Registering a Georgian Individual Entrepreneur and picking up Small Business Status is the fast part of this move, and the 1% rate is real. What decides whether it is actually yours is a question Canadian law asks, not Georgian law: have you genuinely stopped being a Canadian tax resident, and what does the CRA charge on the way out if you have. Canada runs a facts-and-ties test rather than a day count, a departure tax on almost everything you own, and - the detail that changes this guide - no tax treaty with Georgia at all.
What a Canadian freelancer running a Georgian IE actually pays
A freelance developer earning CAD 100,000 in self-employment profit, registered as a Georgian IE with Small Business Status, owes Georgia exactly 1% of turnover: CAD 1,000. The rest happens entirely on the Canadian side, for as long as you remain a Canadian tax resident.
Assume an Ontario-resident freelancer who has not yet broken Canadian residency. Federal tax on CAD 100,000, using the 2026 federal brackets, comes to roughly CAD 14,400 after the basic personal credit. Ontario's own brackets, plus the provincial surtax, add a further CAD 6,600. A self-employed person also pays both portions of the Canada Pension Plan - 11.9% up to the 2026 maximum of CAD 74,600, plus the enhanced CPP2 layer at 8% up to CAD 85,000 - a combined CPP bill of roughly CAD 9,300. Employment Insurance is not part of this bill: self-employed Canadians are not required to pay EI premiums on self-employment income.
| Canada (Ontario, resident) | Georgia (IE + Small Business Status) | |
|---|---|---|
| Turnover / net profit | CAD 100,000 | CAD 100,000 |
| Federal income tax | ~CAD 14,400 | - |
| Ontario tax + surtax | ~CAD 6,600 | - |
| CPP (base + CPP2, self-employed rate) | ~CAD 9,300 | - |
| Georgian tax (1% of turnover) | - | CAD 1,000 |
| Total | ~CAD 30,300 (~30%) | CAD 1,000 (1%) |
That gap is real, and it is exactly why Canadian law does not let it happen automatically the moment someone books a flight.
Does the 1% actually apply to your income in the first place
Before any of the Canadian math matters, the 1% has to genuinely apply, which is a Georgian-side question first. Small Business Status taxes Georgian-source income, and for services that generally means work physically performed in Georgia, not work billed through a Georgian registration while you sit in Toronto or Calgary. We cover the mechanics in Georgia's 1% tax and the source test in Georgian-source income rules. What changes for a Canadian is everything downstream: whether Canada still considers you resident, and what it charges if you leave.
Breaking Canadian tax residency: ties, not a day count
This is the point almost every foreign guide to Canadian tax gets backwards. Canada does not primarily run a day-count test for residents leaving the country - it runs a facts-and-circumstances test built around residential ties, described in PwC's Worldwide Tax Summary for Canada.
Primary ties carry the most weight, and any one left in place can keep you a factual resident regardless of time spent abroad: a dwelling in Canada kept available for your own use (selling it, ending the lease, or handing it to a tenant with no reserved right to reoccupy is what closes this), a spouse or common-law partner who remains in Canada, or dependants who remain and are financially supported by you. Secondary ties - personal property, a driver's licence, provincial health coverage, social ties - matter too, but rarely decide a close case alone.
A separate rule sits alongside the ties test: the 183-day sojourning rule under paragraph 250(1)(a) of the Income Tax Act. Someone who has severed every residential tie can still be deemed resident for the whole year if physically present, or "sojourning," in Canada for 183 days or more - a risk for anyone splitting time between Georgia and visits home. The two tests do not substitute for each other.
What Canada charges on the way out, and why there is no treaty to fall back on
Canada has no tax treaty with Georgia in force. There is no tie-breaker article if the CRA disputes that you have genuinely left, and no reduced withholding on Canadian-source income you keep receiving afterward. Get the residency-severing steps right the first time, because there is no treaty safety net if you don't.
Ceasing Canadian residency triggers a deemed disposition under section 128.1 of the Income Tax Act: most capital property is treated as sold at fair market value the day you stop being resident and immediately reacquired at that value, whether or not you have sold anything. Real exclusions apply - Canadian real property, resource property, registered plans (RRSPs, RRIFs, TFSAs, pensions), and property owned before a short-term residency of 60 months or less in the prior 10 years. Anyone leaving who owns property worth more than CAD 25,000 must file Form T1161, with the deemed gain on Form T1243. Under subsection 220(4.5), you can elect on Form T1244 to defer payment until actual disposal, interest-free; security is only required once the tax owing exceeds roughly CAD 16,500, and the first CAD 100,000 of the deemed gain needs none. None of this is optional - the deemed disposition happens on departure whether or not you file the forms.
Every other guide in this cluster spends real space on whether CFC rules look through a Georgian entity, and Canada's version, Foreign Accrual Property Income, requires a foreign corporation. A Georgian IE has no separate legal personality, so there is no controlled foreign affiliate for FAPI to attribute income from - the income is simply yours. A Georgian LLC is different: Canada classifies foreign entities by their legal characteristics, so an LLC with separate legal personality, limited liability and centralised management is generally treated as a corporation, and can be a controlled foreign affiliate if Canadian residents control it. Whether its income is caught then turns on the active-business-income test, and a lean one-person services LLC risks reclassification as an investment business, pulled into FAPI, if it does not employ more than five full-time employees.
Georgia has double tax treaties in force with 58 countries, and Canada is not one of them - confirmed independently through PwC's Worldwide Tax Summaries for Canada, whose own list of treaty partners does not include Georgia either. No treaty means no tie-breaker article and no reduced withholding either way. Unlike the United States, Canada does not tax citizens on worldwide income once they genuinely leave, so this is a one-time risk around the departure, not a permanent tail.
