Traders working for futures prop firms who move to Georgia almost always ask the same question: do the payouts count as turnover of an individual entrepreneur under Small Business Status — 1 percent instead of 20? In our assessment the answer is yes. But it does not turn on the word “trading”. It turns on two things that have to be checked separately: how the contract characterises the payment and where you physically sit when you work. And it turns on a third point that the debate almost never picks up, although it simplifies the analysis considerably: whether anything is being traded in that account that belongs to anyone at all.
The point almost nobody checks: is anything traded at all?
The tax characterisation of a prop payout turns on whether you dispose of something you own. That makes it worth looking at what technically happens inside a “funded account” — and for most futures programmes the answer is surprisingly clear.
You put in no capital. Topstep puts it this way on its own site: “You’re not depositing funds into the account. You’re trading the firm’s money under agreed-upon rules.” The firm provides the capital, the firm absorbs the losses, and the trader receives a share of the profits generated.
And in the great majority of cases the account is a simulation too. The industry distinguishes between simulated “funded accounts” and genuine live accounts, and the transition is rare: Topstep itself reports that 0.71 percent of participants in an Express Funded Account were called up to a Live Funded Account. For the large majority, then, no contracts are routed to an exchange at all; the firm pays out an amount from its own funds, measured by the result achieved in the simulation.
For the Georgian analysis that is not a detail but a simplification:
- No assets of your own involved — therefore no disposal Annex No. 5 to Resolution 415 removes the "ნამეტი", the surplus on the disposal of securities, from the special regime. Where nothing that belongs to you is disposed of, that item is not engaged in the first place.
- The payment is by its nature contractual compensation What is measured is a performance assessed against a result — the classic structure of performance-based remuneration.
- The regulatory question is defused on top of that Where no securities transactions are executed, the scope of the Securities Market Law is not even approached.
Why the income is Georgian at all
This is where most advisory conversations turn, because the result runs against intuition.
Georgia taxes a resident natural person territorially: what does not come from a Georgian source is exempt under Article 82(1) of the Tax Code — in the Georgian original sub-paragraph “ფ”, in the official English translation letter “u”. Foreign income is therefore not favourably taxed at 1 percent; it is taxed at nothing.
Why then bother with Small Business Status? Because the 1 percent has a base that Article 90(3) confines to Georgian-source income. And whether a service is Georgian-source is decided by Article 104(1)(c): what governs is the place where the service is actually rendered — Georgian “ფაქტობრივად გაიწევა”. Where the client sits is simply not a criterion for that category. Article 104(2) adds that the place where the amount is received — which account the money lands in — is disregarded.
The consequence is counter-intuitive and worth saying out loud: the payouts are taxable in Georgia precisely because you work in Georgia. Someone carrying on the activity from elsewhere has no Georgian source — and then no turnover for the 1% status either.
Three cases that are constantly confused
| Futures prop programme | FX/CFD prop programme | Your own account | |
|---|---|---|---|
| Whose capital | the firm’s | the firm’s | yours |
| Legal nature of the payment | contractual compensation | contractual compensation | surplus on disposal |
| Georgian source | yes, if performed in Georgia | yes, if performed in Georgia | no, with a foreign broker |
| Inside the 1% turnover | yes | yes, with residual risk | no — Annex No. 5 |
| Tax burden | 1% (3% above the threshold) | 1% (3% above the threshold) | 0% — Art. 82(1) |
| Open flank | none identifiable | Annex 4 item 3 "currency operations" | none — but keep it strictly apart |
The middle column deserves a comment, because we deliberately do not state the same level of confidence there. As a matter of civil law the characterisation is the same: in an FX/CFD programme too the firm provides the capital and remunerates a result. Two circumstances nonetheless widen the margin of doubt. The Georgian wording of Annex 4 item 3 — “carrying out currency operations” — invites a wide reading, and no official interpretation of the term exists. And the terms of CFD programmes are drafted far less uniformly than those of futures programmes; some describe the trader as dealing on their own account.
Our recommendation is therefore unspectacular: if futures are the substance of your activity, keep it that way. If a meaningful FX or CFD stream is planned, that is the part of the file that justifies a binding ruling.
