Is the 1% Tax Scheme in Georgia Too Good to Be True for Nomads?

The Question Nobody Asks Clearly Enough

By 2026, the “1% tax in Georgia” has become one of the most repeated selling points in every digital nomad forum, YouTube channel, and relocation newsletter. And it has also become one of the most misunderstood. Some people arrive in Tbilisi having already registered a company, expecting to pay almost nothing in tax, and then discover their home country still wants a cut. Others find out too late that their business type doesn’t qualify at all. The scheme is real — but it is not a blanket deal for every freelancer with a laptop. This article breaks down exactly how it works, who it suits, and where people run into trouble.

What the 1% Small Business Regime Actually Is

Georgia’s 1% tax regime sits inside the country’s Individual Entrepreneur (IE) framework, governed by the Georgian Tax Code. The formal name is the small business status, and it allows qualifying sole traders to pay a flat 1% turnover tax on gross revenue in place of the standard 20% personal income tax. There is no corporate income tax layer on top of that. You are taxed on what comes in, not on profit. That distinction matters enormously for service-based workers — consultants, developers, designers, writers — whose margins are high and costs are low.

The regime does not come automatically when you register as an IE. You must apply separately for small business status at the Revenue Service. Once granted, you file and pay monthly: 1% of whatever revenue you received that month. Payments are due by the 15th of the following month. The accounting is genuinely simple — most people handle it without a full-time accountant, though hiring a local bookkeeper for around 150–250 GEL per month is common and sensible.

The standard income tax rate for IEs who do not hold small business status is 20%. The difference is dramatic. For someone earning 8,000 GEL per month — roughly equivalent to around $2,800 USD at mid-2026 exchange rates — that is either 80 GEL or 1,600 GEL going to the Georgian state each month. The regime is not a loophole. It is an explicitly legislated policy designed to attract economic activity and foreign income into Georgia.

Who Qualifies — and Who Gets Quietly Excluded

The qualifying conditions are specific, and this is where many nomads get a rude surprise.

Revenue ceiling: To hold small business status, your annual turnover must stay below 500,000 GEL (approximately $180,000 USD at current rates). Above that threshold, you automatically lose small business status for the following year and are taxed at 20% on the full amount. This ceiling is high enough that most freelancers never touch it, but it matters for higher earners or those with business expenses that are low relative to revenue.

Prohibited business activities: The Georgian Tax Code explicitly excludes certain types of businesses from small business status. These include:

• Notary and attorney services
• Medical and pharmaceutical activities requiring licensing
• Gambling and gaming operations
• Currency exchange operations
• Businesses producing excisable goods
• Activities that require a specific license where Georgian law restricts IE operation

If your work falls outside these exclusions — software development, content creation, consulting, marketing, design, coaching, translation — you are almost certainly eligible. But confirm this with a Georgian tax adviser before registering. The Revenue Service in 2026 has become more rigorous about activity classification, and mislabelling your business type on registration can create problems later.

Residency connection: Small business status is available to both Georgian citizens and foreign nationals who register as IEs. Georgia does not require you to be a tax resident to hold IE status. However, the question of where you are tax resident — and what your home country thinks about that — is a separate and critical issue covered below.

How to Register as an Individual Entrepreneur in 2026

The registration process has become faster since the House of Justice digital reforms of 2024–2025. In 2026, most foreign nationals can complete IE registration within a single visit to a House of Justice branch in Tbilisi, Batumi, or Kutaisi, or use the online portal if they already hold a Georgian ID card.

1. Obtain your identification document. Foreign nationals register using their passport. You do not need a Georgian residence card to register as an IE, though having one speeds up the process and is needed for a bank account.
2. Choose your business activity code (NACE code). This is where accuracy matters. The code you select shapes which tax regime you can access and how Revenue Service classifies your work.
3. Register at the House of Justice or online. The state registration fee is 20 GEL for same-day service or free for the standard 3-business-day process. You will receive your IE registration certificate and tax identification number (TIN) immediately or within three days.
4. Apply for small business status. This is a separate application submitted to the Revenue Service, either at their office or via the rs.ge online portal. It is usually approved within a few days if your activity qualifies.



