In Georgia, companies engaged in IT activities may benefit from significant tax incentives by obtaining Virtual Zone Person (VZP) status. Businesses with this status are exempt from certain taxes and duties that would otherwise be levied on them for conducting business in the country. However, obtaining and maintaining Virtual Zone Person status requires meeting specific criteria.
In the sections below, we’ll explain what this status entails and outline the steps to apply for it.
What is a Virtual Zone Person?
Under the “Law of Georgia on Information Technology Zones”, a “virtual zone person” or “VZP” means a Georgia-based legal entity conducting IT activities in the territory of Georgia and holding Virtual Zone Person status.
Which taxes are Virtual Zone Persons exempt from?
The “Law of Georgia on Information Technology Zones” aims to create an environment conducive to the development of information technologies (IT) and ensure the production of IT products in Georgia.
The term “information technologies” is defined as the “study, support, development, design, production, and introduction of computer information systems, as a result of which software products are obtained.”
To this end, the statute provides special tax treatment for VZPs carrying out IT activities in Georgia, specifically:
- VZPs are exempt from paying taxes on profits generated from supplying information technologies (including services) produced in the territory of Georgia to persons outside of Georgia;
- The otherwise taxable transaction of supplying information technologies outside Georgia is not subject to value-added tax (VAT);
- VZPs need not pay export duties on exporting information technologies from the customs territory of Georgia.
What are the prerequisites to this tax benefit?
To take advantage of this benefit:
- IT products must be developed in Georgia;
- The products must be developed by a VZP (i.e., a legal entity holding the status of a virtual zone person);
- The products must be supplied to clients based outside of Georgia.
For this purpose, VZPs must have duly qualified human resources in Georgia, in the form of one or more employees or independent contractors.
In the case of a single-member company developing information technologies without the help of hired labor, the partner (shareholder) must be a Georgian resident.
How to obtain Virtual Zone Person status?
One of the best things about becoming a VZP in Georgia is that VZPs are not required to obtain licenses, permits, or other regulatory documents to carry out IT activities. All they need to do is obtain the status of a virtual zone person from the Financial-Analytical Service of Georgia.
An application can be filed electronically via the Service’s official website at www.fas.ge. An applicant must also submit a list of its IT projects from the past 3 years (if any). The Financial-Analytical Service may request additional information related to the applicant’s IT activities.
The status is granted within 10 business days after filing the application.
What is a certificate of a Virtual Zone Person?
Once the application is approved, the Financial-Analytical Service will issue an electronic certificate confirming the applicant’s Virtual Zone Person status within 2 business days.
The certificate will be published on the Service’s website (www.fas.ge) and will become publicly available. The certificate will be valid indefinitely, unless revoked by the Financial-Analytical Service, as explained below.
What are the grounds for revoking Virtual Zone Person status?
The Financial-Analytical Service will revoke the Virtual Zone Person status and the corresponding certificate if:
- The VZP requests revocation by submitting an electronic application via the Service’s website (www.fas.ge);
- The Service receives information from the relevant public authorities that the VZP has used the status illegitimately, namely, to evade taxes;
- The Service receives information from the Revenue Service that the VZP has acquired the status of an International Company as defined under the Tax Code of Georgia.
How to set up a company in Georgia as a non-resident?
A Limited Liability Company (LLC) is the most universal and versatile legal form of doing business in Georgia.
An LLC may have a single partner (shareholder) or multiple partners. There are no restrictions on the nationality of the partners. A director may also be a foreign national. However, note that, as of March 1, 2026, foreigners who work or own a business in Georgia are not allowed to carry out labor or entrepreneurial activities unless they hold “the right to work”. For more information, see “Georgia Work Permit Requirements – March 2026 Complete Guide”.
An LLC must have a legal address within Georgia. A physical office is not technically necessary, but it is highly recommended.
An LLC may be established either “traditionally”, that is, by filing an application and the required documentation with the National Agency of Public Registry (“registration authority”) in person (through a branch office or a “house of justice”), or electronically via the platform my.gov.ge. In the latter case, a qualified signature is required.
The process of forming an LLC takes only one business day. However, an applicant may request expedited services.
Founding partners may also register the economic activities of their undertaking by filing an application with the registration authority. This procedure is generally optional.
What documents are required for establishing an LLC?
To form an LLC, the following documents must be filed with the registration authority:
- The instrument of constitution, setting forth the company’s registration data;
- For the purpose of creating the company’s authorized user page (portal), the instrument must also specify the director responsible for managing the portal, together with that person’s Georgian phone number and email address.
