Georgia's 1% Tax for Freelancers: The Complete Picture (2026)

Georgia’s Small Business Status has become the default answer whenever remote workers compare tax regimes, and the headline is not exaggerated: register as an Individual Entrepreneur, obtain the status, and you pay 1% of turnover — not profit, turnover — up to ₾500,000 a year, which is roughly $190,000 at current official rates. There is no Western European system that comes within an order of magnitude of that for a solo freelancer.

The headline is accurate. The picture around it is where people get hurt. This guide covers both, from the primary sources — the Tax Code itself and the Revenue Service’s own materials.

How the regime works day to day

You register as an Individual Entrepreneur — a one-day procedure at a Public Service Hall requiring a Georgian address — then apply for Small Business Status through the Revenue Service portal at rs.ge. From then on, the rhythm is monthly: declare last month’s turnover on rs.ge by the 15th, pay 1% of it, done. No annual reconciliation, no estimated prepayments, no deduction bookkeeping, because nothing is deductible — the 1% applies to revenue whether your margin was 95% or negative.

That last property deserves a moment’s thought. A turnover tax trades away every deduction for a rate so low the deductions stop mattering — for most freelancers. Whether it works for you depends on your cost structure:

Your expense ratio	1% of turnover equals	Beats a 20%-on-profit system?
5% of revenue (writer, developer)	1.05% of profit	Massively
30% of revenue (studio, subcontractors)	1.43% of profit	Massively
70% of revenue (reseller, agency with payroll)	3.33% of profit	Still yes, but margins shrink
Loss-making year	Tax due anyway	No — you pay 1% of revenue on a loss

Even at heavy cost ratios the regime wins on pure arithmetic. The one genuinely bad case is a loss-making year: profit-based systems charge you nothing, Georgia still takes 1% of what you invoiced.

Two practical notes before the mechanics. First, there is an even cheaper tier below the 1%: Micro Business Status charges 0% for individuals with turnover up to ₾30,000 a year and no hired employees — worth knowing if you are testing a side income before committing. Second, registration requires a Georgian address but not residency or citizenship; the address requirement is why most arrivals register after finding accommodation, and why the IE registration itself — unlike everything else in this guide — cannot be done from abroad. Opening a local bank account as a non-resident has become the slowest step in the chain; budget days rather than hours for it, and expect the bank to ask what the account is for.

The cap is a switch, not a slope

Here is the mechanic almost every blog gets wrong, including — until we read article 90(2) verbatim — an earlier version of our own calculator. Crossing ₾500,000 does not mean “3% on the excess”. The statute says the 3% rate applies from the beginning of the month in which your cumulative income crosses the cap, through the end of the calendar year. Months before the crossing keep their 1%.

That makes timing a real variable. The same annual total costs different amounts depending on when the crossing happens:

Annual turnover (even monthly income)	Crossing month	Tax	Effective rate
₾300,000	—	₾3,000	1.00%
₾500,000	—	₾5,000	1.00%
₾510,000	December	₾5,950	1.17%
₾600,000	November	₾8,000	1.33%
₾700,000	September	₾11,667	1.67%

A freelancer whose big invoices land early in the year crosses sooner and pays 3% on more months. One with a back-loaded year keeps more months at 1% on the identical total. And the cap has a second, harder edge: exceed ₾500,000 in two consecutive calendar years and the status is revoked from 1 January of the third — dropping you into the standard regime of 20% on profit, with the accounting obligations that implies. (Niche footnote from the statute: wine and agro-tourism operators get a ₾700,000 limit.)

The exclusion list is aimed at exactly you

Government Decree No. 415 lists activities that cannot hold the status, and it reads like a freelancer marketplace directory: consulting of any kind — explicitly including tax consulting — plus legal, notarial, medical, architectural and auditing services, currency operations, anything requiring a licence, gambling and staffing.

The practical consequence is that the label on your activity matters enormously. “Software development” qualifies; “IT consulting” is textually on the banned list. Design, writing, translation, marketing execution — generally fine. Advisory retainers, fractional-CxO work, coaching that a tax inspector could reasonably call consulting — dangerous ground. If your work sits near the line, get written confirmation from the Revenue Service before you build a life on the 1%, because a status revoked retroactively means back taxes at 20%.

VAT: the threshold that mostly doesn’t bite

Small Business Status does not exempt you from VAT law. Registration becomes mandatory once VAT-taxable transactions exceed ₾100,000 in any rolling twelve months — but for the typical Georgian IE invoicing foreign companies, B2B services supplied to businesses located abroad have their place of supply outside Georgia. They are outside VAT scope and do not count toward the threshold at all. A freelancer whose clients are all foreign businesses can run ₾400,000 a year through the regime without ever touching VAT registration. Sell meaningfully to Georgian clients or foreign consumers, and the calculus changes — that is the point to involve a local accountant.

The residency question decides everything

Everything above is the easy half. The hard half is a single question: where are you tax-resident?

Paying Georgia 1% does not release you from the country that currently considers you its tax resident. If you spend most of the year in Germany, Korea or Spain, that country’s rules — 183-day counts, permanent home, centre of vital interests — keep your worldwide income taxable at home, and a Georgian IE looks to many tax authorities like a transparent pass-through or even a locally managed business. The 1% plan works cleanly in one scenario: you genuinely relocate, become a Georgian tax resident (183+ days in any rolling 12 months), and cleanly exit your previous residency under its own rules. It works messily or not at all in every other scenario.

This is also why the regime pairs naturally with actually living in Georgia — a country with visa-free stays of a full year for citizens of most Western countries, a low cost of living, and no tax on foreign-source personal income for residents under its territorial principles. The people for whom the 1% is real are the people who moved.

The bottom line

For a solo freelancer with foreign clients, work that stays clear of the consulting ban, and a genuine relocation, Georgia’s Small Business Status is — by the arithmetic in our five-country comparison — the cheapest legitimate tax residence available to a normal person in 2026: about $600 of tax on $60,000 of income, beating even Dubai’s 0% once Dubai’s rent-linked fees are counted.

For everyone else, the honest summary is: the 1% is real, the eligibility is narrower than advertised, the cap switches by month rather than by euro, and the residency question — not the rate — is where the plan succeeds or fails. Run your own numbers, including the over-cap scenarios, with the Georgia Small Business Status Calculator.

Figures use the 2026 rules of the Tax Code of Georgia (arts. 88–90) and official National Bank of Georgia exchange rates; over-cap rows assume even monthly income. Estimates for planning, not tax, legal or immigration advice.