Georgia is a promising and attractive country for foreign freelancers, especially from the IT field. Lack of strict regulations, loyal tax policy, fast and simple registration process attracted businessmen from CIS countries and Europe to open IE with low status in Georgia.
The main advantage of Georgia is the ability to reduce tax costs due to the fact that if your annual turnover is less than 30,000 lari (9,000 dollars) per year, the rate will be 0%. But business owners with small status must file income and expense declarations on a monthly basis.
If your annual turnover is from 30,000 to 500,000 lari (~ 145,000 dollars), then you need to pay 1% of the turnover and submit monthly income and expense declarations, respectively, and pay monthly taxes.
When your annual turnover is above GEL 500,000, the turnover tax is 3% in the first year. If your turnover exceeds the GEL 1,000,000 threshold for 2 years, you lose the small business tax rate and pay 20% on your net profit.
VAT registration is required if your VAT-taxable turnover exceeds 100,000 lari if you work in the Georgian market. The procedure for taxing business with VAT is specific, based on the place of provision of services/sale of goods. Contact our specialists to clearly determine whether your business is subject to VAT.
If you have already arrived in Georgia, then with your personal presence, all stages (from registration at the House of Justice to the issuance of a multicurrency bank card) will take no more than 3 working days.
If you are in another country, the procedure for remote registration by proxy (from the House of Justice to issuing a multicurrency bank card and sending DHL anywhere in the world) will take no more than 5 business days.
The tax service has limited the list of activities for individual entrepreneurs with a low status. Allowed to take advantage of the tax credit:
Those who provide any kind of financial and consulting services. That is, such income will be taxed according to the usual system and you will have to pay 20% of the net profit annually. Therefore, it is so important to get a free consultation from a specialist before registering an individual entrepreneur.
A tax rate of 1% is not retroactive. If you have been working as a freelancer for 183 days in Georgia and receive income, then without registering as an individual entrepreneur, your mandatory tax will be 20% instead of 1%. Before the automatic assignment of tax residency and the accrual of 20% taxes, the best and, in principle, the only correct option for those who move to Georgia is to open a small business. If you have no plans to live in Georgia and you are not threatened with tax residency – with the help of this form of doing business, you can significantly save on taxes in your country of residence by taking advantage of the double taxation avoidance agreement.
The Georgian government is interested in attracting foreign investment, therefore taxes for foreigners are as low as for citizens of the country, and the registration process is simplified as much as possible.