# Georgia: Territorial Tax, HNWI Status and 1% for Sole Proprietors > Georgia does not tax foreign-source income of individuals (territorial principle); residency via 183 days or HNWI status; 1% tax for sole proprietors; residence permits. Author: Мария Плотникова — юрист, Family Office (https://wiki.private.law/authors/plotnikova) Last modified: 2026-07-21T17:06:00.000Z Canonical: https://wiki.private.law/en/georgia-territorial-tax Topics: investments, migration Jurisdictions: georgia Product tags: tax-regime, residence-permit, wealth-planning, substance Semantic tags: tax-regime, residence-permit, wealth-planning, substance --- Over two decades Georgia has assembled a rare combination: a flat 20% income tax, a territorial exemption for the foreign income of individuals, and a small-business regime taxed at 1%. Since the mid-2000s tax reform and the Act on Economic Freedom, the country has kept rates low and administration simple, while the 2022 relocation wave turned it into a mass base for remote workers, freelancers and entrepreneurs with foreign income. Below we work through the three pillars of this design — territoriality, residency and the 1% for sole proprietors — and the new restrictions that appeared in 2026. ## Concept: Territorial Principle > 🔗 **Related** > [substance](https://wiki.private.law/en/economic-substance) Georgia taxes individuals on a territorial basis: a resident's foreign income is generally not taxed, and tax is charged only on Georgian-source income. The basis for this is articles 79 and 82 of the Georgian Tax Code. The income tax rate is flat, 20%, and applies to Georgian income. A "foreign" source is determined by the place where the income is actually generated; the payer's citizenship and the currency of receipt play no role here: a service rendered from Georgian territory can be recharacterised as a Georgian source taxed at 20%. Territoriality therefore works together with the question of substance and source qualification. > 🍓 Territoriality does not equal an unconditional zero. The key question is the qualification of the source of income: if a service is actually rendered from Georgia, it can be recharacterised as a Georgian source. On top of that, in 2026 the work-permit rules are changing (see below) — the parameters are being finalised through secondary legislation. ## Tax Residency: 183 Days or HNWI Status - **183 days** in any continuous 12-month period; or - **HNWI status** (high-net-worth individual) — residency without the 183 days, on an economic nexus. Threshold: assets exceeding GEL 3 million, or annual income above GEL 200,000 in each of the last three years; plus a Georgian nexus — a Georgian residence permit or citizenship, or confirmed Georgian income of at least GEL 25,000 for the year (an alternative route is Georgian real estate worth USD 500,000 or more). The status is granted as a residency certificate and renewed annually. The residency certificate is useful for the treaty tie-breaker and for reducing withholding tax under Georgia's tax treaties (of which there are more than 55). ## 1% for Sole Proprietors (Small Business Status) - a sole proprietor (individual entrepreneur) with **small-business status** pays 1% on turnover up to GEL 500,000 a year (around USD 180,000); on the amount above the threshold, 3%. Exceeding the cap two years in a row removes the status from 1 January of the third year. For agrotourism the threshold is higher, GEL 700,000, while turnover up to GEL 30,000 can fall under micro-business status at 0%. The base rate outside the status is the same 20%. - registration as a sole proprietor is fast and does not require residency; - popular with freelancers and remote workers serving foreign clients. ## Immigration and Work Permits (2026 Changes) - short-term, investment and work residence permits; from 1 March 2026 the real-estate threshold for the investment permit has been raised to USD 150,000 (previously USD 100,000); - from 1 March 2026 (Decree No. 70 of 20 February 2026) a residence permit alone is no longer enough for work or business — a separate "right to labour activity" from the Employment Agency is required, plus a D1 visa or a work residence permit; self-employed foreigners, including sole proprietors, are expressly covered by the requirement, while the treatment of a sole proprietor working only for foreign clients is being finalised through secondary legislation. ## Scenarios **Remote worker / freelancer.** Small-business status (1%) on Georgian turnover plus territorial treatment of foreign income. The narrow spots are source qualification and the new right to labour activity for the self-employed from 2026. **HNWI.** A residency certificate without the 183 days — for those who need the status and the tie-breaker without physically living in the country. **Entrepreneur with a foreign business.** Territorial treatment of foreign income where the business is genuinely managed outside Georgia. ## Risks > 🔗 **Related** > [CFC](https://wiki.private.law/en/kik) - the 1% is a Georgian regime; for foreign income what matters is the source and the real place where the services are performed (substance); - territoriality does not override the controlled-foreign-company (CFC) rules of the former country of residence, exit tax on departure, the treaty tie-breaker or automatic exchange (CRS); - a "foreign source" is sometimes recharacterised as Georgian when the work is physically carried out from Georgia; - the 2026 work-permit changes — watch the secondary legislation. ## Regulation: The 2026 Labour Reform From 1 March 2026 Georgia moved from what was effectively an open labour market to a permit-based model. Decree No. 70 of 20 February 2026 and amendments to the laws on labour migration and on the legal status of foreigners introduced a mandatory "right to labour activity": a temporary residence permit on its own no longer confers the right to work or run a business. A foreigner must simultaneously