Freelancers need to declare income received via Solar Staff on their own, because the service is not a tax agent and does not pay their tax on such income (as per Articles 100, 102, and 153 of the Tax Code of Georgia).
To carry on tax accounting in Georgia for your Solar Staff income, you need to:
Be a tax resident
Obtain a tax ID number
Select a tax regime
Tax residence in Georgia
Georgia's residents are taxed on their worldwide income, while non-residents are taxed only on their Georgian-sourced income.
IMPORTANT! When receiving income via Solar Staff, you need to pay tax in Georgia if the services have actually been provided within Georgia (Article 104 of the Tax Code of Georgia).
An individual is recognized as a tax resident of Georgia if one was actually located in Georgia for 183 days or more in any continuous 12-month period ending in the current tax year (Article 34 of the Tax Code of Georgia). This means that a freelancer that arrived in Georgia in August 2023 and stayed there will obtain a tax resident status in 2024 only, and the status will cover the entire 2024 (no Georgian taxes will apply for the period from August to December 2023).
Georgia has income tax treaties with a number of countries for the purpose of avoiding double taxation (full list here). The provisions of such treaties may override the Georgian resident alien rules.
Tax ID number
To pay tax in Georgia on income received via Solar Staff, freelancers need to obtain a tax ID number.
To do that, contact a service center of Georgia's Revenue Service (შემოსავლების სერვისი) at your place of registration and apply for registration as a taxpayer (Appendices 2 and 3 to Georgia's Procedure on Tax Registration of Taxpayers). Individuals need to use the template form shown in Appendix 3, and for all other taxpayers (including individual entrepreneurs), the form in Appendix 2 applies. The application must be completed in English or Georgian. After submitting you application, you will receive a tax ID number consisting of 9 digits.
Taxes and contributions payable by freelancers
In Georgia, there are the following statuses a freelancer can have in terms of income taxation:
To set up as an individual entrepreneur, you need to apply to the Public Service Hall with the following documents:
Identity card (foreign citizens also need a confirmation that they are staying in Georgia legally, such as a passport stamp by border control)
Registered address in Georgia
Georgian phone number
Email address
State duty payment confirmation (GEL 75).
All documents in a language other than Georgian must be translated to Georgian. Once the registration is complete, individual entrepreneurs receive a text message (using the phone number they have provided) to access their taxpayer account.
IMPORTANT! You can use Solar Staff as a Georgia-based individual entrepreneur or as an individual, but there is no option to choose a tax status in the service. That being said, you can still fill in your tax ID in your account.
Tax obligations depend on the freelancer's status and/or fulfillment of certain conditions. Read on for more details.
Individual
You can receive income via Solar Staff and pay income tax as an individual at a rate of 20% (Article 81 of the Tax Code of Georgia).
Reporting and payment. An income tax return covering only your taxable income must be filed with the tax office at your place of registration and tax must be paid before April 1 of the year following the reporting one (Article 153 of the Tax Code of Georgia). If there are no payments due under your current tax obligations, you can file your tax return three months later. To do this, you will need to submit a written application to the tax office before the last day all tax returns must be filed, which is April 1. Please mind that the deadline for actually paying the tax remains the same (Article 68 of the Tax Code of Georgia). Learn more about filing a tax return here.
Individual holding a micro business status
Individuals with no employees and an annual income of up to GEL 30,000 can apply for a micro business status (Article 84 of the Tax Code of Georgia). In this case they are exempt from paying an income tax.
Limitations. The micro business status does not apply to certain types of activities (such as consulting services, commercial activities that require a permit or a license, etc.). For more information, see Appendix 2 to the Law of Georgia On Special Taxation Regimes.
Registration as a micro business is not required – a certificate from tax authorities will suffice. To obtain a certificate, you need to file an application. For a template and a certificate form, see Appendix 1 to the Law On Special Income Tax Regimes. Applications can be filed by individuals wishing to obtain a micro business status and by individual entrepreneurs classified as a small business.
Reporting and payment. Tax returns must also be filed before April 1 of the year following the reporting one (this deadline can also be extended). For instructions on how to fill out a tax return and other applicable documents, see Appendix 2 to the Law On Special Income Tax Regimes.
Individual entrepreneur holding a small business status
Registration as a small business is similar to the process applicable to micro businesses. Individuals and individual entrepreneurs can register as small businesses with tax authorities, provided the following conditions are met:
Individual entrepreneurs have an income not exceeding GEL 500,000.
The type of activity they engage in is not on the list of prohibited activities (see Appendix 4 to the Law On Special Taxation Regimes).
The income tax rate for small businesses depends on the income: 1% for incomes below GEL 500,000, and 3% for incomes over GEL 500,000. However, the small business status ceases to apply if income for two calendar years exceeds GEL 500,000 for each year (Clause 2 of Article 89 of the Tax Code of Georgia). Individual entrepreneurs who have lost their small business status pay income tax the same way as individuals do.
Reporting and payment. Tax returns are filed and tax paid before the 15th day of the month following the reporting one (but in practice paying before the 10th day is the safest option). Tax returns can only be filed electronically. To do that, taxpayers need access to the online platform of Georgia's Revenue Service. For more information on reporting, see the Revenue Service's guide and video instructions.
Additional taxes and contributions
Value-added tax. Freelancers must register as VAT payers and pay VAT if their total transactions subject to VAT (excluding export transactions) for any consecutive period of 12 calendar month exceed GEL 100,000. Registration with tax authorities must be completed within two business days after you exceed the threshold (Article 165 of the Tax Code of Georgia). You can register in person or online. The VAT rate is 18%. VAT returns must be filed and VAT paid before the 15th day of the month following the reporting one. Returns are filed via an online portal. Learn more about filing a VAT return here.
Contributions to the pension fund. Freelancers make mandatory contributions to the pension fund at a rate of 4% when filing annual income tax returns (Article 3 of the Law On Funded Pension). Payments are made using an individual pension account opened with the Pension Agency (საპენსიო სააგენტო). Learn more about setting up an individual pension account.
Additional info
If you are entitled to deductions under Articles 105–122 of the Tax Code of Georgia, you can reduce your tax, but must still declare your income.
Income received via Solar Staff is declared using certificates and invoices, and in accordance with the offer agreement.
If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].