Employees and Withholding Tax in Georgia: Payroll and Contractors

A practical route for foreign founders and remote teams: employee payroll, contractor status, non-resident payments, withholding deadlines and recipient obligations.

Map the payer and the payment

For a foreign founder building a team in Georgia, the country, start with the legal payer: your Georgian company, your Georgian IE business or an overseas employer. The founder’s passport does not decide the company’s payroll duties. Record each recipient’s residence, registration, actual work location and income type before choosing a withholding treatment.
This guide covers payroll and tax-agent decisions. Hiring permissions and lawful stay remain separate checks in the existing work hub. SBS, VAT and tax residence also have their own tests; a business’s 1% status is not an employee salary tax rate.

Employee or genuinely independent contractor

Article 2 of the Labour Code describes work for remuneration under organised labour conditions. Review how the relationship operates, including duties and control, rather than relying on a contractor label or an invoice. IE registration or SBS does not by itself change employment into independent services.
Article 12(2) requires a written employment agreement when labour relations last more than one month. Agree duties, work location and hours, gross versus net pay, benefits, leave and termination; check essential terms under Article 14. A remote-team template from another country is not a substitute for checking the Georgian rules.

Onboard before the first payroll run

Collect identities and tax numbers, contract and start date, pay calculation and evidence of any claimed status or exemption. Assign an owner for payroll, payment authorisation and RS filing acknowledgements.
The RS-published instructions for Order 996, Article 11², require employee information in the hired-persons register, დაქირავებულ პირთა რეესტრი, before employment starts. The register and the monthly withholding return are different steps. Use the RS instructions for employee data and status updates.
Verification limit: RS publishes the instruction and register guidance, but the full current consolidated Order 996 on Matsne requires access. Confirm live form fields and status-change deadlines with RS before onboarding; this guide does not claim to have checked the restricted consolidation or a logged-in account. The linked operational materials are in Georgian.

Ordinary Georgian payroll and benefits

For ordinary taxable salary paid by a Georgian company or entrepreneur acting as tax agent, with no applicable exemption, Article 81(1) sets 20% and Article 154(1)(a) governs withholding. Check Article 82 relief and special-employer exceptions before applying this baseline.
Salary under Article 101 includes certain benefits as well as cash pay. Accommodation, insurance, debt forgiveness and expense reimbursements need classification and valuation; the article contains exclusions and special rules. Do not treat every reimbursement as tax-free.
Income-tax-only illustration: GEL 2,000 gross produces GEL 400 withholding and GEL 1,600 after that tax. This excludes pension contributions, other deductions and benefits. A promise of GEL 2,000 net needs a separate gross-up and employer-cost calculation.

Paying local service providers

Resident individual without IE registration: where an enterprise, organisation or entrepreneur pays for services, Article 154(1)(d) provides for withholding subject to listed exceptions. Ordinary taxable income without relief uses Article 81(1)’s 20% rate. This is a service-payment scenario, not a rule for every transfer to an individual.
Registered IE providing independent business services: Article 154(1)(d) targets a person not registered as an IE. Keep evidence of registration and the service; the recipient checks their own tax regime and returns. Still test other withholding grounds and non-resident rules where relevant.
The same provision names exceptions for VAT-registered individuals, notaries, private enforcement officers, micro/small-business holders and fixed taxpayers within the relevant activity. Verify the effective status and its scope for this payment. A supplier calling themselves self-employed is insufficient.
An eligible supplier’s SBS rate concerns their own qualifying income, not tax that the customer automatically withholds at 1%. The VAT-registration exception does not make the supply VAT-exempt. Rent, interest, dividends, royalties, gifts and goods purchases require their separate rules under Articles 81, 130–134 and 154.

Overseas contractors and non-resident recipients

First establish Georgian source under Article 104 and whether the income belongs to the recipient’s Georgian permanent establishment. Article 134(1)(e) provides 10% on other Georgian-source payments outside that establishment, without deductions; this is a residual category, not a universal foreign-contractor rate. Salary follows Article 81, and royalties and other income types have separate rules. Article 134(1¹) provides 15% for specified payments to persons registered in preferential-tax jurisdictions.
Citizenship is not tax residence, and an overseas bank account does not establish foreign source. Review the contract, actual service and work location, recipient status and any applicable treaty. Do not promise treaty relief without the relevant entitlement and documentation.
For a distributed team, keep a country-by-country work-location record and reassess when someone moves. Georgian withholding analysis does not settle payroll, employment or corporate-presence obligations in another country.

