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Georgia · Contractor taxation guide · 2026
Hiring in Georgia?
Here’s where the money actually goes
Start with the calculator: enter what you pay and see what reachesyour contractor under each of the three setups. Below it — what to check before you agree a rate, and what it costs if the arrangement reads as employment.
General information, not tax or legal advice. Georgia brought in its first mandatory work-permit regimeon 1 March 2026 and cut it back six weeks later, and the list of activities barred from the 1% regimeis older than most articles written about it. Treat every number here as a starting point and check the activity on your own contract.
Enter what you pay.
See all three bills
Two Georgian contractors can quote you the same rate and keep
very different amounts of it. Usually they did not choose which —
the activity on their registration did.
very different amounts of it. Usually they did not choose which —
the activity on their registration did.
Three things.
Here’s what each one costs
Georgia taxes a registered contractor on turnover rather than profit when they hold Small Business Status, and there are no contributions on either side. Which regime they are in is decided by the activity on their registration, and one whole professional category is shut out of it.
With Small Business Status it is 1% ofeverything invoiced, with no deduction forcosts. Without the status it is 20% of netprofit, where costs do come off. There isno middle band.
Today, 2:15pm
Small Business Status – 1% of turnover
Tomorrow, 11am
Above ~$192,000 – 3% on the excess
Tomorrow, 2pm
Standard regime – 20% of profit
Georgia has no general social-insurance system, no mandatory medical contribution and no unemployment levy. The funded pension binds employees only, so nothing is charged to you and almost nothing to them.
Today, 2:15pm
Your side – 0%
Tomorrow, 11am
Employees – 2% + 2%, plus a state top-up
Tomorrow, 2pm
Self-employed – voluntary, 4%
Resolution 415 lists what cannot hold Small Business Status, and the list isshort, old and categorical. Consulting of any kind is on it. Software development, design, marketing and translation are not, and they qualify.
Today, 2:15pm
IT, design, marketing – eligible
Tomorrow, 11am
Consulting of any kind – barred
Tomorrow, 2pm
Wrong activity found – ~$190 fine
A year in the life
of a Georgian
contractor’s taxes
Beforethe first invoice
The status has to be granted first
Small Business Status is a separate application after registration, and the 1% rate runs from the first day
of the month after it is granted. An invoice paid before that is taxed at 20%.
of the month after it is granted. An invoice paid before that is taxed at 20%.
Monthly,
by the 15th
by the 15th
Declare and pay, every month
A turnover declaration and payment through rs.geby the 15th of the following month, including months with no income. A nil return is still a return, and payment has to come from a Georgian bank account.
Watch
continuously
The $192,000 line
Cross it and the excess is taxed at 3% from that month to 31 December. The status survives the year.
Two years
running
The status is revoked
Cross that line in two consecutive calendar yearsand the status ends automatically on 1 January of the third. Then it is 20% of profit. One breachis survivable.
Two is not.
Two is not.
Before you sign
Deadlines are the contractor’s problem. The contract is yours. Georgia judges independence client by client, and six of the nine criteria it uses are written by you. All nine are further down this page.
Are you working
with them legally?
Tick what’s true of your arrangement. Unusually, Georgia’s tax authority publishes its own questionnaire for this and treats it as the basis for classification. The criteria are administrative rather than statutory, but they decide audits in practice. These are the things they weigh.
You are 75% or more of everything they earn
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You set their working hours
They work from premises you provide or designate
You supply or fund the tools they work with
You direct how the work is done, not just the result
You set their rate and they don’t negotiate it
They sit inside your structure — manager, reviews
They look like your staff from the outside
Over the 75% line. They can now qualify as a TRADE — if they also have no employees, use their own equipment and work differently from your staff. Same tax either way, but a TRADE contract has to be written and registered with the SEPE, and the duty to tell you sits with them.
Three things to check
before you agree a rate
Which status they hold, what activity it rests on, and whether the paperwork actually protects them. All three change the number that matters to them.
Which status,
and whether it’s live
and whether it’s live
Ask for two documents: the entrepreneur registration, and the Small Business Status confirmation with its effective date. The first says they can trade. Only the second says they are on 1%.
