Tax Residents of Georgia: Employment with a Foreign Company
- Current Context
- What Is Considered “Employment” for the Purpose of Tax Exemption?
- The Same Rules Apply to Services
- Conclusion
- Practical Recommendations
- Final Remarks
- Contact our lawyer for more details
In recent years, Georgia has become an increasingly attractive jurisdiction for professionals working remotely.
In particular, the country’s tax legislation is appealing due to a provision that allows Georgian tax residents to be exempt from personal income tax on income received from a foreign source.
In this article, the lawyers at REVERA examine whether this exemption is truly as straightforward in practice as it may initially appear.
Current Context
A common scenario involves Georgian tax residents working remotely from Georgia for a foreign company or providing services to foreign clients.
Note: A tax resident of Georgia is an individual who remains in the country for at least 183 days during any continuous 12-month period.
Individuals who have been granted special tax residency status on the basis of holding significant assets (commonly referred to as residency based on wealth) are also considered tax residents.
What Is Considered “Employment” for the Purpose of Tax Exemption?
Under Georgian law, employment refers to the performance of duties by a natural person within the scope of a relationship governed either by Georgian labour law or foreign labour law.
If a natural person is physically present in Georgia and performs employment duties from within Georgian territory, such income is typically considered to be income from a Georgian source and, consequently, subject to personal income tax, as per applicable legislation.
The Same Rules Apply to Services
Income is likewise deemed to originate from a Georgian source if it is:
- received in connection with the provision of services carried out on the territory of Georgia;
- derived from the use of property located in Georgia;
- generated through entrepreneurial activity carried out in Georgia.
Note: In Georgia, a natural person may legally provide services without registration as an individual entrepreneur (IE) or legal entity and still be subject to personal income tax, provided that:
1. The activity does not qualify as systematic entrepreneurial activity;
2. The income does not exceed substantial amounts (assessed on a case-by-case basis; no defined threshold);
3. The services do not require a mandatory licence or registration.
Conclusion
The exemption from income tax for income not sourced from Georgia applies only if the work is actually performed outside Georgia. The key criterion is physical presence: if the employee is working from within Georgia, tax liability arises — regardless of where the employer is incorporated or located.
Practical Recommendations
To minimise tax risks, especially in remote work arrangements, it is critical to explicitly specify the place of work in the contract.
If work is performed outside Georgia, this should be supported by documentary evidence such as travel tickets, passport stamps, or relevant clauses in the contract.
Final Remarks
Tax practice in Georgia is based primarily on the physical presence of the individual.
Even if the employer is located abroad, employment functions carried out in Georgia are typically treated as Georgian-source income and therefore taxable in Georgia.
For this reason, when structuring remote work, one must take into account not only formal legal arrangements, but also factual circumstances, to avoid unpleasant surprises during interactions with the tax authorities.
Authors: Yaroslavna Zadesenskaya, Oksana Iashagyan
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