Remote Work Tax in Georgia: 20%, 1% and Who Pays Which

You work from a flat in Tbilisi, and every client or employer you have is somewhere else. Georgia taxes income by where it comes from, not by where you bank it, and that rule decides whether you owe 20% or 1% on your remote pay. Here is how the work you do from Georgia is sourced, which regime you can register for, what you file and what filing late costs.

Where your income is sourced when you work from Georgia

Georgia taxes individuals on the source of their income, and Article 104 of the Tax Code is where the source rules live. Services actually rendered in Georgia are Georgian-source income. The same is true of a service a Georgian resident provides to a recipient sitting in another state, with one carve-out: delivery through a permanent establishment the provider holds abroad. It also states that in deciding the source, the place where the income is received is not taken into account.

Applied to a remote worker, the work you do at a desk in Tbilisi for a client in Berlin or an employer in Toronto is Georgian-source income. A euro invoice paid into a foreign account does not change that, and neither does the client never having set foot in the country.

A resident individual's income that falls outside the Georgian source rules is exempt, gains included. Dividends, interest and rent that genuinely arise outside the country are therefore a different question from the hours you bill, and Article 104 is what separates the two.

On whatever is left in the Georgian base, the standard 20% personal rate applies unless you are inside one of the special regimes. A non-resident has a narrower base, because only Georgian-source income is taxed at all, which is not the same thing as a clean exit.

The 183-day test, and why it is not the line that decides your tax

You become a Georgian tax resident for a whole tax year once your actual presence in the country reaches 183 days within any continuous run of 12 calendar months ending in that year, and any part of a day spent in Georgia counts as a full day.

Some days move in both directions. Time spent outside Georgia specifically for treatment, leisure, a business trip or study still counts as time in Georgia. Time inside Georgia is discounted where it is spent in transit, on treatment or leisure, in diplomatic or consular status, in the service of a foreign state, or on the staff of an international organisation covered by a Georgian treaty.

Status is worked out afresh for every tax period, and a day already used to make you resident in one of them cannot be spent again on the next.

What 183 days settle is the size of your tax base, not whether Georgia can tax the work you do here. Residency pulls your income from outside Georgia into scope, where most of it is then exempt, and it does nothing at all to the source of the work you perform at a desk in Tbilisi.

If you are an employee of a foreign company

Salary you earn for work physically performed in Georgia is Georgian-source income taxed at 20%, and the employer sitting abroad changes nothing.

One exemption cuts across that, and it reaches only a short non-resident stay. A non-resident's salary paid by a non-resident employer is exempt from Georgian income tax where 3 conditions all hold: you are not a Georgian tax resident, the work you perform in Georgia lasts no longer than 30 calendar days in the tax year, and the cost of your salary is not borne by a permanent establishment in Georgia. Miss any one of the 3 and the exemption is gone, and a resident employee gets no version of it at all.

A foreign employer with no presence in Georgia withholds nothing here. The withholding duty expressly excludes salary paid by a non-resident employer where that cost is not attributed to a Georgian permanent establishment, so no Georgian tax agent takes the tax off your pay and the return becomes your own job.

The annual return is filed by residents whose income went untaxed at source, and equally by a non-resident with no permanent establishment here whose Georgian-source income nobody withheld on. The tax falls due on the same day as the return.

Say you are resident and your foreign employer pays you the equivalent of GEL 100,000 over the year for work done from Tbilisi. Expenses related to earning salary income are not deductible, so there is nothing to set against it: the tax is 20% of GEL 100,000, which is GEL 20,000, declared and paid on your own annual return.

Salary also cannot be moved into the 1% regime. Small business status is granted to a registered individual entrepreneur, and the income the regime taxes is Georgian-source income excluding salary, so employment pay is outside it by definition.

Hired work under the Tax Code includes performing an obligation within a relationship regulated by Georgian or foreign labour legislation, so a foreign employment contract is still employment in Georgian eyes. Papering the same work as a service contract does not change that by itself, because the tax authority may change the qualification of a transaction where its form does not correspond to its content.

If you invoice foreign clients as a freelancer

Until you register for something, there is no 1%. An individual invoicing foreign clients from Georgia has Georgian-source service income taxed at 20% on the annual return, on the same source rule that catches employment pay.

The alternative is small business status and the 1% rate it carries. It is open only to an entrepreneur natural person, a VAT-registered one included, so registration as an individual entrepreneur comes first and the application for the status comes after it. The base is Georgian-source income other than salary and the income types the Government lists, and neither the Tax Code nor the order that runs the regime provides for any expense to be deducted from it.

