Georgia has rapidly become one of the most attractive business destinations for international entrepreneurs seeking lower operational costs, predictable regulations, and a modern tax framework. With a system built on transparency and simplicity, the country offers significant advantages for companies operating in digital services, consulting, IT, and international trade.
This article explains the tax system in Georgia in a clear and realistic way, based on current legislation and practical experience.
- The Estonian-Based Tax Model: Simple and Transparent
Georgia’s corporate tax structure is based on the Estonian Tax Model, where businesses are taxed only when profits are distributed.
This means:
No tax is paid while profits remain inside the company
Cash flow remains stronger
Companies can reinvest and grow more efficiently
Accounting operations become significantly simpler
The Corporate Income Tax (CIT) rate on distributed profit is 15%, but the tax only applies when dividends are taken out by the owners.
For many international companies, especially those offering services abroad, this system provides a major financial advantage.
- The 1% Tax Regime: Who Qualifies?
The so-called “1% tax regime” is often misunderstood.
In reality, it applies only to:
Small Business Status
Specific service-based activities
Businesses that remain under an annual revenue threshold
Income sources that align with Georgian regulations
For those who meet the criteria, it can significantly reduce tax obligations.
However, it is not a universal solution, and proper evaluation is essential.
- IT Companies and the Virtual Zone
The Virtual Zone status is designed for companies engaged in IT, software development, and digital product creation.
It offers tax advantages, but only under specific conditions:
Services must be exported outside Georgia
Activities must be genuine and technically verifiable
Documentation must support the nature of the work
This status is beneficial, but requires careful compliance with the law.
- VAT Structure – Important for European Entrepreneurs
Georgia’s VAT rate is 18%.
However, companies exporting services to international clients often:
Do not pay local VAT
Benefit from cleaner financial operations
Gain competitive pricing advantages compared to EU-based companies
Reduce administrative complexity
This is a key factor for businesses relocating from Germany or other high-tax jurisdictions.
- Property and Personal Tax Considerations
Individuals owning property in Georgia are subject to an annual property tax, depending on the type, value, and location of the property.
The rate is generally low and manageable, but it is an important aspect for foreign investors to be aware of.
- Why Georgia Attracts International Entrepreneurs
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Key reasons include:
Transparent and easy-to-understand tax laws
Minimal bureaucratic barriers
Lower operational expenses compared to Europe
Access to international banking services
Strategic location between Europe and Asia
Stable and predictable economic environment
These advantages have encouraged many European businesses to establish a second operational base in Georgia.
Georgia provides a competitive and accessible tax environment for international companies, especially those in digital services, technology, and consulting. Choosing the correct tax structure and understanding the legal framework are essential steps for sustainable success.
Berlin Corner LLC supports entrepreneurs and investors in selecting the right tax model, navigating legal requirements, and establishing a stable business foundation in Georgia—through clear analysis and professional guidance.
