Freelance tax in Georgia (the country) — what remote workers actually pay
How freelancers and remote workers are taxed in Georgia, why the 1% regime suits this work so well, and the questions about foreign clients and tax residency that decide whether it applies to you.
Last reviewed
Freelancing is the use case Georgia's 1% regime fits best. Understanding why also tells you where it stops working.
Why the regime suits freelancers
Small Business Status taxes turnover, not profit, at 1% under Article 90(1). For most freelancers, costs are a small share of revenue — a laptop, some software, perhaps a coworking desk. Taxing turnover instead of profit barely hurts when there is little profit being given up.
Compare the two regimes on 100,000 GEL of income with 15,000 GEL of costs:
| Small Business Status | Standard 20% | |
|---|---|---|
| Tax base | 100,000 GEL turnover | 85,000 GEL profit |
| Rate | 1% | 20% |
| Tax | 1,000 GEL | 17,000 GEL |
The gap only closes when expenses approach 95% of revenue. Very few freelancers operate anywhere near that, which is why this regime and this kind of work are so well matched.
The question that actually decides it
Whether you owe Georgian tax at all depends on two things the regime itself does not answer:
Are you a Georgian tax resident? Generally this turns on days of physical presence, and residency is what makes you taxable in Georgia in the first place.
Is the income Georgian-source? Article 90(3) confines the small-business regime to income from a Georgian source and excludes salary income. Where you sit while doing the work, where the client is, and how the arrangement is structured all bear on this.
These are not questions this page can answer for you, and anyone who tells you there is a single universal answer is oversimplifying. If you have foreign clients and meaningful income, the cost of an hour with a Georgian tax adviser is trivial against getting it wrong.
Employment is not freelancing
If you work for one company, on their schedule, with their equipment, you may be an employee in substance even if your contract says contractor. Salary income is expressly outside the small-business regime under Article 90(3).
Some remote workers register as an IE and invoice their single employer for what is functionally a salary. That arrangement is common, and it is not obviously safe. Whether it holds up depends on facts that vary case by case.
The thresholds to watch
- 100,000 GEL over any 12 consecutive months — VAT registration becomes mandatory within 2 business days (Article 165(1)). This is a rolling window, so it can arrive mid-year.
- 500,000 GEL in a calendar year — the rate rises to 3% for the rest of the year (Article 90(2)).
Successful freelancers hit the VAT threshold far sooner than the 500,000 one. At roughly 8,300 GEL a month you are already crossing it.
Pension
Not automatic. Article 3(3) of the Law on Funded Pensions makes participation voluntary for self-employed people, so registering as an IE does not enrol you. Opting in costs 4% of income.
Working it out
Put your real numbers into the 1% tax calculator — including your actual expenses, so the comparison against the 20% regime is honest rather than flattering.
Frequently asked questions
I freelance for clients abroad. Do I pay Georgian tax?
It depends on whether you are a Georgian tax resident and whether the income counts as Georgian-source. Article 90(3) limits the small-business regime to Georgian-source income and excludes salary. Because the answer turns on where you perform the work and your residency position, this is one of the few areas genuinely worth paying an adviser for.
Is freelancing an eligible activity?
Often yes, but not always. Consulting of any kind is commonly cited as excluded under Article 88(2), and the line between consulting and other services can be blurry. How you describe your activity on the application matters.
Do I pay pension contributions?
Not automatically. Under Article 3(3) of the Law on Funded Pensions, joining is voluntary for self-employed people. If you opt in, the contribution is 4% of your income.
What about social security in my home country?
Georgian registration does not by itself end obligations elsewhere. If your home country taxes on citizenship, or you remain resident there under its rules, you may still owe something. Check both sides.
Where these numbers come from
Verified on against the primary sources listed below. This is information, not legal or tax advice. Rules change and individual circumstances differ — confirm anything you intend to act on with the Revenue Service or a qualified adviser.
Important caveats
- The 1% and 3% rates apply to turnover (gross income), not profit. Business expenses are not deductible under this regime.
- Only income from a Georgian source is taxed under this regime, and salary income is excluded (Article 90(3)).
- Losses cannot be carried forward to the next year (Article 91(5)).
- The 20% standard rate applies to taxable income (after allowable deductions), whereas Small Business Status applies to gross turnover. A like-for-like comparison must account for that difference.
- The VAT threshold is measured over any 12 consecutive calendar months, not the calendar year used for the Small Business Status limit. The two can be crossed at different times.
- VAT registration does not by itself end Small Business Status; the 1% regime and VAT registration can coexist (Article 92).
- Exports and certain exempt supplies are treated specially when measuring the threshold (Article 165(7)).
- Participation is voluntary for self-employed persons, so an Individual Entrepreneur is not automatically enrolled.
Sources
- Tax Code of Georgia — Article 90, Taxable income of small business and tax rates — Article 90(1)-(3)
- Tax Code of Georgia — Article 88, Small business — Article 88(2)-(3)
- Tax Code of Georgia — Article 89, Granting the status of small business — Article 89(2)-(5)
- Tax Code of Georgia — Article 93, Filing micro and small business tax returns — Article 93(1^1)
- Tax Code of Georgia — Article 91, Principles of accounting for small business income and costs — Article 91(1), 91(5)
- Tax Code of Georgia — Article 81, Tax rate — Article 81(1)
- Tax Code of Georgia — Article 165, Registration as a VAT taxpayer — Article 165(1)
- Tax Code of Georgia — Article 166, VAT rate — Article 166
- Tax Code of Georgia — Article 92, Registration of a small business as a VAT payer — Article 92(1)
- Law of Georgia on Funded Pensions — participation — Article 3(3)
- Law of Georgia on Funded Pensions — self-employed contribution — Article 3(6)(d)