Forming a Company in Georgia with 1% Tax: Is It Really Worth It?

Over the last quarter, GrowthBusiness has been receiving an average of five inquiries per week from Greek freelancers and digital entrepreneurs who have watched a YouTube video about Georgia, the 1% tax, and the Individual Entrepreneur structure. They want to know if it's legal, if it works, and if it's worth it. Our answer is neither a clear yes nor a clear no, but rather a set of real-world parameters that people usually overlook.

In this article, you'll learn how the Georgian structure actually works, why the "1% tax" isn't as simple as it sounds, what the real limitations and risks are, and why, in most cases, a US LLC in Wyoming is a more serious, safer, and more productive tool for the typical Greek professional. Generally, this will clarify many things about setting up a company abroad and which structure to choose.

How the Georgian Individual Entrepreneur regime works

The Georgian Individual Entrepreneur (IE for short) is a form of activity regulated by the country's Tax Code, similar to a sole proprietorship in Greece. The individual professional registers with the House of Justice, obtains a personal number, and can issue invoices as an IE.

By itself, the IE is taxed at 20% of net income. What makes the structure famous is a special regime called Small Business Status (SBS), regulated by Article 90 of the Georgian Tax Code. Those who meet the criteria are taxed at 1% of gross turnover (not profit), provided their annual turnover does not exceed 500,000 GEL, which is approximately 165,000 euros.

The key figures of the regime:

• 1% tax on turnover up to 500,000 GEL annually
• 3% tax for the portion above the limit
• Two consecutive years above the limit lead to the revocation of SBS
• VAT exemption below 100,000 GEL turnover
• Monthly tax declarations due by the 15th of the following month

There is also another regime, the Micro Business Status, with 0% tax, but a limit of 30,000 GEL (around $11,000), making it a solution for very small operations or for someone just starting out.

On paper, all of this sounds very attractive. In practice, however, once you dig a little deeper, a series of issues emerge that change the picture.

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The first serious truth: it's not a company, it's a sole proprietorship

The most important thing to understand before considering anything else: the Individual Entrepreneur in Georgia is not a company. It is the Georgian version of a Greek sole proprietorship. It does not have a separate legal personality from the individual. It is not an Ltd, it is not an LLC, it has no partners, no share capital, no articles of association.

This has three very serious consequences that no YouTuber mentions.

First consequence: zero personal asset protection. If a client sues you, if debt arises, if something goes wrong in your business, your personal assets (your home, your savings, your properties) are fully exposed. There is no corporate veil, no separation. A court order affects you personally, not your "company," because such a company simply doesn't exist.

Second consequence: poor image with serious clients. If you work with larger clients, corporations, or enterprises, signing a contract with an "Individual Entrepreneur" looks unprofessional. The same would apply if you sent them a Greek self-employment receipt. The Georgian IE passport looks even more exotic and often raises questions for the client's compliance department.

Third consequence: impossible to scale. You cannot meaningfully hire employees, you cannot take on a partner, you cannot divide shares, you cannot sell your business. The IE is personally tied to you and ceases to exist with you.

So, when someone says "I'm going to open a company in Georgia with 1% tax," the more accurate phrasing is "I'm going to open a sole proprietorship in Georgia with 1% tax, without asset protection." It's something very different.

The excluded activities are more numerous than you think

The Georgian government, through Resolution 415, excludes a long list of activities from Small Business Status. This is the first point that shatters the plans of many Greeks who contact us.

Excluded activities:

• All types of consulting, including tax and business consultants
• Legal services, notary services
• Medical services
• Architectural services
• Audit services
• Financial services, currency exchange
• Banking, insurance, financial intermediation
• Betting, casino, gambling
• Staffing services
• Activities requiring a special license

"All types of consulting" is the biggest problem. In practice, half of the Greek freelancers who inquire about Georgia are involved in some kind of consulting. Business coaches, growth marketers, SEO specialists providing strategic advice, financial advisors, wellness coaches – all of them fall into a gray area or, even worse, a clear exclusion zone.

And if you declare something that resembles consulting but try to label it "marketing services" to bypass the exclusion, Georgian authorities have the right to re-examine your activity up to three years retroactively. If it's determined that the actual activity was consulting, the SBS is revoked, and you're charged 20% plus penalties.

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You must actually relocate, otherwise this won't work

This is where most of the problems lie, and it's also the biggest lie of the Georgian hype: you cannot get an SBS in Georgia and continue living normally in Greece. You'll quickly realize it and pay dearly for it.

The Georgian IE alone does not make you a tax resident of Georgia. It's simply a business activity status. If you continue to be a tax resident of Greece (over 183 days in Greece or your center of vital interests is there), the Greek AADE has the right to consider all your income taxable in Greece. The Georgian 1% tax is credited, but the difference up to the Greek 44% plus contributions is yours to pay.

