Georgia tax for sole traders: 1% small business, 0% micro

The short version: an individual entrepreneur in Georgia with small business status pays 1% on turnover (not on profit) as long as annual turnover stays under 500,000 GEL. There is also micro business status - 0% on turnover under 30,000 GEL a year, with no employees. The rate is genuinely low, but three things trip people up: the 1% is income tax only and VAT is counted separately; “consulting” is not allowed under the 1% regime; and income from a single client can be reclassified as salary and taxed at 20%.

Checked 13.07.2026. This is general reference information, not tax or legal advice. Rates, thresholds and the list of eligible activities are set by the Tax Code and government resolutions, and they change - the special regimes were amended on 7 March 2026. Before you register, and especially before you file, check your own case on rs.ge (Revenue Service) and matsne.gov.ge, and take anything non-standard to a local accountant or tax adviser. Getting the status wrong costs more than the advice does.

Small business: 1% of turnover, not profit

The key thing about Georgia’s 1% is that it applies to gross turnover, not net profit. Bill 10,000 GEL in a month and you pay 100. Nobody deducts rent, equipment or other costs first - the tax is charged on everything that flows through your activity. For a freelancer or remote worker with low overheads that is almost always better than the standard 20% on profit, because their profit is close to their whole income.

The cap is 500,000 GEL of turnover a year (roughly 180,000 USD). Below it, the rate is 1%. On the part of turnover above 500,000 GEL in a calendar year the rate rises to 3%. One honest caveat here: exactly how the excess is calculated and what happens to the status is read differently across sources and in practice, and if your turnover clears 500,000 for two years running the status is cancelled automatically from 1 January of the third year. If you are seriously approaching that ceiling, do not guess from blog posts - this is where a one-off session with the Revenue Service or an accountant pays for itself.

The 1% rate is confirmed by the Tax Code (articles 88-95 on special regimes) and PwC’s summary. And one detail everyone underrates: you file a turnover declaration every month by the 15th of the following month, even in months with no income at all. A missed nil return is a tax offence with a fine, not a shrug. Set a reminder for the 10th; it is cheaper than any penalty.

Micro business: 0% up to 30,000 GEL a year

If your turnover is genuinely small, there is an even better status - micro business, taxed at 0%. The conditions are tight: annual turnover up to 30,000 GEL (about 11,000 USD) and no employees at all. You still file declarations; the tax on them is simply zero.

What matters at the seam between the two statuses: from 2026, if a micro business goes over 30,000 GEL, you have 15 calendar days to apply for small business status. Miss that window and the whole period’s income is taxed at the standard 20% instead of the friendly 1%. So micro business works well as a starting point for very small self-employment, but as soon as revenue starts climbing, watch the number and move to 1% ahead of time rather than after the fact.

What you cannot do on 1%

This is where “I’ll just register and be on 1%” plans most often fall apart. Not every activity qualifies for small business status. The list of what is barred comes from Government Resolution No. 415, and some of it stings for people relocating:

• activities that need a licence or permit;
• currency exchange operations;
• medical, architectural, legal (advocacy), notarial, auditing and consulting services - consulting of any kind;
• gambling;
• supply of staff (staffing);
• production of excisable goods;
• and, from more recent amendments, construction services (residential and non-residential buildings, civil engineering and specialised construction); this mainly concerns services provided to Georgian companies and entrepreneurs.

The trap here is the word “consulting”. If you describe your work as consulting, the 1% regime is closed to you. Software development, design, marketing and copywriting, on the other hand, usually go through fine - it comes down to how your activity is defined, not to whether “I work with my head”. For IT people at serious volumes there is a separate story: they are often better off not as a sole trader on 1% but as a company (LLC) with Virtual Zone status, though that is a different conversation with different thresholds.

The big trap: when 1% becomes 20%

This is the part the “Georgia, 1% tax” marketing usually stays quiet about. The Revenue Service can look past the form of a deal to its substance. If on paper you are an independent sole trader but in practice you work for one client in a relationship that looks like employment - continuously, only for them, having previously been their staff member, with all your income coming from that one source - the tax authority can reclassify that income from business to salary. And salary is taxed at 20%, not 1%.

