Georgia’s 1% Tax for Freelancers: the Small Business Status, and the Four Conditions
The rate is quoted everywhere. The rule that decides whether your income qualifies for it almost never travels alongside.
Georgia’s Small Business Status charges 1% of turnover, not of profit, up to 500,000 GEL a year. That’s roughly $180,000 of invoicing at a rate low enough to look like a rounding error, and it isn’t a loophole or a grey structure: it’s a published domestic regime you apply for on a government portal.
Anyone can register for it. There is no citizenship or residency requirement to hold the status. What almost every guide leaves out is that the 1% attaches to income Georgia treats as Georgian-source, and the test for that is where the work is physically performed. Register from your sofa in Milan, keep working from Milan, and the registration exists while the rate does not apply to what you earned. Four conditions decide whether you qualify at all: where you physically do the work, whether you hold the labour permit that has been required since March 2026, whether your activity is in an excluded category, and whether you can be paid without Stripe, which does not operate in Georgia at all. Two recurring obligations then decide what it costs to keep: a declaration filed every month, and a bank account that is its own separate project.
What the 1% actually is
The structure has two layers, and people conflate them. First you register as an Individual Entrepreneur (IE), which is a sole trader, not a company: the entity and you are the same legal person. Then you apply separately for Small Business Status (SBS) through your account on the Revenue Service portal, and that is what brings the rate down to 1%.
| Item | What it is |
|---|---|
| Rate | 1% of gross turnover, not profit. Expenses are largely irrelevant, which favours service businesses with thin costs and penalises anyone reselling goods on a small margin |
| Turnover ceiling | 500,000 GEL per calendar year, roughly $180,000. Turnover above the ceiling in the same year is taxed at 3% |
| Losing the status | Exceed the ceiling in two consecutive calendar years and the status is revoked from 1 January of the third year. Since 2026, after a revocation you can only regain it from the tax year following the one in which it was revoked |
| Micro Business Status | A separate 0% regime for annual turnover under 30,000 GEL, with its own eligibility conditions |
| Who can register | Anyone. No Georgian citizenship or residency is required to hold the status, which is a separate question from whether your income qualifies for the rate |
| Timing | Since March 2026, the status takes effect on the date the request is submitted rather than the following month, so there is no dead period between registering and being taxed at 1% |
Figures from Georgian tax practices and advisory firms whose accounts of the regime agree with each other; the underlying tax code and the government resolution setting the excluded activities were not read in their original text for this piece. Verified July 2026.
The turnover-not-profit design is the first thing to test against your own numbers. A consultant billing 200,000 GEL with almost no costs pays 2,000 GEL, which really is 1% of what they keep. A reseller turning over the same amount on a 10% margin pays the same 2,000 GEL out of 20,000 GEL of actual earnings. On that margin the effective rate on what you keep is 10%, not 1%, so the headline number stops being the headline number the moment your costs aren’t thin.
The condition that decides everything: where you physically work
This is the part that separates a working setup from an expensive misunderstanding. The 1% applies to income Georgia classifies as Georgian-source, and what makes income Georgian-source is the work being physically carried out in Georgia, not where the client sits or where the money lands.
It works in both directions. Freelance work for a client in Germany, the US or anywhere else does qualify at 1%, as long as you were physically in Georgia while doing it. The same work, for the same client, on the same invoice, performed while you were sitting somewhere else does not qualify, even though your registration remains perfectly valid.
So Georgia is not a jurisdiction you register in and then invoice through from wherever you happen to be. It’s a low-tax jurisdiction for work actually carried out inside it, and that distinction is the single most common misunderstanding around Georgia’s tax reputation.
A note on how solid this is, because it’s the load-bearing rule of this article: it comes from published Georgian tax authority guidance on Small Business Status and from how Georgian tax practices describe the source treatment of income. The article of the Georgian tax code itself was not read in the original for this piece. Verified July 2026.
Since March 2026, working from Georgia needs a separate permit
If the answer to the first condition is “yes, I’ll be physically in Georgia,” a second obligation lands on top of the tax registration, and it’s new enough that most guides still don’t carry it.
Since 1 March 2026, foreigners without a Georgian residence permit who are physically present and self-employed in Georgia, including under an IE and Small Business Status registration, need a Special Labour Activity Permit before that income counts as legally earned. It’s applied for through the labour migration portal with a mandatory video interview, and it costs 200 GEL for standard 30-day processing or 400 GEL expedited, with a 2,000 GEL fine for working without it.
