Georgia is known among freelancers and entrepreneurs for one of the simplest tax regimes in the region: an individual entrepreneur (IE) with small business status pays 1% tax on turnover within an annual limit. Here's how to register, what obligations follow and what to watch out for.

Important: this article is a general overview, not tax or legal advice. Tax law changes, and your situation may have nuances. Before registering, consult a local accountant or lawyer and check official Georgia Revenue Service sources.

What an IE is in Georgia

An individual entrepreneur (ინდივიდუალური მეწარმე) is a natural person registered to carry out business activity. Foreigners can register as IEs on the same basis as citizens.

An IE on its own is taxed under general rules. The appeal lies in small business status, which an IE can obtain in addition.

Small business status

Key parameters (at the time of writing — check they're current):

  • the tax rate is 1% of turnover (income), not of profit;
  • the annual turnover limit for the status is 500,000 lari;
  • exceeding the limit triggers a higher rate and may affect your status — check the rules in advance;
  • the status is not available for every activity — some are excluded (for example certain licensed activities and others), and income must not effectively be an employment relationship.

Many IT specialists, designers, translators, marketers and other freelancers use this status, but check that your activity qualifies.

Step 1. Register as an IE

Registration takes place at the Public Service Hall (House of Justice) in Tbilisi, Batumi, Kutaisi and other cities.

You'll usually need:

  • your passport;
  • an application (completed on site with staff help);
  • a legal address in Georgia — often your rented home with the owner's consent, or an address from a legal address service;
  • if you don't speak Georgian, you may need an interpreter or notarised translations of some documents;
  • a small state fee.

Registration usually takes one to several working days, depending on the speed you choose. Afterwards you receive a registry extract and an identification number.

Step 2. Small business status

After registering as an IE, apply for small business status with the Revenue Service:

  • via the Revenue Service online portal (rs.ge);
  • or in person at a Revenue Service centre.

You'll receive a login and password for the portal (or set them up at registration). Many people complete this step with an accountant's help.

Step 3. A bank account

It's advisable to open a separate account for your IE at a Georgian bank. Banks' requirements for foreigners vary and may depend on citizenship, source of income and other factors. Prepare:

  • your passport;
  • the IE registration extract;
  • documents about your business (client contracts, a business description).

See our article on opening a bank account in Georgia for more.

Step 4. Monthly declarations

An IE with small business status usually must:

  • file a declaration monthly — generally by the 15th of the following month;
  • pay 1% tax on the month's turnover;
  • file even with zero income (or face possible fines).

Declarations are filed via the rs.ge portal. The interface is available in English, but many prefer to leave it to an accountant.

Foreign-currency income

If clients pay in dollars or euros, income for tax purposes is usually converted into lari at the National Bank of Georgia's official rate on the date received. Check the rules with your accountant.

Tax residency

IE status in Georgia and tax residency are different things. Tax residency depends on, among other things, the number of days spent in the country (typically 183 days in a 12-month period) and other criteria. You may also have tax obligations in your country of citizenship or residence. Be sure to work this out with a professional.

Accountants

Although many people run their IE themselves, an accountant can help you:

  • register correctly and obtain the status;
  • file declarations on time;
  • avoid fines;
  • understand tax residency and international issues.

Accounting services for a small IE are relatively inexpensive.

Common mistakes

  • Not filing in a month with no income — a fine.
  • An activity that doesn't qualify for small business status.
  • Exceeding the turnover limit without accounting for the consequences.
  • Receiving income into a personal account instead of the IE account — confusing reporting.
  • Ignoring taxes in your home country — possible double obligations.
  • Using the IE for what is really employment — this may not meet the status conditions.

IE and residence permits

Registering as an IE does not by itself grant a residence permit. There are separate grounds for residence permits (work, investment and others), and the requirements change. See our article on residence permits in Georgia.

In short

A Georgian IE with small business status is a simple, attractive regime: register at the Public Service Hall, obtain the status from the Revenue Service, pay 1% of turnover within the limit and file monthly declarations by the 15th. Check that your activity qualifies, open a separate account, file even with zero income and consult an accountant about tax residency — and the regime will work for you.