The standard VAT rate in Georgia is 18%, and it directly affects how you price your goods or services, manage your invoices, and remain compliant with the Georgian Revenue Service.

For international founders considering company formation in Georgia, VAT is often misunderstood.

Some believe that Georgia’s tax system is only attractive because of the 1% tax for small business status or the 15% corporate income tax on distributed profits. But VAT plays an equally important role.

Whether you operate as an individual entrepreneur in Georgia (IE), an LLC, or a company with Virtual Zone status, your VAT obligations will determine cash flow and credibility with partners.

Unlike many European countries where VAT rates exceed 20% and include multiple reduced or special rates, VAT in Georgia is simple. There is only one rate, no reduced rates, and clear rules on exemptions.

This makes the system easier for both local businesses and foreign investors to navigate.

What Is VAT in Georgia?

Blue text reads "VALUE-ADDED TAX (VAT)" with details about Georgia's VAT system and a standard rate of 18%, set against a light background.

Value Added Tax (VAT) is an indirect tax applied at each stage of the supply chain in Georgia. It is collected by businesses but ultimately paid by the end consumer.

Standard VAT rate in Georgia: 18%
Applied to: Most goods and services sold within Georgia
Collected by: VAT-registered businesses, remitted monthly to the Revenue Service
Included in price: Retail prices in Georgia must include VAT so consumers always see the final amount with tax

Example: If you sell a product for 100 GEL, 18 GEL of that amount is VAT. The business collects this 18 GEL and transfers it to the tax authority.

This system ensures that tax is applied consistently throughout production and distribution.

For example, a manufacturer charges VAT when selling to a distributor, the distributor charges VAT to a retailer, and the retailer charges VAT to the final customer.

Each business deducts the VAT it paid from the VAT it collected, and only the final consumer bears the full tax burden.

For companies involved in international trade, IT outsourcing, or digital services, understanding where VAT applies and where it does not is critical.

Georgia operates under a territorial tax system, so income earned outside Georgia is generally not taxed, but services provided to local customers are.

This distinction is especially important if you run a Georgia Virtual Zone company or serve foreign clients remotely.

Who Needs VAT Registration in Georgia?

Flowchart titled "Who Needs to Register for VAT?" asks questions about income, imports, goods, and company ownership to determine VAT status.

Not every business in Georgia is required to register for VAT immediately. The rules are clear and tied to turnover thresholds.

Mandatory VAT Registration in Georgia

You must register for VAT if:

Your VAT-taxable turnover exceeds 100,000 GEL in any continuous 12-month period
You import goods into Georgia
You produce or sell excisable goods such as alcohol, tobacco, or fuel
You are reorganizing your business in ways that require VAT registration under the Georgian Tax Code

Failing to register once you cross the threshold will result in penalties and back payments, so monitoring your monthly turnover is essential.

Voluntary VAT Registration

You can also register voluntarily, even if your annual turnover is below the VAT registration threshold of 100,000 GEL. Many businesses choose this option strategically:

Freelancers and consultants who work with larger corporate clients often register voluntarily because clients prefer suppliers who issue VAT invoices
Businesses that incur significant VAT expenses on equipment or imports can reclaim VAT paid if they are registered
Startups expecting to scale quickly may register in advance to avoid disruptions once the threshold is reached

Common Ownership Rule for 2024–2025

Since 2024, a new rule applies. If you own multiple companies in Georgia, the turnover of those companies is calculated together. If the combined turnover exceeds 100,000 GEL in 12 months, each company is required to register for VAT.

This prevents business owners from splitting operations into several entities to avoid VAT obligations.

Foreign investors with multiple companies should be especially careful to account for this rule when planning company registration in Georgia.

The VAT Registration Process in Georgia

The process of obtaining a VAT number in Georgia is straightforward compared to many countries. Most registrations are processed online through the Revenue Service portal (rs.ge).

Steps to Register for VAT in Georgia

Collect documents: Business registration certificate, TIN (Tax Identification Number), description of business activity, and director’s ID or passport
Access RS portal: Complete the VAT registration form online
Submit application: File electronically or through the Public Service Hall
Approval: Typically within one business day
Receive VAT certificate and VAT ID: This number must be listed on invoices and used for filing VAT returns

Documents Required for VAT Registration

LLC or IE registration certificate
Taxpayer Identification Number (TIN)
Company charter (for LLCs)
Passport copy of founder or director
Application form filed with the Revenue Service

Qualified vs Non-Qualified VAT Payers

A business newly registered for VAT often starts as a non-qualified VAT payer.

