The question comes up in almost every first call with location-independent freelancers, and it almost always comes up framed the wrong way: “Which is cheaper — 1% as a sole trader, or the LLC?” The tax rate is the one point on which the two models do not differ much. The difference that matters sits one level earlier: with an Individual Entrepreneur the income is attributed to you personally, with an LLC to a separate legal person. Everything else follows from that — and the answer is not in your revenue forecast but in your travel calendar.
The difference comes before the tax question
The Individual Entrepreneur (ინდივიდუალური მეწარმე, I/E for short) is not a legal person. It is a register entry granting entrepreneur status to a natural person — for tax purposes an “entrepreneur natural person”. There is no company capital, no separation of liability and no second tax layer: what the business earns, the person has earned.
The LLC (შპს) is the opposite. Under the Law on Entrepreneurs of 2 August 2021 it is a separate legal person with its own assets; the shareholders are not personally liable to the company’s creditors. There is no statutory minimum capital.
| Individual Entrepreneur | Georgian LLC | |
|---|---|---|
| Legal nature | natural person with entrepreneur status | separate legal person |
| Attribution of income | directly to you personally | to the company |
| Liability | unlimited, with private assets | limited to company assets |
| Point of taxation | ongoing, monthly | only on distribution |
| Small Business Status (1%) the status is reserved for natural persons carrying on a business | ||
| Shares transferable the I/E entry is tied to your personal identification number | ||
| Annual accounts filed with SARAS even the smallest LLC files — an audit is only required from category II upwards |
The Individual Entrepreneur: personal in every respect
For the large majority of location-independent freelancers, the I/E with Small Business Status is the right structure. Gross turnover is taxed at 1%, with no deduction for business expenses — at the cost ratios typical of a developer, designer or copywriter that is unbeatable.
Four points are routinely reported incorrectly:
- Registration is strictly personal it is tied to your personal identification number — spouses each need their own registration and their own status application
- Above GEL 500,000, 3% applies to the excess only in fact it applies from the first day of the month in which the threshold is crossed until year end, to the entire taxable income of that period
- The GEL 500,000 is a condition for being granted the status even someone with much higher prior turnover can apply — the threshold governs the rate and the withdrawal, not the grant
- Advisory activities are excluded Annex No. 4 to Government Decree No. 415 — and withdrawal takes effect from the start of the year
The last point is where most self-assessments fail. The list is a negative list; there is no official positive list of eligible occupations. Software development, graphic and web design, copywriting, marketing execution and e-commerce are not on it — advisory activities are, with tax advice named expressly in the wording. The classification is made by the Revenue Service on the basis of the activity actually carried on and the wording of the contracts, not the job title. All procedural detail and the rule changes since 7 March 2026 are set out in Georgia: 1% Tax With Small Business Status.
And there is a second test that bites even where the activity is permitted: certain categories of income are excluded from the 1% regime and taxed under the general rules — among them rental, interest and dividend income, and licence and royalty receipts. For developers who license their product rather than billing it as a service, a substantial part of the tax burden is therefore decided by how the contract is drafted — before the first invoice goes out.
Why the travel plan determines the legal form
This is where attribution and presence interlock. With an I/E, business income is your income. Establish tax residency anywhere and that state will, as a rule, capture your worldwide income — and your business income is part of it. Georgian 1% taxation does not become wrong as a result; it merely becomes largely ineffective. You pay it in addition, not instead.
This is precisely where the common rule of thumb is too imprecise. “183 days per country” is not a switch that works the same way everywhere:
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The threshold is not the same everywhere
Some states count within the calendar year, others across a rolling twelve-month period. Some connect, additionally or instead, to an available dwelling, to the centre of vital interests, or to presence across several years. Georgia uses 183 days in any 12-month period and counts generously: there is no overnight requirement, and on the wording of Art. 34(3) of the Tax Code, time spent outside Georgia specifically for treatment, leisure, a business trip or education also counts as time spent in Georgia. That is one design among many, not an international rule.
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The home country counts no days at all
Unlimited tax liability in Germany arises through residence (§ 8 AO) or habitual abode (§ 9 AO), in Austria through § 26 BAO. Residence knows no minimum period of stay — a dwelling available to you is enough. If the connecting factors at home are not cleanly resolved, counting days in the host country is wasted effort.
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Resident nowhere is not a target position
Banks, payment providers and every CRS self-certification require a country of residence and a tax number. A form field without a supportable answer will eventually be filled in by the other side. And the Georgian tax number is not a certificate of residency — the Revenue Service issues that only once the 183 days are met or HNWI status applies.
Why the rotation does not hold without a documented tax residency is set out in Perpetual Traveller: Counting 183 Days Is Not Enough; the Georgian side of the question in Tax Residency in Georgia.
