Virtual Zone status is real, it is genuinely 0%, and it is the single most misunderstood regime on the Georgian tax code. It is also routinely confused with a completely different status carrying a completely different rate. Here is what Virtual Zone actually requires, what it exempts, what it does not, and where Georgian tax authorities have started pushing back on companies that treated the paperwork as the whole substance.
What Virtual Zone status actually is
A virtual zone person is a Georgian legal entity, in practice an LLC, that has been granted status under the Law of Georgia on Information Technology Zones. The law defines information technology narrowly: the study, support, development, design, production and introduction of computer information systems that result in a software product. Holding the status exempts a company from three things:
- Corporate tax on profit earned from supplying IT products it created to clients outside Georgia
- VAT on those same exports
- Export duties on IT goods leaving Georgia's customs territory
That is a materially better position than Georgia's already low standard rate. Georgia taxes corporate profit at a flat 15%, and only when it is distributed rather than when it is earned, under the Estonian-style model confirmed in PwC's Georgia tax summary. Virtual Zone status takes that 15% on qualifying export profit down to 0%, distributed or not.
Who actually qualifies
The eligibility bar written into the law is low. There is no minimum trading history, no minimum headcount, and no minimum revenue. What the law requires is a company genuinely engaged in producing software, applying for status, and the Government-designated body granting it, which in practice runs through the Revenue Service.
That said, low statutory requirements are not the same as low practical scrutiny, which we cover further down. In our own client work, the companies that qualify cleanly are the ones that can show a real development function: a product, a repository, contracts with clients outside Georgia, and people who actually build the thing.
What counts as "IT activity"
The law's definition, again, is the study, support, development, design, production and introduction of computer information systems resulting in software products. In practice that reaches:
- Custom software development for clients abroad
- Software products and applications, including games
- Platforms and systems built and maintained by the Georgian entity
It does not comfortably reach activities that sit next to software without producing it: pure IT support or helpdesk work, reselling someone else's licence, or consulting about technology rather than building it. Where your business sits close to that line, it is worth getting an answer before you apply rather than after, because a wrong assumption here is expensive in a way that is hard to unwind.
SaaS revenue and where it fits
Software-as-a-service income sits inside the regime when the product is genuinely developed and maintained by the Georgian entity and sold as a subscription to clients outside Georgia. The subscription structure itself is not the issue; the Revenue Service looks at whether the underlying product is your company's own IT output, not at how the invoice is worded.
Where it gets harder is a SaaS business that is mostly licensing or reselling a platform built elsewhere, or one where the Georgian entity handles support and billing while development sits in another jurisdiction. That is a support function riding on someone else's software, not IT activity under the law, and dressing the invoice as a "software subscription" does not change what is actually happening behind it.
The 0% rate, and what it does not cover
The exemption is narrower than "IT companies pay no tax," and the gap between the two is where people overpay attention to the rate and underpay attention to the scope.
It covers profit from supplying IT products the company created to clients outside Georgia. It does not cover:
- Sales to Georgian clients, which are taxed under the standard rules like any other domestic revenue
- Income from activities that are not IT under the law's definition, even if the company holds Virtual Zone status
- Personal income tax on salaries the company pays, which is unaffected by the entity's status
A Virtual Zone LLC selling half its output to Georgian companies and half abroad pays the standard rate on the domestic half and 0% on the exported half. Status is not a blanket exemption on everything the company touches; it is an exemption on a specific, defined category of income.
How to apply for Virtual Zone status
The company has to exist first. Virtual Zone status attaches to a registered Georgian legal entity, so an LLC registration comes before the application, not alongside it. We handle that as part of LLC registration, and it is worth deciding on the Virtual Zone angle before the company is even filed, since it can shape how the charter and activity codes are written.
Once the LLC exists, the application goes in describing the company's IT activities, including a list of projects completed if there is a track record already. The Revenue Service of Georgia reviews it and, by law, a decision follows within 10 working days, with the electronic certificate issued within a further 2 working days if granted. There is no published separate government licence fee for the status itself, distinct from the LLC's own registration cost, though the application is worth preparing carefully rather than treating as a formality given the scrutiny covered below.
Status, once granted, is not time-limited. It does not expire on a fixed schedule the way some licences do, and it is not something you reapply for annually. What does continue is everything else that comes with running a Georgian LLC: monthly Revenue Service declarations, annual financial reporting, and VAT registration if turnover from any non-exempt activity crosses the threshold.
What Virtual Zone status costs in practice
The direct government cost is the LLC's own registration fee, 200 GEL standard or 400 GEL for same-day processing, plus whatever the professional work of preparing the company and the application actually takes. There is no separate stated licence fee for Virtual Zone status on top of that.