This means it cannot issue or accept tax invoices for VAT deduction purposes until the Revenue Service confirms its legitimacy. Once the company shows real taxable activity, it becomes a qualified VAT payer.

This system helps reduce VAT fraud and ensures that only genuine businesses can benefit from VAT refunds and deductions.

VAT Compliance in Georgia: Filing, Invoicing, and Reporting

Registering for VAT is only the beginning. Ongoing compliance is where most businesses struggle, especially foreign-owned entities without local accounting support.

Filing VAT Returns

Returns must be filed monthly
Deadline: the 15th of each month for the previous month
Filing is completed electronically through the Revenue Service portal
Payment of VAT due must also be made by the 15th

Missing a deadline can result in fines, late fees, and potential blocks on your company bank account.

VAT Invoices in Georgia

Every VAT-registered business must issue invoices for taxable transactions. These invoices must contain:

Seller and buyer details
Unique invoice number
Date of transaction
Description of goods or services
VAT amount and total payable

Invoices must be uploaded to the Revenue Service portal within 30 days. Without proper invoices, clients cannot claim VAT deductions, and your business risks penalties.

VAT Refunds in Georgia

If your input VAT (VAT you pay on purchases) exceeds your output VAT (VAT you collect on sales), you can apply for a VAT refund in Georgia.

Refunds are common for:

Exporters
IT companies with Virtual Zone status
Businesses that make large capital purchases

Refund requests are submitted through the RS portal. Once approved, the overpaid VAT is refunded to your bank account or offset against future tax obligations.

VAT Exemptions and Special Cases in Georgia

While the standard VAT rate in Georgia is 18%, certain sectors and transactions are exempt.

Exempt Without Right of Deduction

Medical services provided by licensed institutions
Educational services offered by accredited schools and universities
Financial services, including loans, interest, and banking operations
Land transactions (not including buildings)

These activities do not charge VAT, but businesses in these sectors also cannot reclaim VAT on purchases.

Exempt With Right of Deduction

Exports and services provided to non-residents are VAT exempt, but companies can still reclaim input VAT. This makes Georgia particularly attractive for IT companies, consultants, and digital agencies working with foreign clients.

Crypto Transactions

According to the Ministry of Finance decision, crypto-related transactions involving the transfer or exchange of digital assets are not subject to VAT. This exemption makes Georgia appealing for blockchain startups and international crypto businesses.

Small Business Status and VAT

For those with Small Business Status in Georgia (1% tax up to 500,000 GEL), registering for VAT will automatically cancel small business benefits.

An individual entrepreneur in Georgia cannot remain under the 1% regime and be VAT-registered at the same time.

Careful planning is required before registering for VAT if you want to keep your small business status.

Reverse VAT in Georgia

Reverse VAT applies when a Georgian company buys services or goods from a foreign business. In this case, the responsibility to account for VAT shifts from the supplier to the buyer.

Text on white background reads "REVERSE VAT" in blue. Below, a sentence explains buyers must declare and pay 18% VAT on imported services.

How Reverse VAT Works

A Georgian company purchases a service from a foreign supplier (for example, cloud software or payroll outsourcing)
The foreign supplier issues an invoice without Georgian VAT
The Georgian company must calculate 18 percent VAT and declare it to the Revenue Service as if the service had been provided locally

Why Reverse VAT Matters

Reverse VAT is particularly relevant for companies that:

Subscribe to international software and SaaS tools
Hire foreign consultants or agencies
Use payroll or HR services provided by non-resident companies

If you are a VAT-registered business in Georgia, the reverse VAT you declare can usually be deducted later. If you are not VAT-registered, this reverse VAT becomes an additional expense.

VAT for Digital Services and Foreign Businesses in Georgia

Since October 2021, non-resident companies that provide digital services in Georgia are required to register for VAT if they serve local customers. This rule aligns Georgia with international tax practices and ensures fair treatment between local and foreign businesses.

