Virtual Zone status in Georgia lets IT companies pay no corporate tax on income from services to foreign clients — the rate is 0%. It's one of the main draws for developers, IT studios and product teams relocating to Georgia. In this article we explain who Virtual Zone Person suits, how to obtain it, how it differs from International Company Status, and which taxes you'll still have to pay.
What a Virtual Zone Person Is
Virtual Zone Person (VZP) is a special status for companies engaged in IT activity. Its essence:
- 0% corporate tax on income from IT services provided to foreign clients.
- When profit is withdrawn (dividends are paid), a 5% dividend tax is withheld.
So at the company level, profit from exporting IT services is untaxed, and the tax burden only arises when dividends are distributed.
What Counts as IT Activity
The status covers software development, digital products and related IT services supplied outside Georgia. Important: income from local (Georgian) clients does not fall under the 0% benefit and is taxed on a general basis.
Virtual Zone vs. International Company Status
Georgia has two "IT regimes," and they are often confused. Let's compare them.
| Parameter | Virtual Zone Person | International Company Status |
|---|---|---|
| Corporate tax | 0% on income from foreign IT services | preferential rate on foreign income |
| Dividend tax | 5% | — |
| Employee income tax | standard 20% | 5% instead of 20% |
| Experience requirement | not formally required | 2+ years of IT experience |
| Real office/staff | not strictly mandatory | real presence required |
When to Choose ICS
International Company Status (ICS) gives 5% income tax for employees instead of the standard 20%, plus 5% on foreign income. This is especially advantageous for companies with a large team of developers. But ICS requires confirmed 2+ years of IT experience and a real office with staff in Georgia — it's not a "paper" status.
How to Obtain Virtual Zone Status
Step 1. Register a company
First, register an LLC through the House of Justice (NAPR) — usually within a day.
Step 2. File the status application
The application for Virtual Zone Person status is filed through the relevant authority. A description of the IT activity is attached to it.
Step 3. Obtain the status and keep records
Once the status is granted, it's important to correctly separate income from foreign and local clients, since the 0% benefit applies only to export revenue.
What to Watch For
- The benefit applies to income from foreign clients; local revenue is taxed in the usual way.
- When profit is withdrawn, the 5% dividend tax applies — so the effective overall burden is not zero.
- The tax authorities may request proof of real IT activity — a formal "shell" is risky.
- For large teams, it's worth comparing VZP and ICS on the total burden (corporate plus payroll taxes).
The regulation and interpretation of special regimes in Georgia are evolving. Before filing an application, verify the details on the rs.ge portal and consult a tax specialist.
Conclusion
Virtual Zone status makes Georgia one of the most advantageous jurisdictions for IT exports: 0% corporate tax on foreign revenue and just 5% when profit is withdrawn. For large teams, ICS with its reduced employee income tax can be an alternative. To choose the optimal regime and set up the status correctly, get in touch with the Angels Investment specialists for a consultation.
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FAQ
Is the IT tax really 0% in Georgia?
The 0% applies to corporate tax on income from IT services to foreign clients. When dividends are withdrawn, 5% is withheld.
Is income from Georgian clients taxed?
Yes, the Virtual Zone benefit does not extend to local revenue.
How does Virtual Zone differ from ICS?
VZP gives 0% on foreign IT income but standard employee income tax. ICS reduces employees' income tax to 5% but requires experience and a real office.
Do you need an office for Virtual Zone?
VZP has no strict office requirement, but the reality of the activity matters. For ICS, an office and staff are mandatory.
How much do you pay when withdrawing profit?
A 5% dividend tax when profit is distributed to members.