How To Pay Only 1% Tax Thanks To The Individual Entrepreneur Status In Georgia?

Individual Entrepreneur Georgia Country
Individual Entrepreneur Georgia Country

Individual and sole entrepreneurs, welcome to Georgia!

Foreigners, residents, and non-residents enjoy special business statutes granting them incredible tax advantages.

Do you have an international source of income? The individual entrepreneur status in Georgia offers a 1% up to 3% taxation rate on your income.

  • If your gross annual turnover is at most 500,000 GEL (185,000$), you only pay a 1% tax! 
  • And only a 3% rate on the income above this 500 000 GEL threshold. 
  • You can even have no tax to pay (0%) if your turnover is less than 30,000 GEL a year (7,500$).

The Individual Entrepreneur status:

How To Get The Status Of Individual Entrepreneur in Georgia Country?

  • Be registered as an Individual Entrepreneur in Georgia.
  • You are the sole director of the business.
  • It is not necessary to be a permanent resident or citizen of Georgia to enjoy this business status.

The Individual Entrepreneur & The Small Business Status Key Points

Is your annual gross turnover between 30,000 GEL (7,500$) and 500,000 GEL (185,000$) per year? Then you will enjoy a 1% tax on your income.

Suppose your annual gross turnover is over 500,000 GEL. In that case, a 3% tax rate applies for all income above this threshold.

Accounting is light. You need to keep a record of expenses designed for Small Business accounting.

You can hire employees. In this case, a 20% withholding tax applies to the gross salary. + 4% tax if your employee is a Georgian citizen or resident in Georgia.

 

For Whom Is This Individual Entrepreneur Status An Ideal Solution?

  • Digital entrepreneurs,
  • IT freelancers,
  • Freelance Developers & Programmers,
  • Teachers & Online Teachers
  • Personal coaches & Online Coaches
  • Web Content Creators,
  • Web marketers…

The Individual Entrepreneur status is one of the best solution in Georgia. You can use this status to relocate and invoice a part of your clients in Georgia and pay only 1% tax on turnover. You don’t have to live in Georgia to benefit from this I.E. status.

Individual Entrepreneur In Georgia & Tax Declarations

  • A monthly tax return is mandatory for Individual Entrepreneurs registered in Georgia. 
  • You must submit this Income Tax declaration Online to the Revenue Service (R.S.) between the 1st and 15th of each month.
  • The Revenue Service will generate a tax invoice. 
  • You must make the payment from a Georgian bank account, not a foreign one.

 

Tax Declarations are made in Georgian. We advise you to use the accounting services of Happy Georgia. We will be able to make the declaration in Georgian on your behalf.

 

Important Notes You Should Know

  • The Individual Entrepreneur status in Georgia is perfect for freelancers with a foreign source of income.
  • The Individual Entrepreneur is not a legal entity as a Limited Liability Company could be. The person is registered As A Business. The tax advantages are incredible compared to a classic LLC (standard taxation : 15% Tax on profits).
  • However, suppose your turnover exceeds 500,000 GEL for two consecutive years. In that case, the Revenue Service will cancel your Small Business Status as of the following fiscal year. At this point, an Individual Entrepreneur may consider registering as a Limited Liability Company or another commercial/business structure. You can learn more about Georgian LLCs here. 
  • If you work in the IT sector, software development businesses and some other IT-related businesses, you can apply for Virtual Zone Person Status. This special status offers huge tax incentives:  0% VAT, 0% Profit Income Tax,  5% on Dividends and other benefits.

 

Contact us to set up an Individual Entrepreneur Status.

FAQs About Individual Entrepreneur Status

It’s very simple. Thanks to the Power of Attorney, we can organize the setting up of your I.E remotely. It’s fast : we need 2 up to 3 days to obtain your status.

Please note that this status will be effective on the first day of the month following registration. e.g. your IE status is registered on December 2nd, your IE will be active as of January 1st

You can exclude the following personal income when calculating and reporting your monthly and annual turnover as an individual entrepreneur in Georgia.

  • Leasing of property.
  • Income from loans.
  • Surplus income received from the sale of a property:
  • real estate; vehicle; securities.
  • Income from inherited property.
  • Income from dividends.
  • Income from interest.
  • Income from royalties.
  • Income from debt forgiveness.
  • Surplus obtained from the sale of a partner’s share from another business.

Small Business Status is not granted to Individual Entrepreneurs in Georgia for the following business activities:

 

  • Activities that require specific licensing or permission.
  • Currency exchange operations.
  • Medical, architectural, legal or notarial, auditing activity.
  • Consulting (including tax consultants) activities. But, the denomination of Intermediary or Middleman activities is accepted.
  • Trade (unless you buy materials, produce, and sell).
  • Gambling Business.

Engage in activities that require a significant investment, or in the production of excisable goods

Contact us to set up an Individual Entrepreneur Status.