An overseas employer paying someone in Georgia

Article 154(1)(a.b) addresses salary paid by a non-resident where the expense is not attributed to its permanent establishment; Article 154(5) provides a mechanism for the employee to compute, report and pay under the prescribed procedure. Confirm the applicable process with RS instead of assuming an offshore payroll removes Georgian tax.
This is different from a Georgian LLC owned by a foreign founder. Review the worker’s own liability, the employer’s Georgian presence and expense attribution, and any treaty. A platform or payroll intermediary does not by itself answer who owes the statutory duties.

SBS when you are the employer

SBS does not generally remove tax-agent duties. Article 94(4) has a narrow non-withholding rule for up to GEL 6,000 of total salary paid to hired people in a calendar year if IE registration and SBS were obtained in that same year, or prior-year gross income did not exceed GEL 50,000. It is an aggregate annual amount, not a monthly allowance per employee.
Non-withholding is not automatically exemption for the recipient. Article 100(4)(d) separately excludes salary covered by Article 94(4)(a) from gross income; do not extend that result automatically to 94(4)(b). Confirm the calculation and recipient’s obligations with RS before applying the rule or crossing the limit.

Payment day and monthly filing are separate deadlines

Article 154(3)(a) generally requires transfer of withheld tax to the budget when the monetary payment is made; for non-cash disbursements, on the last day of that month. Do not treat the monthly filing deadline as permission to delay this payment.
Articles 153(5) and 154(4) set the disbursement/withholding return deadline at the 15th of the following month. Article 154(3)(c) covers recipient information. Choose the current RS return and schedules for the payment type; SBS and VAT returns do not replace it. Non-working-day deadlines follow Article 3(6).
Reconcile gross pay, taxable base, relief evidence, tax withheld, net pay and payment dates by recipient. Keep the RS registration acknowledgement and payment evidence. A saved draft is not a filed return. Confirm zero-payment periods and corrections against the current RS reporting setup rather than silently skipping a month.
The payer is responsible under Article 154(2) where withholding is required; a contractor’s promise to pay their own tax does not remove that responsibility. Issue the employee’s income and withholding certificate on request under Article 154(3)(b).

Recipient obligations, pension and other taxes

Keep certificates for correctly withheld income. Income paid without withholding is not automatically tax-free: Article 153(1) provides annual filing by 1 April of the following year for the specified residents with income not taxed at source and non-residents with unwithheld Georgian-source income. Check applicability, exemptions and the special non-resident-employer procedure separately.
Funded pension is a separate check under Articles 1–3 of the current Georgian-language pension law: consider statutory coverage, participation and the definitions of the parties. Do not apply identical pension assumptions to every foreign national or treat 20% as the full cost of hiring. This guide does not provide a detailed pension calculation.
Also check VAT, including possible reverse charge on overseas services, your own SBS reporting and annual property tax. Salary can affect the family-income test for property tax. None of these checks replaces payroll.

Before approving your first payment run

For each person, retain the contract and actual working arrangement, tax ID and residence evidence, effective registration/status, income type and source, rate or relief basis, gross/net and benefits calculation, pension review, payment and filing dates, and acknowledgements.
Reviewed on 3 September 2026 against the current Matsne Tax Code, publication 245 of 25 June 2026, the Labour Code and primary RS materials. The Order 996 access limitation is stated above. Mixed payments, disputed classification, cross-border teams and prior-period corrections need a document-based review.

Hiring in Georgia: Payroll, Contractor Payments and Withholding

Map the payer and the payment

Employee or genuinely independent contractor

Onboard before the first payroll run

Ordinary Georgian payroll and benefits

Paying local service providers

Overseas contractors and non-resident recipients

An overseas employer paying someone in Georgia

SBS when you are the employer

Payment day and monthly filing are separate deadlines

Recipient obligations, pension and other taxes

Before approving your first payment run

Official verification

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