Georgia: the 1% “small business” status appeals to the self-employed

Georgia offers individual entrepreneurs a so-called small business status, which replaces tax on profits with a levy based on turnover.

The rate is 1%¹ of turnover, up to an annual ceiling of up to GEL 500,000², or approximately about €170,000³.

Above this ceiling, the rate rises to 3%⁴. Exceeding it therefore does not push the entrepreneur into the ordinary regime, but into a second tier, which is gentler than in most comparable regimes.

The status requires prior registration with the Georgian tax authority. It does not apply automatically simply because one carries on a self-employed activity.

Certain activities are excluded, notably regulated professions and consulting activities in certain configurations. The classification of the activity is therefore the first point to have checked.

The levy is based on revenue, not on profit. A consulting activity with no expenses is therefore greatly advantaged; a low-margin activity that buys to resell is penalised.

This logic is the same as that of the Romanian micro-enterprise regime, and it calls for the same trade-off: the headline rate means nothing until it has been set against the activity's actual margin.

Georgia's ordinary regime, by comparison, taxes personal income at 20%⁵ and dividends at 5%⁶.

For companies, Georgia applies a tax deferral comparable to the Estonian model: undistributed profit is not taxed, at a rate of 0%⁷, and distributed profit bears 15%⁸.

The choice between small business status and a company therefore depends on the level of turnover, the margin and the share of profit the entrepreneur intends to reinvest.

A second technical point deserves attention: the status applies to an individual trading in their own name, not to a company. The entrepreneur is therefore liable for their business debts with their personal assets, which is a fundamental difference from a limited liability structure and must be weighed beyond the rate alone.

Finally, the regime carries no social security cover. Georgia does not levy contributions comparable to those of the French system, which lightens the burden but leaves the entrepreneur on their own for pensions, health and disability and life cover. These items must be funded separately, and their cost significantly narrows the apparent gap.

Georgia allows nationals of many countries, including France, to stay for 365 days⁹ without a visa. This is an unmatched duration, and it is the second pillar of the country's appeal for the self-employed.

However, this visa-free stay is neither a residence permit nor tax residency. Georgian tax residency is acquired beyond 183 days¹⁰ of presence per year.

A self-employed person can therefore be registered in Georgia under small business status without being a tax resident there, and vice versa. These two statuses are distinct and must be dealt with separately.

This is where the main misunderstanding lies. A French national who remained domiciled in France and registered in Georgia would remain taxable in France on their income, and the Georgian levy would be added on top rather than replacing it.

1. Have the activity classified: some are excluded.
2. Register with the Georgian tax authority: the status does not apply automatically.
3. Set the 1%¹ rate against the actual margin, since the tax base is turnover.
4. Monitor the up to GEL 500,000² ceiling and the move to the second tier.
5. Deal with the departure from France according to its own criteria: the visa-free stay changes nothing.

Finally, the political and regional context is a factor in its own right. Georgia has experienced sustained internal tensions, and its geographical position is a risk factor that tax comparisons ignore. A long-term project must take it into account just as it does the tax rate.