Freelancer in Georgia: small business status and the 1% tax
Many freelancers who moved to Georgia register as individual entrepreneurs and apply for small business status. Turnover is then taxed at 1%. Here is how it works when your clients pay from abroad.
Key facts
- Tax on turnover
- 1% of gross incomeTax Code, Article 90
- Yearly limit
- GEL 500,000 of gross income in a calendar yearTax Code, Article 88
- Over the limit
- 3% from the month you cross it to the end of that yearTax Code, Article 90
- Losing the status
- Only after crossing the limit in two calendar years; it ends on 1 January afterTax Code, Article 89
- Return and payment
- Every month, by the 15th of the next monthTax Code, Article 93
- Foreign currency
- Converted to lari at the official NBG rate of the dayNational Bank of Georgia
Your 1% tax
Estimate- Tax per month
- 80.00 GEL
- Tax per year
- 960.00 GEL
- Turnover per year
- 96,000.00 GEL
- Of the yearly limit
- 19%
This is over GEL 500,000 a year. Income from the month you cross the limit is taxed at 3%, and two such years end the status.
A flat 1% of what you enter. It does not include pension contributions or any tax your client's country may withhold.
Who can use it
You register as an individual entrepreneur at the Public Service Hall, then apply to the Revenue Service for small business status and receive a certificate. The status covers your own work; it is not for a company.
The Government keeps a list of activities that cannot use the status. Some professional services are on it, so read the list or ask the Revenue Service how your work is described before you apply.
Getting paid from abroad
Clients abroad usually pay in dollars or euros to a Georgian bank account. What counts for the 1% is the amount in lari at the official rate on the day you receive it, not the day you convert. Keep the bank statement and the invoice together for each payment.
Your bank converts at its own rate, which is usually worse than the official one. The difference is a cost to you, not a lower tax base.
Questions
Do I pay 1% on money I keep in dollars?
Yes. The tax is on income when you receive it, whatever currency it stays in.
What if I cross GEL 500,000 once?
Income from that month to the end of the year is taxed at 3%. The status itself goes only if you cross the limit in two calendar years.
Do I file even in a month with no income?
The return is monthly. Ask the Revenue Service or your accountant how to file a month with no turnover.
Not tax, legal or financial advice. Rules change and your case may differ; check with the authority linked above or an accountant before you act. Terms