Can you pay 1% tax on rent with small business status?
No. Small business status lets an individual entrepreneur pay 1% on business income, but the government's list of income that stays outside the regime starts with letting property. Government Resolution 415, Annex 5, item 1, names "letting property on lease or renting out real estate", and Article 90(3) of the Tax Code removes those income types from the 1% base. The Revenue Service's own guide for status holders says rent "may additionally" be received and is taxed under the general rules. For a flat let for living, that means 5% of the rent; for other letting, 20%.
The status is not useless to a landlord: you can hold it for another business that is not on the banned list, such as design, translation or software work, and let a flat at the same time. The two incomes are simply taxed separately. The rules for the 5% rate itself, the landlord register and declarations are in our guide to rental income tax.
How small business status works
| Point | Rule |
|---|---|
| Who can have it | An entrepreneur natural person, usually a registered individual entrepreneur (Article 88(1)) |
| Rate | 1% of Georgian-source business income; 3% from the month income passes GEL 500,000 in a year (Article 90) |
| Losing it for size | Only if income exceeds GEL 500,000 in each of 2 calendar years, from the following year (Article 89(2)(a)) |
| Declaration and payment | Monthly, by the 15th of the next month, even when the tax is zero (Article 93(1-1)) |
| Records | A special accounting journal and cash register rules; 3 cash register fines in a year cancel the status back to 1 January |
| Registering as an individual entrepreneur | GEL 26 in 1 working day or GEL 75 the same day; the status itself is a free application on the Revenue Service portal |
| Residence | No citizenship or tax residence condition appears in Articles 88-91 |
Two different lists: banned activities and excluded income
Much of the confusion comes from mixing up two annexes of the same resolution. One list bars the status altogether; the other only keeps certain income out of the 1% base.
| Annex | Effect | Main items |
|---|---|---|
| Annex 4 | Activities for which the status cannot be granted | Licensed or permitted activities (except the Tbilisi taxi permit), excise production, currency exchange, medical, architectural, legal, notary, audit and consulting work, gambling, staffing |
| Annex 5 | Income not taxed at 1% and not counted toward GEL 500,000 | 1 letting property or renting out real estate; 2 lending; 3 gambling winnings; 4 gifts; 5 gains on selling real estate, vehicles or securities; 6 inherited property; 7 dividends; 8 interest; 9 royalties; 10 debt forgiveness; 11 sale of a partner's share; 12 construction services to businesses (from 1 February 2025) |
Letting appears only in Annex 5. So the status survives a flat let to a tenant, but the rent never gets the 1% rate, and it does not use up any of the GEL 500,000 limit either.
An owner with a business and a flat
Take a designer registered as an individual entrepreneur with small business status, earning GEL 60,000 a year from clients, who also lets a Tbilisi flat long term for GEL 2,000 a month. The design income is taxed at 1%, GEL 600 a year, through 12 monthly declarations. The rent, GEL 24,000 a year, is taxed at 5%, GEL 1,200, as residential rent; the landlord registers on the landlord register and files an annual declaration for it before 1 April, or the tenant withholds 5% if the tenant is a company. Total tax: GEL 1,800. Nothing about the flat puts the status at risk.
Tax on rent by route
| Route | Tax on rent | Notes |
|---|---|---|
| Individual, flat let for living | 5% of gross rent | No deductions; landlord register |
| Individual, other letting | 20% of taxable income | Commercial premises, or if expenses are deducted |
| Individual entrepreneur with small business status | Same 5% or 20% | Rent is outside the 1% regime |
| Micro business status | Same 5% or 20% | Rent is outside this regime too |
| Short stays in your own home, optional fixed tax | GEL 10 per m² of the let space per month | Until 1 January 2028; turnover up to GEL 100,000 in 12 months; paid quarterly |
| Hotel room run by a tourist enterprise | 5% withheld by the enterprise, final | Only with a company holding tourist enterprise status |
| Company owning the flat | 15% profit tax on distributed profit plus 5% on dividends | About 19.25% if all profit is paid out; nothing until it is |
Daily lets and Airbnb
Short stays are where the 1% idea is most often repeated, and where the law is least tested. The Tax Code itself classifies short-term letting of your own home as an accommodation activity under code 55.2 of the national classification and gives it a separate, optional fixed tax: GEL 10 per m² of the let space per calendar month until 1 January 2028, for owners whose turnover from it does not exceed GEL 100,000 in any 12 months, with no cash register required. We found no Revenue Service ruling that allows daily-let income of a small business holder to be taxed at 1%, and the excluded-income list speaks of renting out real estate without distinguishing by length of stay. Treat 1% on daily lets as unconfirmed and risky.
To be added by the team: our accountant to confirm how the Revenue Service treats daily-let income of an individual entrepreneur with small business status, and whether long-term residential rent is exempt from VAT once turnover passes GEL 100,000.
Micro business status: no help for landlords either
Micro business status, under Articles 84-87, makes income tax-free for a person who works alone and earns up to GEL 30,000 a year. It is not available for trade, licensed activities or consulting, and its own excluded-income annex, Annex 3, again starts with letting property. A landlord can have it for craft or repair work, but the rent is taxed at 5% or 20% as before.