5. Open a Georgian bank account. This is essential for receiving income declared under the regime. TBC Bank and Bank of Georgia remain the two main options for foreign nationals in 2026. Account opening has become somewhat easier, but both banks conduct due diligence on source of funds, so bring documentation of your work contracts or income history.
6. File monthly declarations and pay. Declarations are filed via the rs.ge portal. The interface is available in Georgian and English. Most people find it manageable; a local bookkeeper is optional but reduces stress.

What the 1% Covers — and What It Doesn’t

The 1% covers your Georgian income tax liability on revenue earned through the IE. That is genuinely it. But several other obligations sit alongside it that nomads frequently overlook.

VAT threshold: If your annual turnover exceeds 100,000 GEL, you are required to register for Georgian VAT at 18%. This threshold catches mid-to-high earners. Once VAT-registered, you charge VAT on your invoices and file quarterly returns. For services sold entirely to non-Georgian clients outside Georgia, the place of supply rules may allow zero-rating, but this requires careful structuring and ongoing documentation. Cross this threshold without registering and the penalties are significant.

Dividend tax: The 1% is a turnover tax, not a dividend or profit distribution tax. If you operate as a Georgian Limited Liability Company (LLC) rather than an IE, distributed profits face a 5% dividend withholding tax. This does not apply to IEs — another reason the IE structure is typically preferred by solo operators over an LLC for most freelance work.

Social contributions: Georgia has no mandatory social insurance contributions for IEs as of 2026. The state pension system is separate and opt-in at this level. This reduces your effective cost significantly compared to EU jurisdictions where social contributions often add 15–25% on top of income tax.

Health insurance: Georgia does not provide public health coverage to foreign nationals who are not in specific visa categories. You need private health insurance. Premiums for a healthy adult aged 25–45 range from around 80 to 250 GEL per month depending on the level of coverage and provider. GPI, Imedi L, and Aldagi are the main insurers. If you are enrolled in the Remotely from Georgia programme (the government initiative relaunched in updated form in 2025), some coverage assistance may apply — check current programme terms.

2026 Budget Reality: Living and Operating from Georgia

The numbers below reflect actual 2026 market conditions for Tbilisi. Batumi and Kutaisi run 15–25% cheaper on average for accommodation.

Accommodation (monthly rent, unfurnished unless noted)

• Budget: Studio or 1-bedroom in Gldani, Didi Dighomi, or outer Saburtalo — 700–1,000 GEL/month
• Mid-range: 1–2 bedroom furnished apartment in central Saburtalo, Vake, or Vera — 1,400–2,200 GEL/month
• Comfortable: Modern 2-bedroom with reliable internet in Mtatsminda or Old Town — 2,500–4,000+ GEL/month

Monthly cost of living (excluding accommodation)

• Budget: 900–1,200 GEL (local food markets, public transport, minimal dining out)
• Mid-range: 1,500–2,200 GEL (mix of eating out and cooking, gym, some travel)
• Comfortable: 2,500–4,000 GEL (regular restaurants, car rental or taxis, premium groceries, travel)

Operating costs for an IE

• IE registration: 0–20 GEL (one-time)
• Bookkeeper: 150–250 GEL/month (optional but recommended)
• Health insurance: 80–250 GEL/month
• Bank fees: 20–50 GEL/month
• Georgian tax (1% of revenue): variable — on 5,000 GEL revenue, that is 50 GEL/month

A freelancer earning 6,000 GEL per month (roughly $2,100 USD) and living mid-range in Tbilisi pays around 60 GEL in Georgian income tax, 200 GEL on a bookkeeper and insurance, and lives comfortably on roughly 2,000 GEL. The remaining 3,700+ GEL is disposable, savings, or investment. The maths is genuinely compelling — if your home-country tax situation allows you to benefit from it.

How Georgia’s Tax Treaty Landscape Affects Your Home-Country Obligations

This is the section that most “1% tax Georgia” articles skip, and it is the one that determines whether the regime actually saves you money.

Georgia has signed double taxation avoidance agreements (DTAAs) with around 56 countries. The list includes Germany, France, Netherlands, UK, Ukraine, Turkey, China, India, and many others. However, having a DTAA does not automatically mean you pay no tax at home. DTAAs prevent you from being taxed twice on the same income — they do not override your home country’s residency-based tax rules.

The critical question is: does your home country tax you on worldwide income regardless of where you live, or does it only tax residents?

