VAT is one of the six taxes that make up Georgia's tax system, and it looks simple from a distance: 18%, and you register once you are big enough. Underneath that, three things trip up almost everyone who is not actively studying the rules. Reverse charge can make you liable for VAT before you have ever registered. Reclaiming what you have paid depends on a status most people do not know they need to apply for separately. And a non-resident selling digital services into Georgia has its own registration track entirely, unconnected to the 100,000 GEL threshold everyone else watches. Here is how VAT actually works, threshold to exemption.
VAT in Georgia: the basics
The standard rate is 18%, charged on the supply of goods and services for consideration within Georgia's economic activity, as set out in the VAT chapter of the Tax Code of Georgia. A VAT-registered business charges 18% on top of its prices, collects it from customers, and periodically pays the government the difference between what it charged (output VAT) and what it paid on its own purchases (input VAT).
Registration is not automatic and it is not tied to any particular entity type. An Individual Entrepreneur, an LLC, a Virtual Zone company or an ordinary sole trader can all end up VAT-registered, and the rules that follow apply the same way regardless of which one you are. VAT sits entirely separately from what an LLC owes on distributed profit, covered in full in corporate income tax in Georgia - a company can be VAT-registered and still owe nothing in corporate tax for years if it never distributes.
The registration threshold, and the two-day countdown
Registration becomes mandatory once your taxable turnover exceeds 100,000 GEL in any continuous 12-month period, not a calendar year - the window rolls, so a business that crosses the line in October counts back to the previous October, not to 1 January. Once you cross it, you have to apply to the Revenue Service within 2 working days.
That short window catches people off guard. A business tracking turnover monthly rather than continuously can cross the threshold mid-month and not notice until the next reconciliation, by which point the registration deadline has already passed. Certain VAT-exempt transactions are excluded when calculating whether you have crossed the line, which is one reason the running total is worth checking against actual taxable turnover rather than total revenue.
Voluntary registration
You can register before the threshold forces it, and it is a genuine strategic choice rather than only a compliance step. Registering voluntarily makes sense if your costs are heavily loaded with Georgian VAT you would like to reclaim, such as an importer buying stock locally, or if your main clients are themselves VAT-registered businesses who would rather see VAT on your invoice than not. An LLC weighing this is usually weighing several structural questions at once, which our LLC registration service can walk through alongside the VAT decision itself.
Reverse charge: why even a 1% Small Business Status IE gets hit by it
This is the mechanism that surprises the most people, precisely because it applies whether or not you are VAT-registered at all.
Buy a service from a supplier outside Georgia - software subscriptions, cloud hosting, a foreign contractor, an overseas marketing agency - and Georgia treats you as the one responsible for the VAT on that purchase, not the foreign supplier. You are liable to declare and pay 18% on it, calculated on the value of the service, regardless of whether your own turnover is anywhere near the registration threshold.
This is exactly why an Individual Entrepreneur holding Small Business Status can be paying 1% on turnover and still owe reverse charge VAT in the same month. The 1% regime taxes what you invoice out; reverse charge taxes what you buy in from abroad, and the two obligations run side by side without cancelling each other out. A freelancer paying for a SaaS subscription or outsourcing part of a project to a contractor overseas is the single most common way this gets missed, since nothing about registering as an IE flags it as a risk.
What differs by registration status is what happens next, not whether the liability exists:
- Not VAT-registered: you calculate and pay the reverse charge amount in full, by the ordinary monthly deadline, as a real cash cost.
- VAT-registered: you calculate the same reverse charge amount, but claim it back as an input deduction in the identical declaration, so no cash actually changes hands on it.
That difference is the practical case for registering voluntarily once your foreign-service spending becomes significant, even below the mandatory threshold: an unregistered business pays reverse charge as a real cost every time; a registered one nets it to zero the same month.
Reclaiming input VAT: the qualified status most people never apply for
Registering for VAT does not, by itself, give you the right to reclaim VAT you paid on local Georgian purchases. This is the second-most-missed rule in the whole system.
