IT regimes · 1%, 0% and 5%
IT business in Georgia: the 1% for freelancers, Virtual Zone, and International Company status
For people in software, Georgia (the country) offers not one regime but three, and the choice is settled by scale, headcount and how real your presence is — not by the lowest rate in an advertisement. Below: what each route gives, what it asks in return, and how to pick yours in an evening with a calculator.
Checked 5 September 2026. General information, not tax or legal advice — your own case deserves a separate look.
Chapter one
Three routes for people in software
The first is an Individual Entrepreneur with Small Business Status: 1% of turnover up to 500,000 ₾ a year — the solo route, for freelancers and contractors. The second is an LLC holding Virtual Zone Person status, whose profit from IT services supplied outside Georgia is not subject to profit tax — the route for a small development team already here. The third is International Company status: 5% on profit, 5% on salaries, 0% on dividends, for a mature business ready to move real work rather than an address.
The difference is not only the rate but how much presence each one demands, from “you happen to work from here” to “your people sit here and decisions are taken here”. A checkable action to begin with: say how many of your team are physically here. That number narrows the choice faster than any spreadsheet.
Chapter two
The Individual Entrepreneur: 1% for a freelancer
The mechanics are short: register an IE, apply to the Revenue Service, take Small Business Status, and business income is taxed at 1% of turnover up to 500,000 ₾ a year. The excess above the cap is taxed at 3%; two consecutive years over it and the status is withdrawn. Declarations are monthly, by the 15th, nil returns included.
And here sits the caveat that matters most in IT. The list of activities incompatible with the status includes consulting services, and the wording is broad. Development, design and technical support normally pass. The difficulty starts where the contract reads as advisory work: audits, recommendations, expert opinions. What gets examined is the wording in contracts and acceptance acts, not a job title, so “IT consulting” as the subject of a contract is a signature on your own exclusion. The full treatment is in the guide on who is excluded from the 1% tax.
Who it suits: one or two people working for foreign clients, without heavy costs or plans to hire. Who it does not: an agency paying subcontractors, where 1% of turnover on a ten per cent margin quietly becomes 10% of profit.
Our price is 400 ₾, one to two working days, with the detail on the IE registration page. The checkable step before any of that: open your contract and read the subject line. If the word “consulting” is in it, that is where the work starts.
Chapter three
Virtual Zone: zero profit tax on IT exports
Virtual Zone Person status is granted to a Georgian LLC and exempts from profit tax the income from software and IT services supplied outside the country. Exported services are zero-rated for VAT. Profit left inside the company is untaxed; on payout 5% is withheld on dividends, and for an individual that is the end of it.
In return the regime asks for substance. In current practice applications are examined strictly: the expectation is that development genuinely happens here — people, a place of work, decisions taken locally. A shell with an address and a director abroad is a standard candidate for refusal.
One distinction gets confused even by competitors: Virtual Zone means 0% on profit from IT exports, not 5%. The five per cent rate belongs to International Company status, below. If someone sells you “Virtual Zone at 5%”, they have not read the rules.
Who it suits: a team writing software here for clients abroad and leaving profit inside the company. Who it does not: a solo operator, for whom the 1% IE is simpler. The base of the route is an ordinary LLC, which we register for 700 ₾ — see LLC registration; the status application is filed separately, and its processing time we confirm on the call.
Chapter four
International Company status: 5% and grown-up conditions
The regime was built for IT and maritime business. On the terms currently in force it gives 5% profit tax, 5% income tax on salaries — against the usual 20% — 0% on dividends, and an exemption from property tax on assets used in the permitted activity.
The conditions are grown-up to match. On the terms currently in force, the expectation is at least two years of group experience in the relevant activity, real presence in the country — an office, staff, actual expenditure — and an overwhelming share of income from permitted activities; our tax guide puts that share at 98%. Thresholds get revised, so the text in force is checked on the filing date.
The economics are decided by payroll rather than by the profit rate. For a company paying salaries here, the gap between 20% and 5% of income tax normally weighs more than the gap between 15% and 5% on profit. That is what makes the status interesting for teams and close to pointless for a single owner with no staff.