- The company’s statutes (charter), which must contain at least the following information:
- The legal form of the company;
- The subject of the company’s activities (purpose). A general statement of purpose, such as “to conduct any lawful business activity”, is permissible;
- Any limitations regarding the ownership of shares, as agreed upon by the shareholders (if any);
- Information on a shareholders’ agreement (if any);
- The consent of each person with management and representative powers to perform their stated functions, unless their consent is expressed in the instrument of constitution;
- Passports of individual shareholders. If the original documents are not submitted directly to the registration authority, their copies must be apostilled, translated into Georgian, and the translation notarized.
If a founder is a company established outside Georgia, an extract from the appropriate commercial register and the company’s statutes must be provided, certified by an apostille, and translated into Georgian.
If the founders are not in Georgia, they can authorize a representative in Georgia to submit registration documents on their behalf, for which a power of attorney is necessary. The power of attorney must be certified by an apostille, translated into Georgian, and the translation notarized.
Note that for registration purposes, it is necessary to specify the legal address of an LLC, which must be an address in Georgia. If the company is renting its registered office, the lease agreement or owner’s consent must be submitted to the Registry.
What is the minimum turnover for LLCs?
In Georgia, there is no minimum turnover requirement to form and operate an LLC.
What about the share capital?
The amount of the initial share capital of an LLC can be GEL 0.
Accordingly, no proof of payment of the initial capital is needed, unlike in some other countries, where the founders must deposit the requisite funds into the company’s corporate bank account and provide a declaration from the management board that the contributions toward the share capital have been made in full.
How much does it cost to form an LLC?
Registration terms and fees:
- Within one working day – GEL 200;
- On the day of submitting the application – GEL 400;
- Confirmation of signatures of the parties – GEL 7 per signature added to the registration fee;
- Preparation of an extract in English (optional) – GEL 26 added to the registration fee.
Note that the above fees cover only the company registration process and do not include charges for legal services, notarization, and translation fees.
Tell me more about taxation in Georgia
Corporate income tax (CIT)
In Georgia, LLCs are liable to pay corporate income tax (CIT) on certain disbursements. The standard CIT rate is 15%. LLCs benefit from the Estonian CIT model, which offers a 0% tax rate on reinvested profits. The tax is levied when the company distributes profits, incurs expenses unrelated to its economic activities, and in certain other instances.
For example, if a company pays dividends to its individual shareholders, a 15% CIT applies at the company level to the sum of disbursements (divided by 0.85).
VZPs are not subject to taxes on profits earned from the supply of information technologies outside Georgia. Note that this exemption only applies to the distribution of profit. VZPs are required to remit CIT on other disbursements/expenses (such as, in the case of free delivery of goods or services). For additional information on these taxable disbursements, see the article referenced below.
Personal income tax (PIT)
At the shareholder level, a special rate of 5% applies to income received in the form of dividends. The tax is withheld at source by the VZP acting as a tax agent.
In Georgia, employers are required to withhold income taxes on the wages paid to their employees and remit them to the taxing authority. The tax system is fairly straightforward, with a fixed rate of 20%. Similarly, board members who receive compensation for rendering management services are subject to PIT at the same rate.
This figure is drastically lower than the average statutory top personal income tax rate of 43.4% among European OECD countries.1
Payroll taxes
There are no payroll taxes in Georgia. For information on pension contributions under the Funded Pension Scheme, see below.
Value-added tax (VAT)
The standard rate of value-added tax (VAT) is 18% with a reduced rate of 0% for certain exempted goods and services. Taxpayers must generally register for VAT if their annual turnover exceeds GEL 100,000.
Under the special tax regime applicable to VZPs, the supply of information technologies outside Georgia is excluded from VAT.
Property tax
In terms of property tax, businesses owning real or personal property in the territory of Georgia are required to pay taxes that vary based on the property’s type and location.
For additional information, see “Taxes in Georgia: A Comprehensive Guide to the Georgian Tax System (2026)”.
Do foreigners working for or operating a Virtual Zone Person (VZP) in Georgia need a work permit?
For purposes of this section, the terms “foreigner” and “foreign national” also refer to independent contractors/freelancers, while the terms “employment” and “employee” only apply to persons employed under a labor contract. A director of an LLC is not an employee.
