Georgia company formation

Few countries have simplified their company law as consistently as Georgia: in the World Bank’s last Doing Business report of 2020, the country ranked 7th out of 190. Profits are taxed only when they leave the company, an LLC requires no minimum capital, and IT companies and individual entrepreneurs have their own tax regimes. Company formation in Georgia means choosing between four clearly defined models – depending on activity, legal form and customer base.

15% only on distributions

Since 2017, Georgia has taxed corporate profits under the Estonian model: corporate tax arises only on distribution. As long as profits remain in the company and are reinvested, no profit tax is due. On distribution the rate is 15%, plus a 5% dividend tax; the total burden on distributed profits is therefore around 19%.

Taxable distributions include not only dividends but also hidden profit distributions, non-business expenses and free-of-charge supplies. Returns are filed and tax is paid monthly via the portal of the Revenue Service, by the 15th of the following month.

International company status

In 2020, Georgia created a dedicated status for IT and shipping businesses: the international company. It pays only 5% corporate tax on distributed profits, its dividends are exempt from dividend tax, and the income tax of its employees drops to 5%.

The status is available to a company registered in Georgia that carries out eligible activities in Georgia – such as software development, IT consulting, hosting or ship management. It requires at least two years of experience in the activity concerned, either of the company itself or of a shareholder holding at least 50%. In addition, income from non-eligible activities must not exceed 2% of revenue.

The application is filed with the Revenue Service, which reviews it within ten working days; the final decision rests with the Ministry of Finance. The status applies from the first day of the month in which it is granted.

1% for individual entrepreneurs

Georgia is best known internationally for its small business status. It is open exclusively to individual entrepreneurs, not companies, and reduces tax to 1% of turnover as long as this does not exceed GEL 500,000 (around €170,000) a year. Turnover above that is taxed at 3%; if the limit is exceeded in two consecutive years, the status is lost.

Not every activity qualifies. Under the underlying government resolution, excluded activities include in particular consulting services of any kind, legal and notarial services, tax advice and auditing, medical and architectural services, financial services such as currency exchange, and gambling. Software development, design, marketing, content creation and many other digital services, by contrast, generally qualify.

The status is applied for via the Revenue Service portal after registering as an individual entrepreneur; tax returns are filed monthly. Citizens of the EU and Switzerland may stay in Georgia visa-free for up to one year.

Virtual Zone for IT companies

For IT companies selling their services abroad, Georgia also offers Virtual Zone Person status. Profits from IT products and services developed in Georgia and supplied to customers outside Georgia are fully exempt from corporate tax. Eligible activities include research, development, design, production and implementation of software; domestic sales and other activities remain subject to the regular 15%.

Any company registered in Georgia with an IT activity can apply for the status electronically with the Ministry of Finance; unlike the international company, no minimum track record is required. The two statuses cannot be combined: obtaining one means losing the other.

IT companies therefore have two routes: the Virtual Zone suits young companies with a pure export business, the international company established teams that also benefit from the lower income tax. Anyone setting up a company in Georgia should therefore decide before formation which status fits the business model.

The four models at a glance

Taxes and requirements of the four models compared:

VAT is 18%; registration is mandatory from taxable turnover of GEL 100,000 (around €34,000) within twelve months. All euro conversions are rounded and depend on the exchange rate.

Tax residency in Georgia

For entrepreneurs who move to Georgia themselves, personal taxation matters just as much as that of the company. Tax residency is acquired by anyone who spends at least 183 days in Georgia within twelve months. A largely territorial principle applies to individuals: income from foreign sources – above all passive income such as interest or dividends from foreign companies – generally remains tax-free in Georgia. Domestic income such as salaries is taxed at a flat 20%, dividends from Georgian companies at 5%.

Without a 183-day stay, residency can be obtained through the programme for high-net-worth individuals. It requires assets of more than GEL 3 million (around €1 million) or annual income of more than GEL 200,000 (around €68,000) in the previous three years. In addition, a Georgian residence permit or Georgian income of at least GEL 25,000 is needed; the status is applied for at the Revenue Service and renewed annually.

Free industrial zones

In Georgia’s free zones for industry in Tbilisi, Poti and Kutaisi, resident companies are exempt from all taxes – with the exception of the 20% payroll tax. These industrial zones are aimed mainly at manufacturing, processing and export; goods can be stored and processed there duty-free. A licence from the respective zone administration is required, and its cost varies by zone.

For service providers without trade in goods, the zones are of little relevance; here the Virtual Zone and the status of an international company are the more suitable instruments.

The formation process

The process in Georgia is remarkably lean. Company formation in Georgia involves these steps:

1. Choose the legal form: LLC for companies, individual entrepreneur for freelancers with the 1% status.
2. Business address: An address in Georgia is required for registration.
3. Registration: via the Public Service Hall or the National Agency of Public Registry, often within one working day; there is no minimum capital for an LLC.
4. Tax status: registration with the Revenue Service and, if required, application for small business, Virtual Zone or international status.
5. Bank account: opening a business account with a Georgian bank, usually in person.

The formation itself can be completed by power of attorney; for opening the account, a short stay in Tbilisi is usually required.

Accounting and obligations

The key obligations for bookkeeping, accounts, audit and VAT at a glance – so you know from the start what running your company involves.

As of 2026. Bookkeeping and filings are usually handled by specialised accountants in the target country.

Is Georgia right for you?

Whether Georgia suits you depends mainly on whether you plan to live there and where your clients are based:

If you want to use the Estonian model within the EU, compare Estonia; for online businesses without relocation, a US LLC is an option. The overview of all locations shows every option, and the tax comparison the rates. Which structure fits in an individual case can be clarified in an initial call.