A Georgia virtual zone company gets sold as a switch: register, apply, pay nothing. That version has been out of date since 2022. The 0% is real and the statute behind it is short, but the exemption is narrower than the sales pages suggest, and what decides whether you keep it is where your code is written and who writes it. Here is the rule, and where it breaks.
A status, not a company type
The rules sit in a short statute, the Law of Georgia on Information Technology Zones, in force since 1 January 2011. Published in English on the Legislative Herald of Georgia, it defines a virtual zone person as a legal person engaged in IT activities and holding the corresponding status.
Two consequences follow.
A virtual zone company is an ordinary Georgian LLC that has been granted an extra status. You go through the standard company registration process at the public registry first, then apply for the status separately.
And the status is open only to legal persons. An Individual Entrepreneur cannot hold it, which is the biggest fork in the road for solo developers. Our comparison of LLC versus Individual Entrepreneur covers what you take on by going the company route.
The same law exempts virtual zone persons from licensing and permit requirements.
What the 0% actually covers
Article 99 of the Tax Code of Georgia carries the exemption. It exempts from profit tax the profit of a virtual zone legal person from the supply of information technologies created by that person, delivered outside Georgia.
Read the qualifiers, because there are three. Created by the company. Information technologies. Supplied outside Georgia. Miss one and the exemption does not attach.
Here is what the status changes.
| Tax | Ordinary Georgian LLC | Virtual zone company |
|---|---|---|
| Profit tax on distribution | 15% | 0% on qualifying exported IT profit |
| VAT on the supply | 18% on Georgian taxable supplies | Outside the charge when the IT is supplied abroad |
| Dividend withholding to an individual | 5% | 5%, unchanged |
| Payroll tax on salaries | 20% plus pension contributions | Unchanged |
| Property tax | Applies | Unchanged |
Georgia taxes corporate profit on distribution rather than accrual, so the 15% only bites when money leaves the company. Our guide to corporate and dividend tax explains why that timing matters more than the headline rate. Confirm every percentage with the Revenue Service before you model anything: rates and thresholds here move.
Exported IT is usually not a Georgian taxable transaction, so the VAT registration threshold rarely bites. The mechanics are in our guide to VAT registration thresholds.
The exemption removes tax, not obligation. A virtual zone company still files monthly, keeps books to Georgian standards, and runs payroll withholding if it employs anyone. Nothing about the status makes you invisible to the Revenue Service.
The rule that decides everything: where the code is written
This is the part the sales pages skip, and the reason people lose the exemption after two profitable years.
The Revenue Service published a methodical instruction on virtual zone profit tax at the end of December 2022. The administration's position since then is that the exemption attaches to information technologies actually created in Georgia. If the developer was not physically in Georgia while building the product, the profit from supplying that product is not exempt.
That reading has been applied to closed periods, not only future ones. Companies have been asked to evidence that the software they invoiced abroad was developed on Georgian territory, and to correct declarations where they could not.
A Georgian company that pays contractors in Warsaw or Bangalore to write the code, then invoices clients in Berlin, is the exact shape the Revenue Service now challenges. The status stays on the certificate; the exemption does not survive the audit. Get a written position from a Georgian tax advisor before you build a structure with the developers elsewhere.
The workable version of a virtual zone company therefore looks boring. Developers physically in Georgia, on payroll or documented Georgian contracts, paid a defensible market rate, producing something you can point at. Substance is not a formality here. It is the whole exemption.
What counts as information technologies
The statute defines IT as the study, support, development, design, production and introduction of computer information systems, resulting in software products. Two boundary cases come up constantly.
Reselling software you did not build
The exemption is for technologies created by the virtual zone person. Acting as a distributor, affiliate or licence reseller for somebody else's product sits outside it, and so does a marketplace that moves other people's code.
Electronic services that are not software
Design, marketing, consulting, video editing and support desks all travel down a wire, but none produce a software product. Electronic delivery is not the test. Creating a computer information system is.
If your revenue is a blend, split it in the books from month one. Our guide to accounting for IT companies shows how the exempt and non-exempt streams have to be tracked separately.
Getting the status, step by step
The Ministry of Finance virtual zone portal is where this happens, and the process is entirely electronic.
- Register the LLC at the public registry and collect your identification number.
- Create an account on the Ministry of Finance virtual zone portal.
- Submit the application, attaching your list of IT projects from the last three years if you have one.
- Answer follow-ups. The Financial-Analytical Service can ask for more detail on your IT activity.
- Receive the decision. Under the IT Zones law the status is granted no later than 10 working days after the application is submitted.
- Download the certificate. It is issued within 2 working days of the grant and exists in electronic form only.
The application asks what you have built. Named projects, repositories, signed client contracts and the CVs of the people writing the code read very differently from a one-line description of a plan.