A Georgia-based company can hire foreign nationals. Foreigners (“labor immigrants”) recruited to physically work in Georgia must reside in the country on a legal basis, i.e., they must hold legal authorization to enter and remain in Georgia, such as a temporary residence permit for IT specialists or a D1 category visa.
Note that, as of March 1, 2026, foreigners are subject to new restrictions on employment and business activities in Georgia. Under the new law, foreigners who work or own a business in Georgia are not allowed to carry out labor or entrepreneurial activities unless they hold “the right to work”. This requirement applies to both employed and self-employed individuals, including sole proprietors/individual entrepreneurs, company directors, and foreign employees working remotely in Georgia.
To obtain “the right to work” for a foreign employee, the employer must, as a rule, demonstrate that no qualified local job seekers are available to fill the position.
Every company intending to recruit foreign employees must notify the Ministry of Labor of Georgia by submitting a declaration of intent to employ a labor immigrant, which can be done electronically.
For additional information, see “Georgia Work Permit Requirements – March 2026 Complete Guide”.
What is a temporary residence permit for IT specialists in Georgia?
A temporary residence permit for IT specialists in Georgia, formally known as “a temporary residence permit of a person employed in the field of Information Technologies (IT),” is issued to labor immigrants working in IT, entrepreneurs registered as small IT businesses, and directors of international IT companies, along with their family members.
To obtain the permit, applicants must provide proof of at least 2 years of IT work or business experience and evidence that their annual income from IT activities is at least the equivalent of USD 25,000 in GEL.
Duration of employment
An employment contract may be concluded for an indefinite period of time, a definite period of time, or the duration of a specified task.
If a company decides to enter into a fixed-term contract with an employee, certain limitations apply. Temporary contracts may be concluded for a period of up to 30 months. After that, the contract may only be concluded for an indefinite period.
A contract with a foreign employee must be definite (fixed-term).
Form of contract
As a rule, an employment contract must be in writing, unless the duration of the employment relationship does not exceed 1 month, and it must include a translation into a language that is understandable to the employee. A contract with a foreign employee must be concluded in writing, regardless of its length. The same form must be followed for any changes to the terms of the contract.
Substance of contract
An employment contract must specify the parties to the contract, the date of its conclusion, the type of work, the place of work, the start date of the work, the remuneration for the work performed (with a breakdown of the remuneration components), the length of working time, and other essential terms and conditions.
Length of working time
Weekly working time, excluding overtime hours, must not exceed 40 hours. The duration of uninterrupted rest between working days must be at least 12 hours.
Work performed in excess of the standard working time (i.e., 40 hours per week) is considered overtime work and must be compensated at an increased hourly rate, i.e., in addition to the regular remuneration, a bonus is due in an amount agreed upon by the parties, which must be reasonable.
Minimum salary
The current minimum wage in Georgia is GEL 20. As of December 2025, the minimum subsistence level is set at GEL 283.3.
Notwithstanding the foregoing, remuneration for developing IT products must be determined in a way that corresponds to the nature of the work, the qualifications needed and reflects the amount and quality of the work performed.
Annual paid leave
The minimum length of paid leave is 24 working days. To be eligible for paid leave, an employee must remain in employment for at least 11 months, unless otherwise determined by the parties.
Social security
Persons employed in Georgia and their employers are not required to pay social security contributions.
For information on the Funded Pension Scheme operating in Georgia since 2019, see “Taxes in Georgia: A Comprehensive Guide to the Georgian Tax System (2026)”. Note that the Scheme does not apply to non-resident employers and individuals who are neither citizens nor permanent residents of Georgia.
Mandatory health insurance
Unlike in some other countries, Georgian employers are not obligated to deduct healthcare premiums from their employees’ paychecks as part of income tax withholding or otherwise.
Independent contractors
In the case of independent contractors/freelancers, their contracts are governed by the more lenient provisions of the Civil Code of Georgia. However, if a court finds the element of subordination, which is characteristic of labor relationships, it may recharacterize the nature of the contract and apply the principles of Labor Law instead.
Are you considering establishing a company in Georgia and obtaining Virtual Zone Person status? Our team is here to help you navigate the process with ease and confidence. We offer professional services in company formation, tax management, immigration, employment issues, and other legal matters.
Contact us today to ensure a smooth and successful setup for your business in Georgia by calling +995 574 58 33 58 or completing our contact form.
- The Tax Foundation, “Top Personal Income Tax Rates in Europe, 2026”, www.taxfoundation.org. ↩︎
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