Timing is where money is lost. The status applies from the day the application is filed, and nothing is backdated. Income you received earlier in the same year stays under whatever regime it was already in, is declared on an annual return filed the following year, and carries no advance payments.

Running the regime is a monthly job. Under Ministry of Finance Order No 999 each reporting month gets its own return, due together with the tax on the 15th of the month that follows it. There are no advance payments, you keep a special record book and hold your tax documents for 3 years, and losses cannot be carried forward.

Say you invoice GEL 120,000 over a year under the regime. The tax is GEL 1,200, declared across 12 monthly returns rather than settled once at the end of the year.

The work that cannot use the 1% rate

Government Resolution No 415 lists 7 categories of activity that small business status cannot cover: anything needing a licence or permit, where the Tbilisi taxi permit is the single exception; anything requiring significant investment; the exchange of currency; gambling; the provision of personnel; the production of excise goods; and medical, architectural, advocacy or notary, audit and consulting work, with tax consultants named inside that last one.

Consulting sits on that list, so a consultant cannot hold the status, and an activity that turns out to be excluded costs you the status from the start of the calendar year in which you carried it on, plus a fine of GEL 500.

A second list matters even once you hold the status. Dividends, interest and royalties, rent and income from lending, gambling winnings, gifts and inherited property, debt forgiveness, the gain on real estate, on a vehicle, on securities or on a partner's share, and construction services supplied to a business all fall outside the 1% and outside the GEL 500,000 count. They are taxed under the general rules and declared on an annual return.

Above GEL 500,000

The limit is measured on gross income from economic activity across a calendar year, and it is GEL 500,000 for everyone except wine tourism and agro tourism operators, who get GEL 700,000. Passing it does not end the status on the spot.

What happens instead is that the rate becomes 3%, running from the first day of the month in which the excess is recorded through to the end of that same calendar year. The status itself is revoked for turnover only where the limit is exceeded in each of 2 calendar years, and that revocation runs from the start of the year after.

VAT when your customers are abroad

VAT is a separate registration with its own threshold, and a one-person business can cross it without noticing. Registration becomes mandatory once your VAT taxable supplies pass GEL 100,000 in any 12 consecutive calendar months, which is a rolling window rather than a calendar year, and the application goes in within 2 business days. The rate is 18%.

The place of supply rule decides whether your invoices count toward that threshold at all. For a service, the place of supply is where the customer is established when the customer is a taxable person, which means anyone except an individual who is not in business, and where the supplier is established when the customer is not. A service sold to a business customer established abroad therefore falls outside Georgian VAT, and it adds nothing to the GEL 100,000 running total, so the VAT question for a one-person business turns on who your customers are rather than on how much you invoice.

The same rules run in the opposite direction and catch the same person. A service you buy from a supplier that is not established in Georgia is taxed on you as tax agent, at 18% of the amount you pay, where the place of supply is Georgia. Every person established in Georgia is that tax agent, registered for VAT or not, with 2 exceptions: an individual who is not an entrepreneur, and an enterprise inside a free industrial zone. Exempt services are not reverse charged.

Pension contributions and who is inside the scheme

The funded pension law applies to Georgian citizens and to foreign citizens and stateless persons who hold a permanent residence permit in Georgia. A foreigner without a permanent residence permit is outside the scheme.

Inside the scheme, membership is mandatory for employees, apart from those who had already reached the age limit when the law took effect, and voluntary for the self-employed. Contributions are 2% of taxable salary from the employer and 2% from the employee, or 4% of income for a self-employed member. On top of that the state pays 2% of the first GEL 24,000 of a member's annual salary or income, then 1% of the slice running from GEL 24,000 up to GEL 60,000.

Leaving Georgia, and what stays taxable after you go

Leaving before day 183 is a weaker move than it looks. It keeps your income from outside Georgia out of the Georgian base, which matters if you have any. It does nothing to the work you did while you were here, because a non-resident is still taxed on Georgian-source income and services rendered in Georgia are Georgian-source.

An entrepreneur who stops business in Georgia files a closing return within 30 business days rather than waiting for March.

Keeping the status is a separate question from staying put. None of the grounds for revoking small business status turns on losing Georgian tax residency, so holding the 1% status from outside the country is possible. What the 1% then reaches goes back to the source rules, which turn on where the service is rendered.

What you file, when, and what late costs

Which return you file depends on the regime you are in and on whether anyone withheld tax for you.

The middle 2 rows never land on the same person in the same year. A small business status holder makes no advance payments, and income taxed under the general rules goes on an annual return instead, which the Revenue Service's own filing deadlines set out alongside the other categories of annual filer.

