Small business status in Georgia: 1% of turnover, and what it means for a landlord

The Georgian tax regime is one of the main reasons the country appears on relocation lists. Inside it is a construction mentioned most often and understood least: small business status for a sole trader at a rate of one percent of turnover.

How the status works

• A sole trader is registered, and small business status is then granted to them.
• The rate is 1% of turnover up to an annual threshold; above the threshold the rate on the excess increases, and with sustained excess the status is lost.
• Accounting is on turnover, not profit: expenses are not deducted, and for a low-margin business that can be unfavourable.
• Reporting is monthly, and failing to file is the most common source of problems.

What the status does not cover

The list of excluded activities is set separately and includes licensed fields, certain types of consulting and activity requiring substantial assets. The specific activity has to be checked by its code rather than by general impression: refusal or retrospective loss of the status means recalculating tax under general rules.

Why letting is a separate story

An individual's income from letting residential property in Georgia is taxed at its own reduced rate, and that regime exists independently of small business status. Moreover, rental income is generally not the kind of activity for which a sole trader with small business status is created.

The practical conclusion is simple: do not register as an entrepreneur in order to let one apartment — there is a separate procedure for that.

• Long letting of housing by an individual — its own rate, a return once a year.
• Short letting through platforms may be treated differently and require another arrangement, including VAT questions at higher turnover.
• Letting non-residential premises — a different regime again.

The territorial principle

Georgia taxes income from Georgian sources, and applies its own approach to individuals' foreign-source income. That is attractive, and it is also where mistakes are most common: the rules for determining the source of income do not match intuition, and your previous country of tax residence may take a different view. The structure is built with a tax adviser on both sides, not on a forum's advice.

What to remember

• The turnover threshold and the exclusion list are figures and lists that get revised; check them at the date of registration.
• 1% of turnover is not "no taxes": it is a rate for a specific form and a specific activity.
• Reporting is compulsory monthly, even at zero turnover.
• Owning an apartment does not require sole trader status — property is bought by an individual without restriction.