In practice this is the main risk for a remote worker who “quit and became a contractor for the same company on 1%”. The setup looks clean right up until the first audit. People usually reduce the risk the same way: several different clients, proper service contracts (not a disguised employment agreement) and real signs of independent work. One client is not an automatic verdict, but it is a red flag - and if that describes your situation, talk it through with an accountant before, not after.

VAT is a separate story from the 1%

The second thing that regularly comes as a shock: the 1% is income tax only. VAT is counted entirely separately. As soon as your VAT-taxable turnover passes 100,000 GEL over any continuous 12 months, you must register for VAT and charge 18% - regardless of the fact that you hold small business status and your income tax is just 1%.

So the tidy picture of “I pay 1% on everything” only holds while you are under 100,000 GEL of turnover. Above that, VAT is added, and that is different maths and different reporting. Plenty of people discover this threshold after the fact, once arrears have built up. If you expect turnover above 100,000 GEL a year, build VAT into the plan from day one and watch that line month by month.

How to set it up: IE first, then the status

The order is this. First you register as an individual entrepreneur at the Public Service Hall (the House of Justice) - it is quick, usually done the same day. Then you apply separately for small or micro business status through the Revenue Service, in your rs.ge personal account. From 2026 small business status takes effect from the date you apply, rather than the first of the following month as before, which is more convenient than it sounds.

One detail the migration reform added: from 1 March 2026 a foreigner working as an individual entrepreneur needs a work (business) permit. It used to be a simple walk-in registration; now there is a separate permit step, and it affects your timeline - the exact order of registration and permit is still settling in practice, so check the sequence when you apply. How this permit itself works is covered in our guide to the Georgia work permit 2026, and how it fits with the work-and-business residence permit in Georgia residence permit 2026: work, business, property. While you are at it, open a local account early - it makes taking payment and proving turnover much easier, and how that works for foreigners is set out in Opening a bank account in Georgia.

183 days: when you become a tax resident

This is separate from your sole trader status, but it decides where you owe tax in the first place. Under the Tax Code (as summarised by PwC and OECD) an individual is a tax resident of Georgia if they physically spend 183 days or more in any continuous 12-month period ending in the current tax year. Visa-free days count too.

Three points here are easy to mix up:

• A residence permit and tax residency are different things. You can hold a residence permit and not be a tax resident, and you can spend 183 days with no permit at all and become a resident automatically. They are two independent counters.
• Georgia taxes on the territorial principle. A resident individual’s income that is not Georgian-source is generally exempt. But the moment you register as a sole trader and invoice for services performed from Georgia, that is Georgian-source income - and it is taxed at your 1%. So “0% on foreign income as a private individual” and “1% as a sole trader” are two different structures; don’t conflate them, and take borderline cases to an adviser.
• The residency certificate is issued by the Revenue Service. There is also a route without the 183 days, for high-net-worth individuals, but it is niche - the details sit in the residence permit guide.

The 183-day rule itself, and what counts as “resetting the clock” when you leave, are worked through in How long you can stay in Georgia without a visa. If you plan to spend most of the year in Georgia, reach day 183 already knowing your tax position.

And without any status?

An ordinary individual entrepreneur with no special status pays 20% on net profit (income minus documented costs) - the standard income tax. For someone with heavy costs and a thin margin that can work out close to the 1% on turnover, but for a typical freelancer with minimal overheads the 1% almost always wins. There is also a third regime, a fixed tax for specific activities, but it rarely fits remote work and services.

In short: what to remember

• Small business - 1% on turnover up to 500,000 GEL a year; 3% on the part above; status is lost if you exceed the cap two years running.
• Micro business - 0% up to 30,000 GEL a year and no employees; go over and you have 15 days to move to small business, otherwise it is 20%.
• File every month by the 15th, even a nil return; a miss means a fine.
• Consulting and several other activities are barred from 1%; IT, design and marketing usually qualify.
• The 1% is income tax only. Above 100,000 GEL of turnover, 18% VAT is added.
• A single client in an employment-like relationship risks having the income reclassified as salary at 20%.
• 183 days in any 12-month period make you a tax resident - separately from any residence permit.

And the same point as at the top: the numbers and rules here are live. Before you file, check the current rates and conditions on rs.ge, and take your specific case to an accountant. That is cheaper than sorting out an assessment later.