Virtual zone against the alternatives
Virtual zone is one of four routes an IT business here can take, and it is not automatically the cheapest.
| Route | Entity required | Profit tax | Payroll and dividends | Main condition |
|---|---|---|---|---|
| Virtual zone company | Georgian LLC | 0% on qualifying exported IT profit | 20% payroll, 5% dividend | IT created in Georgia and supplied abroad |
| International company | Georgian LLC or local representative | Reduced rate on distributed profit | Reduced payroll rate, dividends untaxed at source | Two years of documented experience in a permitted activity |
| Small business status | Individual Entrepreneur | 1% of turnover | Not applicable | Turnover ceiling and permitted activities |
| Ordinary LLC | Georgian LLC | 15% on distribution | 20% payroll, 5% dividend | None |
International company status is the serious alternative, and the two cannot be held at once: taking one revokes the other. The government resolution defining international company status lists the permitted activities and sets an experience test of at least two years, either for the Georgian entity itself or for the non-resident enterprise it represents. A brand new studio fails that test on day one, which is precisely why new companies start with virtual zone instead. Its rates sit in the Tax Code and have been amended more than once, so confirm them for the year you are filing.
Solo developers with modest revenue often do better on 1% small business status. One percent of turnover beats zero percent of profit you then pay withholding to extract.
We research the company registration services working in Tbilisi and rank the ones worth paying. Independently researched, re-checked quarterly, free to read.
See the ranked list
Our ranked list of company registration firms in Tbilisi shows who handles the virtual zone application as part of the package rather than as a later upsell.
Where virtual zone companies come unstuck
Forgetting the tax on the way out
Zero inside the company is not zero in your pocket. Distributing profit to an individual shareholder attracts withholding, and your own position under Georgian tax residency decides how that distribution lands at the other end.
Paying the developers nothing
A company with no salaries, one shareholder and dividends only invites questions about whether any IT was created in Georgia at all. Market-level pay for the people writing the code is cheap insurance.
Treating the certificate as permanent
The status carries no expiry date, but it is revocable: where it is used to facilitate tax evasion, at the holder's own request, or when the company takes international company status instead. It is a permission that gets checked.
Letting the bookkeeping drift
Virtual zone companies get examined on the exempt and non-exempt split, and on where the work happened. Records reconstructed in March do not survive that. Working with English-speaking accountants in Tbilisi from month one is the difference between a clean file and a reassessment.
Key takeaways
- A virtual zone company is a status granted on top of an ordinary Georgian LLC, not a separate entity type, and it is closed to Individual Entrepreneurs.
- Article 99 of the Tax Code exempts profit from supplying information technologies created by the company and delivered outside Georgia.
- The Revenue Service's position since its late-2022 instruction is that the code must be written in Georgia by people physically present here.
- The status changes profit tax only. Payroll, dividend withholding and property tax carry on as normal.
- Reselling other people's software, and electronic services that are not software products, fall outside the exemption.
- The application is electronic, decided within 10 working days, with the certificate two working days later.
FAQ
What is a virtual zone company in Georgia?
It is a Georgian legal entity, almost always an LLC, granted virtual zone person status by the Ministry of Finance. The status exempts profit from supplying information technologies the company itself created to clients outside Georgia. It is granted on application, after the company is already registered.
Is the 0% tax rate really 0%?
On qualifying exported IT profit, yes: no profit tax is charged. Getting the money out is a different question, because distributions to individual shareholders still attract dividend withholding, and payroll taxes on Georgian salaries are unaffected. The effective rate on cash in your hand is above zero.
Can an Individual Entrepreneur get virtual zone status?
No. The statute grants the status to legal persons only, so a sole trader registration cannot hold it. Solo developers wanting a low rate without a company usually look at small business status instead.
Do I need employees in Georgia to keep the exemption?
In practice yes, or at least developers who are physically here. The Revenue Service's position is that the information technologies must be created on Georgian territory, meaning the people writing the code were present while they wrote it. Take written advice before relying on a remote team.
How long does it take to get virtual zone status?
The IT Zones law sets a deadline of 10 working days from the application, with the electronic certificate issued within a further 2 working days. The clock runs on a complete file, so thin applications take longer. Company registration happens first and is separate.
Does virtual zone status cover any kind of IT work?
No. The definition turns on creating computer information systems that result in software products. Reselling software built by someone else falls outside it, and so do services that merely travel over the internet. Mixed businesses must separate the two streams in the accounts.
Can I keep the status if my developers work remotely from abroad?
The status can stay on the certificate, but the exemption on that revenue is what gets challenged. Since the end of 2022 the Revenue Service has asked virtual zone companies to evidence that the software was developed in Georgia, including for past periods. Offshore development is the most common trigger for a reassessment.
Is virtual zone or international company status better?
They suit different companies and cannot be held at the same time. Virtual zone has no experience requirement and fully exempts qualifying export profit, so new software companies start there. International company status needs two years of documented experience but covers wider services and cuts payroll tax.
Do virtual zone companies pay VAT?
Supplying information technologies outside Georgia is not a Georgian taxable transaction, so no VAT arises on that revenue. Domestic sales and purchases can still create VAT consequences, including reverse-charge obligations on services bought from abroad. Check your own position against the current threshold.
Do I still need an accountant with 0% profit tax?
Yes. Monthly filings continue, the exempt and non-exempt split has to be maintained, and the evidence that development happened in Georgia is built through payroll records and contracts rather than after the fact. A short review with tax advisors in Tbilisi before your first distribution is worth more than a correction afterwards.