For most EU and UK nationals, the answer depends on whether you have formally ceased tax residency at home. Germany, for example, taxes residents on worldwide income and has strict rules about what constitutes a break in residency. Simply being in Georgia for six months does not automatically end your German tax obligations. The UK operates a statutory residence test. Australia has its own rules around domicile. Some countries — notably the US — tax citizens on worldwide income regardless of residence, which is a completely separate challenge that requires advice from a US-qualified tax professional before any structure in Georgia is meaningful.

Georgia becoming your tax residence — which generally requires spending more than 183 days in the calendar year in Georgia — is achievable, but it requires deliberately severing tax ties at home. That process varies enormously by nationality. Do not assume paying 1% in Georgia means paying 0% at home without getting specific advice for your country.

When the 1% Stops Working for You

The regime is genuinely excellent for a specific profile. It is less suited — or actively problematic — for others.

High earners approaching the VAT threshold: If you are consistently earning above 100,000 GEL annually (roughly $36,000 USD at current rates), VAT registration adds complexity and potentially cost depending on your client base and invoicing structure. This is manageable, but it requires proper accounting rather than a simple monthly declaration.

People who cannot or will not formally exit their home-country tax system: If you have a mortgage, spouse still living at home, children in local schools, or business ties that your home country’s tax authority will use to argue you remain a resident, the Georgian 1% may not reduce your overall tax burden at all. You could end up paying 1% in Georgia and your full home-country rate on top — not instead.

Businesses with Georgian-source clients: The small business regime’s attractiveness is partly based on the assumption that most income comes from outside Georgia. If you are selling services directly to Georgian businesses, your VAT and income tax picture changes and local tax planning becomes more complex.

People who stay fewer than 183 days: If you use Georgia as one of several bases and never hit 183 days in a calendar year, you will not be a Georgian tax resident. You can still hold IE status and pay 1% on income flowing through the Georgian entity, but whether that satisfies your home-country reporting requirements depends entirely on your home jurisdiction’s rules.

The sunset risk is also real. Georgian tax policy has remained stable for the better part of a decade, but the regime has been discussed in OECD forums as part of broader global minimum tax conversations. While the 1% regime has not been altered as of mid-2026, anyone building a long-term financial plan around it should factor in the possibility of future changes.

That is the honest picture. For a single freelancer with no dependents, who earns in foreign currency from foreign clients, spends most of the year in Georgia, and has formally exited their home-country tax system — the 1% regime is as good as it sounds. For everyone else, it ranges from genuinely useful to irrelevant depending on your specific circumstances. The difference is knowing which category you fall into before you book your flight.

Frequently Asked Questions

Can I register as an Individual Entrepreneur in Georgia without being a resident?

Yes. Foreign nationals can register as an IE using their passport at the House of Justice without holding a Georgian residence permit. However, you will need a Georgian bank account to operate practically, and opening one as a non-resident has become more document-intensive at major banks in 2026. A residence card helps significantly at this stage.

Does the 1% tax apply to all income I earn, including from outside Georgia?

Once registered as an IE with small business status, the 1% applies to all revenue you declare through your Georgian IE, regardless of where the client is based. Georgia uses a territorial-plus system that generally does not tax foreign-source income received by non-residents, but IE registration changes the picture. Confirm the specifics for your income type with a Georgian accountant.

How long can I stay in Georgia without a visa?

Citizens of around 95 countries — including the US, UK, EU member states, Canada, and Australia — can stay in Georgia visa-free for up to 365 days per calendar year. This is one of the most generous visa-free policies in the world and is a core reason Georgia attracts long-stay remote workers. No registration is required for stays under 90 days; longer stays may require additional administrative steps.

What happens if my turnover exceeds 500,000 GEL in a year?

You lose small business status for the following tax year and are taxed at the standard 20% personal income tax rate on your full revenue as an IE. There is a grace period for the year in which you exceed the threshold — you continue on 1% for that year — but planning ahead to restructure before you hit the ceiling is strongly advisable if you are approaching that level.

Is the Remotely from Georgia programme still running in 2026?

The programme was restructured in 2025 and continues operating in updated form in 2026. It targets remote workers employed by or contracting with companies outside Georgia. Benefits include assistance with visa formalities and some administrative support, though the package has been streamlined compared to the original 2020 launch. Check the official Georgian government portal for current eligibility criteria and active benefits before applying.

📷 Featured image by Omar Al-Ghosson on Unsplash.