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Why Digital Nomads and Tech Startups Are Moving to Tbilisi or Batumi in Georgia
Tbilisi, the vibrant capital of Georgia, has rapidly become a magnet for digital nomads and tech entrepreneurs. Its unique blend of affordable living, rich culture, and favorable tax policies makes it an attractive destination for professionals seeking both lifestyle and financial advantages.
Tax Benefits for Digital Nomads
Understanding Tax Residency in Georgia
In Georgia, tax residency is determined by physical presence. If an individual spends 183 days or more in the country within any 12-month period, they are considered a tax resident. This status subjects them to taxation on their worldwide income.
1% Tax Rate for Individual Entrepreneurs
Digital nomads can benefit from Georgia's 1% tax rate by registering as Individual Entrepreneurs (IE) with Small Business Status. To qualify:
- Annual turnover must be under 500,000 GEL.
- The individual should not be VAT registered.
- The business activity must not be on Georgia's prohibited list.
This setup is ideal for freelancers and remote workers offering services to clients outside Georgia.
Exceeding the 500,000 GEL Threshold
If the annual turnover exceeds 500,000 GEL, the tax rate increases to 3% on the excess amount. If this threshold is exceeded for two consecutive years, the Small Business Status is revoked, and the individual is taxed under the general regime.
Prohibited Activities for Small Business Status
Certain activities are excluded from the Small Business Status regime, including:
- Medical, architectural, legal, or notarial services
- Auditing and consulting services
- Gambling and gaming businesses
- Currency exchange operations
- Production of excisable goods
- Staffing and recruitment services
Engaging in these activities disqualifies individuals from obtaining or maintaining Small Business Status.
Alternative: Classic LLC Structure
For those whose activities fall under the prohibited list or who exceed the turnover threshold, establishing a Limited Liability Company (LLC) is a viable alternative. LLCs in Georgia benefit from:
- 15% corporate income tax on distributed profits
- No tax on retained earnings
- Simplified registration and reporting procedures
This structure is suitable for growing businesses and those seeking to reinvest profits.
Lifestyle and Infrastructure in Tbilisi, Batumi, Georgia
Affordable Living
Tbilisi offers a low cost of living compared to Western cities. Monthly expenses, including accommodation, food, and transportation, are budget-friendly, allowing entrepreneurs to allocate more resources to their ventures.
Growing Tech Ecosystem
The city boasts a burgeoning tech scene with numerous coworking spaces, incubators, and networking events. Initiatives like Impact Hub Tbilisi provide support and resources for startups, fostering a collaborative environment.
Tbilisi's combination of favorable tax policies, affordable living, and a supportive startup ecosystem makes it an attractive destination for digital nomads and tech entrepreneurs. As Georgia continues to position itself as a hub for innovation and remote work, now is an opportune time to consider making the move.