with global subscriptions.
IT consultants, cybersecurity specialists, cloud service providers.
Digital marketing and web development firms with international clients.
Blockchain and crypto developers.
Who doesn’t qualify
Real estate companies (buying apartments in Georgia or flipping land for sale in Georgia won’t get you Virtual Zone benefits).
Manufacturing, agriculture, or physical trade businesses.
Local Georgian service providers.
If your clients are abroad and your business lives online, you’re in the sweet spot.
The Big Tax Benefits
0% corporate income tax on foreign revenue
Georgia uses a territorial tax system. That means the government only taxes what you earn inside Georgia. Everything you earn abroad is tax-free.
Example:
You run a SaaS company in Tbilisi with 100% of clients in Germany and Spain. Corporate tax in Georgia? 0%.
You run an IT consulting agency in Batumi serving US-based clients. Corporate tax in Georgia? 0%.
Only if you serve Georgian clients does the standard 15% corporate tax apply.
0% VAT on international services
In the EU, VAT on digital services can easily reach 20%. In Georgia’s Virtual Zone, VAT on exported IT services is 0%. That makes your pricing more attractive to global clients, who don’t have to deal with VAT charges.
5% dividend tax when profits are distributed
You only pay tax when you distribute profits as dividends. The rate is just 5%. Many countries also have double taxation treaties with Georgia, meaning you may not owe extra in your home country.
0% export tax
All services exported abroad are fully tax-free. No export duties, no hidden levies.
Here’s a quick comparison:
Tax Category | Virtual Zone Company | Standard Georgian Company | EU/US Average |
Corporate Income Tax | 0% on foreign income | 15% on distributed profits | 20–30% |
VAT | 0% on exports | 18% | 20%+ |
Dividend Tax | 5% | 5% | 10–30% |
Export Tax | 0% | N/A | N/A |
It’s clear: Georgia beats most global competitors on every point.
How to Get Virtual Zone Status
Step 1: Register your company in Georgia
The easiest and most popular choice is an LLC. It takes just 1–2 business days to register. You’ll need:
A company name.
A legal address in Georgia.
Passport copies of the founders.
Articles of Organization.
No minimum capital is required, and 100% foreign ownership is allowed.
Step 2: Get your Tax Identification Number (TIN)
Every business in Georgia must have a TIN. You’ll need it for everything: banking, payroll, and VAT registration if relevant.
Step 3: Apply for the Virtual Zone certificate
This application goes to the Ministry of Finance. You’ll need to show that your company’s activity is IT-related. That means your Articles of Association must clearly state software development, SaaS, or IT services.
Here’s where things often get tricky for foreigners. Documents in English, German, or Spanish must be translated into Georgian. Many try Google Translate English to Georgian, but that won’t fly. You’ll need a certified translator English to Georgian or translator German to Georgian to make your documents valid.
Step 4: Approval
If everything is in order, the certificate is issued in about 1–2 weeks. The Virtual Zone certificate is free.
Payroll and Employee Taxes Still Apply
The Virtual Zone means no corporate income tax, but it doesn’t free you from payroll obligations if you hire locally.
Hiring employees in Georgia
20% personal income tax on salaries.
2% pension contribution from the employee and another 2% from the employer.
Hiring employees abroad
If you hire remote workers in Germany or Spain through your Georgian Virtual Zone company, they pay taxes in their own country, not Georgia. Thanks to Georgia’s double tax treaties, you won’t face double taxation on their salaries.
Freelancer vs company owner
If you’re a one-person freelancer, you may be better off registering as an Individual Entrepreneur with 1% small business tax status if your turnover is below 500,000 GEL. But if you plan to grow into a company with international clients, the Virtual Zone is more powerful.
How the Virtual Zone Compares to Other Tax Options in Georgia
Georgia has designed several attractive regimes for entrepreneurs, but the Virtual Zone stands apart. To see why, it helps to compare it with the other main routes: Individual Entrepreneur status, LLCs under standard tax rules, and tax residency.
Virtual Zone vs Individual Entrepreneur (IE) with 1% Tax
Many freelancers in Georgia start out as Individual Entrepreneurs.
With Small Business Status, you pay only 1% of turnover if your annual revenue stays below 500,000 GEL. That is one of the lowest rates in the world, and it is perfect for consultants or solo developers.
But once you cross that threshold, or if you want to build a proper company with employees or partners, IE status no longer fits.
