Development work is the classic case for the Georgian IE: the output is a service, the client is usually a company somewhere else, and payments arrive as predictable invoices. If you are contracting rather than employed, the arrangement lines up almost exactly with what the 1% regime was built for.

Does this describe you?

You build software — backend, frontend, mobile, data, infrastructure — for a company, agency or startup that is not in Georgia. You invoice monthly or per sprint, perhaps through a contract with a US or EU entity. You may be full-time with one client or split across several. The work travels with your laptop.

Why the 1% rate applies

An IE with Small Business Status pays 1% on turnover, up to 500,000 GEL a year. Turnover means what your clients pay you. For developers this is unusually clean: your costs are typically a laptop and some subscriptions, so a turnover tax that ignores expenses is not a disadvantage — there was little to deduct anyway. At typical contractor rates, most developers stay comfortably under the ceiling.

The B2B point that matters most

When your client is a foreign company rather than a private individual, standard B2B place-of-supply rules put the supply where your customer is — outside Georgia. That gives you two things:

• No Georgian VAT on those invoices.
• Those sales are excluded from the 100,000 GEL VAT-registration threshold — so a good year does not push you into VAT registration.

This is the single most useful thing for a contracting developer to understand: earning well past 100,000 GEL from foreign company clients does not create a VAT obligation. Keep the contract and invoices in the company’s name — the treatment depends on the client being a business, not a consumer.

What it looks like month to month

You invoice the client, payment lands in your Georgian business account, and turnover is declared monthly. Keep the contract, the invoices and the incoming payments consistent with each other — that trail is what supports the B2B treatment if it is ever questioned.

What to watch

• Selling to consumers — an app or course sold to private individuals is a different analysis and can count toward the VAT threshold.
• The 500,000 GEL ceiling — plan ahead if you are approaching it or hiring subcontractors.

Frequently Asked Questions

Do I charge VAT to my foreign client?

No. Services to a foreign company fall outside Georgian VAT under B2B place-of-supply rules, and those sales are excluded from the 100,000 GEL registration threshold.

What if I sell my own app to individuals?

That is B2C, analysed differently, and such sales can count toward the VAT threshold. If you mix contracting with consumer sales, get the split reviewed before it grows.