Tax-Free Foreign Income and Double Tax Treaties in Georgia
- Tinatin Tolordava
- Jul 23
- 10 min read
Updated: Aug 14
Table of contents
Is it really possible to pay 0% corporate tax legally?
In Georgia, the answer is yes – if you know how to structure your business correctly.
Georgia has become one of the most attractive destinations in the world for entrepreneurs, startups, and remote teams. Thanks to its territorial tax system, special tax regimes like Virtual Zone and International Company, and over 50 double tax treaties, you can legally earn tax-free income from abroad while enjoying a simple, transparent system.
Let’s break down exactly how it works and how to make the most of it.
What does “foreign-sourced income” mean in Georgia?
Georgia applies a territorial tax system. That means only income earned inside Georgia is taxed here. Everything else, foreign contracts, international client payments, overseas consulting, global licensing revenue, is considered foreign-sourced and tax-exempt under the right conditions.
If you're not selling products or services to Georgian clients, you're likely off the hook for corporate tax.
Simple as that.
How to qualify for 0% tax on foreign income
There are three main routes:
Virtual Zone status (for IT companies)
0% corporate tax on foreign-sourced income
0% VAT on international digital services
Only 5% tax on distributed dividends
This applies to software development companies, IT consultants, SaaS firms, blockchain startups, and digital agencies serving clients outside Georgia. You must register a Georgian company and apply for Virtual Zone status.
Example:
You run a small dev agency building apps for U.S. clients. You register a Georgian LLC and obtain Virtual Zone status. As long as you don’t earn from Georgian clients, your corporate income is 100% tax-free.
International Company status (for established IT firms)
5% corporate tax
0% dividend tax
0% property tax on operational assets
This status is for tech companies with at least 2 years of history and substance in Georgia. You’ll need a real office and a local team to qualify.
Good to know: This regime also applies to maritime businesses, but 95% of users are in tech.
1% Individual Entrepreneur status (for freelancers and micro-businesses)
1% tax on turnover up to 500,000 GEL
No corporate tax
No dividend tax
Simplified reporting
Ideal for solo founders, consultants, and remote freelancers. You register as an Individual Entrepreneur and apply for Small Business Status.
Important: This status only applies to natural persons. It’s not available for LLCs or foreign entities.
Is this actually legal for foreigners?
Yes, 100% legal. Georgia is one of the most open countries in Europe when it comes to foreign company ownership. You don’t need to be a Georgian citizen or even live in Georgia to:
Register a business
Own 100% of the shares
Be the director
Operate entirely from abroad
You can set up remotely through a power of attorney or work with a local partner like Gegidze, who handles everything for you.
There’s no requirement to have a local partner or sponsor. No hidden local ownership rules. Foreign ownership is fully allowed and recognized by Georgian law.
What matters isn’t your passport.
It’s where your income comes from.
If your income is foreign-sourced, and your company is compliant under Georgian tax law, you can legally enjoy the country’s low-tax or no-tax benefits, even if you never set foot in Tbilisi.
What counts as foreign-sourced income?
Georgia’s tax system is territorial. That means only Georgian-sourced income is taxed. Foreign-sourced income is tax-free under the right setup.
Here’s what qualifies as foreign-sourced:
Client payments from abroad
You invoice clients in the U.S., Germany, or UK for consulting, development, design, writing, etc.
Digital product sales to non-Georgian users
SaaS subscriptions, app sales, online course revenue, and licensing deals with international users.
Remote service delivery
Work performed online for clients abroad. Think software outsourcing, digital marketing, tech support.
Foreign royalties and affiliate income
Licensing IP to foreign entities, earning from international ad platforms or affiliate programs.
What doesn’t qualify?
Sales to Georgian customers: If a Georgian person or company pays you, it’s considered Georgian-sourced income, even if the service is digital.
That part will be taxed under the regular 15% corporate tax or 1% IE regime, depending on your structure.
If you’re not sure how your income is classified, book a consultation with Gegidze’s legal team. They’ll help you determine if your revenue qualifies as foreign-sourced and build the right structure for your business.
Does Georgia have Double Tax Treaties?
Yes. Georgia has signed Double Taxation Avoidance Agreements (DTAs) with more than 50 countries, including:
Germany
France
United Kingdom
Netherlands
Austria
Switzerland
Ireland
Most other EU member states
These agreements are based on the OECD model and are designed to protect individuals and businesses from paying income tax twice on the same income in two different countries.
What does a DTA actually do?
Let’s say you’re a German resident and you run a business registered in Georgia. Without a DTA, both Georgia and Germany might claim the right to tax your profits. That’s double taxation.