This is where the Virtual Zone shines. You can scale revenue into the millions and still pay 0% corporate tax on foreign income and 0% VAT.
The IE status is a fantastic entry point, but the Virtual Zone is the upgrade that allows you to keep growing without hitting a ceiling.
Virtual Zone vs Standard LLC in Georgia
If you register a Limited Liability Company in Georgia without applying for Virtual Zone status, you fall under the standard rules:
15% corporate income tax on distributed profits
18% VAT on most services
5% dividend tax
That is still competitive compared to Europe, but the Virtual Zone cuts out both the 15% corporate tax on foreign income and the 18% VAT on exported services. The result is a much leaner structure for IT businesses serving clients abroad.
Virtual Zone and Georgian Tax Residency
Another piece of the puzzle is tax residency.
If you personally spend 183 days or more in Georgia within a 12-month period, you become a Georgian tax resident. That means your global income as an individual may be taxable in Georgia.
For many founders, this can be advantageous because:
Georgia has a flat 20% personal income tax which can be lower than their home country’s rates.
Georgia has double taxation treaties with over 50 countries. These treaties prevent you from being taxed twice on the same income.
If you own a Virtual Zone company, you can distribute dividends at 5%, and as a tax resident, you are not hit with additional dividend taxes in Georgia.
By combining Virtual Zone status with Georgian tax residency, many entrepreneurs build highly efficient personal and corporate tax structures. This is an area where Gegidze provides tailored guidance.
Common Mistakes When Applying for Virtual Zone Status
Even though the program looks straightforward, it has its traps. Here are the mistakes we see most often and how they can be avoided.
Using the wrong company activity descriptionIf your Articles of Association do not clearly mention IT services like software development or SaaS, your application will be rejected. Gegidze makes sure these documents are drafted correctly.
Assuming all income is tax-freeForeign income is tax-free, but revenue from Georgian clients is not. Local services are taxed at 15% corporate income tax and 18% VAT. We help companies separate their accounting properly to stay compliant.
Underestimating translation requirementsForeign founders often try to submit documents in English or German with rough translations. Georgia requires certified English to Georgian translation or German to Georgian translation done by professionals. Gegidze provides these services in-house so applications are never delayed.
Ignoring payroll obligationsIf you hire local employees, you must register for withholding tax and pension contributions. That means 20% income tax plus 2% from the employer and 2% from the employee for pensions. We set up payroll systems to keep businesses compliant.
Forgetting about dividend taxVirtual Zone status does not eliminate dividend tax. When you distribute profits, 5% is due. If you structure it incorrectly, you may face further taxation in your home country. Gegidze designs payout strategies using double tax treaties to reduce this burden.
Real Use Cases Where the Virtual Zone Fits Perfectly
The Virtual Zone is not for every type of business, but for IT, SaaS, and digital services it is one of the most effective setups worldwide.
The SaaS FounderA startup founder in Europe builds a subscription platform serving thousands of clients across Germany, Spain, and the US. By registering a Georgian LLC with Virtual Zone status, the entire foreign revenue stream is tax-free in Georgia. Their competitors in Western Europe pay up to 30% corporate tax, while they reinvest nearly all profits into growth.
The IT ConsultantAn independent cybersecurity consultant upgrades from Individual Entrepreneur status to an LLC with Virtual Zone status after exceeding 500,000 GEL in revenue. Instead of losing the 1% regime and paying higher rates, they move to a company setup where their foreign income remains tax-free.
The Digital AgencyA web development agency in Tbilisi serving international e-commerce clients applies for Virtual Zone status. They invoice clients without VAT, save 18% instantly, and only pay 5% on distributed dividends.
Why Translation and Compliance Cannot Be Ignored
The success of your application often depends on paperwork.
Every foreign document must be translated into Georgian. Whether you are moving documents from English, German, or Spanish, Georgia requires certified versions.
Searching online for "translate English to Georgian text" or "translator English to Georgian" might give you a quick answer, but in practice, only certified translators are accepted.
This is one of the most common reasons why applications get delayed or rejected.
At Gegidze, we provide complete English Georgian and translation from English to Georgian services so clients never face these issues.
Combined with legal support and notary services, it means your application is airtight from the beginning.
Is the Virtual Zone Right for You?
Picture this. You are building an IT company serving clients in Berlin, London, or San Francisco.