A checkable step: take your annual Georgian payroll and multiply it by 15% — a rough measure of what the regime saves in a year on salaries alone. If that is below the cost of running the structure, the conversation can end there.
Chapter five
How to choose: the three routes side by side
The three regimes in one table. Rates are for a typical IT profile with foreign clients; your case may add VAT, payroll and the cost of the structure.
| Route | Rate | Who | What it requires | When it fits |
|---|---|---|---|---|
| IE with Small Business Status | 1% of turnover (3% above the cap) | Freelancer or contractor | Turnover under 500,000 ₾ a year; activity not on the exclusion list | You work for foreign clients and carry few costs |
| LLC with Virtual Zone status | 0% profit tax on IT exports; 5% on dividends | A small development team | Genuine development here: people, a place, decisions. Services supplied inside Georgia fall outside the exemption | You write software here for clients abroad and leave profit in the company |
| International Company status | 5% on profit, 5% on salaries, 0% on dividends | A mature business with a team | On current terms: two years of group experience, presence and expenditure here, income from permitted activities | You are moving real operations here and paying salaries locally |
A fourth thread is worth knowing about: a separate residence-permit track for IT specialists. It exists, but its conditions keep moving, so we confirm them on the assessment call rather than repeat forum lore.
A checkable action instead of an argument: take three numbers — annual turnover, annual Georgian payroll, and the share of profit you pay out. The first decides whether the IE is enough, the second whether International Company status is worth pursuing, the third how much the dividend rate matters.
Check yourself
Six lines before you pick an IT regime
- How many of your team physically work from the country today?
- How is the subject described in your contracts — development, or advisory work?
- Does annual turnover stay inside 500,000 ₾, and what happens next year?
- What share of revenue comes from clients outside the country?
- What is your annual local payroll, and what do you pay on it today?
- How much profit do you draw out, and how much stays inside the company?
Those six numbers settle the choice better than any table of rates. We work through them and say plainly when a special regime is out of reach.
Sources
What this guide is based on
The links go to primary sources. Their wording changes — check the version in force on the date you file.
- Tax Code of Georgia and government decrees — matsne.gov.ge, the official legislative portal
- Revenue Service of Georgia — rs.ge: registration, small-business status, filings
- Public Service Hall — psh.gov.ge: IE and company registration, civil records, apostille
- State Commission on Migration Issues and the Georgian ministry responsible for labour and health — labour-migration and work-permit rules. Deliberately given without a link: the address of the filing portal has changed, so check the current one on the day you apply
- PwC Worldwide Tax Summaries — taxsummaries.pwc.com/georgia: an independent summary of the rates and rules
Questions
Common questions about the IT regimes
Virtual Zone exempts profit from IT services supplied abroad and leaves 5% on dividends. International Company status gives 5% on profit, 5% income tax on salaries and 0% on dividends, but requires group experience and genuine presence. The first is about exporting software; the second about relocating operations.
Most likely the Individual Entrepreneur with Small Business Status: 1% of turnover, registration in one to two working days, 400 ₾ with us. A special-status company usually costs a lone owner more than it saves.
It can be a problem for Small Business Status: consulting services sit on the exclusion list and the wording is broad. Development and technical support normally pass; audits and recommendations do not. What matters is the subject of the contract, not your title, and it is far cheaper to check before registering.
In current practice, yes: the expectation is that development happens here — people, a place of work and decisions taken locally. Applications are examined strictly, and a company without substance risks a refusal.
Such a track exists. Its conditions change, so rather than repeat them from memory we confirm the current position on the assessment call, against your situation and filing date.
Related pages: IE registration, LLC registration, who is excluded from the 1% tax, the Georgian tax guide.
The next step
Which IT regime is yours — we will do the arithmetic for free
Half an hour on your numbers: turnover, team, where the clients are, how much you draw out. You leave with one recommended route and a written quote. IE registration is 400 ₾, an LLC 700 ₾; special statuses are quoted separately.