Standard VAT in Georgia
The standard value-added tax (VAT) rate in Georgia is 18%.
Mandatory Registration
Companies are required to register as VAT payers if their revenue from taxable operations exceeds 100,000 GEL over any consecutive 12-month period.
Voluntary Registration
Organizations may also register voluntarily to benefit from tax incentives provided by Georgian legislation.
VAT Exemptions
Certain sectors are exempt from charging VAT on specific goods and services. However, even such companies may voluntarily register for VAT to reclaim VAT paid on purchases.
Who Can Register for VAT in Georgia?
Eligible entities include:
- Individuals
- Sole proprietors (including small business status)
- Legal entities such as LLCs and virtual companies
Exception: Sole proprietors with micro-business status in Georgia are not eligible to become VAT payers.
Services for Foreign Clients
When Georgian companies provide services to foreign clients, they are not required to charge VAT, provided the transactions meet certain legal criteria.
Reverse VAT
Services purchased from foreign suppliers are subject to reverse VAT.
Georgian companies must file VAT declarations monthly. If the company is registered for VAT, no actual payment is required, but submission of the declaration is mandatory.
What Is VAT?
Value-added tax is a consumption tax applied to the sale of goods and services within Georgia and on imports. The standard rate is 18%.
Companies with annual taxable turnover under 100,000 GEL are exempt from VAT unless they register voluntarily.
Who Must Pay VAT in Georgia?
Both legal and natural persons engaged in economic activity must pay VAT.
Mandatory registration applies once turnover exceeds 100,000 GEL within the last 12 months.
Below that threshold, registration is optional.
Taxable Transactions Include:
- Sale of goods within Georgia
- Provision of services within the country
- Import of goods
If services are provided to foreign clients outside Georgia, such transactions are generally exempt from VAT.
VAT Exemptions: With and Without Input Tax Deduction Rights
With deduction rights:
- Export of goods
- Services to diplomatic missions
- Tourist packages for foreigners
- Supply of pharmaceuticals
Without deduction rights:
- Medical and educational services
- Financial operations
- Sale of land
Examples of VAT Treatment:
- Cross-border trade (e.g., Poland–Ukraine): A Georgian company buys in Poland and sells in Ukraine. Such operations are not subject to Georgian VAT.
- Consulting for foreign clients: If services are delivered remotely to a client abroad, they are not taxed, assuming all legal conditions are met.
Invoices & Reporting
Registered VAT payers must issue electronic tax invoices via rs.ge.
Monthly declarations are due by the 15th of each month.
Proposed VAT Threshold Changes
There is discussion in Georgia to increase the mandatory registration threshold from 100,000 GEL to 500,000 GEL, a move supported by local businesses to ease burdens on small entrepreneurs.
FAQ (Frequently Asked Questions)
1. Is a small-status sole proprietor required to pay VAT in Georgia?
Yes — if you provide services within Georgia and your taxable revenue exceeds 100,000 GEL over the past 12 months, registration is mandatory.
If services are provided to foreign clients, VAT may not apply.
2. Do I need to pay VAT on services to foreign clients?
No — if services are rendered remotely and payment is received from abroad.
However, if payment is made through a Georgian bank, the revenue may be treated as domestic.
3. Is the initial revenue up to 100,000 GEL counted toward the VAT threshold?
Yes — the threshold includes the total taxable income over any 12 months. Only taxable operations are included.
4. Must I register if I exceed 100,000 GEL but plan to close my business?
Yes — VAT registration is still required. It remains active for 12 months from the moment the threshold is exceeded.
5. Do I need to pay VAT on salaries exceeding 100,000 GEL?
No — VAT does not apply to wages. However, taxable income over 100,000 GEL requires registration.
6. Do I have to pay VAT for Facebook ads as a sole proprietor in Georgia?
Yes — if you’ve selected “for business” ads, Facebook doesn’t charge VAT.
In this case, you must self-assess and declare reverse VAT (B2B rule).
7. Does international trading (e.g., Poland–Ukraine) count toward the VAT threshold?
No — if goods do not cross Georgia’s borders, VAT doesn’t apply, and such transactions are not included in the threshold.
8. Can I avoid VAT if I exceed 100,000 GEL but stop operating?
No — once the threshold is exceeded, registration is mandatory, even if your activity pauses.
9. Do I pay VAT for foreign services paid via a Georgian bank?
Yes — tax authorities may treat this as local income, which contributes to the threshold.
10. Must virtual-status sole proprietors pay VAT?
Yes — if taxable operations exceed 100,000 GEL in 12 months.
However, remote services to foreign clients may be exempt.
11. What happens if I don’t register after exceeding the threshold?
The tax office may automatically assign you as a VAT payer and impose fines and penalties.
12. How do I calculate VAT payable?
VAT = output VAT (charged to clients) – input VAT (paid to suppliers).
Declarations must be filed monthly by the 15th.
13. Can I get a VAT refund on exported goods?
Yes — exports are zero-rated with the right to deduct input VAT.
This means you can reclaim VAT paid on purchases related to export.
