Georgia's 1% Tax Regime Explained: Why Digital Nomads Flock to Tbilisi

By Paulo Horta · Published July 2026 · 8 min read

Of every country modelled in our Nomad Tax Calculator, Georgia produces the lowest tax bill by a wide margin for freelancers and remote professionals below a certain income — and it isn't a loophole or an aggressive interpretation of the rules. It's a deliberate, well-established government policy, and understanding exactly how it's structured is the difference between using it correctly and accidentally stepping outside it.

A Territorial Tax System

Georgia taxes on a territorial basis: income sourced from outside Georgia is generally not taxed in Georgia at all for individuals, regardless of how long you live there. Combined with no capital gains tax on most foreign-source gains and no wealth tax, this is the foundation that makes Georgia attractive before the 1% regime even enters the picture — for anyone whose clients and income sources are genuinely outside the country.

Standard Rate vs Small Business Status

Individuals registered as an Individual Entrepreneur (IE) in Georgia — the standard structure for freelancers and the self-employed — can choose between the standard rate and one of two special statuses:

The 1% figure is genuinely on turnover, not profit — there's no deduction for expenses, which makes the regime extraordinarily simple but means it suits service-based freelancers with low overhead far better than anyone with significant business costs to offset.

What Happens If You Exceed the Threshold

Go over GEL 500,000 in turnover during the year and the excess above the threshold is taxed at 3%, not the full 20% standard rate — you don't lose Small Business Status retroactively, and you keep it through the end of the calendar year even after crossing the line. Agritourism businesses get a higher GEL 700,000 threshold, reflecting a specific policy push to support that sector, though it's not relevant to most remote-work freelancers.

Worked Example: $120,000 in Freelance Income

A freelance consultant billing international clients for the equivalent of roughly GEL 330,000 (about $120,000) a year, registered under Small Business Status, owes 1% tax — around GEL 3,300, or roughly $1,200 — with the rest untouched by Georgian tax entirely, since the income is foreign-sourced and the turnover sits comfortably under the threshold. Compare that directly against the standard 20% regime and other countries' freelancer regimes on our Georgia Small Business Status calculator.

What This Doesn't Cover

• Employment income — the 1% regime is specifically for registered Individual Entrepreneurs, not employees on a Georgian payroll, who are taxed at the standard rates.
• Georgian-source client income for IEs still needs care — the territorial exemption applies most cleanly to genuinely foreign clients, not local Georgian business.
• Your home country's tax obligations — Georgia's low rates don't automatically exempt you from tax residency rules or reporting obligations in your country of citizenship or previous residency; that's a separate question entirely.

This article is general information, not tax advice. Georgia's special tax regimes for Individual Entrepreneurs have been amended before and the specific eligibility rules matter — confirm current requirements with a Georgian tax consultant before registering.