Accounting for Individual Entrepreneurs in Georgia

An individual entrepreneur with Small Business Status pays 1% of turnover in Georgia. The status still comes with a declaration due every month, an 18% VAT charge on services bought from abroad that applies without any VAT registration, and limits on turnover and activity that can end the status.

Tax Rates for Individual Entrepreneurs in Georgia

Individual entrepreneur (IE) is the legal form: a sole proprietorship registered at the Public Service Hall. Small Business Status is the tax regime, applied for separately at the Revenue Service once the IE exists. Register the first and stop there, and you are an ordinary sole trader paying the standard 20%.

Regime	Tax rate	Turnover ceiling	Declarations
Micro Business Status	0%	₾30,000 a year, no employees	Outside the monthly cycle, with lighter reporting
Small Business Status	1% of turnover, 3% above the ceiling	₾500,000 a year	Every month, zero-income months included
No special status	20% of profit	None	Annual return before 1 April

The 1% is charged on turnover, not profit. Invoice ₾200,000 in a year and the tax is ₾2,000, whatever your costs were. No expenses are deductible, which is why the regime suits service work with wide margins and suits resale or subcontract-heavy businesses poorly.

The status has no citizenship or residency requirement. It does require turnover under the ceiling, an activity outside the prohibited list, income that counts as Georgian-source and a declaration filed every month.

Monthly Declaration: Deadline and Filing Rules

The declaration is due by the 15th of the month after the one being reported, so January’s turnover is declared by 15 February. It is filed through rs.ge, the Revenue Service portal, where the taxpayer cabinet and the forms are in Georgian. The system calculates the tax once the turnover is entered.

Three rules cause most of the trouble:

• A month with no income still needs a declaration, because the filing is required every month and not only when there is income to report.
• Filing and paying are separate actions. Submitting the declaration records what you owe, and the payment still has to be made from a Georgian bank account before the same deadline.
• Foreign currency is converted to lari at the National Bank of Georgia’s official rate on the date each payment lands, not the invoice date and not a monthly average.

The third rule affects anyone paid from abroad. Three client payments in one month are converted separately, each at its own day’s rate, and the declaration reports the sum of the three.

The deadline is the same for every business type, and the monthly declaration grows by one return when VAT registration applies and by another when the first employee is hired. The annual income tax return, due before 1 April, covers income that was not already declared monthly or taxed at source. For most IEs with Small Business Status, the twelve monthly declarations are the substantive filing.

Bookkeeping Rules for Individual Entrepreneurs

An individual entrepreneur with Small Business Status is not required to keep formal accounts of income and expenses. What the Tax Code does require is a tax source document behind every transaction, which in practice means your invoices and receipts.

Under Article 72 of the Tax Code, each one has to:

• identify both parties to the transaction
• carry a date
• describe what was supplied
• state its value
• exist in at least two identical copies, one for each party

These documents are kept for at least three years after the end of the calendar year they relate to. An invoice issued in March 2026 has to survive until the end of 2029.

The light regime ends the moment a VAT obligation arises. From then on, an IE with Small Business Status keeps proper accounts of income and expenses on top of the source documents, while the tax rate stays at 1%. An individual entrepreneur without the status keeps full accounts from the first day, because expense deductions depend on documented costs.

VAT for Individual Entrepreneurs: Reverse VAT and the ₾100,000 Threshold

Two VAT rules reach individual entrepreneurs who have never registered for VAT.

The first is reverse VAT. Buy a service from a supplier outside Georgia, such as a software subscription, cloud hosting or a foreign contractor, and you are the one who declares and pays 18% Georgian VAT on it. The 1% regime taxes what you invoice out, reverse VAT taxes what you buy in, and neither cancels the other. An unregistered business pays it as a real cost by the ordinary monthly deadline.

