We take IT companies into Georgia's 0% and 5% tax regimes, and build the agreements that founders, users and investors rely on.
profit tax on IT you develop and supply abroad with Virtual Zone status
profit tax and 5% tax on salaries with International Company status
tax on dividends paid by an International Company
working days: the legal deadline to grant Virtual Zone status after you apply
KNM Advisory is a law firm in Tbilisi, Georgia (the country) that works with tech companies and startups from incorporation to investment rounds. We draft shareholders' agreements and Terms & Conditions, support investor relations, protect IP, and represent companies before the authorities to obtain preferential tax status: Virtual Zone Person (0% profit tax on qualifying IT exports) or International Company (5% profit tax, 5% tax on salaries, 0% on dividends).
Georgia gives IT companies two established regimes. Virtual Zone status removes profit tax on IT you develop in Georgia and supply abroad. International Company status taxes profit and salaries at 5% and removes tax on dividends, in return for real operations in Georgia. Our managing partner has advised more than 40 international companies on tax structuring, and we represent you until the final decision.
| Standard company | Virtual Zone Person | International Company | |
|---|---|---|---|
| Profit tax (on distribution) | 15% | 0%on IT developed by the company and supplied outside Georgia; other profit stays at 15% | 5% |
| Income tax on salaries | 20% | 20% | 5% |
| Tax on dividends | 5% | 5%treaty relief may apply | 0% |
| Property tax | Up to 1% | Up to 1% | 0%on property used for permitted activities, land excluded |
| VAT on IT supplied abroad | General rules | Not levied | General rules |
| What reduces the taxable base | Nothing specific | Nothing specific | Salaries paid to Georgian citizens, plus research, design and experimental costs incurred in Georgia |
| Qualifying activity | Any | IT: studying, developing, designing and producing computer systems that result in software products | Software, programming, IT consulting, hosting and digital products. Maritime services also qualify |
| Experience required | None | None. You list your IT projects from the last 3 years, if any | Two years in the activity: your own, or that of the non-resident enterprise you represent, or of partner enterprises holding over 50% of your shares |
| Presence in Georgia | Normal rules | IT must be produced in Georgia | Core income-generating activity, qualified staff and operating costs in Georgia |
| Other income | Unrestricted | Allowed, taxed under general rules | Capped at 2% of revenue from permitted activities |
| Who grants the status | Not applicable | The Financial-Analytical Service of the Ministry of Finance, within 10 working days; certificate within 2 more | The Government of Georgia, after the Revenue Service and Ministry of Finance review the file |
| How long it lasts | Not applicable | No fixed expiry | Indefinite, while the conditions are met |
Worked example: GEL 1,000,000 of pre-tax profit, all of it distributed, and GEL 500,000 of gross salaries. Amounts in GEL.
| Standard company | Virtual Zone Person | International Company | |
|---|---|---|---|
| Profit tax | 150,000 | 0 | 50,000 |
| Tax on dividends | 42,500 | 50,000 | 0 |
| Income tax on salaries | 100,000 | 100,000 | 25,000 |
| Total tax | 292,500 | 150,000 | 75,000 |
Assumes all income qualifies. Before treaty relief, pension contributions and the International Company base reductions, which can lower its profit tax further.
Enter your figures to compare the three regimes. This is an estimate to start a conversation, not tax advice.
Assumes all income qualifies. Before treaty relief, pension contributions and International Company base reductions.
You build software in Georgia for clients abroad, payroll is modest, and you want the fastest filing.
Payroll is a major cost, your team works from Georgia, and you have two years' experience of your own or through a parent company.
You raised at least GEL 100,000 from a fund, angel network or accelerator, or GEL 150,000 in GITA grants, and you are building an innovative product.
Most of your revenue comes from Georgian clients. Virtual Zone relief only covers IT supplied abroad.
Introduced in June 2025. Salaries are free of income tax in years 1 to 3, up to a limit set by the Government. In years 4 to 6, salaries and profit are taxed at 5%; in years 7 to 10, at 10%. The status runs one year at a time for up to 10 years, with investment milestones of GEL 5 million by the end of year 3 and GEL 15 million by the end of year 6. It cannot be combined with Virtual Zone or International Company status.
We test your activities, contracts, revenue split and team against the law, and tell you which status is realistic.
We align the company, service contracts and invoices with permitted activities, and assemble proof of experience and substance.
We draft and file within 10 business days: with the Financial-Analytical Service for Virtual Zone, with the Revenue Service for International Company.
We deal with the Revenue Service, the Ministry of Finance and the Administration of the Government until the final decision.