For the Georgian setup to work seriously, you need:

• Actual physical presence of 183 days per year in Georgia
• Full transfer of tax residency, with a file at the Tax Office for Residents Abroad
• Lease agreement and utility bills at a Georgian address
• Local bank transactions that show daily life
• Local health insurance coverage
• Certificate of Tax Residence from the Georgian Revenue Service

If you have a family, children in Greek school, or a spouse working in Greece, the residency transfer will not be approved. And because Georgia has been a member of the Common Reporting Standard (CRS) since 2023, Georgian banks automatically report your balances and transactions to the Greek AADE. So, the "I'll secretly make money in Georgia" scenario is no longer viable.

In practice, this means the Georgian model only works for someone willing to relocate and literally live six months a year in Tbilisi or Batumi. For anyone with a life, family, or ties in Greece, the structure becomes more of a headache than a saving.

The risks no one tells you about

Beyond taxes, there are risks that the average YouTuber or affiliate marketer doesn't mention because they don't sell well.

Geopolitical risk. Georgia borders Russia, has Russian-occupied Abkhazia and South Ossetia within its internationally recognized borders, and is located in one of Eurasia's most fragile geopolitical zones. The 2008 war is a recent memory. Your financial exposure to a country with such risk is not something to be taken lightly.

Currency risk. The Georgian Lari (GEL) is not a hard currency. Its fluctuations against the euro and dollar have reached 15-20% within short periods. If your payments come in euros but your turnover is recorded and taxed in GEL, you are exposed to exchange rate risk that you cannot control.

Legislative instability. The Georgian tax framework is constantly changing. In February 2022, the method for activating the SBS was amended. In April 2023, the HNWI status for tax residency changed. In 2024, rules for labor migration changed. This continuous change in the framework makes long-term planning difficult.

Tightening banking compliance. The two main Georgian banks (Bank of Georgia and TBC) have significantly tightened the account opening process for foreigners. In many cases, they request additional documents, a handwritten letter explaining the business model, a client list, and even an interview. Account opening, which once happened the same day, can now take weeks or be rejected entirely.

Difficulty with international payment gateways. If you operate an e-commerce or SaaS business, you'll find that Stripe, PayPal Business, and other services are either very difficult or impossible to connect with a Georgian business account. This alone is a deal-breaker for a huge portion of online businesses.

The alternative you should seriously consider: Wyoming LLC

Let's now turn to the other side of the discussion. Many who come to us for Georgia end up deciding to set up a company in America, specifically in Wyoming. And they don't do it because we're selling them something, but because when we show them the numbers and the legal comparison, the choice becomes clear.

First and foremost, a Wyoming LLC is a real company. It is a Limited Liability Company with separate legal personality, a separate EIN (US tax ID), its own Operating Agreement, and the right to contract on its own behalf. It carries the same legal weight as any other US company.

You have real asset protection. Limited Liability means that, in the event of a lawsuit or company debt, your personal assets are legally protected. Wyoming has the toughest legislation in the entire US regarding this, with charging order protection regulations that make it practically impossible to access personal assets through a lawsuit against the LLC.

You don't need to move anywhere. This is perhaps the biggest practical advantage. You can remain a resident of Greece, continue your life in Thessaloniki, Athens, or wherever you are, and operate your LLC from your computer. There is no requirement for physical presence or a minimum number of days.

You have 0% federal tax for foreign-source income. As a foreign owner of a single-member Wyoming LLC, without actual activity within the US (something called ETBUS, Effectively Connected Business), you owe no federal tax in the US for income derived from foreign clients. Wyoming doesn't even have a state income tax. Your tax is determined by where you are a tax resident.

You have no professional restrictions. Consulting, business coaching, financial advisory – all are permitted. No exceptions, no exclusion lists.

You have access to the entire US fintech ecosystem. All US banks open accounts for Wyoming LLCs. If you sell online, e-commerce, SaaS, or international services, this access is critical.

You have true anonymity. Wyoming does not publish the names of LLC members or directors in a public registry. Your competitors, your clients, the general public cannot see who is behind the company.

You have stability in a jurisdiction that controls global rules. The US is not just a country with friendly taxes. It is the jurisdiction that largely sets global rules. Your legal, banking, and commercial transactions are conducted through the most stable system in the world.

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Side by side: Georgian IE vs. Wyoming LLC

Let's put them side by side:

Feature	Georgian IE + SBS	Wyoming LLC
Legal Form	Sole Proprietorship	Real Company (Limited Liability Company)
Personal Asset Protection	None	Full (charging order protection)
Tax	1% up to 500K GEL, then 3%	0% federal for foreigners (foreign source), 0% state
Relocation Requirement	Yes, 183 days minimum presence	No, you work from wherever you are
Excluded activities	Consulting, legal, medical, financial, etc.	None
Filings	Monthly	Yes, annually (Form 5472 + 1120)
Anonymity	Partial	Full in public information
Access to Stripe, PayPal	Difficult or impossible	Immediate
Legislative Stability	Continuous changes	Decades of stability
Geopolitical Risk	High	Minimal
Currency Risk	Yes (GEL)	No (USD, the world's reserve currency)
Scaling Potential	Zero (single-person)	Full (members, shares, transferability)
Greek Tax Residency	Must change	Remains as is

The picture, when you see the comparison, is quite clear.

