Georgia: Territorial Tax, HNWI Status and 1% for Sole Proprietors

Concept: Territorial Principle

Georgia taxes individuals on a territorial basis: foreign-source income is generally not taxed; only Georgian-source income is subject to tax. Personal income tax is 20% (on Georgian income). This makes Georgia one of the most convenient bases for those whose income comes from abroad.

🍓 Territoriality does not equal "zero without conditions." The key question is the qualification of the source of income: if a service is actually provided from Georgia, it may be reclassified as Georgian-source. Plus, in 2026 the work permit rules are changing (see below)—the parameters are being finalized by secondary legislation.

Tax Residency: 183 Days or HNWI Status

183 days in any continuous 12-month period; or
HNWI status (high-net-worth individual)—without the 183-day requirement, if assets exceed 3 million lari OR annual income exceeds 200,000 lari (over the last 3 years), plus Georgian real estate from $500,000 or at least 25,000 lari of Georgian income per year; grants a tax residency certificate.

A residency certificate is useful for treaty tie-breaker purposes and reducing withholding tax under treaties (Georgia has more than 55 of them).

1% for Sole Proprietors (Small Business Status)

A sole proprietor (IP) with small business status pays 1% on turnover up to 500,000 lari (≈$180k) per year; 3% on the excess; if the threshold is exceeded two years in a row, the status is removed;
IP registration is quick and does not require residency;
popular among freelancers and remote workers serving foreign clients.

Immigration and Work Permits (2026 Changes)

Short-term, investment, and work residence permits; "low" threshold for real estate;
From March 1, 2026, a "right to work" (work permit) is introduced, but sole proprietors with small business status working for the external market, remote workers, freelancers serving foreign clients, founders and directors are exempted from the requirement (April 2026). Final parameters are being finalized by secondary legislation—monitor for publication.

Scenarios

Remote worker / freelancer. Sole proprietor with small business status (1%) plus territorial foreign income—but source qualification is important.

HNWI. Residency certificate without 183 days—for those who need status and tie-breaker without physical residence.

Entrepreneur with foreign business. Territorial foreign income with actual management outside Georgia.

Risks

1% is a Georgian regime; for foreign income, source and actual place of service provision (substance) are important;
territoriality does not cancel controlled foreign companies (CFC), exit tax, tie-breaker of the country of exit, and automatic exchange (CRS);
"foreign source" is sometimes reclassified as Georgian if work is physically conducted from Georgia;
2026 changes to work permits—monitor secondary legislation.

Frequently Asked Questions

Is foreign income of an individual taxed?

As a general rule, no—the territorial principle applies. But source qualification is important: income from work actually performed in Georgia may be considered Georgian.

What is HNWI status?

A mechanism to become a tax resident without 183 days by meeting thresholds for assets/income and connection to Georgia (real estate from $500,000 or Georgian income from 25,000 lari).

Is residency required for a sole proprietor with 1%?

No. IP registration and small business status do not require residency, but tax residency and substance are important for protection against claims from other countries.

Is this suitable for Russian-speaking relocators?

Yes, this is one of the most popular routes, but you need to close the tax tail of the country of exit (CFC, tie-breaker) and confirm the reality of residency.

FAQ