Tax Code of Georgia: 10 Key Questions

Law No. 3591 of 17.09.2010, as amended in 2026. For businessmen, investors, and expats.

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1. When do I become a tax resident?

183+ days of actual presence within any continuous 12-month period ending in the given tax year (Art. 34). Any day of presence counts, regardless of duration. Status is determined anew each year — days from a previous period do not carry over.

Not counted: days in Georgia as a diplomat/consul and family members, employee of an international organization, transit, travel for medical treatment or vacation.

Alternative paths: High Net Worth Individual status or a separate Ministry of Finance procedure — without 183 days.

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2. Is it true that foreign income is not taxed?

Only partially. Formally, resident individuals are exempt from income tax on income from a foreign source (Art. 82). However, the source is determined under Art. 104, not by the country of the payer.

Main pitfall. If you are physically present in Georgia and provide services, it is a Georgian source, even if the client is foreign and the money goes to a foreign account. Passive income (dividends, interest, royalties from abroad) is generally exempt.

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3. What does the Small Business status (1%) provide?

1% on turnover for individual entrepreneurs (IE) with turnover up to 500,000 GEL/year. Expenses are not deductible.

• Exceeding the threshold → 3% (according to some interpretations, for the entire year, not just the excess)
• Exceeding two years in a row → status is cancelled, transition to 20%
• Declaration monthly by the 15th, even with zero income
• The rate applies from the date of obtaining the status, not retroactively
• Prohibited activities: financial, legal services, consulting (partially), gambling

Below 30,000 GEL — Micro Business Status with 0%, but without the right to hire employees.

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4. How does the corporate tax (Estonian model) work?

Since 2017: undistributed profit is not taxed at all. The 15% tax arises only upon distribution.

• Reinvested 300,000 GEL → CIT = 0
• Paid dividends 100,000 GEL → CIT = 15,000 GEL
• Plus 5% withholding tax on dividends to individuals
• Total effective burden upon withdrawal ≈ 20%
• Banks, MFIs, credit unions — 20%

Calculation: payment amount ÷ 0.85 × 15%. Declaration — by the 15th of the month following distribution.

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5. Do I create a 'permanent establishment' (PE)?

PE — a fixed place of business in Georgia, including a 'permanent base of a non-resident individual' (Art. 29). Management of a foreign company by another person on its behalf for more than 3 months also creates a PE.

Does NOT create a PE: ownership of shares or property; leasing; warehouse/showcase; purchasing and information collection; preparatory activities; independent agent without signing authority; posted personnel under the control of the receiving party.

Risk for investors. If you manage your foreign company while physically located in Tbilisi, the PE and place of effective management rules (Art. 28) may apply — the company risks becoming a Georgian taxpayer.

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6. What are the withholding taxes on payments to non-residents?

Type of payment	Rate
Dividends	5%
Interest	5%
Royalties	5%
Services of a non-resident (Georgian source)	10%
International transportation/communication	4%
Any payments to offshore jurisdictions from the Ministry of Finance's 'black list'	15%
Salary	20%

Exemption under DTT (more than 50 treaties) applies if the counterparty's tax residency certificate is provided. Ratified treaties take precedence over the Code (Art. 2.7).

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7. When is VAT registration mandatory?

Turnover exceeding 100,000 GEL in any rolling 12 months. Rate 18%. Registration must be done within 2 days after exceeding the threshold — penalties are calculated from the date of exceeding, not from the date of registration.

Services to non-residents under B2B rules (place of supply abroad) are not subject to VAT and are not included in the threshold. Exports — zero rate. Exempt: financial services, education, healthcare, residential real estate.

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8. How are real estate and capital gains taxed?

• No tax on purchase
• Sale of residential real estate: 5% for individuals
• Ownership more than 2 years → full exemption (0%)
• Shares held for more than 2 years and not used in economic activity → exemption
• Other capital gains of individuals — 20%
• Corporate capital gains — only upon distribution (Estonian model)

Property tax — local, payable by November 1.

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9. What preferential statuses are available for companies?

Status	Main benefit
International Company	Profit 5%, employee salary 5%, dividends exempt, exemption from property tax (except land). Activities outside the permitted list → cancellation retroactively from January 1
Virtual Zone (IT)	Exemption of profit from software exports
FIZ (Free Industrial Zone)	0% CIT / 0% VAT / 0% WHT. But 4% on supplies to Georgian residents and strict restrictions on services
Special Trading Company	Exemption from profit tax on re-exports from customs warehouse

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10. How confidential is my data and how long can I be audited?

Statute of limitations — 3 years (Art. 4): for additional assessment, penalties, audit, and refund of overpayment. The period starts at the end of the calendar year. It is extended by one year if you filed a declaration (including amended) less than a year before the expiration.

Public (not tax secrecy): name, address, TIN, VAT payer status, tax debt, founders, persons with representation rights, seizures and pledges of property.

Data transfer: the tax authority transfers information to competent authorities of foreign states under international agreements. Georgia participates in CRS — banks exchange account data automatically. It is a low-tax jurisdiction, but not a secrecy jurisdiction.

Criminal risk: non-payment of 100,000 GEL or more may become a criminal matter.

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Rates and thresholds are as of 2026 and are subject to regular changes. Before structuring transactions, check the current version on matsne.gov.ge and consult a local tax advisor.