What Counts as Digital Services

Digital services include:

Software subscriptions (SaaS)
Streaming and online media platforms
Cloud storage or hosting
Online advertising platforms
Gaming platforms and mobile app stores

If your customers are based in Georgia, you must register for VAT, even if your company is located abroad.

Triggers for VAT Liability

A foreign company is considered to be providing services in Georgia if:

The customer’s payment is made via a Georgian bank account or electronic financial institution
The customer’s IP address shows a Georgian location
The customer uses a Georgian phone number to register or pay
The buyer is physically located in Georgia when the service is delivered

VAT Reporting for Foreign Businesses

Filing frequency: Quarterly
Deadline: The 20th of the month following the quarter
Payment: Due by the last day of the same month
Accepted currencies: GEL, USD, or EUR

Foreign companies that fail to comply risk penalties, fines, and restrictions on further business in Georgia.

This rule is especially important for global SaaS providers, gaming companies, and online marketplaces. Even if you do not plan to open a company in Georgia, offering services to Georgian residents creates VAT obligations.

VAT and Small Businesses in Georgia

For many entrepreneurs, Georgia’s biggest attraction is the 1 percent small business tax available to individual entrepreneurs (IEs) with turnover up to 500,000 GEL. But how does this interact with VAT?

Small Business Status and VAT

Businesses with Small Business Status (1% turnover tax up to 500,000 GEL) are not required to register for VAT unless they cross the 100,000 GEL VAT threshold
Once registered for VAT, they automatically lose the benefits of Small Business Status
This means they will no longer pay just 1 percent on turnover and instead must follow VAT rules plus standard income tax rules

For freelancers, consultants, and digital nomads, this trade-off can be significant. Staying under the VAT threshold is often more beneficial than registering voluntarily if you want to keep the 1 percent tax regime.

Micro-Businesses

Micro-businesses in Georgia with annual turnover under 30,000 GEL are completely exempt from tax. They cannot register for VAT and cannot issue VAT invoices. This regime is designed for very small-scale entrepreneurs.

Practical Example

A consultant registered as an IE Georgia with Small Business Status earns 80,000 GEL per year from foreign clients. They pay just 1 percent tax on turnover and are not required to register for VAT.
If the same consultant earns 120,000 GEL, they must register for VAT. Once registered, they lose the 1 percent regime and must comply with VAT obligations plus pay personal income tax.

Careful planning with tax consultants in Georgia is essential to avoid losing beneficial status by accident.

Comparison table of VAT vs 1% IE Tax, showing differences in turnover limit, tax rate, invoicing, filing, and refund eligibility with bold text.

Excise Tax and VAT in Georgia

Excise tax is another area that interacts with VAT. Excise applies to certain goods such as alcohol, tobacco, fuel, and vehicles. VAT is then charged on top of the excise-inclusive price.

Goods Subject to Excise Tax

Alcoholic beverages (taxed by volume and alcohol content)
Tobacco products (taxed per unit or weight)
Petroleum and natural gas products (based on weight or volume)
Automobiles (based on engine capacity and age)

For example, when importing a car into Georgia, excise duty is calculated first. Then VAT at 18 percent is applied on the total value including excise.

This structure is important for companies engaged in trading or importing excisable goods. It ensures the state collects both excise duty and VAT without overlap.

Quick Facts About VAT in Georgia 2025

Standard VAT rate: 18%
Reduced rates: None
VAT registration threshold: 100,000 GEL turnover in 12 months
Mandatory registration: Importers, excisable goods producers, companies above threshold
Voluntary registration: Allowed below threshold
Filing frequency: Monthly for local businesses, quarterly for foreign digital providers
Filing deadline: 15th of the month (local), 20th of the quarter (foreign)
Refunds: Possible if input VAT exceeds output VAT
Reverse VAT: 18% applied to foreign services used in Georgia
Exemptions: Healthcare, education, financial services, land sales, exports, and crypto transactions
Interaction with IE 1% tax: Registering for VAT cancels small business status

Common Pitfalls with VAT in Georgia

Chart with "Be aware of these pitfalls with VAT in Georgia" text. A blue circle labeled "Mistakes" connects to six issues: Missing threshold, Incorrect declarations, Not applying for VAT refunds, Losing SBS, Incorrect record-keeping, Assuming automatic exemptions.