With a DTA in place, you can:
Claim a tax credit in your home country for taxes paid in Georgia
Get a tax exemption on certain types of income
Reduce withholding tax rates on dividends, interest, and royalties
Clarify where income is sourced, so you're not taxed twice on the same revenue
Practical Example:
You run a SaaS company through a Georgian Virtual Zone entity. Your clients are in the UK and Germany. You withdraw profits and pay the 5% dividend tax in Georgia. Because of the DTA:
You won’t be taxed again on the same dividend in Germany or the UK
Or, if you are taxed again, you can claim a credit for what you already paid in Georgia
What income types do DTAs cover?
Most DTAs with Georgia cover:
Business income
Dividends
Interest
Royalties
Capital gains
Employment income
Independent personal services
Pensions and annuities
Each treaty defines which country has taxing rights over each income type, helping avoid overlap.
Why DTAs matter if you're relocating or working remotely
If you spend a lot of time in Georgia, or plan to qualify for tax residency, a DTA ensures that your income isn’t taxed again in your home country, provided you follow the correct reporting process. You’ll likely need to present a Certificate of Tax Residency from Georgia and file specific forms (like Form 1116 in the U.S. or Anlage AUS in Germany) to claim tax relief.
If you’re only spending part of the year in Georgia, or earning income through a Georgian company while living abroad, DTAs are still useful for:
Lowering withholding tax rates when you pay yourself
Reducing your global tax burden
Clarifying your filing obligations across countries
Where to find more
You can see Georgia’s full list of DTAs on the Ministry of Finance’s official site.
Or if you want help applying the correct treaty to your situation, book a tax consultation with Gegidze. We’ll help you interpret your specific treaty, file the right paperwork, and avoid double taxation.
How DTAs work in real life
Let’s take an example.
You’re a U.S. citizen
You open a Virtual Zone LLC in Georgia and serve U.S. clients.
Georgia doesn’t tax your corporate income (as long as it’s foreign-sourced).
You may still owe U.S. tax (based on your worldwide income), but thanks to the U.S.-Georgia DTA, you can use the Foreign Tax Credit or Foreign Earned Income Exclusion (FEIE) to reduce your IRS bill.
Same goes for Germany, the UK, and most of Europe: you claim tax credits or exemptions at home based on taxes paid (or not paid) in Georgia.
But what about tax residency?
Here’s the golden rule: if you spend more than 183 days in Georgia, you become a Georgian tax resident.
That’s not a bad thing.
Benefits of Georgian tax residency:
You only pay tax on Georgian-sourced income
No wealth tax, inheritance tax, or capital gains on foreign assets
No global income tax (unlike the U.S.)
Access to DTA protection as a resident
So, if you relocate to Georgia full-time, you’ll likely reduce your global tax burden – unless you’re a U.S. citizen, in which case you must still file and pay U.S. taxes (but can often offset them).
Let’s talk dividend tax
Even if your company pays no corporate tax, what happens when you withdraw profits?
In Georgia:
Dividends are taxed at just 5%
That’s the only layer of taxation for most non-residents
And if your home country has a DTA with Georgia, you may avoid further tax on that dividend.
Example:
A U.K. resident receives a dividend from a Georgian Virtual Zone company.
Under the DTA, Georgia withholds 5%. The U.K. gives credit for that 5%, avoiding double taxation.
What about payroll tax?
If you have employees in Georgia, you’ll need to handle local payroll taxes:
20% personal income tax
2% employer pension contribution
2% employee pension contribution
But if your team is fully remote (living outside Georgia), you likely won’t owe payroll taxes here.
Still, there are nuances. For example, a Georgian tax resident working for a Georgian company from abroad may still trigger obligations. It’s best to get advice on this.
Where things can go wrong
Let’s be real: Georgia’s tax system is simple, but there are traps if you’re not careful.
Starting to earn before registering
If you begin invoicing before you have Small Business Status or Virtual Zone status, you’ll be taxed at 20%.
Staying 183+ days without planning
You could trigger worldwide tax liability unless you plan residency and DTA coverage correctly.
Mixing local and foreign income
Only foreign-sourced income is tax-exempt. Serve one Georgian client, and that portion becomes taxable.
Not keeping records
Even in a low-bureaucracy country, you still need to file monthly tax reports, keep accounting records, and submit annual declarations.
Failing to apply for DTA benefits
If you don’t file the right documents with your home tax authority (like Form 1116 in the U.S. or Anlage AUS in Germany), you might be taxed twice.
The role of Gegidze
We’ve helped hundreds of founders move their operations to Georgia legally, efficiently, and with real savings.
Here’s how we can help:
Determine the best tax structure for your business
Handle company registration and tax status applications
Ensure compliance with DTA rules
Manage accounting, payroll, and dividend reporting
Offer local representation (if needed for Virtual Zone or substance requirements)
And we do it with clear, no-BS advice tailored to your situation.