The real risk is called consultancy
The question we get asked is almost always “is trading allowed?”. The question that costs people their status is a different one.
Annex No. 4 item 4 excludes medical, architectural, advocacy or notarial, audit and consultancy activity — expressly including tax consultants. Anyone who, alongside trading, sells signals, offers mentoring, distributes courses or earns affiliate commissions from the same prop firms is carrying on advice-adjacent activity. That is the most common sideline in precisely this audience — and it is the point at which the status tips.
The consequence sits in Article 89: withdrawal for an excluded activity takes effect from the beginning of the current calendar year. Not from discovery, not from the start of the sideline — from the start of the year. The whole year is then assessed outside the preferential regime.
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Declare side income before registering
If signals, courses or affiliate income are part of the plan, they do not belong in the same individual entrepreneur. Either a separate company — or leave it.
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Draft the register description along the delimitation
We draft it in Georgian and deliberately around what the activity is NOT: no acceptance of client funds, no management of third-party portfolios, no investment advice, no brokerage, no exchange business. That is exactly what the reviewing officer compares it against.
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Do not land in Section K on the activity code
The code is descriptive and the authority assesses the substance — but it is the first signal the file sends. And there is a trap here: the classification routes dealing on own account to class 64.99, which sits in financial Section K. Anyone classifying themselves "correctly" by intuition lands in precisely the section that invites the licensing and Annex 4 questions. Better fits are 82.99 (other business support service activities) or 74.90 (other professional, scientific and technical activities) — both outside Section K. What is not a safe harbour is 70.22: that is a consultancy code, and consultancy is excluded under Annex 4 item 4.
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Keep the evidential chain from day one
Terms per programme, payout request, confirmation, bank credit. We additionally recommend a monthly self-billed statement per firm reconciling payouts to bank credits — not legally required, but in an audit the difference between a document set and a pile of screenshots.
What else belongs to the burden — and what does not
There are no social security contributions. The Tax Code lists the taxes exhaustively in Article 5, and no social contribution appears among them. Pension contributions are a separate levy outside the Tax Code; under the Law on Funded Pensions participation is voluntary for self-employed persons and then amounts to 4 percent. For foreign nationals the Law additionally turns on holding a permanent residence permit — not, as is often written, on tax residence.
There is no mandatory health insurance for anyone. That is where the good news ends: the state health programme is not open to foreign nationals holding a residence permit. Anyone moving here insures privately — and should arrange it before arrival, not after.
VAT runs well in one direction and awkwardly in the other. The payouts themselves are out of scope because the recipient is established abroad (Art. 162¹(3)(a)), and they therefore do not count towards the GEL 100,000 threshold in Art. 165 either. Conversely, Article 161(2) makes the individual entrepreneur a tax agent for services received from abroad — even without registration. Evaluation fees, resets, platform and data subscriptions can therefore attract reverse-charge VAT, and an input credit is available under Article 175 only to registered taxable persons. For the typical futures trader the amount is modest; but it should be a decision, not an oversight.
“1 percent and nothing else” is therefore too absolute. What is correct: no social contributions, no mandatory health insurance, no quarterly advance payments (Art. 94(1)). What can be added: reverse-charge VAT, property tax, and the voluntary pension.
What follows from this
For a futures prop model operated physically from Georgia, Small Business Status is in our assessment the correct and the defensible route: 1 percent on the payouts, 3 percent from the month in which GEL 500,000 is exceeded, and otherwise no levies.
Three things decide whether that holds. The contract must characterise the payment as compensation and not as a gain on your own assets — which is why we read each programme’s terms individually. The presence must be genuine, because the source follows the place of actual performance. And the side income must stay outside, because consultancy under Annex 4 item 4 costs the status — retroactively to the start of the year.
What the 1% status expressly is not: a treatment for your own securities account. That runs better — at zero — and belongs on a different account.
FAQ
Do prop-firm payouts fall under the 1% Small Business Status?