Some Georgian advisory sites describe carve-outs for people serving only international clients. The rule as published by Georgia’s Ministry of Labour, and confirmed independently in KPMG’s international tax alert, lists no such exemption for Small Business Status or IE registration, so the safer assumption is that the permit applies to anyone physically working from Georgia under this status. Against a 1% tax rate, a 200 GEL permit is not the expensive part of this setup. Not knowing it exists is.
There is one route that sidesteps the permit entirely, and it isn’t cheap: Georgia’s residence permit for property investors, where only the higher investment tier is confirmed exempt. The thresholds and what each tier actually buys are covered in opening a Georgian bank account as a non-resident, the same piece that handles the tax ID and account sequence discussed further down.
The activity test decides whether you qualify at all
Small Business Status is not open to every activity. The exclusions are set out in a government resolution and cover licensed and regulated work: legal and notarial services, audit and accounting, tax advisory, medical and licensed architectural or engineering work, financial intermediation and investment advice, currency exchange and crypto exchange services, real estate activity, gambling and betting, excisable goods, and recruitment or intermediary work earning commissions.
Software development, web and app work, design and marketing services are described as eligible by the Georgian practices that publish on this. The unresolved question is IT consulting itself. Some sources treat it as ordinary eligible IT work; others read it into the excluded consultancy category, which is taxed at the standard 20%. No primary text resolved that split for this piece, and it matters directly to a large share of the people this regime attracts.
It matters more because the activity classification is self-declared at registration and the tax authority can revisit it afterwards. A later reclassification means the income is recalculated at 20% with back taxes and penalties, and practices describe that reach as extending up to three years. If your work is billed as consulting rather than development, the cheap move is a written classification opinion from a Georgian tax adviser before registering, not after the first audit.
Stripe does not operate in Georgia
This is the omission that turns an otherwise good decision into the wrong one, and it is absent from almost every guide selling the 1%.
Stripe’s own published country list, checked directly in July 2026, has no Georgia entry and no registration path. Estonia, Romania and Bulgaria are all on it. Georgia is not.
If your business invoices B2B clients who pay by bank transfer, that costs you nothing and the 1% stands on its own. If you sell to consumers, run a subscription product, or need to charge cards at all, the Georgian registration gives you no payment rail, and no amount of tax saving compensates for not being able to take money. Answer that question before any other: does your business need to charge cards? If it does, Georgia is the wrong place for the invoicing side even if it’s the right place for you to live, and the two decisions have to be separated. How to structure an online business works through that split, and the Estonia e-Residency route exists precisely because Stripe access, not tax, is what most freelancers are really buying.
You file every month, including the empty ones
Small Business Status carries a monthly declaration, and 2026 tightened it. Until the amendments that took effect on 7 March 2026, not filing in a month with no income was treated in practice as equivalent to a zero return. It no longer is: failure to file by an SBS holder counts as non-compliance and attracts penalties even when the income for that month was zero.
There’s a practical layer on top. The declarations go through the Revenue Service’s online portal, and its two-factor authentication sends codes to Georgian mobile numbers only. So the recurring obligation isn’t just “file monthly,” it’s “keep a Georgian number alive and reachable every month.” Most people solve this by paying a local accountant to handle the filing, which is the sensible answer and also a recurring cost that belongs in any comparison against the regime you’re leaving. A 1% rate with twelve mandatory filings a year is a different product from a 1% rate with one.
The bank account is a separate project
Registering the IE is one process. Getting a Georgian bank account as a non-resident is another, and the sequencing catches people out: you need a Georgian tax identification number before the bank will open anything. One account holder described the order plainly, saying you get the number from the state office and then take it back to the bank to fill in the forms.
The received wisdom that TBC is the nomad-friendly bank also doesn’t survive contact with the remote process, and remote video onboarding tends to be limited to a short list of passport nationalities. The full comparison, including which bank actually opens for whom, what the Power of Attorney route really involves and how the tax ID is obtained from outside the country, is in opening a Georgian bank account as a non-resident.
What the 1% does not do
Small Business Status is a Georgian tax on Georgian-source activity. It says nothing about where you are tax resident, and it does not stop another country taxing you. Georgian tax residence is its own test at 183 days, and holding the status doesn’t make you resident anywhere.
