Virtual Zone Status for a Software Company in Georgia: The Evidence That Wins It
Virtual Zone Person status exempts a Georgian company's exported IT services from profit tax and leaves dividends at 5%. It is granted on application and tested on substance: who writes the code, where, under which contracts, and whether the company can show it. Most refusals and later revocations trace back to a file that asserted development and could not evidence it. What the status is worth, what the authority looks at, how the file is built, and how Trustlex sells it in two stages.
Georgia's Virtual Zone regime was written for one kind of company: a Georgian legal entity that develops software and sells it outside Georgia. For that company the status removes profit tax on the exported IT income and keeps the tax on dividends at 5%, which makes it one of the lightest positions an IT business can hold in Europe's neighbourhood. The status is not a formality. It is granted on application by the Financial-Analytical Service of the Ministry of Finance, and the Revenue Service has, since about 2020, tested in tax control whether the development is real and Georgian. This guide is about passing that test, honestly and the first time.
0%
Profit tax
On income from IT services supplied outside Georgia
5%
Tax on dividends
Withheld on distribution to the owners
Substance
What the authority tests
Development performed in Georgia, by the company
What the status is worth, and what it is not
A standard Georgian LLC pays profit tax only when it distributes profit, at 15% of the distribution, and then 5% on the dividend. A Virtual Zone company pays no profit tax on the exported IT income at all and 5% on the dividend. Exported services are outside Georgian VAT in both cases. On EUR 200,000 of profit distributed in full, the difference is roughly EUR 30,000 a year at the time of writing. The status does nothing for Georgian-source income, for non-IT income, or for a company that cannot show where its software is made.
A legal person engaged in information technology activity may be granted Virtual Zone Person status; profit earned by a Virtual Zone Person from supplying information technology products or services outside Georgia is exempt from profit tax.
What the Revenue Service actually looks at
- Who develops: employees or contractors of the Georgian company, with contracts, payroll or service agreements, and payments from the company's account. A sole founder who codes alone can qualify; a company that resells a foreign team's work usually cannot.
- Where: the development work, or a material part of it, performed in Georgia. Remote team members abroad are not fatal in themselves, but a company with no activity in Georgia beyond a registered address is the file that gets refused.
- What: software, platforms, applications, components, development services. IT consulting, support without development, hosting resale, marketing technology sold as a service and outsourced sales operations are not development.
- For whom: clients outside Georgia, under contracts that describe the software or the development service and that are invoiced by the Georgian company.
- Evidence: repository and deployment records, task trackers, specifications, acceptance acts, a Georgian address in real use, local expenses. The authority may ask for these at the application and later, during a review.
The refusals and revocations we see
| Pattern | Why it fails | What works instead |
|---|---|---|
| Consulting described as development | The deliverable is advice, not software | Describe the real activity; the standard LLC may be the honest answer |
| Development entirely abroad | No activity in Georgia beyond the address | Hire or contract in Georgia, or do the development there yourself |
| Contracts that name no software | Nothing ties the income to IT services | Contracts and invoices that describe the product or the development service |
| Mixed income on one company | Georgian-source or non-IT income clouds the exemption | Separate the IT export line, or accept that only part of the income is exempt |
| Evidence assembled after the question | The review finds a gap between the claim and the records | Keep the repository, tracker and acceptance records from day one |
The authority can review the status after it is granted. A company that qualified on paper and never built the evidence trail loses the exemption retrospectively, with the tax and the penalties that follow. The file is built to survive the review, not only to obtain the letter.
How Trustlex sells it: assessment first, application second
- 1
Written eligibility assessment, EUR 150: your activity, client geography, where the development happens and what can be evidenced, with a reasoned yes or no. If the answer is no, that is the whole cost, and you know before you pay for an application that cannot succeed.
- 2
Application through to decision, EUR 450, only after a positive assessment: the substance and evidence file, the application and the correspondence with the authority until the status is granted or refused.
- 3
The company itself, if it does not exist yet, is formed on the Starter package; the status is an additional service beside it, never part of the package price.
- 4
After the grant: the evidence trail continues, the bookkeeping shows the exported income on its own line, and dividends are distributed with the 5% withheld.
A two-founder SaaS company moves its development to Tbilisi
Two founders sell a subscription analytics product to customers in the EU and the US. One founder and two developers relocate to Tbilisi; the product's repositories, deployments and support run from there.
- 1The assessment confirms the activity is development of a software product, exported, with the development performed in Georgia by people the Georgian company pays.
- 2The company is formed with a registered address in active use and the three people on contracts or payroll.
- 3The application is filed with the contracts, the repository and deployment records, the specifications and the employment evidence; the status is granted.
- 4At year end the exported subscription income is exempt from profit tax; the founders distribute dividends at 5%.
The status held because the company could show, from its own records, exactly what the regime rewards: Georgian development of exported software. A company that kept its developers abroad and used Tbilisi as a mailbox would have been refused, or worse, reviewed later.
Illustrative. Rates, the authority's practice and the evidence it requests change; Trustlex confirms them in the written assessment.
If the Virtual Zone is not your regime
International Company Status is the regime for an established IT or maritime business relocating a team: 5% profit tax, 5% on salaries, no tax on dividends, granted on a track record and real presence. A solo developer who does not need a company is usually better off as an individual entrepreneur on the 1% status. A standard LLC remains the honest answer for IT consulting and for mixed businesses, with profit tax due only on distribution.
Next step
A written answer for EUR 150, before any application
Trustlex assesses Virtual Zone eligibility in writing first and files the application only after a positive answer. Nobody can promise the status; it is granted by the Financial-Analytical Service of the Ministry of Finance, and the Revenue Service tests the exemption afterwards. What we can promise is a file built to pass the test.
See the Virtual Zone service