Structuring Foreign Service Contracts for Georgia’s 1% Small Business Status

Small Business Status can allow a 1% tax on gross turnover for eligible Individual Entrepreneurs (IEs), subject to turnover limits and activity rules under the Tax Code of Georgia. The regime is narrow: excluded activities and imprecise descriptions can disqualify you or invite reclassification and standard-rate treatment.

This guide focuses on how foreign client contracts support—or undermine—a coherent independent-business story for the Revenue Service. It does not replace a review of your actual agreements and RS registration.

B2B deliverables versus employment language

Favour clauses that describe scope, deliverables, timelines, and acceptance. Avoid importing HR handbook concepts (paid vacation as an employee, line-manager duties, exclusivity framed as a personal job) unless they truly reflect a non-employment structure you can defend.

Timing: revenue before status

Income earned before IE registration and effective Small Business Status is a recurring problem area. The 1% regime applies according to law and registration facts for each period—not retroactively by wishful thinking.

Activity descriptions and “consulting”

Many disputes turn on whether work is eligible IT, marketing, or other permitted categories versus activities the RS treats as excluded or standard-rated. Labels in contracts and on RS.ge should match reality; generic “consulting” language is a frequent mismatch when the statute is more specific.

Banks, clients, and one narrative

Georgian banks and the RS both dislike inconsistency. Your contracts, invoices, tax filings, and KYC story should describe the same business model.

For IE registration, contract review, and status strategy, use our Digital Nomad & Remote Work Law service or contact TK Counsel.