The Revenue Service grants two tiers. Plain, "unqualified" registration lets you charge output VAT and offset reverse charge against it, but it does not let you issue or receive full tax invoices for the purpose of reclaiming input VAT on ordinary domestic purchases. Qualified VAT status is a separate approval, following a verification process, that unlocks the right to actually deduct VAT paid to Georgian suppliers against what you owe.
A business that registers for VAT and assumes qualified status came with it can spend months paying 18% on local purchases with no way to claim it back, simply because the second application was never filed. If your business buys meaningfully from Georgian suppliers, whether office space, equipment or local subcontractors, applying for qualified status alongside the initial registration is the step that actually makes the input side of VAT work the way people expect it to.
VAT on digital and e-services: the rule that has nothing to do with the 100,000 GEL threshold
Since October 2021, a foreign company with no establishment in Georgia that supplies digital services to a Georgian consumer has to register for VAT here, through a dedicated non-resident portal, regardless of the ordinary registration threshold that applies to businesses operating inside Georgia.
The obligation reaches a non-resident selling digital products such as streaming, software, apps or online subscriptions where the buyer is a natural person in Georgia not using the service for their own business, or a business buyer receiving something unconnected to their economic activity. Registration is a simplified electronic process, and the reporting period runs quarterly, with the VAT liability due by the last day of the month following the reporting quarter.
This matters to two different readers of this guide. If you run a Georgian company selling digital products abroad, this rule is not yours - it applies to foreign sellers into Georgia, not Georgian sellers exporting out, which is a completely different and typically zero-rated position covered below. If you are a non-resident business selling software or digital content to Georgian consumers, this is a real, separate registration obligation that exists independently of everything else in this guide.
Exemptions: VAT-free is not the same as VAT-neutral
Georgia's Tax Code splits exemptions into two genuinely different categories, and which one applies changes whether you can reclaim anything on the exempt activity itself.
| Category | Examples | Right to reclaim input VAT |
|---|---|---|
| Exempt without credit | Financial services, medical care, education, funeral services, land sales | No |
| Exempt with credit (zero-rated) | Exports of goods, certain international transport | Yes |
The distinction matters because "VAT-exempt" sounds like a straightforward benefit, and for the first category it is not entirely one. A business supplying medical or educational services does not charge VAT to its customers, but it also cannot reclaim the VAT it paid on its own inputs, which is why some businesses in exempt sectors elect to charge VAT on financial or land transactions anyway where the law allows it, purely to preserve the right to deduct. Exports sit in the better category: no VAT charged to the foreign buyer, and full input VAT recovery on everything that went into producing what was sold.
That election is worth taking seriously rather than defaulting into the exemption automatically. A business that mainly sells exempt financial or land-related services, but also carries meaningful VAT-bearing costs such as office rent, equipment or professional fees, can end up worse off staying exempt than it would be electing to charge VAT and reclaiming what it paid on those costs. The decision is specific to each business's actual cost structure, which is exactly the kind of arithmetic worth checking before assuming the exemption is automatically the cheaper path.
Deregistering
VAT registration ends automatically on liquidation, on an individual's death, or from the date a bankruptcy ruling is published. Voluntary deregistration is available once at least a year has passed since you registered and your taxable turnover over the preceding 12 months has stayed under the 100,000 GEL threshold. The Revenue Service can also cancel registration with the taxpayer's consent, effective from the first day of the following month.
Filing and paying VAT
A VAT-registered business declares and pays through the same monthly cycle as every other Georgian tax obligation - by the 15th, covering output VAT charged, input VAT reclaimed, and any reverse charge activity for the month. It sits alongside, not instead of, whichever income or corporate declaration already applies to your entity type, exactly as covered in our monthly tax declaration guide. Every deadline that touches a VAT-registered business across the year, from the monthly cycle through annual reporting, is collected in one place in Georgia's tax deadlines.
An LLC holding Virtual Zone status is a useful illustration of how these rules interact rather than replace each other: its exported IT income is exempt from VAT specifically, but the same company still has to register if its non-exempt Georgian revenue crosses the threshold, and reverse charge on services it buys from abroad still applies regardless of status.