If letting is your only income in Georgia
For an owner whose only Georgian income is rent, registering as an individual entrepreneur adds obligations without lowering any tax. Registration costs GEL 26 or GEL 75 and, according to advisers, needs a legal address in Georgia; the small business status that follows brings a declaration every month, even in months with no business income, a special accounting journal and cash register rules. None of it changes the rate on the rent. The simpler setup is to stay a private landlord: join the landlord register through your Revenue Service account and file one annual return before 1 April on 5% of the rent, or let a company tenant withhold 5% for you.
For daily lets, do the arithmetic before choosing the fixed tax. On a 40 m² flat it is GEL 400 a month, GEL 4,800 a year if chosen for all 12 months. That equals 5% of GEL 96,000 of bookings, or 20% of GEL 24,000. Which rate applies to daily lets without the fixed tax is itself not settled, as our guide to rental income tax explains, so the comparison depends on that answer and on how many months you let the flat.
What it costs to get it wrong
Putting rent through the 1% declaration understates the tax. On GEL 24,000 of residential rent, 1% would be GEL 240 instead of GEL 1,200, an understatement of GEL 960. Under Article 275 the fine is 50% of the understated tax, GEL 480, reduced to 10% or 25% only for small understatements, plus late-payment interest of 0.05% a day under Article 272. An understatement above GEL 100,000 is treated as tax evasion and can lead to criminal liability. For commercial premises taxed at 20%, the gap grows quickly.
Five things buyers are told, and what the rules say
| Claim | What the rules say |
|---|---|
| "Register as an entrepreneur and pay 1% on your rent" | Rent is outside the 1% regime; 5% or 20% applies |
| "Letting a flat disqualifies you from small business status" | Letting is not a banned activity; the status stays |
| "Long-term rent of a home is tax-free" | It is taxed at 5% of the gross rent |
| "Airbnb is a business, so it qualifies for 1%" | No ruling supports it; a separate fixed tax exists for short stays |
| "All excluded income is taxed at 20%" | Residential rent, dividends and interest keep their own 5% rates |
Several flats and the VAT threshold
The number of flats you own does not by itself make you an entrepreneur: Public Ruling 175 of 8 June 2026 says ownership, the number of homes and the holding period are not enough on their own. Letting property for regular income is an economic activity for VAT, though, and an owner whose taxable turnover exceeds GEL 100,000 in any 12 months must register for VAT at 18%. Rent from all your flats counts together toward that line. An owner with that much rent should plan the structure with an accountant rather than look for a lower rate.
Choosing the right regime, step by step
Separate your incomes
Rent on one side, any business or freelance income on the other.
Tax the rent under the general rules
Join the landlord register and use 5% for a home let for living.
Consider the fixed tax for short stays
Compare GEL 10 per m² a month with 5% of your expected bookings.
Use small business status for the business
Only for activities not on the banned list.
Watch GEL 100,000
Add up all taxable turnover for the VAT test.
Risks and exceptions
- Wrong rate on rent. 1% on rent leads to back tax, a fine of up to 50% and interest.
- Monthly filings. Status holders must file every month, even with no income.
- Cash register fines. Three in a year cancel the status from 1 January.
- Daily lets. The 1% treatment is unconfirmed.
- VAT. Rent counts toward the GEL 100,000 registration threshold.
Frequently asked questions
Can I pay 1% tax on rental income in Georgia?
No. Rent is excluded from the small business regime and taxed at 5% or 20%.
Will letting a flat cancel my small business status?
No. Letting is not a banned activity; only the rent is taxed separately.
What tax do I pay on a flat let for living?
5% of the gross rent, with no deductions.
Can a foreigner get small business status?
The law sets no citizenship or residence condition; you first register as an individual entrepreneur.
Is there a special tax for Airbnb?
Yes: an optional fixed amount of GEL 10 per m² of let space monthly, available until 1 January 2028.
Does micro business status make rent tax-free?
No. Rent is excluded from that regime too.
What if I already paid 1% on rent?
Ask an accountant to correct the declarations; a voluntary correction is cheaper than an audit.
How much does registering as an entrepreneur cost?
GEL 26, or GEL 75 for same-day registration.
Sources
- Tax Code of Georgia, consolidated 15 October 2026, Legislative Herald of Georgia (accessed 20 October 2026)
- Government Resolution No 415 on special taxation regimes, consolidated 24 January 2025, Legislative Herald of Georgia (accessed 20 October 2026)
- Government Resolution No 436 of 23 December 2024, Legislative Herald of Georgia (accessed 20 October 2026)
- Monthly income tax declaration for small business status holders, Revenue Service of Georgia, 2025 (accessed 20 October 2026)
- Fees and terms, National Agency of Public Registry (accessed 20 October 2026)
- Tax Code of Georgia, English text, Legislative Herald of Georgia (accessed 20 October 2026)
- Small business status, Bugalteri, July 2026 (accessed 20 October 2026)
Change log
- - Explainer published from the Tax Code consolidated on 15 October 2026, Government Resolution 415 and the Revenue Service guide for small business status holders.