In our assessment yes, where two conditions coincide. First, the contract must characterise the payment as performance-based compensation for a service rendered to the firm — not as a gain on assets you own. Second, you must carry on the activity physically in Georgia, because only then is it Georgian-source under Art. 104(1)(c) of the Tax Code, and only Georgian-source income enters the 1% base under Art. 90(3). Both are regularly satisfied by the common futures programmes. We are not aware of any published administrative position of the Revenue Service on prop-firm payouts — rulings under Art. 47 are not published.
Is this an excluded financial service under Decree 415?
No. Annex No. 4 to Government Resolution No. 415 is a closed list of seven items, and none of them names financial services, financial intermediation, investment management, brokerage or securities. The long list circulating in English with exactly those headings is not the text of the Resolution. The only finance-adjacent item is number 3, "carrying out currency operations" — on the prevailing practitioner reading, the currency-exchange trade. No official interpretation of that term exists, which is why it remains the open flank for FX and CFD programmes.
Do I need a licence from the National Bank of Georgia?
In our assessment no. The Law on the Securities Market provides for four National Bank licences — brokerage activity, stock exchange, central depository, securities registrar — and each presupposes acting for third parties. Someone who accepts no client money, executes no client orders and gives no advice falls outside all four. We say openly, though: the Law contains no sentence expressly declaring own-account dealing licence-free. The conclusion is an argument from the contrary based on Articles 20 and 23. Anyone building a business model on it should have it confirmed.
Is my own brokerage account treated differently?
Fundamentally, and that separation is the most important organisational consequence of the whole subject. Trading your own capital through a foreign broker produces no turnover of the individual entrepreneur but a surplus on the disposal of your own assets. That sits in Annex No. 5 to Resolution 415 and therefore falls outside the special regime in any event; with a foreign broker and foreign instruments it is also foreign-source and, for a Georgian tax resident, exempt under Art. 82(1). Two worlds, two accounts — mixing them is the most reliable way to turn a clean file into an audit file.
Must I issue an invoice to the prop firm?
In practice no, and the programmes do not accept them either. The payout runs through their own request-and-approval process. What must exist is a closed evidential chain: the signed terms for each programme, the payout request and its confirmation, the bank statement showing the credit — and the accounting journal under Art. 91 of the Tax Code. On that journal, one clarification that is wrong almost everywhere: it is an accounting journal whose content the Minister of Finance determines, and under the implementing instruction it is an expense journal — not a turnover ledger.
Is Georgian VAT payable on this?
Not on the payouts: the recipient of the service is a foreign company, so under Art. 162¹(3)(a) the place of supply is outside Georgia. Such supplies are not exempt but out of scope — and therefore do not count towards the GEL 100,000 registration threshold in Art. 165 either. In the other direction, however, there is a trap that is regularly missed: under Art. 161(2) an individual entrepreneur is a tax agent for services received from abroad, even without VAT registration. Evaluation fees, resets, platform and data subscriptions can therefore attract Georgian reverse-charge VAT — with no input credit, because Art. 175 reserves that for registered taxable persons.
As at: August 2026. Provisions cited: Tax Code of Georgia Arts. 5 and 6 (exhaustive list of taxes), Art. 34 (residence), Art. 82(1) (exemption of foreign-source income, Georgian sub-paragraph “ფ” = English “u”), Arts. 88–95 (Small Business Status, in particular Art. 89 withdrawal, Art. 90 rate and base, Art. 91 accounting journal, Art. 94 no advance payments), Art. 104 (source), Arts. 161, 162¹, 165 and 175 (VAT), Art. 47 (binding ruling); Government of Georgia Resolution No. 415 of 29 December 2010, Annexes Nos. 4 and 5; Law of Georgia on the Securities Market, Arts. 2, 20 and 23; Law of Georgia on Funded Pensions, Arts. 1, 2 and 3.
On sourcing: the basis is the Georgian wording of the Tax Code; the official English translation on matsne.gov.ge is roughly eleven years old and out of date in several places. The statements about the structure of prop programmes (no capital from the trader, losses borne by the firm, predominantly simulated accounts, the rate of promotion to live accounts) come from providers’ public disclosures and describe market practice, not your contract. We are not aware of any published administrative position of the Revenue Service on prop-firm payouts. This article is not tax or legal advice and says nothing about the tax law of the country you are leaving.