hold a work permit from the Employment Support Agency and a corresponding D1 visa or work residence permit. > ⚙️ Deadlines and penalties: the self-employed already working as of 1 March 2026 were given a transition until 1 May 2026; registered labour migrants must obtain the permit and residence permit by 1 January 2027. Working without the right to labour is punishable by a GEL 2,000 fine. The real-estate threshold for the investment residence permit was raised at the same time from USD 100,000 to USD 150,000. For a sole proprietor working for foreign clients, this means keeping an eye on the secondary regulation: the key unresolved question is whether work exclusively for a foreign market falls within the definition of "labour activity in Georgia". Until practice becomes clearer, it is sensible to treat obtaining the right to labour as the default scenario. ## Territoriality, Substance and Information Exchange > 🔗 **Related** > [substance](https://wiki.private.law/en/economic-substance) · [suspension of tax treaties](https://wiki.private.law/en/russia-tax-treaties-suspension) A residency certificate does not create an automatic exemption for any "foreign" income — it merely fixes residency. What decides the rest is source qualification: where value is physically created and whether real substance stands behind the structure. If the centre of the work sits in Georgia, the income is highly likely to be treated as Georgian at the 20% rate. The territorial regime does not override the rules of the former country of residence. Controlled foreign companies (CFC), exit tax and the treaty tie-breaker apply under the laws of the place a person leaves; for Russians there is the added suspension of tax treaties, because of which a Georgian certificate does not always remove withholding tax. In parallel, automatic exchange (CRS) is in force: residency in Georgia does not make accounts invisible. ## Evolution and Takeaway > 🔗 **Related** > [non-dom](https://wiki.private.law/en/greece-non-dom) · [perpetual traveler](https://wiki.private.law/en/perpetual-traveler) Georgia's logic has held steady for two decades — low flat rates and territoriality as a tool to attract capital and people. What has changed is the surrounding framework: tighter control over the source of income, alignment with the exchange standards, and the 2026 labour reform, which closes off "grey" self-employment. The base remains convenient for those whose income is genuinely created outside the country and who arrange residency and the right to labour carefully. Regimes close in logic are the Greek non-dom and the perpetual-traveler lifestyle. ## Frequently Asked Questions > 🔗 **Related** > [economic substance](https://wiki.private.law/en/economic-substance) · [CFC](https://wiki.private.law/en/kik) · [Greece: non-dom](https://wiki.private.law/en/greece-non-dom) · [perpetual traveler](https://wiki.private.law/en/perpetual-traveler) · [suspension of tax treaties with Russia](https://wiki.private.law/en/russia-tax-treaties-suspension) · [holding structures](https://wiki.private.law/en/holding-structures) ### Is an individual's foreign income taxed? As a general rule, no — the territorial principle applies. But source qualification matters: income from work actually performed in Georgia may be treated as Georgian. ### What is HNWI status? A mechanism to become a tax resident without the 183 days by meeting thresholds for assets/income and a connection to Georgia (real estate from $500,000 or Georgian income from GEL 25,000). ### Does a sole proprietor on the 1% need residency? No. Registration as a sole proprietor and small-business status do not require residency, but tax residency and substance matter for protection against claims from other countries. ### Is this suitable for Russian-speaking relocators? Yes, it is one of the most popular routes, but you need to close the tax tail of the country you left (CFC, tie-breaker) and confirm that your residency is real. > 🍓 Georgia offers three independent levers: a territorial exemption for foreign income (arts. 79 and 82 of the Tax Code), residency through HNWI status without the 183 days, and 1% for sole proprietors with turnover up to GEL 500,000. All three come down to one question — where the income is really created; from 1 March 2026 a mandatory right to labour activity has been added to it. --- ## Sources - [Revenue Service of Georgia](https://rs.ge/) - [Tax Code of Georgia — Matsne (official law portal)](https://matsne.gov.ge/en/document/view/1043717?publication=22) - [Matsne — Legislative Herald of Georgia](https://matsne.gov.ge/) --- ## FAQ ### Is an individual's foreign income taxed? As a general rule, no — the territorial principle applies. But source qualification matters: income from work actually performed in Georgia may be treated as Georgian. ### What is HNWI status? A mechanism to become a tax resident without the 183 days by meeting thresholds for assets/income and a connection to Georgia (real estate from $500,000 or Georgian income from GEL 25,000). ### Does a sole proprietor on the 1% need residency? No. Registration as a sole proprietor and small-business status do not require residency, but tax residency and substance matter for protection against claims from other countries. ### Is this suitable for Russian-speaking relocators? Yes, it is one of the most popular routes, but you need to close the tax tail of the country you left (CFC, tie-breaker) and confirm that your residency is real. --- ## Factual claims - Over two decades Georgia has assembled a rare combination: a flat 20% income tax, a territorial exemption for the foreign income of individuals, and a small-business regime taxed at 1%. - The residency certificate is useful for the treaty tie-breaker and for reducing withholding tax under Georgia's tax treaties (of which there are more than 55). - From 1 March 2026 Georgia moved from what was effectively an open labour market to a permit-based model.