The Georgian Individual Entrepreneur, end to end

What exactly is a Georgian Individual Entrepreneur?

The Individual Entrepreneur is the simplest form of business registration under Georgian law^[2]. It is NOT a separate legal entity — the IE is the founder themselves, registered as engaged in business activity. The IE owns assets in their personal name, signs contracts in their personal name, and is personally liable for business debts.

The IE is registered at the Public Service Hall, receives a Tax Identification Number (TIN), and gains the ability to issue tax-recognised invoices, declare business income, deduct business expenses, and (optionally) elect Small Business Status.

Most foreign founders who choose the IE form do so because it gives them eligibility for Small Business Status. If you don’t plan to elect SBS, the IE is rarely the right structure compared to an LLC.

How fast is IE registration, really?

Same-day in Tbilisi, in our experience^[3]. A founder who arrives at the Public Service Hall in the morning with a passport and an address can typically leave before lunch with a registered IE and an active TIN. The state fee is around 50 GEL.

End-to-end practical timeline including RS.ge profile setup and Small Business Status application:

• Day 0 morning: Public Service Hall registration.
• Day 0 afternoon: RS.ge profile activation.
• Days 1–3: Small Business Status application processing (filed on RS.ge — free).
• Days 1–7: Personal Georgian bank account (often opened the same day if the founder already has Georgian residency or a personal address; longer for first-time foreign nationals).

What documents are needed for IE registration?

The bar is low compared to an LLC:

• Founder’s passport.
• A registered Georgian address (residential or commercial).
• The state-fee payment receipt (~50 GEL).
• A short application form filled at the Public Service Hall counter.

No charter is required (the IE has no constitutional document — it’s not an entity). No notary involvement. No founders’ resolution. No director consent.

Founders unable to attend in person can grant a Georgian lawyer power of attorney via a notarised PoA executed in their home country, apostilled (or consular-legalised) per the Hague Apostille Convention or applicable bilateral treaty.

How does the standard (non-SBS) IE pay tax?

A standard Individual Entrepreneur — without Small Business Status — pays the flat 20% Personal Income Tax on net business income^[1]. “Net” means after deductible business expenses. The deductible categories include:

• Direct cost of services (subcontractors, materials, software licences).
• Office and workspace rent (if not used personally).
• Business travel (with supporting receipts).
• Professional services (accounting, legal).
• Bank fees on the IE’s business account.
• Capital allowances on business equipment.

Deductible expenses must be:

1. Genuinely incurred in the business.
2. Documented with proper supporting evidence (invoice, receipt, bank statement).
3. Not personal in nature (food, leisure travel, etc.).

The 20% rate applies only to the net figure after legitimate deductions. Worked example: a freelance consultant earning 100,000 GEL of revenue with 20,000 GEL of deductible business expenses pays 20% × (100,000 − 20,000) = 16,000 GEL in PIT.

When does the standard IE make sense over Small Business Status?

Three specific situations where the standard 20% IE is the correct choice over SBS:

1. Your activity is excluded from SBS.Some categories (notably consulting income characterised strictly as “personal services”) are excluded from the 1% SBS rate; they fall to a 3% intra-SBS rate or to the standard 20% PIT entirely. The Revenue Service publishes periodic clarifications^[4].
2. You expect to cross the 500,000 GEL threshold mid-year. If you cross the threshold under SBS, you lose the regime retroactively for the entire year. Founders close to the threshold often de-elect SBS pre-emptively or convert to LLC to avoid retroactive recharacterisation.
3. Your deductible expenses are large enough that 20% of net income beats 1% of gross. Mathematically: standard IE beats SBS when deductible expenses exceed 95% of revenue (since 20% × 5% = 1%). This is rare in pure- services businesses but possible in product-resale or high-cost-of-goods scenarios.

What about VAT for an Individual Entrepreneur?

The 100,000 GEL VAT-registration threshold applies to IEs identically to LLCs^[1]. An IE crossing 100,000 GEL of rolling 12-month turnover must register for VAT and charge 18% on Georgian supplies. Cross-border B2B services typically use the reverse-charge mechanism, removing Georgian VAT from the invoice — but the registration obligation remains.

IEs with Small Business Status are still subject to the same VAT rules. SBS replaces income tax, not VAT.

What are the most common IE pitfalls?

Three recurring issues we see in our practice:

1. Assuming SBS is automatic. Registering as an IE does NOT grant Small Business Status. SBS is a separate election filed via RS.ge. The election isprospective — granted from the date filed, not retroactively. File on day one of registration.
2. Mixing personal and business expenses.Because the IE is the founder personally, the line between business and personal spend can blur. The Revenue Service disallows poorly-substantiated personal expenses on audit. Use a separate IE bank account; document everything.
3. Skipping monthly tax declarations. Even a zero-activity month requires a nil declaration. Penalties for late filing are small per month but compound; founders who miss six months face several hundred GEL of avoidable fines.