Even though the VAT system is relatively simple, businesses often make mistakes that lead to penalties.

Missing the VAT registration threshold

Many small businesses forget to track cumulative turnover and only realize they crossed 100,000 GEL once penalties arrive.

Losing Small Business Status unintentionally

An IE Georgia with small business status may register for VAT voluntarily without realizing it cancels the 1 percent tax regime.

Incorrect reverse VAT declarations

Businesses often forget to declare foreign invoices for software or consulting services, leading to fines.

Poor record-keeping

Incomplete invoices or late uploads to the Revenue Service portal can prevent clients from deducting VAT and expose your company to audits.

Not applying for VAT refunds

Many exporters and IT companies do not reclaim input VAT even when eligible, leaving money on the table.

Assuming exemptions apply automatically

Just because a transaction might qualify for exemption does not mean it is recognized by the tax authority. Proper classification and filing are required.

Practical Scenarios of VAT in Georgia

Understanding how VAT works in Georgia becomes easier when you look at real-life business cases. Below are examples that show how different types of businesses deal with Georgian VAT, the 18% VAT rate, and the 100,000 GEL VAT registration threshold.

1.Individual Entrepreneur (IE) under the 1% Small Business Tax Regime

A freelance consultant registered as an individual entrepreneur in Georgia (IE) with Small Business Status earns 95,000 GEL in one financial year. Because their turnover stays below the VAT registration threshold of 100,000 GEL, they do not need to register for VAT.

They continue benefiting from the 1% tax regime for small businesses in Georgia (up to 500,000 GEL turnover in 2025).

However, once their income exceeds 100,000 GEL, VAT registration becomes mandatory. At that point, they must start applying the standard Georgian VAT rate of 18% to their invoices.

This is a common case for freelancers, digital service providers, and consultants working with international clients while enjoying Georgia’s attractive business tax policies.

2. VAT Registration for a Georgian LLC

A local company goes through company registration in Georgia and sets up as an LLC.

In its first year, it generated 150,000 GEL from sales in Tbilisi. Because it exceeded the 100,000 GEL VAT threshold, it is legally required to register for VAT with the Georgian Revenue Service.

The company must include VAT in its sales prices and issue proper VAT invoices. It can also deduct VAT paid on its own business expenses, such as office rent, accounting services, and imported goods.

Many businesses use professional accounting services in Georgia to stay compliant and avoid penalties, as VAT reporting requires monthly declarations.

3. Foreign Digital Services Company with Clients in Georgia

Since October 2021, foreign companies offering digital services in Georgia must pay VAT if they serve Georgian customers.

For example, a SaaS company based in Europe sells subscriptions to clients in Tbilisi. Because the end-users are located in Georgia, the company must register with the Georgian Revenue Service and pay the 18% VAT on digital services.

This is part of Georgia’s tax alignment with global rules on digital economies. It affects online platforms, streaming providers, hosting services, and even mobile app developers. Businesses without a physical office in Georgia but with local clients are still required to comply.

4. Company with Virtual Zone Status

A Georgian IT company obtains Virtual Zone Status in Georgia, which gives it a 0% corporate tax rate for exports of IT services. However, when this company sells services to local clients inside Georgia, those transactions are subject to the standard VAT rate of 18%.

This means that Virtual Zone companies benefit from tax exemptions on international sales but must remain compliant with domestic VAT rules.

Many tech startups in Tbilisi combine Virtual Zone tax benefits with small business status or IE registration to optimize their taxes.

5. Importing Excisable Goods into Georgia

A trading company imports alcoholic beverages and fuel into Georgia. These are excisable goods and automatically subject to VAT at the 18% Georgian VAT rate, regardless of the company’s turnover.

Even if the business has not reached the 100,000 GEL VAT registration threshold, it must still register for VAT because excisable goods are always taxed. This is especially important for companies dealing in alcohol, tobacco, or petroleum products.

Imports also require careful calculation of customs duty, excise tax, and VAT, which are paid at the border. Many businesses rely on tax consultants in Georgia to handle customs clearance and VAT reporting correctly.

6. Reverse VAT for Services from Abroad

A Georgian LLC hires a foreign marketing agency to run ads. Because the service provider is outside Georgia, the local company must apply the reverse VAT mechanism. This means the Georgian business self-assesses VAT at 18% as if the transaction had taken place locally.

