Georgia has become a sought-after destination for freelancers and digital nomads due to its attractive tax regime, simple business registration, and minimal bureaucracy. One of the most appealing aspects for freelancers is the 1% taxation rate, available under the Individual Entrepreneur (IE) Small Business Status. This article provides a step-by-step guide on registering as a freelancer, operating legally, and understanding tax obligations in Georgia.
Who Qualifies for 1% Taxation in Georgia?
The Small Business Status (SBS) is available to individual entrepreneurs (IEs) whose annual revenue does not exceed 500,000 GEL. If this threshold is exceeded, the standard 20% income tax may apply. Freelancers engaged in various professional services, including IT, marketing, consulting, and creative work, can benefit from this status. However, some regulated professions are excluded, such as:
- Activities that require licensing or a permit (except for M1 category private taxis in the capital of Georgia)
- Activities that require significant investment (e.g., production of excisable goods)
- Carrying out foreign exchange transactions
- Medical, architectural, legal or notarial, auditing, and tax consulting activities
- Gambling business
- Staffing
- Production of excisable goods
Step-by-Step Registration Process for Freelancers in Georgia
Step 1 – Register as an Individual Entrepreneur (IE)
To start, freelancers must register as an Individual Entrepreneur (IE) in Georgia. This can be done by visiting the National Agency of Public Registry (NAPR) in person or by registering online via the Georgian Public Service Hall. To complete the registration, you will need to provide:
- Your passport or ID
- Proof of address
- Business details
Step 2 – Apply for Small Business Status (SBS)
After registering as an IE, apply for the Small Business Status (SBS) at the Revenue Service of Georgia. You can submit a request via their online portal or visit the office in person. Approval is typically granted within a few days.
Step 3 – Open a Georgian Bank Account
Having a Georgian bank account is necessary for tax payments and business transactions. Banks such as TBC Bank and Bank of Georgia offer business-friendly services for entrepreneurs.
Taxation and Reporting for Freelancers in Georgia
Once you are registered under the Small Business Status (SBS), you will be taxed at 1% of your total revenue (excluding VAT if applicable). Here are the key tax obligations:
- Monthly Tax Payments: The 1% tax must be paid by the 15th of the following month.
- Annual Revenue Cap: If your revenue exceeds 500,000 GEL in two consecutive years, SBS may be revoked.
- VAT Considerations: If your turnover exceeds 500,000 GEL per year, you must register for VAT (18%) and pay income tax (2%).
Unlike LLCs, IEs are not subject to corporate tax, making this structure ideal for solo entrepreneurs.
Merits of the 1% Tax Regime in Georgia for Freelancers
- Low Tax Rate: The 1% tax on revenue is significantly lower than global tax rates.
- No Additional Taxation: Individual entrepreneurs under SBS are not subject to personal income tax or corporate tax.
- Easy Administration: IEs have simple reporting requirements compared to company structures.
- Access to International Payments: Freelancers can easily receive payments from global clients through platforms like PayPal, Wise, and Georgian banks.
Why Freelancers Should Consider Registering in Georgia
Georgia’s 1% tax regime is a game-changer for freelancers seeking a low-tax, business-friendly environment. By following the simple registration steps and adhering to tax regulations, freelancers can legally operate while benefiting from one of the lowest tax rates in the world. If you are considering setting up in Georgia, now is the time to explore this opportunity and take advantage of the favorable business climate.
By registering as an Individual Entrepreneur and applying for Small Business Status, you can benefit from ultra-low taxes, simplified regulations, and access to a thriving freelance market.
Start your registration today and let us help you legally optimize your freelance business in Georgia!
