If you hire a professional in Georgia as a contractor, they will most likely work as an Individual Entrepreneur (IE) with Small Business Status. Understanding how this works helps you set up the relationship correctly — and explains why the arrangement is attractive for professionals.
What is an Individual Entrepreneur?
An Individual Entrepreneur is Georgia’s simplest legal form for a person doing business on their own — similar to a sole trader or freelancer registration elsewhere. Registration takes place at the Public Service Hall and is usually quick.
What is Small Business Status?
Small Business Status is a special tax regime that an Individual Entrepreneur applies for separately, through the Revenue Service (rs.ge). Since 2026, the status starts on the day the request is filed.
- 1% of turnover on annual turnover up to GEL 500,000 (approx. USD 190,000).
- 3% of turnover above that amount.
- The tax is calculated on turnover, not profit.
Without the status, an Individual Entrepreneur pays the standard 20% personal income tax on net profit.
There is also a Micro Business Status with a 0% rate for very small turnovers, up to GEL 30,000 (approx. USD 11,400) a year. Professionals working full time with a foreign client usually exceed this.
Who qualifies — and who doesn’t
Most online professions qualify, including software development, design and marketing. The regime is not available for activities on the government’s excluded list, which includes:
- consulting of any kind, including management, business and tax consulting;
- legal, notarial, medical, architectural and audit services;
- financial services, gambling and staffing;
- activities that require a licence or permit.
Practical tip: describe the actual service in contracts and invoices. A developer whose invoices say “consulting services” may put their status at risk, while “software development services” accurately reflects the work.
Monthly and annual obligations
- A monthly turnover declaration, with the 1% tax paid by the 15th of the following month.
- An annual return by 1 April.
These obligations sit with the contractor, not with your company. In practice, many professionals working with a foreign client for the first time find the paperwork the hardest part.
What this means for your company
- You don’t withhold Georgian taxes or run payroll — the contractor invoices you and handles their own filings.
- Agree on currency and invoicing in your contract; payment is usually by international bank transfer.
- Make sure the services fall within an eligible activity, so your contractor keeps the 1% regime.
- Remember that classification rules in your own country still apply. Get local legal advice for your situation.
At HirePoint, every professional we place gets free help with Individual Entrepreneur registration, Small Business Status and accounting — so both sides can focus on the work.
Frequently asked questions
Is the 1% tax automatic for Individual Entrepreneurs?
No. A professional first registers as an Individual Entrepreneur and then applies separately for Small Business Status through the Revenue Service.
What happens above GEL 500,000?
Turnover above GEL 500,000 (approx. USD 190,000) a year is taxed at 3% under Small Business Status.
Which activities are excluded?
Excluded activities include consulting of any kind, legal, notarial, medical, architectural and audit services, financial services, gambling, staffing and activities that require a licence.
What does an Individual Entrepreneur pay without the status?
Without Small Business Status, an Individual Entrepreneur pays the standard 20% personal income tax on net profit.
This article is general information, not legal or tax advice. Rules change, and eligibility depends on individual circumstances. Amounts in US dollars are approximate (1 GEL ≈ 0.38 USD, October 2026). See our Recruitment Services Disclaimer.
Hiring in Georgia?
HirePoint finds and screens professionals in Georgia, and every professional we place gets free help with contractor registration and accounting.
Send an inquiry