A low tax rate is useful when the business behind it is organised properly. We help freelancers and individual entrepreneurs in Georgia get the activity, registration, contracts and monthly reporting working together.
Start with the work you actually do
An individual entrepreneur with Small Business Status generally pays 1% on qualifying Georgian-source business income. The tax is calculated on the relevant income, rather than the profit left after business expenses. Salary follows the employment-income rules. This makes the status particularly interesting for a professional with a simple business and relatively low running costs.
The first question is what you deliver to the client. Software development, design, management and consulting can lead to different classifications. Consulting is among the excluded activities. A useful review starts with a real contract, an invoice and a plain description of the work, rather than the job title on a website.
Understand the 500,000 GEL threshold
For a typical service business, the annual threshold is 500,000 GEL. When the relevant gross income exceeds that amount, the rate rises to 3% from the beginning of the month of the excess through December. Exceeding the threshold in two consecutive calendar years leads to loss of the status under the statutory rules.
Track the running total during the year. If a large contract is about to take you above the threshold, calculate the tax effect before agreeing the payment schedule. Keep business receipts, personal transfers and loan movements clearly identified in the records.
Keep VAT on a separate page
The general compulsory VAT threshold is 100,000 GEL of relevant taxable transactions over any consecutive 12 months. It measures a different period and a different tax base from the annual small-business threshold. Review both figures as the business grows.
For overseas services, establish the customer’s business status, the nature of the service and its place of supply. Keep the contract and evidence of the customer’s identity with the invoice. Purchases of foreign advertising, software and professional services also deserve a VAT check.
Make the first month straightforward
Individual entrepreneur registration and Small Business Status are separate steps. Check the effective date on the status certificate against the date you started earning. Monthly declarations and payment are due by the 15th of the following month. A regular handover of receipts and bank records makes that a routine task.
We help organise registration, the status application, Revenue Service access and continuing accounts. For a move to Georgia, we also connect the tax work with the 2026 employment and self-employment requirements.
Use separate schedules for the two turnover tests
The Small Business Status annual threshold and compulsory VAT registration use different periods and legal definitions. Track qualifying small-business income by calendar year and relevant VAT-taxable transactions over rolling twelve-month periods. Classify the receipts before calculating either total.
| Point | Small Business Status | General compulsory VAT registration |
|---|---|---|
| Person/tax | Eligible individual entrepreneur; income tax | Person carrying out relevant taxable transactions; VAT |
| General threshold | 500,000 GEL qualifying annual income | 100,000 GEL relevant transactions |
| Measurement period | Calendar year | Any consecutive twelve months |
| Effect of exceeding | 3% applies from the exceeding month through year-end; continuing-status rules also matter | Apply within two business days; the triggering transaction enters the VAT obligation |
| Records | Income schedule, contracts and receipts | Supply classification and rolling turnover calculation |
An example of the month in which 3% begins
Assume qualifying receipts total 490,000 GEL at the end of September. In October the entrepreneur receives a further 30,000 GEL and exceeds the general 500,000 GEL threshold. Under the excess-month rule, the October qualifying income is taxed at 3%, giving 900 GEL on that month’s 30,000 GEL. The 3% treatment continues through December under the relevant rules.
Keep the year-to-date calculation and the individual receipts behind it. If the threshold is exceeded in two consecutive calendar years, review the rules ending the status. A business approaching the threshold should plan its prices, VAT position and future legal form before the final months of the year.
Check the activity from the deliverable
A job title or invoice heading is not enough to establish eligibility. Compare the actual work with the excluded-activity rules, including consulting. Retain the contract and examples of the work delivered. Employment income and other income outside the special regime should be identified and taxed under their own provisions.
Tell us what you do and who pays you
Send a sample contract, your expected annual income and the date you started or plan to start working in Georgia. We will explain the right treatment and help put the registrations in place.
Request a consultationFrequently asked questions
Is the 1% calculated after my business expenses?
The preferential tax is calculated on qualifying income, rather than net profit after business expenses. Expenses still need proper records for accounting and other tax purposes.
What should I bring to a Small Business Status consultation?
Bring your service contract, an example invoice, expected receipts, the work location and any existing individual entrepreneur registration or status certificate. These show how the activity operates in practice.
Legal basis: Tax Code of Georgia, Small Business Status and VAT provisions; Government Resolution No. 415 on special tax regimes.