The Small Business Status (SBS) is a special tax scheme designed for Individual Entrepreneurs (IEs), registered in Georgia. It allows for those IEs to apply for the SBS and change their income taxes from 20% on net profit, to 1% on gross turnover. For many freelancers/solopreneurs this leads to huge tax savings. Not all IEs qualify, so read more below on if you will. ExpatHub can assist with both your IE registration and/or SBS registration (for those who qualify).
* Consult with our tax advisors for exceptions. Other VAT exemptions also apply.
Documents and other essential considerations. All sole proprietors qualify for IE registration.
* If you are on the prohibited list, you can still get the Individual Entrepreneur status (20% flat tax on net annual profit), but will not qualify for the Small Business Status (monthly 1% tax on gross turnover).
Available in Tbilisi & Batumi
Our complete Individual Entrepreneur business registration service will get you set up quickly and professionally.
We'll help you avoid translation problems and easily navigate the pitfalls of Georgian law to complete your business registration without potential legal headaches in the future. You will be required to attend 2 appointments with our representative, one at the Public Service Hall, and one at the Revenue Service.
We can assist with both Individual Entrepreneur & Small Business Status Registration.
How will your Georgian IE with SBS* be taxed?
* If you ONLY qualify for IE status and not SBS (1% tax rate), then all of the above are accurate, except you will pay 20% on annual net profit, rather than 1% on gross turnover (monthly).
In most cases, the registration process takes ~3 business days and involves a visit to the Public Service Hall and the Revenue Service (on different days), where you're accompanied by our specialist. If you already have a Georgian tax ID, it will need to be merged with your new IE account, this can delay completion of the the SBS registration by up to 10 business days.
Your SBS 1% tax rate is effective from the first day of the month following completion of the SBS application. Therefore, if you already have a Georgian tax ID it is advised to start at least 15 days before the end of the month, in order to have the status active for the first day of the following month.
If you don’t meet all the criteria to qualify, your application for SBS (1%) will either be rejected, or simply not accepted in the first place. Some typical reasons you do not qualify include:
* You are an employee posing as a contractor/freelancer (ie. you have only 1 client and various benefits, fixed monthly compensation etc.)
* You are a consultant (of any kind), architect, tax adviser or any of the other prohibited activities.
If you do not qualify for SBS (1%) you can still register as an IE, then main difference will be that you pay 20% tax on your net annual income (declared annually) rather than 1% on your gross turnover (declared monthly).
You do not legally need a business bank account, you can use any bank account personal, business, local, international, providing you declare all business income accurately. However, it is highly advised to have a separate bank account for business, even if it is a separate personal account, in order to differentiate your finances and avoid any issues. Read more about bank accounts here.
Technically a Power of Attorney could be used, but this turns a relatively simple process into a far more complicated one. Because tax residency is expected (the full explanation on this is pretty complex, ask your adviser) when looking to benefit from the 1% tax rate, it is likely you will come to Georgia in person, so we recommend performing the registration as soon as you arrive, in most cases.
VAT registration is mandatory if gross VATable turnover exceeds 100,000 GEL in any 12 month period. Once VAT registered, 18% VAT must be collected on all VATable transactions.
Non-VATable sales to foreign clients/customers do not count towards this threshold. They also remain non-VATable even once VAT registered. With limited exceptions, sales of services (including SaaS) which are digitally rendered and provided to customers resident outside Georgia, and not physically present in Georgia, will be non-VATable.
All B2B (business to business) service transactions between a Georgian business and a non-Georgian business located outside Georgia are entirely VAT exempt.
These are not the only non-VATable transactions. Read more about what is VAT exempt here.
No. Business registration in Georgia is indefinite and there are no annual renewal fees or procedures. Occasionally legislation may change which then requires filing of some paperwork.
No. Our fee includes everything to get you started, assuming you have a permanent legal address in Georgia to register your business. If not, check out our virtual address service.
Note: Remote applications rather than those made in person can incur higher fees, see pricing information above. You will also require a power of attorney and apostilled passport copy for each company director, if you will not come to Georgia in person. Physical copies of these must be sent to us, fees incurred for this process where you are located outside Georgia, are at your own expense.