The activity
on the certificate
on the certificate
Consulting of any kind is barred from the 1% regime, along with legal, medical, architectural, audit and staffing work. Software development, design and marketing are not. Read the registered activity.
A certificate is not a guarantee
A Small Business or Virtual Zone certificate does not bind the tax authority. Getting the status is easier than qualifying for it, and they can look behind the paper years later.
The questions
The nine that come up most when companies hire in Georgia.
Can we hire a Georgian contractor
without a Georgian entity?
without a Georgian entity?
Yes. A commercial agreement with a registered individual
entrepreneur needs nothing from you locally:
no registration, no filing, no presence. You do not even
withhold, as long as you have no permanent establishment
in Georgia, so the whole invoice leaves your account.
What you cannot do is run that arrangement like employment.
entrepreneur needs nothing from you locally:
no registration, no filing, no presence. You do not even
withhold, as long as you have no permanent establishment
in Georgia, so the whole invoice leaves your account.
What you cannot do is run that arrangement like employment.
Who actually pays the tax,
us or the contractor?
us or the contractor?
The contractor, entirely. They declare and pay under
whichever of the three setups they are on. A Georgian
company or entrepreneur paying an unregistered individual
for services would have to withhold 20% at source; paying
a registered entrepreneur it withholds nothing,
and as a foreign payer without a permanent establishment you withhold nothing either way. Nothing is settled
in advance, so their whole bill arrives later, on their side. Worth knowing before the first rate conversation.
whichever of the three setups they are on. A Georgian
company or entrepreneur paying an unregistered individual
for services would have to withhold 20% at source; paying
a registered entrepreneur it withholds nothing,
and as a foreign payer without a permanent establishment you withhold nothing either way. Nothing is settled
in advance, so their whole bill arrives later, on their side. Worth knowing before the first rate conversation.
Our contractor is a registered individual entrepreneur.
Is that enough?
Is that enough?
It is their half, and it counts. Two questions stay open.
Whether the activity on their registration actually permits
the regime they are filing under. Consulting of any kind
is barred from the 1% rate, and a good deal of work gets described as consulting. And whether the relationship reads as employment, which is mostly your decisions rather than their filings. A properly registered entrepreneur on a contract that reads as employment is still a reclassification case.
Whether the activity on their registration actually permits
the regime they are filing under. Consulting of any kind
is barred from the 1% rate, and a good deal of work gets described as consulting. And whether the relationship reads as employment, which is mostly your decisions rather than their filings. A properly registered entrepreneur on a contract that reads as employment is still a reclassification case.
Does our contractor need permission to work in Georgia?
Probably not, and this is where most coverage is out
of date. Georgia introduced its first work-permit regime
on 1 March 2026, then amended it on 16 April: someone providing services to a non-resident client whose business is conducted outside Georgia is exempt, which is exactly this arrangement. Authorisation plus a residence permit
or a D1 visa is still needed by a contractor selling into
the Georgian market itself, and the fine for working without it is about $770. Georgian nationals sit outside all of it. The detail is still being codified, so ask which basis they are on.
of date. Georgia introduced its first work-permit regime
on 1 March 2026, then amended it on 16 April: someone providing services to a non-resident client whose business is conducted outside Georgia is exempt, which is exactly this arrangement. Authorisation plus a residence permit
or a D1 visa is still needed by a contractor selling into
the Georgian market itself, and the fine for working without it is about $770. Georgian nationals sit outside all of it. The detail is still being codified, so ask which basis they are on.
What is this 1% our developer keeps mentioning?
Small Business Status, under articles 88 to 90 of the Tax
Code. A registered individual entrepreneur pays 1% of gross turnover instead of 20% of profit, up to about $192,000 a year, with 3% on the excess. It is a separate application after registration and runs only from the first of the following month. Software development, design and marketing
qualify; consulting does not, and nor do legal, medical,
architectural, audit and personnel-supply work. Ask
which activity is on the certificate.
Code. A registered individual entrepreneur pays 1% of gross turnover instead of 20% of profit, up to about $192,000 a year, with 3% on the excess. It is a separate application after registration and runs only from the first of the following month. Software development, design and marketing
qualify; consulting does not, and nor do legal, medical,
architectural, audit and personnel-supply work. Ask
which activity is on the certificate.
How do we actually get money to them?