That gap is where people get hurt. If you keep living in a country that still considers you resident, the 1% doesn’t displace that country’s claim on your income: at best it sits underneath it, at worst you’ve added an obligation without removing one. The tests that decide which country actually gets to tax you are in why “legally offshore” is mostly a myth. If you’re weighing Georgia against staying put under a European flat-tax regime, move the company or move yourself runs that comparison with the exit rules and the real arithmetic included.
Deciding it properly
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Start with where you’ll physically be working. The 1% applies to work carried out in Georgia, so a registration you invoice through from another country doesn’t deliver the rate you registered for.
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If you’ll be working from Georgia without a residence permit, budget the Special Labour Activity Permit: 200 to 400 GEL depending on speed, required since 1 March 2026, with a 2,000 GEL fine for working without it.
- ✓
Answer the card question early. If you need Stripe or any card processing, Georgia does not supply it, and the tax rate is the wrong thing to optimise first.
- ✓
Check your activity against the excluded categories before registering, and get a written opinion if your work is billed as consulting. Reclassification is retroactive and lands at 20%.
- ✓
Price the monthly filing, not just the rate. Twelve declarations a year, mandatory even at zero income since March 2026, plus a Georgian mobile number for portal access, usually means paying a local accountant.
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Do the tax ID first, then the bank. The account cannot be opened without the number.
- ✓
Model turnover, not profit. On a thin-margin business, 1% of turnover can take a larger share of what you keep than a higher rate charged on profit elsewhere.
FAQ
How much tax do freelancers pay in Georgia under Small Business Status?+–
1% of gross turnover up to 500,000 GEL a year, roughly $180,000, with 3% on any turnover above that ceiling in the same year. It’s charged on turnover rather than profit, so business expenses generally don’t reduce it.
Do I have to live in Georgia to get the 1% rate?+–
There’s no residency requirement to hold the status, but that isn’t the same question. The 1% applies to income Georgia treats as Georgian-source, and that turns on the work being physically performed in Georgia. Work done while you’re sitting in another country doesn’t qualify for the rate, even though your registration remains valid.
Do I need a work permit to work from Georgia under this status?+–
Since 1 March 2026, yes, if you’re physically self-employed in Georgia without a residence permit. The Special Labour Activity Permit costs 200 GEL for standard processing or 400 GEL expedited, and working without it risks a 2,000 GEL fine. It’s separate from, and comes after, the tax registration itself.
Can I use Stripe with a Georgian registration?+–
No. Georgia does not appear on Stripe’s supported country list, checked directly in July 2026. If your business needs to charge cards, the Georgian side won’t provide the rail, and you’d be looking at a different jurisdiction for the invoicing entity.
Is IT consulting eligible for Small Business Status?+–
Software development, web and app work, design and marketing services are described as eligible. Licensed and regulated advisory work, including legal, audit, tax and financial consulting, is excluded and taxed at 20%. IT consulting specifically is where sources split, some treating it as ordinary IT work and others reading it into the excluded consultancy category. Because classification is self-declared and can be revisited retroactively, a written opinion from a Georgian adviser before registering is worth its cost.
What happens if I exceed 500,000 GEL?+–
The excess in that year is taxed at 3%. Exceed the ceiling in two consecutive calendar years and the status is revoked from 1 January of the third year, after which you can only reapply from the tax year following the revocation.
Do I have to file anything in a month where I earned nothing?+–
Yes. Since the amendments effective 7 March 2026, an SBS holder who doesn’t file a monthly return is treated as non-compliant rather than as having filed a zero return, and penalties can apply even with no income.
Written by Daniel Hart, who covers neobanks, account freezes and cross-border banking for neobankfit. Based on Stripe’s published supported-country list (checked directly), the Georgian Ministry of Labour’s published labour permit rule and KPMG’s tax alert on it, the accounts of Georgian tax and advisory practices on Small Business Status and the March 2026 amendments, and first-hand Reddit reports from foreigners registering and banking in Georgia (r/tbilisi, r/Sakartvelo).
This article is general information, not legal or financial advice. Tax rules, thresholds, permit requirements and eligible activities change and depend on your circumstances and how your work is classified. For your situation, check current rules and consider a qualified adviser.
