US Citizens With a Georgian Individual Entrepreneur: What Georgia Changes and What It Doesn't

Overview

• Georgia's 1% rate is real for Americans. It's what you owe Georgia on turnover if you have an Individual Entrepreneur with Small Business Status.
• It doesn't change what you owe the US. The US taxes its citizens on worldwide income wherever they live.
• A Georgian IE is usually treated as a sole proprietorship for US tax. That means US self-employment tax can still apply.
• Georgian bank accounts bring US reporting duties. Plan the Georgian side and the US side together, before you register.

A lot of Americans read about Georgia's 1% tax and assume it's a way to pay 1% in total. It isn't. For a US citizen, Georgia's 1% sits on top of a US tax position that follows you everywhere. That doesn't make Georgia a bad choice. Many Americans still come out ahead here. But the math is different from what the headlines suggest.

We're Georgian lawyers. We handle the Georgian side. For the US side, you need a US tax adviser who works with Americans abroad. This guide explains how the two fit together so you can ask the right questions.

Rules current as of October 28, 2026.

What Georgia gives you

• Individual Entrepreneur registration in about a day.
• Small Business Status at 1% of turnover up to 500,000 GEL a year, if your activity qualifies. Consulting, legal and some other activities don't. See Georgia's 1% tax in 2026.
• A territorial system for individuals. If you're a Georgian tax resident, foreign-source income of an individual is generally not taxed in Georgia.
• A tax residency certificate if you spend 183 days or more in Georgia in a 12-month period.

What the US still expects

The US taxes its citizens on their worldwide income, whether they live in Ohio or Tbilisi. Living in Georgia doesn't end that. The questions your US adviser will look at:

Is the IE a separate business?

Usually not. A Georgian IE isn't a separate legal entity. It's you, registered for business. For US purposes, it's normally treated like a sole proprietorship, and your IE income goes on your US return as self-employment income.

What about self-employment tax?

This is the part that surprises Americans most. US self-employment tax, which funds Social Security and Medicare, applies to self-employment income. The Foreign Earned Income Exclusion can reduce income tax, but it doesn't remove self-employment tax. Whether any treaty or agreement changes that for Georgia is a question for your US adviser, not an assumption to make.

Does the 1% count as a foreign tax?

The Georgian 1% is a tax on turnover, not on profit. Whether it can be claimed as a foreign tax credit against US tax is a technical US question. Ask before you count on it.

What about the Foreign Earned Income Exclusion?

If you live and work in Georgia and meet the US tests for living abroad, you may be able to exclude part of your earned income from US income tax. The 183 days that make you a Georgian tax resident and the US tests aren't the same thing. Track your days for both.

Bank accounts and US reporting

Opening a Georgian bank account brings US reporting duties:

• Foreign account reports. US citizens with foreign accounts above certain totals have to report them to the US Treasury each year.
• Bank questions. Georgian banks, like banks around the world, ask US citizens for US tax details when they open an account.

Neither of these is a reason not to bank in Georgia. They're reasons to keep records from day one. See our guide to opening a bank account in Georgia.

An LLC instead?

Some Americans look at a Georgian LLC instead of an IE. A Georgian LLC is a separate company. Georgia taxes it on profit when it's paid out. For US purposes, a foreign company owned by a US person brings its own set of rules and forms. It can be the right answer, especially for consultants who can't get the 1% rate anyway, but it's not a shortcut. See Individual Entrepreneur vs LLC in Georgia.

The work permit

Since March 1, 2026, a foreigner who runs an IE in Georgia generally needs a self-employed work permit. That's true for Americans like everyone else. If you work only for US clients and don't register a Georgian business, you may not need one at all. See whether remote workers need a permit.

What to ask your US tax adviser

Take these questions to someone who prepares US returns for Americans abroad:

1. How should my Georgian IE be reported on my US return?
2. Will I owe US self-employment tax on IE income, and is there any way to reduce it?
3. Can the Georgian 1% turnover tax be claimed as a foreign tax credit?
4. Do I qualify for the Foreign Earned Income Exclusion, and which test should I use?
5. Is an IE or a Georgian LLC better for me from the US side?
6. Which US forms do I need for my Georgian bank accounts?

How we can help

We register your IE or LLC, apply for Small Business Status, get your Georgian tax residency certificate and handle the work permit. We can work alongside your US tax adviser so the two sides match. Ask about tax or see what we do.