Georgia's small business status is one of the simplest low-tax regimes available to freelancers. An individual registered as an entrepreneur in Georgia can apply for the status and then pay 1% of turnover, instead of the standard 20% personal income tax on profit, as long as annual turnover stays within GEL 500,000.
The headline number is real, but the regime has limits that matter. It applies only to individual entrepreneurs, not companies. A list of activities, including consulting, is excluded. The 1% applies to Georgian-source income, and it does not change how any other country taxes the same person.
This guide explains how the regime works under Georgia's Tax Code, who can use it, how residence and source rules interact with it, and what the filing duties look like, as of October 2026.
Key takeaways
- Small business status is available to natural persons registered as individual entrepreneurs, with a turnover limit of GEL 500,000 per calendar year.
- Qualifying income is taxed at 1% of turnover, with no deduction for expenses. Above the limit, the rate rises to 3%.
- Several activities cannot use the status, including consulting, legal, audit, medical and architectural services and activities that need a special license.
- Georgia taxes residents only on Georgian-source income. The 1% applies to Georgian-source business income, which generally depends on where the work is done.
- Returns are filed monthly, by the 15th day of the following month, and VAT registration applies above GEL 100,000 of taxable supplies in 12 months.
How Georgia's small business regime works
The rules sit in Chapter XII of the Tax Code of Georgia, in Articles 83 to 95, which cover both micro and small businesses. The main provisions are:
- Article 88 says small business status can only be granted to an entrepreneur who is a natural person, and sets the limit of GEL 500,000 of gross income per calendar year (GEL 700,000 for wine tourism and agritourism operators).
- Article 89 covers how status is granted and revoked.
- Article 90 sets the 1% rate and the higher 3% rate.
- Article 91 requires a special book of records and says losses cannot be carried forward.
- Article 93 sets the filing deadlines.
PwC's Georgia tax summary puts it simply: individual entrepreneurs with annual turnover of less than GEL 500,000 may register as a small business and pay 1% tax on their turnover, with the rate rising to 3% if turnover exceeds GEL 500,000.
What happens above GEL 500,000
Under Article 90, once gross income from the activity passes the limit, the 3% rate applies from the month in which the limit is crossed until the end of that calendar year. Exceeding the limit once does not end the status. Under Article 89, the status is revoked if gross income exceeds the limit in each of two consecutive calendar years.
The status can also be revoked if the holder asks for it, carries out a restricted activity, receives repeated fines related to cash registers in a year, or stops being an individual entrepreneur.
The three tax options for individual entrepreneurs
| Regime | Who can use it | Tax | Main limits |
|---|---|---|---|
| General regime | Any individual entrepreneur | 20% of taxable profit | Expenses deductible, normal bookkeeping |
| Small business status | Individual entrepreneurs in permitted activities | 1% of turnover; 3% above GEL 500,000 | Turnover limit, excluded activities, no expense deduction |
| Micro business status | Individuals without hired staff | 0% on business income | Annual turnover up to GEL 30,000, restricted activities |
The 1% is charged on turnover, not profit. For a freelancer with low costs, that is usually far below 20% of profit. For a business with high costs, the gap is smaller, but the 1% rate still applies regardless of expenses.
Who can apply, and which activities are excluded
The status is only for natural persons registered as individual entrepreneurs. A Georgian limited liability company cannot hold it. Article 88 does not require the person to be a Georgian citizen or tax resident.
The Georgian government can bar specific activities from the regime. According to the Tbilisi office of Andersen, the excluded activities include:
- Consulting services of any kind.
- Legal and notarial services.
- Tax advisory and audit services.
- Medical and architectural activities.
- Financial services such as currency exchange and financial intermediation.
- Gambling and businesses dealing in excisable goods.
- Staffing services.
- Activities that need a special license, with limited exceptions.
The consulting exclusion catches many freelancers by surprise, because the line between consulting and other professional services is not always obvious. Whether a specific technical or creative service counts as consulting is a question for the Revenue Service or a local adviser, and it is worth settling before relying on the 1% rate.
