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Georgia vs Estonia vs Cyprus: The Best Country to Open Your IT Company in 2025
Entrepreneurs looking to open an IT company in 2025 are evaluating Georgia, Estonia, and Cyprus for their favorable tax environments and digital infrastructure. Each jurisdiction offers unique benefits depending on your company’s structure, activity type, and operational model. This article compares their tax systems, business environments, and, specifically for Georgia, explains the differences between the Virtual Zone Company (VZC) and the International Company (IC) statuses.
Tax Comparison: Georgia, Estonia, and Cyprus
| Country | Corporate Tax | Dividend Tax | VAT on Exported IT Services |
|---|---|---|---|
| Georgia (VZC) | 0% | 0% | 0% |
| Georgia (IC) | 5% | 0% | 0% |
| Estonia | 20% (only on distributed profit) | 20% | 0% |
| Cyprus | 12.5% | 0% (for non-residents) | 0% |
Business Environment and Setup
- Georgia: Offers fast online registration, low business costs, and tax benefits for IT. VZC is ideal for fully remote companies, while IC status suits those with substance and staff in Georgia.
- Estonia: Known for its e-Residency program, allowing global entrepreneurs to manage Estonian companies online. A strong digital state infrastructure supports fully remote businesses.
- Cyprus: A member of the EU, Cyprus has a well-established financial and legal framework. It's especially attractive for holding companies and IP-intensive operations.
IT Activities Allowed Under Georgia’s VZC and IC
Virtual Zone Company (VZC)
- Primary Benefit: 0% corporate income tax on income from exported IT services.
- Allowed Activities:
- Software development
- Web and mobile application development
- SaaS platforms
- Software support and updates
- IT consulting (if related to software usage)
- Restrictions:
- Only income from foreign clients qualifies for the 0% rate.
- Company must be solely engaged in IT-related activity.
- No requirement for local office or employees (can operate remotely).
- Cannot provide services locally in Georgia.
International Company (IC)
- Primary Benefit: 5% corporate income tax, 0% dividend tax, 0% property tax on IT assets.
- Allowed Activities:
- Software development
- IT system administration
- Web hosting and data processing
- Cybersecurity services
- Database and network support
- Application management and operation
- Licensing and IP management
- Requirements:
- Must rent an office in Georgia (economic substance).
- Must have at least 2 local employees (can be outsourced).
- Must be registered as a legal entity in Georgia.
- Status is granted through Ministry of Finance and confirmed by Revenue Service.
- Must demonstrate 2 year IT business experince
Compliance & Reporting Differences
| Feature | Virtual Zone Company (VZC) | International Company (IC) |
|---|---|---|
| Local Office Required | No | Yes |
| Employees Required | No | Yes (min. 2) |
| Reporting Regime | Standard (RS.ge) | Extended + SARAS |
| Audit Requirement | Optional | Recommended (based on size) |
| Scope of Tax Benefit | Only exported IT services | Broad IT services (local/global) |
Which One Should You Choose in 2025?
- Georgia (VZC): Ideal for small, remote-first software businesses serving foreign clients. Offers maximum tax efficiency with minimal compliance obligations.
- Georgia (IC): Best for companies that plan to operate from Georgia, build local teams, and deliver broader IT or IP-based services globally.
- Estonia: Perfect for fully remote digital businesses that want easy management and accept the 20% profit distribution tax.
- Cyprus: Suitable for those targeting the EU market, managing IP portfolios, or building holding structures with moderate tax exposure.
Georgia stands out as one of the most attractive jurisdictions in 2025 for IT companies seeking low taxes and business flexibility. Whether you prefer the lean Virtual Zone Company or the substance-backed International Company status, Georgia provides world-class advantages for startups and tech firms.
Estonia and Cyprus continue to offer value, depending on your business model and target market. Always consult with advisors to align your legal setup with your commercial goals.
For personalized assistance with registration and compliance in Georgia, contact us.