Payroll in Georgia: Income Tax, the Pension Scheme and What the Employer Files
Employing someone in Georgia costs the gross salary plus, where the funded pension scheme applies, 2% on top. From the gross the employer withholds 20% income tax and the employee's 2% contribution, files one return a month and pays in lari. Who is in the pension scheme, how the State's share works, what counts as a benefit in kind, and the arithmetic from gross to net.
Employing a person in the country of Georgia is simple to administer and, for the same reason, easy to get wrong. An employee costs the company the gross salary plus 2% where the funded pension scheme applies. From the gross the employer withholds income tax at a flat 20% and the employee's own 2% pension contribution, at the rates in force at the time of writing. The Tax Code's list of taxes contains no social security tax, no payroll tax and no health levy. What remains is a monthly routine with fixed dates, and an employer that owes the tax itself if it fails to withhold it.
20%
Income tax withheld from salary
Flat rate, withheld by the employer as tax agent; at the time of writing
2% + 2%
Pension contributions
Employee and employer, where the employee is in the scheme; the State adds up to 2%
15th
Monthly return deadline
Day of the month after the salary month; confirm against the Tax Code
What is withheld from a salary in Georgia
Salary income is taxed at 20%, and the Code makes whoever pays the salary a tax agent: the employer calculates the tax, withholds it and transfers it to the budget. Responsibility rests with the payer. An employer that pays a salary without withholding owes the tax itself, with the penalties that go with it. There is no general tax-free allowance; the Code keeps a short list of specific exemptions, for example for some persons with disabilities and for residents of high-mountain settlements. One reduction of the base matters for every participant in the pension scheme: contributions to the individual pension account are exempt from income tax, so the 20% is calculated on the gross salary less the employee's 2%. At these rates a participant takes home 78.4% of gross, a non-participant 80%.
A person paying salary to an employee withholds income tax at source as tax agent. Responsibility for withholding the tax and transferring it to the budget rests with the payer of the income; a payer that fails to withhold pays the tax and the related penalties itself. The tax is transferred to the budget when the amount is paid, and for a payment in non-monetary form on the last day of the month; a return on the remuneration paid and the tax withheld is filed no later than the 15th day of the month following the reporting month.
The funded pension scheme and who is in it
Pension contributions are set by the Law of Georgia on Funded Pension, not by the Tax Code. The Law applies to employers, to citizens of Georgia and to foreign citizens and stateless persons who hold a permanent residence permit in Georgia. An employee for this purpose includes a company's director, and an employer is anyone who pays for the work, other than a non-resident. Participation starts automatically with the first contribution and is mandatory, with two age exceptions fixed by reference to August 2018, when the Law entered into force: people who had already reached 60 (men) or 55 (women) by then join only if they choose to, and people who had already reached 40 may leave by written application to the Pension Fund, no earlier than three months and no later than five months after being enrolled. Everyone younger stays in. The employer may not persuade an employee either way.
| Contributor | Rate | Base and limit |
|---|---|---|
| Employee | 2% | Taxable salary; withheld by the employer |
| Employer | 2% | Taxable salary; on top of gross, at its own expense |
| State | 2% | On the first GEL 24,000 of annual salary |
| State | 1% | On annual salary above GEL 24,000 and up to GEL 60,000 |
| State | 0% | On annual salary above GEL 60,000 |
The Law applies to employers, to citizens of Georgia, and to foreign citizens and stateless persons holding a permanent residence permit in Georgia. The employer transfers 2% of the employee's taxable salary at its own expense and 2% on behalf and at the expense of the employee, no later than the day the income declaration is submitted; the State adds 2% within the first GEL 24,000 of annual salary and 1% on the amount above that up to GEL 60,000 inclusive. Contributions are made in lari.
From gross salary to net pay and employer cost
| Line | In the pension scheme | Not in the scheme | How it is calculated |
|---|---|---|---|
| Gross salary | 3,000.00 | 3,000.00 | Agreed in the contract |
| Employee pension contribution | 60.00 | 0.00 | 2% of gross, withheld |
| Income tax | 588.00 | 600.00 | 20% of gross less the employee contribution |
| Net pay | 2,352.00 | 2,400.00 | Gross less the two lines above |
| Employer pension contribution | 60.00 | 0.00 | 2% of gross, on top of it |
| Total cost to the employer | 3,060.00 | 3,000.00 | Gross plus the employer contribution |
| State contribution to the account | 60.00 | 0.00 | 2% until annual salary passes GEL 24,000, then 1% |
A developer on GEL 5,000 a month for a full year
A Tbilisi company employs a developer, a Georgian citizen aged 30, at GEL 5,000 gross a month from January to December. She is a participant in the pension scheme and receives no benefits in kind.
- 1Each month: employee contribution 2% x 5,000 = GEL 100; income tax 20% x 4,900 = GEL 980; net pay GEL 3,920; employer contribution GEL 100; cost to the company GEL 5,100.
- 2Over the year: income tax GEL 11,760, employee contributions GEL 1,200, employer contributions GEL 1,200, net pay GEL 47,040, cost to the company GEL 61,200.