The second is the registration threshold. VAT registration becomes mandatory once taxable turnover passes ₾100,000 in any continuous 12 months, and the application is due within 2 working days of crossing it. Services supplied to clients outside Georgia typically fall outside the scope of Georgian VAT, which is why many entrepreneurs who work only for foreign clients never register.

A VAT-registered IE keeps the 1% rate and moves from the Lite package to Business, which adds the monthly VAT return.

Small Business Status Limits: ₾500,000 Turnover and Prohibited Activities

Crossing ₾500,000 in a year does not end Small Business Status. The rate rises to 3% for the rest of that calendar year and resets to 1% on 1 January. Cross the ceiling two years running and the status is revoked from 1 January of the third year, which puts the business on the standard 20% rate.

Published guidance disagrees on whether the 3% applies only to turnover above the ceiling or to the whole year once it is crossed. On ₾550,000 the two readings produce ₾6,500 and ₾16,500. We plan clients around the more expensive reading.

The ceiling is measured on gross turnover. An agency that bills ₾600,000 and passes ₾400,000 to subcontractors has crossed it on the full ₾600,000.

The status can also be lost because of the activity itself. Government Resolution No. 415 of 29 December 2010 excludes, among others:

• medical, architectural, legal and notarial services
• auditing
• consulting, including tax consulting
• currency exchange, banking, insurance and financial intermediation
• gambling
• activities that require a licence or permit

The Revenue Service reads the wording of contracts and invoices, so work described as consulting invites exclusion from the status. The status is also not retroactive: income invoiced before it applies is taxed at 20% and is not corrected later.

When turnover approaches the ceiling, the alternative to the IE structure is a company. A company has no turnover ceiling and pays corporate tax only on the profit it distributes, though LLC accounting means full accounts from the day of incorporation.

Penalties and Common Filing Mistakes

Penalties for late filing and underpayment are applied automatically. Interest accrues daily on any unpaid balance from the deadline until it is settled, and understating the tax in a declaration carries its own penalty on top of the shortfall.

These are the common mistakes:

1. Skipping the declaration in a month with no income.
2. Missing reverse VAT on foreign software and overseas contractors.
3. Converting currency at the invoice date or at a monthly average.
4. Treating the filed declaration as the payment.
5. Keeping only the sent PDF, when the law expects two identical copies.
6. Clearing out invoices before the three years are up.

One missed zero declaration that is caught quickly is a small problem, while a run of missed months is a larger one that tends to surface when you open a bank account, convert to an LLC or close the business. Months already missed are filed one by one through accounting restoration, at ₾270 per month of arrears.

Do You Need an Accountant as an Individual Entrepreneur?

A disciplined IE with Small Business Status, no VAT registration and a handful of invoices a month can run this cycle alone. For that profile it is about twenty minutes a month, and the Georgian-language portal is the main obstacle, not the accounting.

Handing the work to an accountant makes more sense when VAT registration applies, when a first employee adds payroll and pension declarations to the same deadline, or when the number of invoices makes the monthly work take much longer than twenty minutes.

When we take the cycle over, you upload the month’s invoices, bank statements and contracts. We record the transactions, calculate reverse VAT, convert foreign income at the correct daily rates and file before the 15th, then tell you what to pay and where. Most clients spend 20 to 30 minutes a month on it, and liability for a filing error we make sits with us, not with you.

IE Accounting Prices

The price follows your transaction count, not your revenue. One bank statement row, invoice, payment or expense is one transaction.

Transactions a month	Lite	Business
Up to 10	₾180	₾315
11 to 30	₾315	₾495
31 to 60	₾495	₾855
More than 60	Quoted	Quoted

Lite is for individual entrepreneurs who are not registered for VAT, and its first quarter is paid upfront. A VAT-registered IE or one with employees moves to Business, which adds monthly VAT returns and pension declarations. All prices exclude 18% VAT.

One month slightly over your band usually costs nothing extra, and a business with uneven months can have its volume averaged to find the right package.