Georgia vs Estonia for Freelancers: 1% Turnover or 0% Retained (2026)

Ask where a freelancer should base themselves to pay less, and two answers come back more than any others. Georgia, for its 1% small business status. Estonia, for its 0% on retained corporate profit.

They are usually presented as two versions of the same idea. They are not. One taxes your revenue as it arrives and leaves you free to spend it; the other taxes nothing until you take money out of a company, and then takes a fifth. Which is cheaper is decided almost entirely by that difference.

Two mechanisms, not two rates

Georgia’s small business status charges 1% of turnover. Not profit — turnover. Expenses are irrelevant to the calculation, there is no second layer when you spend the money, and the tax is settled monthly. It applies to you personally as a sole trader.

Estonia’s system charges nothing while profit stays in the company and 22% of the gross amount when it is distributed. Costs are deductible before that, and the company is a separate legal person that files accounts and needs a local contact person.

So Georgia is a low, flat, unavoidable charge on everything you invoice. Estonia is no charge at all until a decision you control, then a large one.

If you take the money out

The realistic case for most freelancers is that the money is their income and they need it. Here both are compared on the same revenue, with Estonia distributing everything and carrying mid-range service costs of €100 a month for accounting and €300 a year for a contact person and address.

Revenue	Georgia tax	Georgia net	Estonia tax + services	Estonia net	Georgia advantage
€30,000	€300	€29,700	€7,770	€22,230	€7,470
€60,000	€600	€59,400	€14,370	€45,630	€13,770
€100,000	€1,000	€99,000	€23,170	€76,830	€22,170
€150,000	€1,500	€148,500	€34,170	€115,830	€32,670
€200,000	€3,000	€197,000	€45,170	€154,830	€42,170

It is not close. If you extract everything, Georgia is cheaper by a margin that grows with income, and at €100,000 the difference is more than a fifth of the revenue. Estonia’s 22% is simply a much bigger number than 1%, and no amount of deducting expenses closes it.

If you leave it in

Change one assumption and the comparison inverts.

Revenue	Georgia	Estonia, distributing nothing
€60,000	€600 (1.0%)	€1,500 in services (2.5%), €58,500 retained untaxed
€100,000	€1,000 (1.0%)	€1,500 in services (1.5%), €98,500 retained untaxed
€200,000	€3,000 (1.5%)	€1,500 in services (0.8%), €198,500 retained untaxed

Estonia’s cost stops growing, because the only thing you are paying is the service stack. Georgia’s keeps rising, because 1% of a bigger number is a bigger number. They cross somewhere around €200,000 of revenue, above which the Estonian company is the cheaper place to accumulate capital.

The catch is in the word accumulate. That €198,500 is untaxed, not tax-free — the 22% is waiting whenever you want it personally. Estonia wins here only for money you genuinely intend to leave invested.

The cap that changes Georgia’s answer

Georgia’s 1% is not unlimited. Small business status applies up to ₾500,000 of annual turnover, about €166,000 at current rates. Beyond it the rate becomes 3% — and not only on the excess. Under article 90(2), income from the start of the month in which the cap is crossed through to year end is charged at 3%, with earlier months staying at 1%.

On ₾700,000 of even monthly turnover that produces about ₾11,667 of tax, roughly 1.7% of turnover rather than 1%. Still low. But it means Georgia’s headline rate quietly stops being the rate you pay somewhere below the level where Estonia becomes interesting anyway.

Two further limits matter more than the arithmetic. Consulting is excluded from small business status outright, which disqualifies a large share of the freelancers who read about the 1% and assume it applies to them. And the status is personal: it requires you to genuinely become Georgian tax resident, not merely to register something.

The costs that are not tax

Estonia carries a running cost floor that Georgia does not. Accounting from about €50 a month, a contact person and legal address at €200–400 a year, and one-off state fees of €415 to get started — €150 for e-Residency and €265 to register the company. The official e-Residency knowledge base puts a realistic first year at roughly €600 doing your own books or €1,300 with an accountant.

At €30,000 of revenue that stack is a meaningful percentage. At €200,000 it is noise. This is a second reason Estonia suits larger operations and Georgia suits smaller ones, independent of the tax.

The administrative rhythm differs too, in the opposite direction to the cost. Georgia’s small business status is declared and paid monthly, by the 15th, which is twelve obligations a year that fall on you personally and do not stop because you were travelling. Estonia costs more but hands most of that rhythm to an accountant you are already paying. Cheaper in money is not always cheaper in attention.

VAT: the one place they behave the same

On paper the two look far apart here. Estonia’s standard rate is 24%, permanent since July 2025, with registration obligatory above €40,000. Georgia’s is 18%, with a ₾100,000 threshold.

In practice, for a freelancer invoicing businesses abroad, both are close to irrelevant — and for the same structural reason. Estonia’s threshold counts Estonian turnover, and services supplied to business customers in other countries are generally reverse-charged to the customer or outside Estonian VAT scope. Georgia treats services supplied to foreign businesses as supplied outside Georgia. Either way the invoices that make up an export business mostly do not count toward the threshold that would drag you into the system.

That is worth saying plainly because the headline rates invite the opposite conclusion. Someone comparing 24% against 18% is comparing two numbers that will probably never appear on their invoices. The rates matter for what you buy locally and for any domestic clients, not for the export work that brought you to either country.

Which one is actually for you

The question to answer first is not how much you earn. It is what the money is for.

If your revenue is your income — you invoice, you take it, you live on it — Georgia is cheaper at every level in this table, by a lot, provided your activity is eligible and you are willing to actually move there.

If you are building a business that reinvests, holds cash, or pays for things that are genuinely business costs, Estonia’s deferral is worth real money and gets better the more you retain.

And if you are not moving anywhere, neither answer is safe. Georgia’s status requires Georgian tax residence. An Estonian company run from your desk in a high-tax country risks being treated as tax resident there under management-and-control rules, which is covered in the Estonia guide. Both structures are legal; both assume facts about where you live that a lot of people skip past.

Run your own numbers with the Georgia small business calculator and the Estonia company cost calculator.

The verdict

For an ordinary freelancer taking their income out, Georgia wins and it is not a close call. For someone accumulating capital inside a company above roughly €200,000 of revenue, Estonia wins on cost and adds an EU company that clients and payment providers find easier to deal with.

What neither one does is remove your own country from the picture. Both answers assume you have genuinely relocated, and the tax you save is measured against a residence position you have actually changed rather than one you have merely stopped mentioning.