For the choice of legal form, one sentence follows: as long as the income is attributed to you personally, it travels with you into every residency you establish. Anyone who foreseeably stays somewhere longer — by plan or because the route changes — therefore needs a structure that breaks that attribution.
The Georgian LLC: separation instead of counting days
That is exactly what the LLC delivers. Business income arises with the company, not with you. Georgia taxes it under the Estonian model only at the point of distribution — retained profits initially carry nothing. You therefore decide yourself when, and how much, accrues to you personally.
Precision pays off on the percentages, because several reference figures are in circulation:
| What is meant | Reference figure | |
|---|---|---|
| 15% | profit tax | on the grossed-up amount — the amount paid out is divided by 0.85 |
| 17.65% | the same tax | measured against the amount actually paid out (15/85) |
| 5% | withholding tax | on the dividend, in addition to the profit tax |
| 19.25% | both combined | measured against pre-tax profit, on full distribution |
| 0% | for as long as nothing is distributed | the actual lever of the model |
Important for readers in Germany, Austria and Switzerland: the 19.25% is the Georgian burden. Anyone taxable in their country of residence also pays tax on the dividend there; the Georgian withholding tax is credited. Details on the rates: Withholding Tax in Georgia.
Two things that are underestimated in practice:
- Not only the dividend counts as a distribution so do non-business expenses and entertainment costs above the statutory limit — and loans to natural persons or non-residents, whether or not the recipient is a shareholder
- The annual accounts must be filed with SARAS by 1 October of the following year at the latest, even for the smallest one-person LLC; the audit obligation begins considerably later
- The monthly return distinguishes LLC from I/E it does not — Small Business Status also requires a monthly return by the 15th of the following month
The real additional effort of the LLC therefore lies not in filing frequency but in the bookkeeping, and in the discipline of checking every payment for whether it counts as a distribution. How that spreads across the year: Bookkeeping and Compliance in Georgia.
What the LLC does not do
The separation works against your person. It does not work against the place where the company is managed — and that is where self-built structures regularly fail.
Germany attaches unlimited corporate tax liability to the seat or the place of management; what counts is the centre of top-level management (§ 10 AO), which the tax administration reads as the day-to-day business. No dedicated business facility is required for this — the managing director’s dwelling is enough. Austria defines the place of management in § 27(2) BAO to the same effect.
For perpetual travellers this contains a notable nuance: decisions taken while travelling do not, in themselves, generally establish a place of management, because the place-based facility is missing. But as soon as a dwelling becomes a fixed point of reference, that dwelling is the candidate. The travelling phase is thus the uncritical one; what is critical is the moment someone arrives somewhere.
Anyone remaining resident in Germany will find the full order of testing in Georgian LLC, German Residence: The Active-Income Test; on running a company cleanly from a distance, Holding and Director Structures.
The second decision path: how you get paid
Alongside the travel profile, a second factor has a say — and a rule of thumb circulates about it that does not hold for Georgia: that online payments require “a company anyway”. Access to card acceptance in Georgia depends not on the legal form but on the country of establishment and the chosen channel.
| I/E | Georgian LLC | |
|---|---|---|
| Invoicing business clients, paid by bank transfer the normal case for freelancers — the I/E is sufficient here | ||
| Stripe Georgia is not a supported country; cross-border payouts via Connect do not lead there either | ||
| E-commerce acquiring with a Georgian bank the TBC merchant contract expressly names individual entrepreneurs too — an account with the bank is a precondition | ||
| PayPal documented as a receiving market PayPal publishes a separate merchant fee table for Georgia; older claims that Georgian accounts can only send are out of date | ||
| Merchant of record (Paddle, FastSpring) Georgia is on none of the published exclusion lists — that is not an onboarding promise, but it is not a block either |
Three practical consequences follow:
- Local acquiring settles in lari. Anyone invoicing in euros or dollars therefore carries a currency conversion — an argument for the merchant-of-record route that holds regardless of legal form. Add to that content requirements for the website, a security reserve and chargeback risk sitting with the merchant. Discount rates are broadly in the region of 2 to 2.5 per cent depending on where the card was issued, but are agreed individually per merchant.
- If you need Stripe and the US market, you need a US structure — not a Georgian one. How that combines with a Georgian base: Location-Independent at 0% and US LLC + Georgia.
- The reason growing online businesses eventually need a company is not the payment rail, but the GEL 500,000 turnover threshold and liability.
Banking: two corrections before departure
Opening accounts with Wise and Revolut before leaving is right — but only half of the follow-up holds.
Both points are snapshots: provider country lists are undated, continuously amended documents. What follows for the sequence of steps is in the Wise account FAQ; opening an account on the ground is described in Opening a Bank Account in Georgia.