CPP contributions stop once you are non-resident with no Canadian-source self-employment income - benefits already earned remain payable. EI was never mandatory for the self-employed. Quebec runs its own parallel residency test, and a person sojourning there 183 days or more can be deemed a Quebec resident independent of the federal test, generally requiring both a federal T1 departure return and a separate Revenu Québec return.
The steps, in order
- Decide what happens to any Canadian home before you leave - selling it or removing your own right to reoccupy it is what actually closes this tie.
- Address every other primary tie, since a spouse or dependants remaining in Canada can keep you resident regardless of the home.
- Track presence even after ties are severed, since 183 days or more of sojourning in a year can deem you resident anyway.
- Value your property against the section 128.1 deemed-disposition rule before departure, checking which exclusions apply.
- File Forms T1161 and T1243 with your departure-year return, electing to defer under Form T1244 if the numbers favour it.
- Register a Georgian Individual Entrepreneur and apply for Small Business Status, in person or under power of attorney through remote company registration.
- Choose an IE over an LLC if FAPI exposure is a concern, particularly for a lean one-person services business.
- Check Quebec's separate residency test and filing requirement if that is where you are leaving from.
Timeline and cost
The Georgian side moves fast: an IE with Small Business Status typically registers within days in person, or two to three weeks under power of attorney. The Canadian side sets the real pace - severing ties properly takes planning, and valuing property for the deemed disposition is worth doing with an accountant who has filed a T1243 before.
The verdict for a Canadian national
Georgia works with conditions for a Canadian national. Canada does not tax citizens on worldwide income once they genuinely leave, and has no multi-year trailing-residence rule the way Germany's or Spain's law does - once ties are severed and the departure tax settled, this is a one-time event, not an ongoing tail. The catch is that "handled properly" carries more weight here than elsewhere in this cluster, because there is no treaty. If the CRA decides a dwelling kept "just in case," or a spouse left behind, means residency never ended, there is no tie-breaker article to resolve it - domestic Canadian law is the only rule in the room.
We'll work through your residential-ties position, whether your departure tax exposure needs a deferral election, and whether an IE or an LLC is the right call given Canada's FAPI rules, before you register anything here. Written summary included.
See what it costs
Our full country-by-country guide compares the treaty position and headline trap for every country we cover, including moving from Australia to Georgia, the other economy here with no Georgian treaty, and moving from Portugal to Georgia, where the trap is entirely different.
Key takeaways
- Sever every primary tie, not just the home - a spouse or dependants left in Canada can preserve residency on their own.
- Track presence even after ties are gone: 183 days or more of sojourning in a year can deem you resident regardless.
- The deemed-disposition bill is calculated as at the day residency ends, and Form T1244 deferral needs electing with that year's return.
- FAPI only reaches a foreign corporation, so a Georgian IE is generally clear; a lean one-person LLC risks reclassification under the five-employee rule.
- Without a treaty, there is no independent referee if the CRA disputes your departure, which is why the paperwork has to be right the first time.
- Leaving from Quebec means a separate provincial residency test and a second, independent filing.
Frequently asked questions
Is there a tax treaty between Canada and Georgia?
No. Georgia has double tax treaties in force with 58 countries according to its Ministry of Finance, and Canada is not among them. Canada's own treaty network, confirmed through PwC's Worldwide Tax Summaries, does not list Georgia either, so there is no tie-breaker article and no reduced withholding to rely on.
Does moving to Georgia automatically end my Canadian tax residency?
No. Canadian residency depends on your residential ties - a dwelling kept available, a spouse or dependants remaining in Canada - not on where you register a business or how long you stay away. A Georgian IE registration changes nothing about your Canadian residency status on its own.
What is the departure tax and when does it apply?
Section 128.1 deems most of your capital property sold at fair market value the moment you cease to be a Canadian resident, whether or not you actually sell anything. Real property in Canada, registered plans like RRSPs and TFSAs, and property owned before a short period of Canadian residency are excluded; most other property is not.
Can I defer paying the departure tax?
Yes. Electing under subsection 220(4.5) on Form T1244 defers payment, interest-free, until the property is actually disposed of. Security is required once the tax owing passes roughly CAD 16,500, but the first CAD 100,000 of the deemed gain does not require security at all.
Does a Georgian IE or LLC trigger Canada's FAPI rules?
Generally not an IE: FAPI attributes income from a controlled foreign affiliate, which has to be a corporation, and an IE has no separate legal personality for the rule to attach to. An LLC is different - it is a separate legal person and can be a controlled foreign affiliate if Canadian residents control it, and a lean one-person LLC providing services risks reclassification as an investment business under the five-employee rule, pulling its income into FAPI.
Do I still owe CPP or EI if I keep freelancing from Georgia?
Not CPP, once you are genuinely non-resident with no Canadian-source self-employment income - though benefits already earned remain payable. EI was never mandatory for the self-employed in the first place, and regular EI benefits have never covered them either.
I live in Quebec. Does anything change for me specifically?
Yes. Quebec applies its own residency test in parallel with the federal one, and a person sojourning there 183 days or more in a year can be deemed resident independent of federal status, generally requiring both a federal T1 return and a separate Revenu Québec return.
Without a treaty, how does double taxation actually get resolved if it happens?
It does not get resolved by treaty, because there is not one. Any dispute over which country has the right to tax a given piece of income falls back entirely on domestic law, which is exactly why getting the Canadian residency-severing steps right the first time matters more here than where a treaty exists as a backstop.