Georgia's 1% tax for digital nomads: how the Small Business regime really works
Georgia (the country) offers one of the lowest tax rates a freelancer can legally pay: 1% on revenue. It is genuinely excellent, and genuinely misunderstood. Here is exactly how the Small Business regime works in 2026, who it is for, and the two traps that catch people.
Short version. Register as an Individual Entrepreneur with Small Business Status and pay 1% on turnover up to GEL 500,000 (about $185,000), then 3% above. Two catches: consulting and regulated professions are excluded (taxed at 20%), and the famous 0% on foreign income does not cover work you do while sitting in Georgia, that is local-source and taxed at 1%. For real remote service work like development, design, or marketing, it is one of the best setups going.
The rates
| Situation | Tax |
|---|---|
| Turnover up to GEL 500,000 (~$185,000) a year | 1% of turnover |
| Turnover above GEL 500,000 in the year | 3% on the excess |
| Excluded activity (e.g. consulting), or status lost | 20% income tax |
Source: Georgia Revenue Service (rs.ge); status is revoked if turnover tops GEL 500,000 for two consecutive years.
Trap 1: the consulting exclusion
Not every job qualifies for 1%. Consulting of any kind, and regulated professions (legal, audit, medical, architecture), are excluded and taxed at the standard 20%. The good news is that genuine service work, software development, design, copywriting, and digital marketing, qualifies fine. The risk is labelling: Georgia's tax office looks at what you actually do, not what your contract is titled, so a "service agreement" that is really consulting, or that looks like disguised employment for one client, can be reclassified and taxed at 20%.
Trap 2: the foreign-income myth
You will read that Georgia is territorial and foreign income is tax-free. True, but not the way nomads hope. If you are physically in Georgia when you do the work, that income is treated as Georgian-source and falls under the 1%, regardless of where your client sits or where you get paid. The 0% exemption is really for passive foreign income, like dividends from foreign shares or rent on a property abroad. For your active remote work, plan on the 1%, which is still a remarkable rate.
How to set it up
Citizens of 90+ countries can enter Georgia visa-free for a full year, which makes this easy. You register as an Individual Entrepreneur at the Public Service Hall, then apply separately for Small Business Status through the Revenue Service portal (the 1% rate starts the month after approval), and open a Georgian business bank account, often the same day. You become a Georgian tax resident after 183 days in the country in a 12-month period, or sooner via the high-net-worth route. If your rolling revenue tops GEL 100,000 you register for VAT, though B2B service exports are generally VAT-exempt under the reverse-charge rule.
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Georgia 1% tax FAQ
How does Georgia's 1% tax work?
You register as an Individual Entrepreneur and apply for Small Business Status. You then pay 1% on your gross turnover up to GEL 500,000 a year (about $185,000), and 3% on anything above that. It is a tax on revenue, not profit, so you cannot deduct expenses, but at 1% that rarely matters.
What work is excluded from the 1% rate?
Consulting of any kind, plus regulated professional services like legal, audit, medical, and architecture, are excluded and taxed at 20%. Genuine service work such as software development, design, and digital marketing qualifies. Georgia scrutinizes contracts, so a 'service agreement' that is really consulting or disguised employment can be reclassified.
Is my foreign income tax-free in Georgia?
This is the big misconception. If you are physically in Georgia doing the work, that income is Georgian-source and taxed at 1%, no matter where your client or bank is. The 0% foreign-income exemption only covers passive income like foreign dividends or rent, not the active work you do while living there.
Do I have to live in Georgia to use it?
You register easily (most nationalities get 365 days visa-free), but you only become a Georgian tax resident after 183 days in the country, or via the high-net-worth route. Tax residency is what lets you rely on the 1% against your home country, so the regime suits people who actually spend real time there.
Georgian tax rules and the 2026 work-permit changes depend on your activity and residency. This is general information, not legal or tax advice. Confirm the current rules with a qualified Georgian tax adviser before you rely on the 1% regime.