And one more thing that sounds obvious but is not: Georgia has taken part in the automatic exchange of information since 2024. The self-certification given to the bank is a compliance step by the institution, not a determination of your residency — the two are regularly confused.
The decision in four questions
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What exactly do you do?
Not the job title but the actual service. Advisory activities are excluded from the 1% status; development, design, copywriting, marketing execution and e-commerce are not on the prohibited list. This question decides whether the I/E is available to you at all.
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Where will you be over the next twelve months?
If Georgia stays the base and the rest is travel, the I/E holds. If it is foreseeable that you will stay somewhere longer, the income travels with you into that residency — and then the point at issue is the separation that only the LLC provides.
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How does the money come in?
Invoice and bank transfer to business clients: the I/E is enough. Card payments in your own shop, SaaS subscriptions, marketplaces: what needs clarifying is the channel, not the legal form — and if Stripe is indispensable, the route runs through a US structure, not a Georgian LLC.
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What happens if things go well?
GEL 500,000 arrives faster than the plan suggests, and the 3% rate then applies from the start of that month to all turnover until year end. If growth is foreseeable, plan the switch rather than experiencing it.
The honest summary: for the large majority of location-independent freelancers with foreign clients, the I/E with Small Business Status is the right choice — inexpensive, lean, set up within days. The LLC is not a better tool but a different one. It pays off when attribution to the person becomes the problem: foreseeable residency in a high-tax country, liability risks, employees and partners, profits that should stay in the business. What both routes cost is set out in What Setting Up in Georgia Really Costs.
Frequently asked questions
My partner and I are both self-employed — is one registration enough?
No. Registration as an Individual Entrepreneur is tied to your personal identification number and is therefore strictly personal; Georgian law has no joint registration for married couples. If both of you carry on a business, you each register separately and each apply for Small Business Status separately. That has a welcome side effect: the GEL 500,000 turnover threshold applies per person, not per household.
I am a consultant — can I use the 1% status?
No. Annex No. 4 to Government Decree No. 415 excludes advisory activities from Small Business Status, regardless of the field. The real risk is not rejection of the application but later withdrawal: if an excluded activity is established, the withdrawal takes effect from the beginning of the calendar year — the 1% then becomes the standard rate retroactively. What counts is the activity actually carried on, not the label in the contract. The classification therefore belongs before registration, not after it.
Does a Georgian LLC protect me from being taxed in the country I stay in?
Not automatically. It separates business income from you personally — that is its purpose and its benefit. It does not prevent the company itself from becoming taxable where it is in fact managed. Germany connects to this through the centre of top-level management (§ 10 AO), Austria in identical wording through § 27(2) BAO, and the double tax treaty between Germany and Georgia still resolves dual company residence in Art. 4(3) by reference to the place of effective management. The registered seat in Tbilisi does not decide the question.
Does a Georgian LLC get me access to Stripe?
No. Georgia is not among the countries where Stripe opens accounts, and the legal form changes nothing: Stripe requires a company registered in a supported country, together with a tax number, a postal address and a physical bank account there. Nor does the detour via cross-border payouts in Stripe Connect lead there — it is limited to accounts in the US, UK, EEA, Canada and Switzerland. If you need card payments in Georgia, the route is local e-commerce acquiring with a Georgian bank or a merchant of record; if you need Stripe and the US market, you need a US structure for it.
Can I keep using Wise and Revolut after the move?
Only in part, and the difference between the two is the most practically important point of the whole preparation. Wise lists Georgia as an eligible country of residence: the change is possible, but it requires proof of address and the account is temporarily restricted during review. The Wise card, by contrast, is not available in Georgia — a card already activated can be used until it expires, but no replacement is issued. Revolut does not list Georgia as a supported country at all; anyone moving their residency there has to close the account under Revolut own terms. A Georgian bank account is therefore not a convenience but a prerequisite.
When is it worth switching from Individual Entrepreneur to LLC?
When one of four things happens: you approach the GEL 500,000 turnover threshold; you carry a liability risk you do not want to carry with your private assets; you take on employees, partners or investors; or you want profits to stay in the business rather than being attributed to you personally as they arise. Payment processing is not on that list: the Georgian acquirer does not distinguish by legal form in its e-commerce contract.
This article is general information and does not constitute legal or tax advice. The choice between an Individual Entrepreneur and an LLC depends on activity, presence profile and payment route in the individual case; rules on the place of management and on CFC taxation are country-specific and should be checked in advance. Anyone who is or remains taxable in Germany, Austria or Switzerland must declare foreign income there — always involve a tax adviser in your home country for the move and for ongoing obligations. Statements about providers (Stripe, PayPal, Wise, Revolut, acquiring terms) are snapshots and should be rechecked before any structural decision. As at August 2026, subject to changes in the legal position.