The 1% Tax for IT Freelancers in Georgia: A Developer's Guide (2026)
Georgia's Small Business Status taxes an individual entrepreneur at 1% of turnover, and software development is squarely inside the regime. It is one of the best positions a freelance developer can hold anywhere, but the details decide whether it holds: the activity description, the turnover ceiling, the monthly declaration, the client contracts, and, since 2026, the right-to-work step for foreign nationals. What a developer needs to know before registering.
A freelance developer who invoices clients abroad can register as an individual entrepreneur in Georgia and, with Small Business Status, pay 1% of turnover as tax. No profit calculation, no deductions to argue about, a monthly declaration that takes minutes. For people in software, design, testing, DevOps and data work, this is the regime that makes Georgia worth a serious look. This guide is written for them: what the status is, which IT activities fit and which do not, the order of steps in 2026, and the numbers for a typical year.
1%
Of turnover
Small Business Status, while the conditions hold
GEL 500,000
Annual turnover ceiling
About EUR 175,000 at 2026 rates; the rate changes above it
Monthly
Declaration and payment
Due even in a month with no income
Which IT work is inside the regime
The status is granted to a natural person registered as an individual entrepreneur whose activity is not on the excluded list. Software development, web and mobile development, UI and UX design, quality assurance, DevOps and cloud engineering, data engineering and analytics delivered as a service are not excluded: a developer billing a foreign client for building or maintaining software is the textbook case. The exclusions that matter to IT people are narrower than they look, but they are real.
- Consulting is excluded. An engineer who sells advice rather than work product, an IT consultant, a fractional CTO whose deliverable is recommendations, should expect the Revenue Service to read the activity as consulting. The line is drawn by what you actually deliver and what your contracts say.
- Work that needs a licence or a professional qualification (medical, legal, audit, architecture) is excluded whatever the medium; software for those industries is not.
- Income from renting out property, from gambling and from currency exchange is outside the regime and does not become eligible because it passes through a developer's account.
- Employment income is not turnover. If a foreign company treats you as an employee in substance (fixed hours, its equipment, its management), the 1% status does not convert the relationship into a business.
A natural person carrying out economic activity may be granted small business status; the taxable turnover of a person holding the status is taxed at the preferential rate, provided the annual turnover does not exceed the established threshold and the activity is not among those excluded by the Government's list.
The 2026 order of steps for a foreign developer
The tax rules are the easy part. Since 1 March 2026 a foreign national who carries out activity in Georgia, including as an individual entrepreneur, needs a right-to-work authorisation before invoicing unless an exemption applies, and in practice Georgian banks ask for it when they open the account. The sequence that works is therefore not the one most guides describe.
- 1
Classify the activity honestly: development, design, testing or engineering, with the deliverable named. This wording goes on the registration and decides the status.
- 2
Register as an individual entrepreneur at the Public Registry, in your own name, no company name and no shareholders.
- 3
Check whether an exemption applies and, if none does, obtain the right-to-work authorisation that applies to your residence situation; the route depends on whether you are in Georgia on a visa-free stay, a residence permit or from abroad.
- 4
Apply for Small Business Status at the Revenue Service; it applies from the period the Code specifies, never retroactively at will.
- 5
Open the account: the bank sees the registration, the status and the authorisation together.
- 6
Invoice, declare turnover monthly, pay 1% monthly, and keep the contracts and invoices behind every declaration.
A status granted on a vague activity description is not a status you can rely on: a later reclassification is retrospective. Trustlex gives the eligibility answer in writing before the registration is filed, so the description on the register and the facts of your work agree from day one.
A year in numbers
| Line | Amount | Note |
|---|---|---|
| Turnover | EUR 72,000 | About GEL 205,000, under the GEL 500,000 ceiling |
| Tax at 1% | EUR 720 | Declared and paid monthly, roughly EUR 60 a month |
| VAT | None on exported services | Services to foreign businesses are outside Georgian VAT; registration becomes relevant near the VAT threshold on Georgian-source turnover |
| Social contributions | None for an individual entrepreneur | Georgia has no mandatory social security contribution for self-employed persons at the time of writing; pension participation is voluntary for those the Law on Funded Pension covers |
| Bookkeeping | From EUR 110 a month, optional | Or your own monthly declaration on rs.ge |
A Berlin-based React developer moves to Tbilisi
She bills two European agencies about EUR 6,000 a month for front-end development, under contracts that name the deliverables and leave her free to choose tools and hours. She wants the 1% status and a Georgian account.
- 1The written assessment confirms development is not an excluded activity and that her contracts read as services, not employment.
- 2Registration as an individual entrepreneur takes a day; the right-to-work step is handled before the first invoice, because her bank will ask about it: with only non-resident clients, the exemption is checked first and the authorisation is applied for if it does not hold.
- 3Small Business Status is granted; her first monthly declaration covers the month in which the status took effect.
- 4Her year ends at about EUR 72,000 of turnover and EUR 720 of tax, with no VAT on the exported services.
The regime did exactly what it promises because the activity, the contracts and the sequence were right. The same developer selling architecture advice by the hour would have had a harder conversation about consulting.
Illustrative. The ceiling, the rate above it and the 2026 authorisation rule should be confirmed against the Tax Code and the migration rules in force when you register.
When the 1% stops being the right answer
The status is for one person billing in their own name. It stops fitting when the business grows past that: when turnover approaches the ceiling, when a client insists on contracting with a company, when a second developer joins, when limited liability matters, or when the work becomes a product rather than a service. That is the point to look at a company with Virtual Zone status, which exempts exported IT services from profit tax and taxes dividends at 5%. The comparison for IT founders is in the companion guide.
Next step
Eligibility in writing, before you register
Trustlex registers individual entrepreneurs with the Small Business Status assessment, prepares the file for the 2026 right-to-work application alongside the registration, and tells you in writing whether your IT work fits before anything is filed.
See the 1% route