The Tax-Free Income List: Rental, Dividends, and Other Exempt Income for Small Business Status Holders
- Tinatin Tolordava
- Nov 8, 2025
- 8 min read
Table of contents
The Hidden Perks of Georgia’s Tax System
Georgia is known worldwide for its 1% Small Business Status, a system so simple that freelancers, consultants, and entrepreneurs from across the globe have made it their go-to base for business registration.
But what many don’t realise is that Georgia’s tax advantages don’t stop at the 1% rule. In fact, there’s an entire category of income that’s completely tax-free for residents and Individual Entrepreneurs (IEs).
From rental income and dividends to interest, crypto gains, and foreign-sourced income, Georgia’s tax code gives residents more breathing room than almost anywhere else in Europe.
Understanding how these exemptions work, and how they interact with your Small Business Status, can help you keep more of your income legally and confidently.
Let’s go through the full list.
Understanding How Georgia Taxes Income
Before diving into exemptions, it’s important to understand Georgia’s unique territorial tax system.
Unlike most countries, Georgia taxes only income that comes from within Georgia, what’s called Georgian-source income. Income you earn outside the country’s borders is generally tax-exempt for individuals.
So if you:
live in Georgia,
register as an IE,
and work for clients abroad,
your income is taxed at just 1% as active Georgian-source income.
But if you also earn passive income, like dividends from a foreign company or rent from property abroad, that income is completely exempt from Georgian taxation.
This is where Georgia’s system really shines.
You can operate a business locally and earn passive income globally, all while staying legally compliant and tax-efficient.
The Main Categories of Tax-Free Income in Georgia
Let’s explore each major exemption that applies to individuals and Small Business Status holders.
1. Rental Income (for Residential Property)
Georgia treats rental income differently depending on how it’s earned.
If you rent out residential property for personal use, such as long-term housing, that income is completely tax-free. You don’t even need to register as a business.
For example:
You own an apartment in Tbilisi and rent it to a tenant on a 12-month lease.
You collect 2,000 GEL per month.
You pay 0% tax on that income.
However, there’s one important condition: the property must be used for living purposes, not commercial activity.
If you start renting through Airbnb or manage multiple properties as a business, it becomes a commercial activity. In that case, you’d need to register as an IE or LLC and pay tax, usually under the 1% Small Business regime or standard 20% rules, depending on your structure.
For individuals who own one or two apartments for long-term rent, though, the system is straightforward: no registration, no tax, no complications.
That’s one reason property investment in Georgia, especially apartments in Tbilisi Georgia and apartments in Batumi Georgia, continues to attract global investors.
2. Dividend Income
Dividends are one of the most attractive forms of passive income in Georgia.
Here’s how they’re taxed:
Dividends from Georgian companies: 5% flat tax for individuals.
Dividends from foreign companies: 0% tax for Georgian residents.
That’s right, if you hold shares in a foreign business or receive payouts from overseas investments, that income is fully tax-free under Georgian law.
This applies whether the company is based in the EU, the UK, or elsewhere, as long as you’re a Georgian tax resident.
Example:
You’re an IE working under the 1% regime and also own shares in a U.S. startup.
You receive $10,000 in dividends each year.
You pay 0% tax on that dividend income in Georgia.
The key is to maintain Georgian tax residency and report income properly to avoid confusion with foreign authorities.
This makes Georgia an ideal place for entrepreneurs who also invest, you can build your business and your portfolio without double taxation.
3. Interest Income from Bank Deposits
Interest earned from deposits in Georgian banks is completely tax-exempt for individuals.
This applies to both local and foreign currency deposits and is one of the simplest exemptions to claim because banks handle everything automatically.
For example:
You hold 100,000 GEL in a Bank of Georgia savings account.
It earns 8% annual interest.
The entire interest amount is tax-free.
There’s no need to declare it to the Revenue Service Georgia or include it in your 1% turnover filings.
This exemption encourages both locals and expats to save in Georgian banks and strengthens the country’s financial system.
4. Capital Gains from Crypto and Securities
Georgia has one of the world’s friendliest crypto tax regimes.
For individuals, income from selling cryptocurrency is fully tax-free, as long as:
It’s your own investment, not business activity.
You’re not operating a crypto exchange or offering crypto-related services.
That means if you bought Bitcoin, Ethereum, or any other digital asset and later sell it at a profit, you pay 0% tax.
The same applies to foreign securities. Selling shares in Apple, Tesla, or an ETF through an international platform doesn’t trigger Georgian tax as long as it’s your personal investment.
However, if you run a crypto mining company, manage assets for others, or receive income from crypto services, that’s considered active business income, and it’s taxable under regular business rules.
For investors, this makes Georgia a global hotspot for crypto tax efficiency and a safe base for managing digital portfolios.
5. Inheritance and Gifts
Georgia also exempts inheritance and gifts from taxation in most cases.
If you inherit money or assets from family members, or receive a gift from a close relative, it’s fully tax-free.
Only large gifts from unrelated individuals might be subject to minimal taxation, but even then, thresholds are generous and enforcement is limited.
For entrepreneurs living long-term in Georgia, this provides a stable, predictable legal framework for estate planning and intergenerational asset transfers.
6. Foreign-Sourced Income
Perhaps the most overlooked advantage of Georgia’s tax system is that foreign-sourced income is not taxable.
