Individual entrepreneur in Georgia: the 1% small business status (2026)
Georgia’s individual entrepreneur (IE) status with small business status is one of the simplest tax set-ups in Europe: 1% of turnover up to GEL 500,000 a year. It is also easy to get wrong. The status has excluded activities, a monthly filing duty and, since 2026, a separate right-to-work requirement for foreigners. This guide sets out how it works, with the legal source for each rule.
1. Two steps: the IE, then the status
Registering as an individual entrepreneur and getting small business status are separate steps. First you register as an IE with the National Agency of Public Registry (NAPR). Then you apply to the Revenue Service for small business status, which it confirms with a certificate (Tax Code, Art. 89(1)). Only an individual entrepreneur can hold the status; a company (LLC) cannot (Art. 88(1)).
- IE registration fee: GEL 26 for registration in one working day, GEL 75 for the same day (NAPR fees and terms).
- Tax with small business status: 1% of income (Art. 90(1)).
- Income limit: GEL 500,000 a year (GEL 700,000 for wine tourism and agrotourism) (Art. 89(2), 90(2)).
- Filing: a monthly declaration and payment by the 15th of the following month (Art. 93).
2. What the 1% covers, and what it does not
The 1% is charged on Georgian-source income from the business, excluding salary income (Art. 90(3)). Salary from an employer is taxed under the ordinary rules, not at 1%. Holders of small business status do not make the current (advance) tax payments other taxpayers make (Art. 94(1)).
Small business status is an income tax regime only. VAT is a separate tax with its own registration test, and the status does not replace it. Check VAT separately as turnover grows.
Whether income from foreign clients is Georgian-source income, and therefore taxed at 1%, depends on how and where the work is done. It is the most common question we receive about this regime and it has no one-line answer. Settle it before you rely on the 1% in your plans.
3. Excluded activities
Not every business qualifies. The Tax Code lets the Government exclude activities and types of income from small business status, with the agreement of Parliament’s Finance and Budget Committee (Art. 88(2)–(3)). The list sits in a Government resolution, not in the Tax Code itself, and it changes.
Carrying on an excluded activity costs the status from 1 January of the current year (Art. 89(2)). In other words, the 1% is lost retroactively for the whole year, not from the day the problem is found. Check your exact activity against the current list before you apply, especially for consulting, professional and licensed services.
4. Going over GEL 500,000
If income passes GEL 500,000 in a calendar year, the rate becomes 3% from the month the limit is exceeded until the end of that year (Art. 90(2)). If the limit is exceeded in two consecutive years, the status is withdrawn from 1 January of the following year (Art. 89(2)–(3)).
The status also ends if you ask for it to end (from the first day of the next month), if you carry on an excluded activity, or after three or more cash-register fines in one year (both from 1 January of the current year) (Art. 89(2)).
5. Monthly filing
An IE with small business status files a declaration and pays the tax every month, by the 15th of the month after the reporting month (Art. 93). Most people who get into trouble with this regime do so here: the tax is small, so the deadline feels unimportant, and missed months build up into fines.
6. Tax residence
IE registration does not by itself make you a Georgian tax resident. Tax residence depends on physical presence: broadly, 183 days or more in Georgia in a continuous 12-month period. Residents are taxed on their income under the Tax Code (Art. 79); non-residents only on Georgian-source income.
If you live elsewhere, your home country may tax the same income. A Georgian IE does not switch that off. Check your home country’s rules and any tax treaty before you rely on the 1%.
7. Foreigners: the 2026 right-to-work rule
Since 2026, Georgia’s Law on Labour Migration requires foreigners who are employed or self-employed in Georgia to have a right to work together with a work or IT residence permit or a D1 visa (Arts. 131–139). "Self-employed" covers foreigners without permanent residence who earn income from trade, services or contracting. The rules apply from 1 March 2026, with enforcement for people already self-employed on that date from 1 May 2026.
Working without the right to work carries a GEL 2,000 fine for the worker or self-employed person, and higher fines for repeat breaches (Art. 161). Some groups are exempt, including holders of an investment residence permit and permanent residents. Read our guide to residence permits in Georgia for the routes.
A foreigner who registers as an IE in Georgia and works from Georgia should treat the right to work as part of the set-up, not an afterthought. How the rule applies to work done entirely from abroad for foreign clients is not yet settled; take advice on your facts.
Frequently asked questions
What is small business status in Georgia?
A tax status for individual entrepreneurs that replaces ordinary income tax with 1% of income, up to GEL 500,000 a year. You register as an IE with the Public Registry and then apply to the Revenue Service for the status.
How much does it cost to register as an individual entrepreneur?
NAPR charges GEL 26 for registration in one working day, or GEL 75 for same-day registration.
What happens if my income goes over GEL 500,000?
The rate rises to 3% from the month you exceed the limit until the end of that year. If you exceed it two years in a row, you lose the status from 1 January of the next year.
When do I file and pay?
Every month, by the 15th of the following month.
Can a company (LLC) have small business status?
No. Only an individual entrepreneur can hold small business status.
Does every activity qualify for the 1% rate?
No. The Government excludes certain activities by resolution, and an excluded activity costs the status from 1 January of the current year. Check the current list for your activity before applying.
Does registering as an IE make me a Georgian tax resident?
No. Tax residence depends on physical presence, broadly 183 days or more in Georgia in a continuous 12-month period.
Do foreigners need a work permit to be an individual entrepreneur in Georgia?
Since 2026, foreigners who are self-employed in Georgia need a right to work under the Law on Labour Migration, plus a work or IT residence permit or a D1 visa, unless an exemption applies. The fine for working without it is GEL 2,000.
Sources
Setting up as an individual entrepreneur in Georgia? Book a call with the market entry team. We check your activity, your tax position and your right to work before you register.
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