Georgia's 1% Small Business Tax for Remote Workers: What to Check

Georgia's 1% Small Business Status can be useful for qualifying remote professionals, but the headline rate is only one part of the analysis.

The regime is not a special "digital nomad tax." It is a statutory Small Business regime for a qualifying entrepreneur natural person, and its application depends on the actual activity, income, source, timing and compliance facts.

The 1% rate and the threshold

Under Article 90 of the Tax Code, qualifying Small Business taxable income is generally taxed at 1%.

If gross income from the person's economic activities exceeds 500,000 GEL, the rate becomes 3% from the beginning of the month in which the threshold is exceeded until the end of that calendar year.

Different threshold rules apply to qualifying wine-tourism and agro-tourism operators.

Small Business Status does not turn salary into 1% income

The Tax Code expressly excludes salary income from the Small Business taxable base.

A remote worker should therefore distinguish an entrepreneurial service relationship from employment income rather than assuming that registering as an Individual Entrepreneur changes the character of every payment received.

Do not rely on blanket activity lists from blogs

Article 88 permits the Government to prohibit specified activities from using Small Business Status.

Activity eligibility should therefore be checked against the current subordinate rules and the person's actual registered activity.

The previous version of this article stated, too broadly, that "consulting and crypto are banned." That formulation was not sufficiently precise for a legal guide and has been removed.

A transaction involving virtual assets can also raise separate questions about the nature and source of the income, VASP regulation, and banking compliance. Those questions should not be reduced to one generic Small Business rule.

A foreign client does not automatically make the income foreign-source

Article 104 defines Georgian-source income.

Among other rules, income from services can be Georgian-source where the services are actually rendered in Georgia. The Code also contains a rule for a Georgian-resident service provider and a recipient in another state, subject to the statutory permanent-establishment exception.

So a remote worker should not assume that payment from a foreign bank account or foreign customer automatically means the income sits outside the Georgian tax system.

Tax residence is a separate question

Article 34 generally treats a natural person as a Georgian tax resident for the current tax year where the person has actually stayed in Georgia for 183 or more days in any continuous 12-calendar-month period ending in that tax year, subject to the Code's detailed rules and exceptions.

Tax residence can affect the broader tax analysis. It is separate from:

• visa-free stay;
• Labour Migration Law exemptions;
• Small Business Status; and
• the source-of-income rules.

Tax treaties can also matter in cross-border cases.

Filing is monthly

Under the current Article 93, a Small Business return must be filed and the tax paid no later than the 15th day of the month following the reporting month.

The person's actual filing obligations should be checked for each period rather than relying on a generic reminder that every possible month is identical in every circumstance.

VAT is separate from the 1% regime

Small Business Status does not replace the VAT rules.

Turnover, place-of-supply rules and the nature of the services can create separate VAT questions. A person planning around the 1% rate should check VAT independently.

A practical review sequence

Before relying on the 1% regime, verify:

1. whether the person is properly registered as an entrepreneur natural person;
2. whether the actual activity is eligible under the current rules;
3. whether the income is entrepreneurial rather than salary or another excluded category;
4. when Small Business Status became effective;
5. the Georgian-source analysis under Article 104;
6. the person's tax-residence position;
7. the 500,000 GEL threshold and status rules;
8. monthly filing obligations; and
9. any separate VAT or treaty issues.

For a remote-work tax assessment, contact TK Counsel.