What is an Individual Entrepreneur (IE) in Georgia?

If you've been reading about relocating to Georgia (the country, not the US state) or setting up a tax-efficient base for freelance income, you've probably run into the phrase "Individual Entrepreneur" and the almost mythical 1% tax rate. Both are real, both are legal, and both are more nuanced than the headlines suggest.

Here's what an Individual Entrepreneur actually is in Georgia, and what you're signing up for if you become one.

The Individual Entrepreneur (IE) in one paragraph

An Individual Entrepreneur (in Georgian: ინდივიდუალური მეწარმე — often abbreviated IE or სპ) is a natural person registered with the Georgian tax authority as conducting business activity. It is not a separate legal entity — it's you, personally, wearing a business hat. Your business assets and personal assets are legally the same pool, which means you have unlimited liability. In exchange, registration is instant, cheap, and comes with access to some of the friendliest small-business tax regimes in the world.

How it compares to an LLC

	Individual Entrepreneur	LLC (შპს)
Legal personality	No — it's you	Yes — separate entity
Liability	Unlimited (personal)	Limited to capital
Capital required	None	GEL 1 minimum in practice
Registration	Same-day, ~GEL 25	Same-day, ~GEL 100
Tax regimes available	1% Small Business Status, standard 20% PIT	15% corporate + 5% dividend
Accounting overhead	Very low	Moderate

For a solo freelancer, consultant, or service provider, the IE is almost always the better choice. For anything with employees, investors, or physical inventory, you probably want a შპს (LLC).

Small Business Status — the 1% regime

The reason IEs get so much attention: an IE can apply for Small Business Status (მცირე ბიზნესის სტატუსი), which taxes turnover — not profit — at 1%, as long as annual revenue stays under GEL 500,000 (~€175,000). Above that threshold in a given year, and again in the following year, the rate on excess turnover becomes 3%, and the status can be revoked.

Small Business Status is only available to IEs (not LLCs). It excludes certain activities: consulting, legal services, medical services, financial services, gambling, arms trade, and a specific published list — the exclusions are more restrictive than most blog posts suggest, so check the current list before assuming your work qualifies.

If you don't qualify for Small Business Status, an IE defaults to the standard 20% personal income tax on net business profit — still competitive, and with no separate dividend layer since the money is already yours.

Micro Business Status — the 0% cousin

There's also Micro Business Status for IEs earning under GEL 30,000/year from allowed activities, taxed at 0%. Same exclusion list caveats apply. If you're just starting out, it's a genuinely free tier.

Registration — what actually happens

You go to a Public Service Hall (Justice House) in person with:

• Your passport
• A Georgian tax residency certificate is not required to register as an IE
• The registration fee: GEL 25 (regular) or GEL 50 (expedited, one day)

You walk out with a taxpayer identification number and a certificate of registration. The whole process, if you have the paperwork in order, takes under an hour.

After registration, you separately apply to the Revenue Service (rs.ge) for Small Business Status — this is a form submission, done online in the taxpayer portal, and approval is usually within a few days.

Ongoing obligations

Once you're an IE with Small Business Status, your monthly rhythm is:

• Monthly tax return submitted via rs.ge, declaring the month's turnover
• 1% tax paid by the 15th of the following month
• Annual income tax return by April 1 of the following year
• Invoices issued through the Revenue Service's electronic system for B2B transactions

Bookkeeping requirements are light — you keep a book of income and expenses, but as a turnover-taxed IE, only income is really relevant for tax.

VAT registration is separate: mandatory if turnover exceeds GEL 100,000 in any 12-month period. Once VAT-registered, you charge 18% on invoices and file monthly VAT returns — this is where the compliance burden picks up.

The catches nobody mentions

1. You are personally liable. If a client sues, they can come after your apartment.
2. The 1% is on turnover, not profit. For high-margin service businesses this is incredible. For low-margin trading it can be worse than the standard regime.
3. "Small Business Status" excludes consulting and professional services in many interpretations. The tax office has become stricter over the last few years about what counts as consulting-like work. If you're a "consultant" who invoices for advice, do not assume you qualify.
4. Foreign residency doesn't automatically make you a Georgian tax resident. To use Georgia as your primary tax base, you generally need to be physically present 183+ days per year, or use the High Net Worth Individual program.
5. Payment processors matter. Wise, Payoneer, and Revolut all work with Georgian IEs, but you'll want a Georgian bank account too (Bank of Georgia and TBC are the usual picks) for local operations and rent.

When an IE makes sense

An Individual Entrepreneur is a great fit if you're a solo operator with clean, allowed business activities and turnover under half a million GEL a year. You get near-zero tax overhead, minimal paperwork, and the ability to operate legally from one of the most open jurisdictions in the region.

It's a bad fit if you have partners, need to raise capital, want liability protection, or your work falls into the excluded professional-services categories. In those cases, form an LLC — the tax rate is higher, but the structure will actually fit your business.