How to Register as an Individual Entrepreneur in Georgia for 1% Tax

For digital bootstrappers and US 1099 freelancers, the Republic of Georgia offers one of the most aggressive tax arbitrage opportunities in the world: a 1% flat tax on gross revenue for micro-businesses.

While the standard personal income tax in Georgia is 20%, the Ministry of Finance specifically carved out the “Small Business Status” to attract foreign capital and digital nomads. If you structure your operations correctly, you can entirely bypass the standard rate and secure the 1% shield.

Here is the tactical blueprint to navigate the Georgian bureaucracy and lock in the Micro-Business Status.

The Revenue Threshold and Eligibility

The 1% tax rate applies to your gross revenue, not your net profit. There are zero deductions. You simply pay 1% on every dollar that hits your Georgian corporate account.

The Threshold: You can maintain the 1% rate up to 500,000 GEL (roughly $185,000 USD) in gross revenue per calendar year.

The Catch: If you exceed 500,000 GEL, your tax rate increases to 3% for the remainder of the year. If you exceed the threshold for two consecutive years, your Small Business Status is revoked, and you default to the standard 20% progressive brackets.

Eligibility: The 1% rate is strictly for service-based businesses (e.g., SaaS founders, consultants, freelance developers, copywriters). It explicitly excludes crypto trading, financial consulting, and pure passive income (like dividends or real estate rentals).

Step 1: The Public Service Hall

You cannot execute this setup online from your laptop in Austin. You must be physically present in Georgia or issue a highly specific Power of Attorney (PoA) to a local Georgian law firm.

If you are physically in Tbilisi, the process begins at the Public Service Hall (Justice House).

1. Take your passport to the Public Service Hall.
2. Request to be registered as an Individual Entrepreneur (IE).
3. You will need a legal address in Georgia. Since you likely just arrived and are living in an Airbnb, you cannot use your temporary address. You must hire a local service provider or a Georgian citizen to explicitly grant you permission to use their address for your business registration (this usually costs around $50-$100 USD).
4. Pay the registration fee (roughly 20 GEL for same-day service).
5. By the end of the day, you will receive an SMS with your official 9-digit Georgian taxpayer identification number.

Step 2: The Revenue Service Activation

This is where most foreigners fail.

Registering as an Individual Entrepreneur at the Justice House does not automatically grant you the 1% tax rate. It defaults you to the 20% standard rate.

To activate the 1% shield, you must:

1. Immediately go to the Revenue Service (RS.ge) office (conveniently located in the same building as the Justice Hall).
2. Register your IE on the RS.ge portal and obtain your login credentials.
3. File a specific application requesting Small Business Status.

Crucial Timing: The Small Business Status only becomes active on the 1st day of the following month after your application is approved. If you register your IE on October 15th, apply for the status on October 16th, and receive a $10,000 client payment on October 25th, that income will be taxed at 20%. You must hold all incoming payments until November 1st.

Step 3: Corporate Banking and TBC

Once your Small Business Status is active on the RS.ge portal, take your physical registration documents to a premium Georgian bank.

For US citizens and western freelancers, TBC Bank is the premier choice. They offer aggressive multi-currency accounts (GEL, USD, EUR, GBP) and have dedicated “Concept” branches for high-net-worth and expat clients.

Do not route your freelance income to your personal checking account. You must open a dedicated Business Account under your IE registration.

The Downstream Reporting

Maintaining the 1% rate requires absolute compliance. You must file a monthly tax declaration on the RS.ge portal between the 1st and the 15th of every month, even if your revenue was zero. You then transfer the 1% tax from your TBC corporate account directly to the Treasury.

Deepen the Strategy

Setting up the IE is only the mechanical first step. To execute a full, legally compliant exit from the US tax system using the Foreign Earned Income Exclusion (FEIE), you need a comprehensive strategy.

For the complete architectural breakdown of the Georgian residency loophole, banking mechanics, and how to structure your international invoices, download the complete guide:

Download The Georgia 1% Blueprint [EPUB]