The real cost most companies underestimate is compliance, not the application. A Virtual Zone LLC sits in the higher accounting tier rather than the simplest one, because it needs monthly declarations that correctly separate exempt export income from any domestic revenue, and because financial reporting has to hold up if the Revenue Service ever asks for the underlying evidence. Our own accounting packages price Virtual Zone companies on the same "Business" tier as VAT-registered LLCs for this reason, not the entry-level tier built for a plain IE. Budgeting for that ongoing cost, not just the setup fee, is the honest way to plan for it.
Virtual Zone versus International Company: the distinction that actually matters
Virtual Zone Person status and International Company status are not two names for the same thing, and conflating them is the single most common mistake in this space. Virtual Zone gives 0% corporate tax on foreign-sourced IT income specifically, with a narrow activity definition and no minimum trading history. International Company status, defined in a separate government ordinance, gives 5% profit tax on a much broader range of IT and maritime services, but only to companies with at least two years of genuine experience and real operating substance already in place. They sit at different points on the same spectrum, not on top of each other.
| Virtual Zone Person | International Company | |
|---|---|---|
| Corporate tax rate | 0% on qualifying export profit | 5% on profit |
| Dividend tax | Standard rules apply | 0% |
| Wage tax on staff | Standard 20% | 5% |
| Property tax | Standard rules apply | 0% on qualifying assets |
| Minimum experience | None stated | At least 2 years in the permitted activity |
| Substance requirement | Genuine IT production, increasingly scrutinised | Explicit: local staff, real operating costs, offices |
| Qualifying activities | Narrow: production of software products only | Broader: development, hosting, maintenance, consulting, plus maritime services |
| Revenue mix limit | Not specified in the law | At least 98% of revenue from permitted activities |
Neither status is straightforwardly "better." A new company with a genuine software product and no trading history cannot meet International Company's two-year bar, so Virtual Zone is the only route available to it even though the rate is more favourable. An established company with a broader service mix, real local staff and two years behind it often finds International Company's wider activity definition and legal certainty worth more than the difference between 0% and 5%. We walk through the decision properly, including the maths at different revenue levels, in Georgia's tax regime comparison, and cover International Company's own requirements in full in International Company status.
The retrospective revocation risk
This is the part most English-language guides skip, and it is the part worth taking seriously before you apply rather than after.
Article 6 of the Law on Information Technology Zones ties the whole regime to activity "related to the production of ITs in the territory of Georgia." For years, that language was applied loosely: a Georgian-registered entity holding the status was generally treated as compliant regardless of exactly where the underlying development work happened. Enforcement has since tightened, and the Revenue Service has moved toward reading that clause literally, asking companies to show that development genuinely took place inside Georgia, developers physically present, work product traceable to Georgian-based activity, rather than accepting the certificate and the company's registered address as sufficient evidence on their own.
The practical exposure is retrospective. A company that held the status but cannot produce evidence that development happened in Georgia can be asked to restate past filings at the standard 15% rate rather than 0%, with the usual penalties and interest that come with a correction rather than an original filing. This is not a theoretical risk confined to obvious shell arrangements. It reaches any company that outsourced core development outside Georgia while billing the exempt income through the Georgian entity.
What genuine substance actually looks like
The practical answer to the scrutiny above is evidence, held before it is ever asked for rather than assembled afterward.
- Developers who are actually in Georgia, whether employed directly or engaged as contractors working from here
- Client contracts and invoices that trace to the Georgian entity's own output, not a pass-through of someone else's product
- Technical artefacts: repositories, documentation, product history, that show the software was built by this company
- Ordinary operating costs consistent with a real office and a real team, not just a registered address
None of this is exotic. It is the same kind of evidence any tax authority would want to see before accepting that income earned abroad and taxed at 0% is genuinely what it claims to be. Companies that could always produce it have little to worry about from the shift; companies relying on the certificate alone are the ones actually at risk. If you are setting this up from outside Georgia and coordinating through a representative, the substance question is worth resolving before registration rather than treating remote company registration as the whole job.
VAT, monthly filing and what does not go away
Virtual Zone status exempts qualifying export income from VAT specifically. It does not exempt the company from registering for VAT if it also earns Georgian-source revenue above the standard 100,000 GEL threshold, and it does not remove the ordinary monthly declaration obligation every Georgian LLC carries. Reverse VAT on services bought from abroad, hosting, software tools, foreign contractors, can also still apply on the Georgian side of the business regardless of the company's status. We go through the mechanics of both in VAT in Georgia.