Quick comparison table
Structure | Tax Rate on Foreign Income | Dividend Tax | VAT | Physical Presence Needed |
Virtual Zone Company | 0% | 5% | 0% | No |
International Company Status | 5% | 0% | 0% (on exports) | Yes |
Individual Entrepreneur (IE) | 1% on turnover | 0% | 0% | No |
Standard LLC (no status) | 15% on all income | 5% | 18% | No |
Final tips before you register
If you want to benefit from Georgia’s low-tax structure, timing and paperwork matter more than most people think. Here’s what you need to do right from the start.
Apply for your tax ID immediately
The moment you decide to start a business in Georgia, get your tax identification number (TIN). This is your unique number for all filings, VAT declarations, and banking activities. Without it, you can’t invoice clients legally, access the tax portal, or apply for special tax statuses like 1 percent IE or Virtual Zone. Even if you’re not generating income yet, getting your TIN early helps you avoid legal grey areas.
Register your business before invoicing
If you invoice even one client before officially registering your business or receiving special tax status, that income is taxed at the standard 20 percent personal income tax or 15 percent corporate tax. Georgia doesn’t backdate tax benefits. That first invoice could end up costing you far more than you expect. The solution is simple. Register your business before you sign a client contract or send out your first invoice. Gegidze helps founders set up their structure in one to two working days, so there’s no need to delay your launch.
Know your 183-day timeline
Stay in Georgia for 183 days within any 12-month period and you become a tax resident automatically. The days don’t need to be consecutive. Once you qualify, you are expected to file a personal income tax return. You may also be eligible to apply for a Tax Residency Certificate, which allows you to access Georgia’s double tax treaties and protect yourself from foreign tax claims. If you do not want to trigger tax residency, keep close track of your day count. Gegidze clients often request monthly reports to monitor their timeline precisely.
Keep proper records and file on time
Georgia’s system is low-tax, not no-responsibility. Even if you’re taxed at just one percent, you still need to submit monthly tax declarations by the 15th of each month, track all revenue, and maintain an internal journal of business activity. These documents are not submitted unless requested, but you are legally obligated to keep them up to date. Missing deadlines or failing to keep accurate records can result in fines, audits, or loss of your special tax status. Gegidze offers a monthly compliance service that handles this on your behalf.
Get DTA certificates from your home country if needed
A Double Taxation Agreement only protects you if you claim it properly. That usually involves applying for a Tax Residency Certificate in Georgia and filing it with your home country’s tax authority. You also need to submit the correct forms to reduce or eliminate taxation at home. For example, US citizens use Form 1116, German residents file Anlage AUS, and UK taxpayers may submit an R43. Requirements differ from country to country. Gegidze’s legal team can assist you with the process to ensure your exemption or credit is legally recognized.
If you’re earning remotely, structuring your business correctly from the start is one of the smartest financial decisions you can make. Georgia allows you to run a business legally, avoid double taxation, and pay as little as zero to one percent on foreign income. But the benefits only apply if you get the structure right.
Ready to reduce your tax bill?
Whether you’re a solo freelancer, startup founder, or scaling tech firm, Georgia offers legal ways to minimize your tax exposure while staying fully compliant.
At Gegidze, we help you make that move simple.
Book your free consultation today and find out how much you could save by relocating your business to Georgia.
Frequently Asked Questions (FAQ)
Is foreign income really tax-free in Georgia?
Yes. If your business income is earned from non-Georgian clients or activities performed outside of Georgia, it is considered foreign-sourced and exempt from corporate tax under Georgia’s territorial system. This applies to Virtual Zone companies, International Company status, and Individual Entrepreneurs, if structured properly.
What is the difference between Virtual Zone and Individual Entrepreneur status?
Virtual Zone status is for IT companies registered as LLCs. It offers 0% corporate income tax on foreign services and 5% dividend tax. Individual Entrepreneur status is for freelancers or solo consultants and offers 1% tax on turnover up to 500,000 GEL. You can’t have both statuses at once.
Can I open a Georgian company if I’m not living in Georgia?
Yes. You can register a business in Georgia as a non-resident. There’s no citizenship or residency requirement to own or manage a Georgian company. You can even set up remotely via power of attorney or with local assistance from Gegidze.
How do I know if my income is foreign-sourced?
If your clients are based outside Georgia, and the service or product is delivered digitally or consumed abroad, your income is likely foreign-sourced. Common examples include SaaS, digital marketing, consulting, and freelance development. Income from Georgian clients is always taxed locally.
What happens if I invoice before registering?
Any income earned before officially registering your tax status (e.g. IE or Virtual Zone) will be taxed at the standard 20% personal income tax or 15% corporate tax. Georgia does not apply benefits retroactively. Always register before you invoice.