Example with real numbers

Take the case of Nikos, a freelance web developer with foreign clients, €80,000 turnover, €5,000 expenses.

Scenario A: Georgian IE with SBS

• Requirement: relocate to Tbilisi, 183+ days per year
• Tax: 800 euros (1% of turnover)
• Legal address, accountant, banking: 1,500-2,500 euros
• Travel to cover the 183 days: 3,000-6,000 euros
• Loss of ties with Greek family and network
• Risk of activity re-evaluation by Georgian authorities
• Actual cost: 5,300 to 9,300 euros, plus the cost of a life change

Scenario B: Wyoming LLC as a foreign member, remaining in Greece

• No relocation needed
• US federal tax: 0 (foreign-owned single member LLC, foreign source)
• State tax Wyoming: 0
• US accounting (Form 5472 + 1120 pro forma): 1200€ / year
• Greek tax on profit distribution to a Greek tax resident: 5% dividend

In Scenario B, Nikos continues to live his life in Greece, is not exposed to geopolitical risk, has a real company with legal protection, has no problems with activity restrictions, and has access to the entire US fintech ecosystem.

The accounting picture for the Greek side is a matter for our consulting. At GrowthBusiness, we work daily with Greek owners of Wyoming LLCs, and there are clear legal pathways for correctly declaring income in Greece, with clear tax outcomes.

When the Georgian structure is worthwhile

We're not telling you that Georgia is never worth it. There are specific cases where it might be the right choice:

• You are single, with no family ties to Greece, and want to change your country of residence from the outset
• You want a lower cost of living on a daily basis, not just lower taxes
• Your activity is entirely outside the excluded categories (typically IT development, not consulting)
• You have a turnover of 50,000 to 150,000 euros with foreign clients
• You do not depend on US payment gateways or US platforms
• You don't mind geopolitical exposure in the Caucasus region

For all other cases (and these represent the vast majority of Greek professionals who inquire), a Wyoming LLC is a more serious, safer, and more productive option.

The essence of the matter

A 1% tax always sounds appealing. In practice, however, the tax burden is only one piece of the equation. A serious tool for professional activity requires legal personality, personal asset protection, flexibility, access to global services, jurisdictional stability, and the ability to stand by you as you grow.

The Georgian Individual Entrepreneur, even with the attractive Small Business Status, is essentially an improved version of a sole proprietorship, tied to a country with multiple risks and requiring a complete life change.

A Wyoming LLC is a real company, in the most stable jurisdiction in the world, with no activity restrictions, zero federal tax for foreign owners, no relocation requirement, access to every fintech tool available on the market today, and legal protection that has been tested in real US courts for decades.

At GrowthBusiness.gr we have set up hundreds of Wyoming LLCs for Greek clients. We work daily with the Greek accounting aspect and know exactly how to handle income declaration and profit flow so that the structure stands legally and fiscally.

If you are seriously considering opening something in Georgia, first do a serious analysis of the Wyoming LLC. You will be surprised how much more flexible and safer this tool is. And if you still believe Georgia suits you, at least you will do so having compared it with the facts, not with a YouTube video.

Book a Google Meet from our page and let's discuss your profile specifically. We don't give you general advice or hasty solutions. We work with your numbers and show you what truly benefits you.

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Frequently Asked Questions

Is the Individual Entrepreneur in Georgia a real company? No. It is the Georgian version of a sole proprietorship. It does not have a separate legal personality from the individual, nor does it provide personal asset protection. For a real company with limited liability, you need an Ltd, LLC, or equivalent form.

Can I have a Georgian IE without living in Georgia? Technically yes, but without 183+ days of physical presence or HNWI status, you do not acquire Georgian tax residency. This means that the Greek AADE (Independent Authority for Public Revenue) can tax the income normally in Greece, practically nullifying the 1% benefit.

What is the main difference between a Georgian IE and a Wyoming LLC? A Wyoming LLC is a real company with legal personality, limited liability, access to US fintech tools, and does not require relocation. A Georgian IE is a sole proprietorship without asset protection that requires actual relocation to function fiscally.

Do I pay US tax if I have a Wyoming LLC as a Greek owner? As a foreign owner of a single-member LLC without actual business activity within the US (ETBUS), you do not pay federal income tax in the US for foreign-sourced income. Wyoming doesn't even have a state income tax. Your tax liability is determined by where you are a tax resident.

Why do you recommend a Wyoming LLC instead of a Georgian IE? Because in the majority of cases for Greek professionals, a Wyoming LLC offers a real legal structure, asset protection, zero federal tax for foreigners, access to global fintech tools, and doesn't require a life change or relocation. It's a more serious and flexible tool for long-term professional growth.

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