Every invoice you send abroad comes back without Georgian corporate tax attached. You do not add VAT.
You only pay a 5% dividend tax when you decide to take profits out. That is the Virtual Zone in action: clean, transparent, and built for businesses that think globally.
But it is not a one-size-fits-all solution. Georgia offers different doors, and the best one depends on where you are in your journey.
If you are just starting out as a freelancer or consultant: registering as an Individual Entrepreneur (IE) with 1% tax can be perfect. A solo developer billing under 500,000 GEL a year can run everything legally and almost tax-free. It is simple, quick, and lightweight.
If you are scaling beyond that threshold: the Virtual Zone becomes the natural next step. Your SaaS startup, design agency, or IT consultancy can move from the 1% IE model into a full company structure while still enjoying 0% corporate income tax on foreign revenue and 0% VAT. You can hire staff, sign international contracts, and build credibility while keeping costs lean.
If you are establishing a serious local presence: for example, opening an office, employing dozens of staff, and seeking investors, then the International Company status may suit you. It offers a reduced 5% corporate tax but comes with more obligations such as physical offices and payroll.
The beauty of Georgia’s system is that these doors are not walls.
You can start as an IE, graduate into a Virtual Zone LLC, and eventually build an International Company if your growth takes you there.
Gegidze guides you at every step, so you never outgrow your structure by surprise.
Visualize it as a staircase:
The 1% IE is the first step, light and easy for solo entrepreneurs.
The Virtual Zone is the strong middle ground, where global IT companies thrive with minimal tax.
The International Company is the higher platform, designed for established firms with physical presence.
Where you stand today decides the step you take, but all of them lead upward if managed correctly.
How Gegidze Supports Virtual Zone Companies
The Virtual Zone is a powerful opportunity, but it works best when it is done correctly. That is where Gegidze steps in.
Company registration: We set up your LLC quickly and draft your Articles of Association so they fit Virtual Zone requirements.
Virtual Zone application: We manage the full submission process and handle communication with the Ministry of Finance.
Certified translations: We cover everything from English to Georgian translation to notarized German documents.
Banking setup: We open accounts with Bank of Georgia, TBC, and other banks so you can operate globally.
Payroll and compliance: We register your company for withholding tax, handle monthly filings, and keep you compliant.
Tax residency planning: We help you understand how Georgian tax residency interacts with your corporate setup, ensuring both your company and your personal income are structured efficiently.
This is not just about filing papers. It is about creating a long-term structure that allows your business to grow globally with confidence.
Ready to see if Georgia’s Virtual Zone is the right fit for your business?
Our team will walk you through company registration, certified translations, payroll setup, and tax residency planning so you can take advantage of 0% corporate tax and 0% VAT without the stress.
Let us handle the details while you focus on growing your business globally.
Frequently asked questions (FAQ)
Can I register a Virtual Zone company in Georgia as a foreigner?
Yes, foreigners can register an LLC in Georgia and apply for Virtual Zone status without needing Georgian residency. The process involves certified translation from English to Georgian or German to Georgian, a legal address, and filing with the National Agency of Public Registry.
What is the difference between an Individual Entrepreneur and an LLC with Virtual Zone status?
An Individual Entrepreneur in Georgia with small business status pays just 1% tax on turnover up to 500,000 GEL. This works well for freelancers or consultants. An LLC with Virtual Zone status is better for larger IT and SaaS companies since foreign revenue is exempt from corporate income tax and VAT, and dividends are taxed only at 5%.
How does Georgian tax residency affect Virtual Zone companies?
If you spend more than 183 days in Georgia, you become a Georgian tax resident. This can benefit foreign founders of Virtual Zone companies because Georgia has a flat 20% personal income tax and double tax treaties with over 50 countries, reducing the chance of double taxation on dividends and salary.
What are the main tax benefits of Georgia Virtual Zone compared to standard business registration?
A standard Georgian company pays 15% corporate income tax on distributed profits and 18% VAT on most services. A Virtual Zone company pays 0% corporate income tax on foreign-sourced income, 0% VAT on exported IT services, and only 5% tax on dividends, making it far more efficient for global IT businesses.
Can I use a Georgian English translator for contracts and banking documents?
Yes, when registering a Virtual Zone company or opening a bank account in Georgia, all foreign documents must be translated into Georgian. Using a certified Georgian language translator for contracts, powers of attorney, and banking paperwork ensures full compliance and avoids delays in approval.