Which regime fits you turns on your contracts, your days in the country and your registration dates, and where that is not obvious you can put the question to us in writing and get the answer as an opinion signed by David Sisvadze.

Filing late is priced on the tax due under the return. Up to 2 months late costs 5% of that tax, more than 2 months costs 10%, and where the tax due on the return is zero there is no fine. Unpaid tax then carries interest of 0.05% for each overdue day. Understating the tax on a return costs 10% of the understatement where it is no more than 5% of the tax you declared, 25% where it runs from 5% to 20%, and 50% above that.

Whether you are taxed twice

Georgia has 58 double taxation treaties in force, and the Ministry of Finance list of them names every partner country. Neither the United States nor Russia is on it.

Where a treaty does apply, relief is claimed under Ministry of Finance Order No 633, and Georgian residency is evidenced by a tax residency certificate that a resident applies for electronically and the Revenue Service issues in the approved form. Where your own country insists on its own form instead, the tax authority confirms residency on that form, as long as it carries a field for the confirmation and comes with a notarised Georgian translation.

What a treaty does with a particular kind of income is a question for that treaty's own text, and 34 of the 58 are further modified by the multilateral instrument, so the version that applies is the treaty as amended.

Frequently asked questions

Is remote work income taxed in Georgia if all my clients are abroad?

Yes. Services actually rendered in Georgia are Georgian-source income, and the place where the money is received is not taken into account. A foreign client, a foreign contract and a foreign bank account do not move the work out of the Georgian base, so it is taxed at 20% unless you hold a status that changes the rate.

Do I pay tax in Georgia if I stay less than 183 days?

On the work you did here, usually yes. The 183-day count decides residency, and a non-resident is still taxed on Georgian-source income, which includes services rendered in Georgia. The exception is salary: a non-resident paid by a non-resident employer owes nothing on it where the work done in the country stayed inside 30 calendar days of the tax year and the cost sat with no Georgian permanent establishment.

Can a remote employee get the 1% tax rate in Georgia?

No. Small business status is granted to a registered individual entrepreneur, and the income the regime taxes is Georgian-source income excluding salary. Employment pay is outside the 1% base whatever the contract is called, and it is taxed at 20%.

My foreign client pays into my Georgian bank account. Does that make it Georgian income?

The account makes no difference in either direction. Source is fixed without any regard to the place the money is actually received. What decides it is where the service was rendered and, for a Georgian resident, whether the recipient was in another state.

Do digital nomads in Georgia pay pension contributions?

Not unless they hold a permanent residence permit. The funded pension law covers Georgian citizens and foreign citizens or stateless persons holding a permanent residence permit, and membership is voluntary for the self-employed among them. Members contribute 2% from the employer and 2% from the employee, or 4% of income if self-employed.

What happens to the income I earned before I registered as an individual entrepreneur?

It stays under the regime it was already in. Small business status applies from the day the application is filed and is not backdated, so income received earlier in the same year is taxed under the previous rules, declared on an annual return filed the following year, and carries no advance payments.

When does a freelancer in Georgia have to register for VAT?

When taxable supplies cross GEL 100,000 over any 12 consecutive calendar months, and the application is then due within 2 business days. A supply to a business customer abroad is outside Georgian VAT and adds nothing to that total, so a freelancer billing only foreign businesses can invoice well past the figure without ever crossing it. That is not the same as being outside VAT: as an entrepreneur you are still the tax agent on services you buy from suppliers not established in Georgia.

What does a late tax return cost in Georgia?

Up to 2 months late, 5% of the tax due under that return. Past 2 months, 10%. A return showing no tax due attracts no fine at all. Interest of 0.05% a day then runs on tax left unpaid, and understating the tax costs 10%, 25% or 50% of the understatement depending on how far it runs past the tax you declared.

Do I still owe Georgian tax on work I did here after I leave?

Yes. A non-resident is taxed on Georgian-source income, and leaving does not change where the work was performed. If you were registered as an entrepreneur and you stop the business in Georgia, the return is due within 30 business days rather than at the end of March.

Does a Georgian residence permit make me a tax resident?

No. Residency is decided by Article 34 of the Tax Code, which counts days of physical presence and adds 3 discretionary routes: high net worth individuals under Minister of Finance rules, Georgian citizens whose residency in any country cannot be established, and other foreign citizens in cases the Minister defines. A visa, a residence permit, a registered address and registration as an individual entrepreneur appear nowhere in it, so none of them creates or prevents tax residency.