Filing has to distinguish exempt export income from anything that is not, every month, correctly, because that distinction is exactly what an audit tests. This is the ongoing compliance cost referenced above, and it is the reason monthly accounting for a Virtual Zone company looks different from accounting for a plain IE.
Free Industrial Zone: a different regime again
Free Industrial Zones are a third preferential structure entirely, aimed at companies physically operating within one of Georgia's designated zones rather than exporting software from anywhere in the country. The exemptions and conditions are different from both Virtual Zone and International Company status, and it is worth not conflating the three just because all three sit under the general heading of "Georgian tax incentives." Where FIZ genuinely fits is covered separately in Free Industrial Zone Georgia.
We register the Georgian LLC your Virtual Zone application needs, check your activity against the current IT definition before you file, and prepare the application so the substance evidence holds up if the Revenue Service ever asks.
See what it costs
Key takeaways
- Virtual Zone status gives an LLC 0% corporate tax, 0% VAT and no export duty on IT products it created, sold to clients outside Georgia.
- It only covers that specific category of income. Domestic sales and non-IT activity are taxed normally.
- Virtual Zone (0%, narrow activity, no minimum history) and International Company status (5%, broader activity, 2-year minimum) are different regimes, not two names for the same thing.
- The application takes up to 10 working days, with a certificate 2 working days after approval, and there is no separate published licence fee.
- Status does not expire on a schedule, but Revenue Service scrutiny of genuine Georgia-based development has tightened, with retrospective correction to 15% a real risk for companies that cannot evidence it.
- Monthly filing, VAT registration above the standard threshold, and reverse VAT obligations all continue regardless of status.
Frequently asked questions
What is Virtual Zone status in Georgia?
It is a status granted to a Georgian legal entity, in practice an LLC, engaged in producing software, that exempts profit earned from exporting that IT product to clients outside Georgia from corporate tax, VAT and export duties. The core benefit is a 0% rate on qualifying income rather than Georgia's standard 15%.
Is Virtual Zone the same as International Company status?
No. Virtual Zone gives 0% on a narrowly defined category of exported IT income with no minimum trading history. International Company status gives 5% profit tax across a broader range of IT and maritime services, but requires at least two years of genuine experience and real operating substance. They are separate regimes with separate eligibility rules.
Who can apply for Virtual Zone status?
Any Georgian-registered legal entity genuinely engaged in developing software products can apply. There is no minimum revenue, headcount or trading history written into the law, though the Revenue Service increasingly wants to see evidence that development is genuinely happening in Georgia before accepting the exemption applies.
Does Virtual Zone status cover SaaS subscription income?
Yes, where the underlying software is genuinely developed and maintained by the Georgian entity and sold as a subscription to clients outside Georgia. It does not cover a business that is mainly reselling or supporting a platform built elsewhere, regardless of how the invoice describes the fee.
How long does it take to get Virtual Zone status?
Up to 10 working days for the decision, with an electronic certificate issued within a further 2 working days once granted. The LLC has to already be registered before the application goes in, which adds its own few days on top.
How much does Virtual Zone status cost?
There is no separate published government licence fee for the status itself. The cost that exists is the LLC's own registration fee, 200 GEL standard or 400 GEL same-day, plus professional preparation of the application and the ongoing accounting a Virtual Zone company needs to keep exempt and taxable income properly separated.
Can my status be revoked and back-taxed?
Yes, and this has become a real risk rather than a theoretical one. Revenue Service enforcement has tightened around whether development genuinely happened inside Georgia. A company that cannot evidence this can be required to restate past filings at the standard 15% rate, with penalties, even years after the income was originally reported at 0%.
Does Virtual Zone status cover sales to Georgian clients?
No. The exemption applies specifically to IT products supplied to clients outside Georgia. Revenue from Georgian clients is taxed under the standard rules regardless of the company's Virtual Zone status.
Do I still have to file monthly if I hold Virtual Zone status?
Yes. Every Georgian LLC files monthly with the Revenue Service regardless of status, and a Virtual Zone company additionally has to correctly separate exempt export income from any other revenue in that filing. VAT registration still applies if non-exempt turnover crosses 100,000 GEL.
Which is better for a new company with no trading history, Virtual Zone or International Company?
Virtual Zone, by default, because International Company status requires at least two years of documented experience in the permitted activity that a brand-new company cannot show. Companies that clear the two-year bar often reassess once they qualify, since International Company's broader activity definition and dividend treatment can be worth more than the rate difference.
What happens if my business does some IT work and some consulting?
Only the genuine IT-activity income, production of software products supplied outside Georgia, qualifies for the 0% rate. Consulting or support revenue sitting alongside it is taxed under the standard rules, so the company needs to track and report the two separately rather than applying one rate to everything.