We register you for VAT, apply for Qualified status where it genuinely pays for itself, and handle the monthly declaration that reconciles output, input and reverse charge together.
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Key takeaways
- VAT is 18%, mandatory once taxable turnover exceeds 100,000 GEL in any rolling 12 months, with 2 working days to register once you cross it.
- Reverse charge VAT applies to services bought from abroad regardless of your own VAT status, which is why even a 1% Small Business Status IE can owe it.
- Plain VAT registration does not include the right to reclaim input VAT on local purchases - that requires the separate Qualified status approval.
- Non-resident sellers of digital services to Georgian consumers have registered and paid VAT here since October 2021, independent of the 100,000 GEL threshold.
- Financial services, medical care, education and land sales are exempt without the right to reclaim input VAT; exports are zero-rated with that right intact.
- VAT is declared and paid on the same monthly, 15th-of-the-month cycle as every other Georgian tax obligation.
Frequently asked questions
When do I have to register for VAT in Georgia?
Once your taxable turnover exceeds 100,000 GEL in any continuous 12-month period, not a fixed calendar year. You then have 2 working days to apply to the Revenue Service. You can also register voluntarily before reaching that point.
What is reverse charge VAT and does it apply to me?
If you buy a service from outside Georgia, such as software, hosting or a foreign contractor, you are liable to declare and pay 18% VAT on it, whether or not you are VAT-registered yourself. It surprises almost every new Individual Entrepreneur, including those on Small Business Status.
Why would a 1% tax Individual Entrepreneur owe VAT?
Small Business Status taxes what you invoice out at 1%. Reverse charge taxes services you buy in from abroad at 18%. They are separate obligations that run alongside each other, and holding the 1% status does nothing to remove the second one.
Can I reclaim VAT on things I buy in Georgia?
Only if you hold Qualified VAT status, which is a separate approval from plain registration. Unqualified registration lets you charge output VAT and offset reverse charge, but not reclaim VAT paid on ordinary local purchases.
What is the difference between qualified and unqualified VAT status?
Unqualified status is what every business gets automatically on initial registration. It does not carry the right to issue or receive full tax invoices for input VAT purposes. Qualified status is a further approval, following a verification process, that unlocks the ability to reclaim VAT paid to Georgian suppliers.
Do foreign companies selling digital services to Georgia have to register for VAT?
Yes, since October 2021, a foreign company with no Georgian establishment that supplies digital services to a Georgian consumer must register through a dedicated non-resident portal and account for VAT, independent of the 100,000 GEL threshold that applies to businesses operating inside Georgia.
What is exempt from VAT in Georgia?
Financial services, medical care, education and land sales are exempt without the right to reclaim input VAT. Exports of goods are zero-rated instead, meaning no VAT is charged but the exporter keeps the right to reclaim VAT paid on their own costs.
Should I register for VAT voluntarily before I hit the threshold?
It can make sense if your costs carry significant Georgian VAT you want to reclaim, such as an importer or a business buying heavily from local suppliers, or if your main clients are VAT-registered businesses who prefer to see VAT on your invoices. Below that, most small service businesses wait for the threshold rather than registering early.
How do I deregister for VAT?
Voluntarily, once at least a year has passed since registration and your taxable turnover has stayed under 100,000 GEL over the preceding 12 months. Registration also ends automatically on liquidation, an individual's death, or the opening of bankruptcy proceedings.
Does Virtual Zone status remove my VAT obligations?
Only for the specific exported IT income the status covers. A Virtual Zone company still has to register for VAT if its non-exempt Georgian revenue crosses the threshold, and reverse charge on services bought from abroad still applies regardless of the company's status.
Is VAT charged on services I export to clients outside Georgia?
Generally no - services supplied to a client outside Georgia typically fall outside the scope of Georgian VAT rather than being taxed at 18%, which is a large part of why most solo exporters never end up registered at all unless they choose to be.