- 3The State's share: 2% on the first GEL 24,000 of annual salary is GEL 480, and 1% on the next GEL 36,000, up to GEL 60,000, is GEL 360. Total GEL 840.
- 4Her pension account receives GEL 3,240 for the year: 1,200 from her salary, 1,200 from the employer and 840 from the State.
- 5Had she earned more than GEL 60,000 in the year, the State would add nothing on the excess, while the 2% from her and the 2% from the employer would continue.
The company's cost above the agreed gross is 2%. The employee keeps 78.4% of gross in hand and has a further 5.4% of gross in her pension account, of which GEL 1,200 was withheld from her own salary.
Illustrative and rounded. It assumes participation for the whole calendar year and no other income; the rates and the State's thresholds are those of the Tax Code and the Law on Funded Pension at the time of writing.
What the employer files and pays each month
- 1
Before the first payment: sign the written employment contract and register the employee in the Revenue Service's system, so that payroll exists before money moves.
- 2
On pay day: pay the net salary and record the tax withheld. The Labour Code requires remuneration to be paid at least once a month and adds 0.07% of the delayed amount for each day of delay.
- 3
By the 15th of the following month: file the return of remuneration paid and tax withheld through rs.ge. The Code ties the transfer of the withheld tax to the moment the salary is paid; in practice the payment is settled together with the return, so agree the routine with your accountant.
- 4
By the day that return is filed: transfer the employee's 2% and the employer's 2% to the Pension Fund through its electronic system, on the basis of the same return.
- 5
On request: give the employee a statement of the income paid and the tax withheld.
- 6
Every month without exception: repeat the cycle, even for a single employee, and keep the calculations and the payslips.
The penalty rules for pension contributions differ on either side of 15 October 2026. Under the rules in force until that date, a missed or late contribution carries a fine under the Administrative Offences Code, GEL 500 and GEL 1,000 for a repeat, and a daily charge under the Law on Funded Pension. Amendments adopted in September 2026 move the whole regime into the Law on Funded Pension from that date. Under the amended rules the fine is GEL 300 and is cancelled if the arrears and the accrued charge are paid within ten working days of the fine. The daily charge stays: it is calculated by reference to the National Bank's monetary policy rate plus five percentage points and is credited to the employee's pension account. As before, the employer pays the missed contribution entirely from its own funds. Confirm the text in force before relying on these figures.
Benefits in kind, bonuses and reimbursements
- Salary income is any compensation or benefit received from employment, in money or in kind. A bonus is taxed like salary.
- Benefits the Code names include goods or services given free or below price (at market value), accommodation provided for the employee's use, the employee's expenses reimbursed by the employer, life and health insurance premiums paid for the employee, a debt written off, and a loan at an interest rate below the one fixed by the Minister of Finance.
- For a payment in kind the withheld tax is transferred on the last day of the month, because there is no cash payment to take it from.
- Not salary income: business travel expenses reimbursed within the limits set by the Ministry of Finance, and the pension contributions made by the employer and by the State.
- Private use of a company car has its own fixed treatment in the Code; ask the accountant before handing over the keys.
Employing a foreign national and paying in lari
Three questions arise when the employee is not Georgian, and each has a different answer. Tax: income from employment carried out in Georgia is Georgian-source income, and a non-resident's salary is taxed at source at the same rate, so the withholding does not change with the passport. Pension: the Law covers citizens and holders of a permanent residence permit. A foreign employee on a temporary permit or a visa-free stay is in neither group, so in practice no contributions are calculated for them; whether such a person may join voluntarily should be confirmed with the Pension Fund. Right to work: since 1 March 2026 a foreign national employed in Georgia needs a right-to-work authorisation unless an exemption applies, and the employer applies for it as part of hiring; our article on the 2026 work authorisation rule covers it. The employee's home country may also claim tax on the same salary under its own rules and any treaty.
Pay in lari. Under the law on the National Bank the lari is the only legal tender in Georgia, with narrow exceptions, and the Law on Funded Pension requires contributions, and the Pension Fund's settlements with employers and employees, to be in lari. In practice some contracts fix the salary by reference to a foreign currency and pay the lari equivalent on pay day; the payslip, the return and the contributions are in lari either way.
Next step
Have payroll running before the first salary
Employer registration, the monthly withholding and pension calculations and the returns are part of our monthly accounting plan; employment contracts are drafted by our lawyers. We do not advise on tax in the employee's home country.
See the monthly planWhat this article does not answer
It does not cover ending the employment or the line between an employee and a contractor, which our article on hiring a first employee introduces, or a founder's choice between salary and dividends. It leaves out the special payroll treatment of International Company status and of enterprises in a Free Industrial Zone, sick pay, leave pay and overtime, and share-based pay. The rates and thresholds are those of the consolidated texts at the time of writing; both laws were amended in 2026 and will be amended again. We run payroll and file the returns for the companies we look after; we do not act as the employer, and we do not advise on another country's tax.
General information, not legal or tax advice. Payroll withholding is governed by the Tax Code of Georgia, pension contributions by the Law of Georgia on Funded Pension and pay itself by the Labour Code of Georgia; rates, thresholds and deadlines change, and the official Georgian text governs.