Reverse VAT applies widely, from payroll services purchased abroad to consulting, IT development, or digital advertising. Even non-resident companies in Georgia face these rules if they sell to Georgian clients.

This system ensures that both local and international services consumed in Georgia are taxed fairly.

7. Micro-Business and VAT Limitations

An entrepreneur registered under the micro-business tax regime in Georgia earns less than 500,000 GEL annually.

They pay no income tax under the micro-business rules, but if they register for VAT, they automatically lose their micro-business status.

This is an important consideration for freelancers and small traders who want to stay in the 0% or 1% tax regime while avoiding VAT obligations. Once their turnover or activities push them into VAT registration, they must shift to standard tax rules.

These scenarios highlight how VAT in Georgia interacts with different business structures, from individual entrepreneurs (IEs) and LLCs to foreign companies, Virtual Zone entities, and importers of excisable goods.

Whether you’re starting a small freelance practice, scaling a tech startup, or entering Georgia with an international business, VAT rules will play a central role in your business tax compliance strategy.

How Gegidze Helps with VAT in Georgia

Understanding VAT is one thing. Staying compliant month after month is another. That is where expert guidance makes the difference.

At Gegidze, we support clients with:

VAT registration in Georgia and assistance with obtaining a VAT number
Monthly VAT filings and compliance with Revenue Service deadlines
Claiming VAT refunds in Georgia for exporters and IT companies
Advising on the interaction between VAT, small business status, and 1 percent tax
Structuring businesses for Virtual Zone benefits and international tax efficiency
Handling reverse VAT declarations for foreign services
Full accounting services in Georgia, including payroll, bookkeeping, and tax strategy

Whether you are a freelancer, startup founder, or foreign investor opening an LLC in Georgia, having a partner who understands the details of Georgian VAT saves you time, money, and unnecessary stress.

Final Thoughts

Georgia offers one of the most straightforward VAT systems in the region. With a flat VAT rate of 18 percent, a clear registration threshold of 100,000 GEL, and multiple exemptions, the system is designed to be transparent and business-friendly.

But simplicity does not mean there are no risks. Mistakes with VAT registration, invoicing, or refunds can cost businesses heavily. Whether you are an individual entrepreneur in Georgia, an LLC with Virtual Zone status, or a foreign company serving Georgian clients, understanding your VAT obligations is essential.

With expert help, compliance becomes easy.

By combining VAT registration, monthly reporting, and refund claims with broader accounting and tax services in Georgia, you can focus on running your business while avoiding unnecessary tax burdens.

Book your free consultation with Gegidze today and learn more about how to optimize taxes in Georgia.

Frequently asked questions (FAQ)

What is the VAT rate in Georgia in 2025?

The standard VAT rate in Georgia is 18%. This applies to most goods and services, including imports and excisable products. There are no reduced VAT rates, but certain sectors like healthcare, education, and financial services are exempt.

What is the VAT registration threshold in Georgia?

Businesses must register for VAT once their annual turnover exceeds 100,000 GEL in any rolling 12-month period. Importers of goods and companies dealing in excisable products must register regardless of turnover. Voluntary registration is also possible for smaller businesses that want to claim VAT refunds.

How does VAT affect individual entrepreneurs with Small Business Status?

An individual entrepreneur (IE) in Georgia with Small Business Status (1% turnover tax up to 500,000 GEL 2025)is not required to pay VAT unless they cross the 100,000 GEL VAT threshold. Once they register, they lose the 1% regime and must comply with standard VAT and income tax rules.

Do foreign companies providing digital services in Georgia need to pay VAT?

Yes. Since October 2021, foreign digital service providers in Georgia (SaaS, streaming platforms, hosting services, online advertising) must register for VAT if they have Georgian clients. They pay 18% VAT on digital services in Georgia and file quarterly VAT returns with the Revenue Service.

Can businesses in Georgia claim VAT refunds?

Yes. VAT-registered companies can claim refunds if their input VAT exceeds their output VAT. This is common for exporters, IT companies with Virtual Zone status in Georgia, and businesses with large upfront investments. Proper documentation and timely filing are required to secure a VAT refund in Georgia.