Why E-commerce Sellers Are Setting Up in Georgia
A store doing €120,000 a year in revenue typically loses somewhere between €35,000 and €45,000 of that to tax and social contributions in most EU countries. Registered in Georgia instead, the same revenue could cost roughly €3,600. That gap is real, and it's why a growing number of e-commerce sellers have moved their business registration there. But the arithmetic only holds if a few specific things about how your store operates are actually true — and that's what most articles on this topic skip past.
Why E-commerce Fits This Tax System Particularly Well
Georgia's Small Business Status was built for exactly this shape of business: one owner, digital operations, customers who could be anywhere. Online stores, dropshipping, and marketplace selling — Shopify, Etsy, Amazon, eBay — are explicitly recognised as qualifying activities.
The rate is 1% of gross turnover, not profit, up to roughly €160,000 a year, plus a 2% pension contribution — an effective rate close to 3%. Because it taxes revenue rather than profit, it tends to favour lower-margin businesses like dropshipping particularly well: even after supplier and shipping costs eat into the margin, the 1% is calculated on the full sale price, and it is still dramatically lower than a normal income tax rate applied to a much smaller profit figure.
How Registration Actually Happens
Register as an Individual Entrepreneur
A single-owner registration, not a full company — this is the structure that unlocks Small Business Status.
Apply for Small Business Status
A separate application submitted after IE registration. For the full mechanics — thresholds, timing, qualifying activities — see: Georgia's 1% Tax for Freelancers: The Complete Guide.
Set Up a Way to Accept International Payments
Covered in detail below — it's genuinely different from what most store owners expect.
The Distinction Most Guides Skip: Dropshipping vs. Actually Trading Goods
There are two different things people mean when they say "e-commerce," and Georgian law treats them differently.
| Model | How It's Treated |
|---|---|
| Dropshipping / online retail facilitation | The goods never physically enter Georgia — a supplier ships directly to the customer. This is the most common model, and it fits cleanly under an Individual Entrepreneur with Small Business Status. No import or customs process is involved, because nothing crosses into Georgian territory. |
| Actual import/export trading | You import goods into Georgia, warehouse them, then ship or export from there. This involves real customs declarations and import VAT, and at meaningful volume is generally better suited to an LLC rather than an IE. |
If your model involves warehousing stock or importing in bulk, the calculation changes meaningfully — that's a different conversation from what most people mean when they ask about "e-commerce and Georgia." The rest of this article covers the dropshipping/facilitation model, which is by far the more common case.
The Threshold Trap: VAT Hits Long Before the Small Business Cap Does
This is the part that catches e-commerce sellers specifically, more than it catches typical freelancers. A store doing 350,000 GEL a year in revenue is comfortably under the 500,000 GEL Small Business Status cap — but Georgia requires VAT registration once taxable turnover crosses 100,000 GEL in any rolling 12-month period, a completely separate and much lower number.
A freelance consultant might take years to reach 100,000 GEL in turnover. A store with meaningful transaction volume can cross it in a single quarter. The two thresholds do unrelated jobs, and a genuinely successful store can be liable for VAT registration while remaining well inside Small Business Status on the income tax side.
The relevant question then becomes how VAT actually applies to sales made to customers outside Georgia. For a pure dropshipping model — where goods never enter or exit Georgian customs territory at all — the standard "export of goods" VAT rules, which are built around customs documentation of goods physically crossing the border, don't map cleanly onto a transaction that never touches Georgian soil. Whether such sales count toward the threshold, and how they're treated once you're registered, is a genuinely fact-specific question for your particular setup rather than something a general article can answer with certainty.
What Would Disqualify You Entirely
Separately from VAT, a short list of activities is excluded from Small Business Status regardless of turnover or structure:
For a straightforward store selling ordinary consumer products through normal dropshipping or marketplace channels, none of these typically apply. The exclusion that catches people off guard is usually the drift from "selling" into "consulting," not the product category itself.
The Payment Problem, and What Actually Solves It
Stripe does not currently support Georgia as a registered business country. You cannot open a standard Stripe merchant account with a Georgian business and receive payouts directly to a Georgian bank account. If your store's checkout is built entirely around Stripe, this matters before you register anything.
Both Bank of Georgia (iPay) and TBC Bank (E-Commerce) run their own card-payment gateways, accepting Visa, Mastercard, and other major cards from international customers — including US and EU cardholders — and settling directly into a Georgian IE's own account. No foreign entity required. For more on how Georgian IEs handle international payments generally, see: How to Receive Payments as a Georgian Individual Entrepreneur.
Where This Actually Fits
This works well for a solo-run store, dropshipping or light-inventory, selling products rather than advice, comfortably under the thresholds or prepared to handle VAT registration once turnover crosses 100,000 GEL. It fits less well if you're planning to hire a team soon, if your platform is contractually locked into Stripe, or if your actual model is closer to bulk import/export trading than online retail.
Questions We Get Asked a Lot
Click any question to expand.
Does dropshipping qualify for the 1% tax rate?
Yes — dropshipping and marketplace selling are explicitly recognised as qualifying activities, provided the business doesn't drift into an excluded category such as consulting.
If all my customers are outside Georgia, do I still need to worry about VAT?
This genuinely depends on your specific setup — particularly whether goods physically transit through Georgia or ship directly between your supplier and your customer abroad, since the two scenarios are treated differently. Worth confirming for your exact model rather than assuming.
What if my store is set up specifically around Stripe checkout?
You'd need to either transition to a Georgian bank gateway (Bank of Georgia's iPay or TBC's E-Commerce solution) or maintain a separate arrangement for Stripe-specific processing. Worth deciding before registering anything, since switching payment infrastructure mid-business is more disruptive than planning for it upfront.