Under the territorial principle, Georgia taxes only income generated inside its borders. Anything you earn abroad, whether it’s dividends, royalties, rental income, or interest, is exempt.
Example:
You’re a Georgian resident.
You own a small apartment in Warsaw, Poland, and rent it out.
You also have shares in a U.S. company that pay quarterly dividends.
Georgia does not tax either source.
As long as your business activity (like IE operations) happens inside Georgia, your foreign investments remain outside its tax reach.
This setup makes Georgia one of the most efficient jurisdictions in the world for global entrepreneurs who mix active and passive income streams.
How Tax-Free Income Interacts with Small Business Status
If you’re an IE with Small Business Status, your active business income (turnover) is taxed at 1%.
But any passive income, like dividends, interest, or capital gains, remains exempt and doesn’t affect your 500,000 GEL turnover limit.
That means you can legally:
Earn freelance income under the 1% regime.
Collect dividends from foreign companies.
Hold crypto or earn interest from savings.
Receive all of it without exceeding your turnover cap.
The important part is keeping your income types separate.
Active income (client payments, project fees, business activity) must be reported monthly to the Revenue Service Georgia. Passive income (investments, rent, interest) is personal and untaxed, you don’t mix it with business reporting.
Proper separation ensures that your Small Business Status stays valid and that you avoid compliance issues during audits or renewals.
Common Misunderstandings About Tax-Free Income
Georgia’s tax exemptions are generous, but many entrepreneurs still misunderstand them.
Let’s clear up the most common myths:
Myth 1: “All income is tax-free if I have Small Business Status.”False. Only your active business income under 500,000 GEL qualifies for the 1% tax. Other active income may still be taxable, while certain passive income is tax-free by law.
Myth 2: “Airbnb rentals are considered passive income.”False. Short-term rentals and property management count as business activity, not passive income. Only long-term residential rentals are tax-exempt.
Myth 3: “Foreign dividends must be reported and taxed.”Not true. Foreign dividends are exempt for individuals but can be reported voluntarily for transparency.
Myth 4: “Interest income counts toward my turnover limit.”Incorrect. Interest and other exempt income are excluded from turnover calculations. They don’t affect your 500,000 GEL cap.
Myth 5: “Crypto income is always exempt.”Only personal investment income is exempt. If you provide crypto services or run a mining operation, it becomes business income and must be registered.
Understanding these nuances keeps your filings accurate and your tax benefits secure.
How Gegidze Helps You Stay Compliant While Maximising Exemptions
Georgia’s system is simple, but staying compliant still requires precision.
At Gegidze, we help entrepreneurs and investors structure their income legally to make the most of Georgia’s exemptions while maintaining Small Business Status.
Our services include:
Reviewing your income sources to classify taxable vs. tax-free categories.
Registering your Individual Entrepreneur or LLC with the Revenue Service Georgia.
Managing monthly filings and annual reports.
Providing certified English to Georgian translations for contracts, tax documents, and certificates.
Advising on how to combine active business income with tax-free passive income.
Helping you secure Georgian tax residency for foreign dividend and income exemptions.
With Gegidze, you can run your business confidently, knowing every GEL you save is 100% legal.
The Bigger Picture: Georgia’s Fair, Transparent Tax Philosophy
What makes Georgia’s system truly unique is its clarity. There are no hidden clauses or arbitrary rules. Income is either taxed simply or exempt entirely.
By combining the 1% IE regime with multiple categories of tax-free income, entrepreneurs can build long-term financial stability and freedom.
Whether you earn from clients, property, or investments, Georgia rewards transparency, not complexity.
It’s this philosophy that keeps it at the top of global rankings for business friendliness and tax fairness.
If you’re unsure which parts of your income are taxable or tax-free under Georgian law, it’s time to get clarity.
Book a free consultation with Gegidze today. We’ll analyse your income streams, ensure your Small Business Status stays compliant, and help you take advantage of Georgia’s full list of legal tax exemptions, from rental and dividends to interest, crypto, and more.
Frequently Asked Questions (FAQs)
Which types of income are completely tax-free in Georgia?
Georgia exempts several income types for residents and Individual Entrepreneurs (IEs), including residential rental income, dividends from foreign companies, interest from Georgian bank deposits, crypto gains, inheritance, and most foreign-sourced income.
Does foreign income count toward the 1% Small Business Status turnover limit?
No. Only Georgian-source business income is included in the 500,000 GEL turnover cap. Passive or foreign-sourced income such as dividends, interest, and rent from abroad are excluded and remain tax-free for Georgian residents.
Is rental income from apartments in Georgia tax-free?
Yes, if the rental is for residential use and not commercial. Long-term apartment rentals in Tbilisi or Batumi are exempt from income tax. However, short-term or Airbnb-style rentals are considered business income and taxed under standard IE or LLC rules.
Are crypto and investment profits taxed in Georgia?
No. For individuals, capital gains from cryptocurrency sales and foreign securities are completely tax-exempt. Only businesses providing crypto services, exchanges, or mining are taxed.
How can Gegidze help me manage tax-free income and business compliance?
Gegidze ensures your Small Business Status stays compliant while maximising exemptions. We handle IE registration, translations (English to Georgian), filings with the Revenue Service Georgia, and residency planning for dividend and foreign income exemptions.