We advise on the taxable base, the 2% income test, payroll reporting and the conditions for retaining the status.
International Company status can be revoked retroactively if income from non-permitted activities exceeds 2% of permitted-activity revenue, or if the company stops meeting the eligibility conditions. Get the structure right before filing, and monitor it afterwards.
Equity, roles and exits stay informal until a dispute or an investor forces the question.
A shareholders' agreement and charter covering equity and vesting, roles, IP assignment, governance and deadlock, leaver terms and transfer restrictions.
Code written before incorporation, or by freelancers without a contract, can sit outside the company. Georgian law requires copyright assignments and licences to be in writing.
An IP chain from founders, employees and contractors into the company, so the product passes due diligence. See our IP practice.
Borrowed terms leave liability, payouts, content rights and suspension rules open, often in the wrong language.
Terms built around your product, in Georgian and English, with a privacy policy that matches your real data flows.
Rounds stall on missing minutes, an untidy cap table and unsigned IP assignments.
An investor-readiness review, a clean data room, SAFEs and convertible notes, term sheet negotiation, and reporting that keeps investor relations in order after closing.
Misclassified contractors create tax and labour risk, and most foreign hires now need the right to work in Georgia.
Employment and contractor templates, plus right-to-work filings through our market entry team.
Payments, crypto and lending models can require registration with the National Bank of Georgia.
Regulatory mapping before launch, and licence applications where they are needed.
For platforms, SaaS and marketplaces, in Georgian and English.
Aligned with a charter that is ready for registration.
From the first conversation to reporting after the round closes.
Entity formation and structure, the founders' deal, IP assignment and your first contracts.
T&Cs and privacy policy, tax status, SAFEs or convertible notes, employment templates.
Due diligence clean-up, a restated shareholders' agreement, board and investor reporting.
New markets and subsidiaries, group restructuring, M&A and sale.
Managing Partner
Leads the firm's Corporate, Tax, Litigation, Start-up and IP work. Member of the Georgian Bar Association, with a Master of Law and Business from Bucerius Law School in Hamburg and a Master of Business Law concentrating in Tax Law.
View profile
Senior Partner
Leads the Corporate, Litigation and Regulatory practices. Represents clients in complex disputes before courts and arbitral tribunals, and guides businesses through licensing and regulatory authorisation.
View profileA Georgian legal entity engaged in IT activities that holds Virtual Zone status. Profit from supplying abroad the IT it developed is exempt from profit tax. The status must be granted within 10 working days of applying, and an electronic certificate follows within 2 working days.
Dividends to individuals and non-residents are taxed at 5%, unless a treaty reduces this. Salaries are taxed at 20%. Property tax applies at up to 1%. Profit from Georgian clients stays taxable at 15% when distributed.
Profit tax is 5% on distribution, income tax on salaries is 5%, dividends are not taxed, and property used for permitted activities is exempt from property tax, except land. Salaries paid to Georgian citizens and research costs incurred in Georgia can reduce the taxable amount further.
Yes, if it represents a non-resident enterprise with at least two years' experience in the permitted activity, or if over 50% of its shares are held by partner enterprises with that experience. Otherwise it needs two years of its own experience. A common path is to start as a Virtual Zone Person and apply once those two years are built.
It depends on payroll. On profit alone, both leave a total tax of about 5% on fully distributed profit. International Company status wins when salaries are significant, because salaries are taxed at 5% instead of 20%. Virtual Zone status is easier to obtain and has no fixed experience or staffing test.
No. If a Virtual Zone Person receives International Company status, its Virtual Zone status is treated as cancelled from the start of that month. If an International Company receives Virtual Zone status, its International Company status is revoked. The same logic applies to innovative start-up status, so choose the regime first.
The Revenue Service checks the application within 10 days, then the file passes through the Ministry of Finance to the Government, which makes the decision. Timing after that depends on the Government, so plan for more than the initial check. The status applies from the beginning of the month in which it is granted.
A status for companies building innovative products that raised at least GEL 100,000 from a fund, angel network or accelerator, or GEL 150,000 in GITA grants, in the two years before applying. It reduces salary and profit tax in stages over up to 10 years, and cannot be combined with Virtual Zone or International Company status.
Yes. We incorporate companies and open bank accounts under power of attorney, so founders do not need to stay in Georgia for the process. See Market Entry.
· Reviewed by: Nika Magedani, Managing Partner. This page is general information, not legal advice. Rates, deadlines and procedures change: please speak to us before relying on them for a decision.
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