Income outside the business activity, such as salary, rent, dividends, interest and capital gains, is not covered by the 1% rate and follows the general rules.
Georgian-source income and tax residency
Georgia's personal tax system is close to territorial for individuals. PwC notes that resident individuals are exempt from tax on income that does not have a Georgian source. Article 90 of the Tax Code also defines the taxable income of a small business by reference to Georgian-source income.
For service businesses, the source of income generally depends on where the services are performed. A freelancer who lives in Tbilisi and works for clients abroad is performing services in Georgia, so the income is generally Georgian-source and falls under the 1% regime. A person registered in Georgia who does the work while living in another country is in a different position: the income may not be Georgian-source at all, and the country where they live may tax it in full. Our overview of territorial tax countries explains how source-based systems work more broadly.
When you become a Georgian tax resident
According to PwC's residence summary, an individual is a Georgian tax resident if they are physically present in Georgia for 183 days or more in any continuous 12-month period ending in the current tax year. The status is set for each tax year separately.
Becoming resident in Georgia does not automatically end residence in another country. Your previous country applies its own tests, which often look beyond day counts to homes, family and economic ties. Our guide to the 183-day rule explains why a day count alone rarely settles the question.
Registering and staying compliant
The process has two separate steps.
- Register as an individual entrepreneur. Registration is handled by the public registry, often in person at a Public Service Hall, and foreign nationals generally register with their passport.
- Apply for small business status. The application is made to the Revenue Service, usually online through the taxpayer's account. The status is not automatic, so registering as an individual entrepreneur alone leaves the person under the general 20% regime.
After that, the main ongoing duties are:
- Monthly returns. Under Article 93, small business returns and payments are due by the 15th day of the month after each reporting month.
- Records. A special book of records must be kept, together with the invoices and receipts the business issues and receives.
- VAT. Registration for Georgian VAT is required once taxable supplies exceed GEL 100,000 in any continuous 12-month period. Local advisers note that many services supplied to foreign business clients fall outside Georgian VAT under the place-of-supply rules, so they do not count toward that limit.
- Bank account. Most individual entrepreneurs open a Georgian business bank account to receive payments, and banks will ask about the source of funds and the client base.
Limits of the regime for international freelancers
The 1% rate is attractive, but it works only inside Georgia's own system. Some points that often come up:
- Other countries' rules still apply. A person who remains resident elsewhere may owe full tax there on the same income, and may not get a credit for Georgian tax.
- Clients may have questions. Some foreign clients need to check withholding rules or their own permanent establishment exposure when working with a contractor abroad.
- Growth changes the picture. Above GEL 500,000 the rate rises, and two consecutive years above the limit end the status. Businesses that grow often reconsider their structure, which is one of the factors in where to base an online business.
- Entry rules are separate. The tax status does not give a right to live in Georgia. Visa-free stays depend on nationality, and longer stays need a residence permit.
Georgia is one of several countries in and around Europe with low or simplified taxes. Our overview of low-tax countries in Europe puts it in context.
Frequently asked questions
Do I need to be a Georgian tax resident to get small business status?
No. The Tax Code reserves the status for natural persons registered as individual entrepreneurs, but it does not require residence or citizenship. However, the 1% applies to Georgian-source income, which generally means work performed in Georgia.
Is consulting allowed under Georgia's 1% regime?
No. Consulting is on the list of activities that cannot use small business status. Whether a specific service counts as consulting depends on its nature, and the Revenue Service makes the final determination.
What happens if my turnover exceeds GEL 500,000?
The rate rises to 3% from the month in which the limit is crossed until the end of that year. If the limit is exceeded in two consecutive calendar years, the status is revoked.
Can I deduct business expenses under the 1% regime?
No. The tax is calculated on turnover, so expenses do not reduce it, and losses cannot be carried forward while the status applies.
How often do I file returns?
Small businesses file monthly. The return and payment for each month are due by the 15th day of the following month.
Important: This article is general information, not tax, legal or financial advice. Rules change often and depend on your personal circumstances. Speak with a qualified professional in each relevant country before you act.