Georgian LLC vs IE: Which Business Structure Is Right for You?
It's the first question almost every foreign entrepreneur asks when they discover Georgia's tax advantages: should I register an LLC or an Individual Entrepreneur? The honest answer is it depends on how you work — and this guide will make the decision straightforward.
For most solo freelancers and digital service providers, an IE with Small Business Status is the faster, cheaper, and lower-tax route. For businesses with employees, multiple partners, or higher liability risk — an LLC is the right structure. Both structures can issue invoices and receive international payments — the differences lie in tax, liability, and operational flexibility.
The Full Comparison
| Factor | Individual Entrepreneur (IE) | LLC |
|---|---|---|
| What it is | Person registered as a business | Separate legal company entity |
| Tax rate | 1% on turnover (with Small Business Status) | 0% corporate until profits distributed. Then 15% |
| Dividend tax | N/A | 5% when profits paid out |
| Personal liability | Unlimited — personal assets at risk | Limited — company assets only |
| Employees | Not allowed (loses SBS eligibility) | Allowed — hire freely |
| Multiple owners | Not possible — sole operator only | Yes — up to 50 shareholders |
| Setup time | 24 hours | 24 hours |
| Setup cost (Legal Vista) | From EUR 699 | From EUR 499 |
| Monthly accounting | Simple — one monthly declaration | More complex — payroll, dividends |
| Work permit (from Mar 2026) | Required if residing in Georgia | Director also requires permit |
Tax: Where the Real Difference Lies
Individual Entreprenuer — 1% on Turnover
An IE with Small Business Status pays 1% of gross turnover up to 500,000 GEL per year. Above that, 3% applies on the excess. There's no corporate tax, no dividend tax, no complexity — you pay 1% on everything you invoice. On top of that, a 2% pension contribution applies, making the effective total rate 3% of gross turnover.
LLC — 0% Until You Take Money Out
A Georgian LLC benefits from Estonian-style territorial taxation. Profits retained inside the company are taxed at 0%. You only pay tax when money leaves:
EUR 80,000 annual income, all taken out:
IE with SBS: approx. EUR 2,400 total (1% tax + 2% pension)
LLC with dividends: approx. EUR 15,400 total
EUR 80,000 annual income, EUR 50,000 reinvested:
IE: same EUR 2,400 (tax is on turnover regardless)
LLC: 0% on EUR 50,000 retained — approx. EUR 5,775 on EUR 30,000 distributed
For most solo service providers, the IE wins on tax. For businesses that reinvest significantly, the LLC becomes competitive.
Liability: The One Area Where LLC Clearly Wins
An IE offers no liability protection. You and your business are legally the same person — if your business is sued or owes debts, your personal assets are exposed. An LLC is a separate legal entity; your personal assets remain protected regardless of what happens to the company.
For most freelancers and digital service providers, this distinction is rarely relevant in practice. But for higher-risk sectors, or those dealing with significant client contracts, limited liability is a meaningful protection worth having.
Can I Convert From IE to LLC Later?
Yes — and many entrepreneurs do exactly this. Start as an IE to get operational quickly on the 1% tax rate, then register an LLC when the business grows beyond what the IE structure supports. Closing an IE is straightforward: file a deregistration, settle any outstanding tax obligations, done.
The 2026 Work Permit — Same Requirement for Both
From March 2026, the Right to Labour Activity permit is required for foreign nationals operating either structure while residing in Georgia. IE owners apply independently; foreign LLC directors are also in scope. The structure you choose doesn't change this requirement — but it's important to factor the 30-day processing time into your setup plan.
Questions We Get Asked a Lot
Click any question to expand.
Can a foreigner register either structure in Georgia?
Yes. Both IEs and LLCs can be registered by foreign nationals without Georgian citizenship or residency. You need a valid passport and a Georgian address. Registration can be done remotely for both structures via power of attorney.
Which has a lower tax rate — IE or LLC?
For most solo service providers who take out their income, the IE wins clearly — 3% effective rate vs approximately 19.25% for LLC dividends. The LLC's 0% corporate tax only applies to profits you leave inside the company and reinvest. If you pay yourself regularly, the IE is almost always lower.
Can I have both an IE and an LLC at the same time?
Technically yes — they are separate registrations. However, maintaining both adds accounting complexity and may complicate your tax situation. Most people choose one structure based on their business model. If you're considering both, speak with a Legal Vista adviser first.
Does an LLC need a Georgian director?
No. A foreign national can serve as the sole director of a Georgian LLC. From March 2026, that foreign director must also hold a Right to Labour Activity permit if they reside in Georgia. If you'd prefer not to be named as director, Legal Vista offers nominee director services.
Which is better for receiving international payments?
Both work equally well. Georgian banks (TBC, Bank of Georgia) support foreign currency accounts and international wire transfers for both IEs and LLCs. The structure you choose does not significantly affect your ability to receive payments from abroad.