Most Georgian contractors invoice in dollars or euros
to a Georgian bank account, usually TBC or Bank of Georgia, and SWIFT is the normal rail. There is a wrinkle worth agreeing up front: Small Business Status tax has
to be paid from a Georgian account, and the monthly rs.ge portal login needs a Georgian phone number. A contractor who has left the country and kept the status can find the compliance harder than the tax. Or Kleos becomes the Contractor of Record, and that stops being a negotiation.
to a Georgian bank account, usually TBC or Bank of Georgia, and SWIFT is the normal rail. There is a wrinkle worth agreeing up front: Small Business Status tax has
to be paid from a Georgian account, and the monthly rs.ge portal login needs a Georgian phone number. A contractor who has left the country and kept the status can find the compliance harder than the tax. Or Kleos becomes the Contractor of Record, and that stops being a negotiation.
Does it matter that we’re a foreign client
and pay from abroad?
and pay from abroad?
Not for their tax. Georgia taxes services physically
performed in Georgia as Georgian-source income,
and article 104 says the place of payment is irrelevant. A developer in Tbilisi invoicing a company in San Francisco and paid into a foreign account is earning Georgian income. Client location, currency and bank all drop out. Paying someone in Georgia does not on its own give you a taxable
presence there, but a person habitually concluding business on your behalf, or a fixed place of business you effectively control, can. That is a corporate tax question, separate from classification.
performed in Georgia as Georgian-source income,
and article 104 says the place of payment is irrelevant. A developer in Tbilisi invoicing a company in San Francisco and paid into a foreign account is earning Georgian income. Client location, currency and bank all drop out. Paying someone in Georgia does not on its own give you a taxable
presence there, but a person habitually concluding business on your behalf, or a fixed place of business you effectively control, can. That is a corporate tax question, separate from classification.
What happens if the arrangement
is reclassified as employment?
is reclassified as employment?
Less to you than you might expect, and more to them.
Salary income cannot be taxed at 1%, so reclassification moves the money from 1% of turnover to 20% of gross, with interest, a fine of about $190, loss of the status, and no reapplication until the following tax year. Your side
is second-order: a rate renegotiation, labour claims
if Georgian labour law is engaged, and a separate
permanent-establishment question. There is no employment-contract register in Georgia, so this usually surfaces through
a tax audit of your contractor rather than a labour inspection of you.
Salary income cannot be taxed at 1%, so reclassification moves the money from 1% of turnover to 20% of gross, with interest, a fine of about $190, loss of the status, and no reapplication until the following tax year. Your side
is second-order: a rate renegotiation, labour claims
if Georgian labour law is engaged, and a separate
permanent-establishment question. There is no employment-contract register in Georgia, so this usually surfaces through
a tax audit of your contractor rather than a labour inspection of you.
Can we hire employees in Georgia, or use
an Employer of Record?
an Employer of Record?
Not directly, since the employer has to be a Georgian entity or a registered Employer of Record. The employment side
is light: 20% income tax withheld, 2% employer pension, 24 working days of paid leave, and a statutory minimum wage of about $8 a month that functions as nothing. What is not
light is dismissal: Georgia lists its termination grounds
exhaustively, and exiting an employment relationship costs either 30 days’ notice with a month’s severance or 3 days’ notice with two months’. Or Kleos becomes that Employer of Record, with the payroll in lari and the filings on our side.
is light: 20% income tax withheld, 2% employer pension, 24 working days of paid leave, and a statutory minimum wage of about $8 a month that functions as nothing. What is not
light is dismissal: Georgia lists its termination grounds
exhaustively, and exiting an employment relationship costs either 30 days’ notice with a month’s severance or 3 days’ notice with two months’. Or Kleos becomes that Employer of Record, with the payroll in lari and the filings on our side.
This page is general information only, not tax, legal or immigration advice. Figures reflect 2026 Georgian rules and the assumptions stated next to each calculation. Small Business Status is conditional and revocable, not automatic — eligibility depends on activity, turnover and genuine self-employment, and the source-of-income rules turn on specific facts. Amounts are shown in euros at an indicative ~2.99 GEL/€; Georgian tax is assessed in lari and the rate moves. Confirm your position — status, VAT registration, the labour-permit requirement — at rs.ge or with a qualified Georgian adviser.