Virtual Zone or International Company? Two Georgian IT regimes that solve different problems

Describe what the company actually creates: custom code, SaaS, licences, support, consulting, reselling, hosting or mixed services. Identify who performs development, where they work, employment/contractor status and which entity owns the intellectual property.

A regime should follow this operating map. Registering a Georgian LLC and using an IT activity code does not prove qualifying creation, export or substance.

Virtual Zone Person status is associated with a Georgian legal entity carrying out qualifying information-technology activity, with products created in Georgia and supplied outside Georgia. The frequently advertised benefit is exemption treatment for qualifying exported IT profit and VAT treatment under the applicable rules.

The hard questions are what counts as an IT product, whether it was created in Georgia, where the customer and use are, and how mixed services are allocated. A foreign software resale or general business consulting invoice does not become qualifying development because the company holds a certificate.

International Company status is granted by the Government to a Georgian enterprise performing defined activities and earning income solely from those activities. Current benefits commonly highlighted include 5% corporate profit tax, 5% employment income tax and 0% withholding on qualifying dividends.

It is a more operationally demanding profile, usually relevant to established qualifying IT or maritime activity. Experience, activity history and prescribed conditions must be proved; non-permitted activity can endanger the status from the beginning of the relevant year.

A small founder-led software exporter may investigate Virtual Zone when genuine product creation takes place through the Georgian company and customers are abroad. The comparison must include substance, contractor arrangements, dividend tax, banking and whether the activity is truly product creation.

An established development company employing a Georgian team may find International Company’s 5% salary framework commercially significant. But the status is not simply “Virtual Zone plus payroll”; its eligibility and exclusivity rules are different.

Implementation, maintenance, training, hardware, advertising, marketplace income and consulting can sit beside software development. Classify each contract and deliverable. International Company law expressly focuses on income solely from permitted activities; Virtual Zone benefit analysis also needs qualifying versus non-qualifying income discipline.

Do not hide mixed activity inside one broad invoice. Contract scope, acceptance records, developer evidence, repositories and accounting segmentation should support the claimed treatment.

Prepare corporate history, activity narrative, customer contracts, invoices, deliverables, personnel and evidence that work is performed in Georgia. Resolve IP ownership and related-party pricing. After status, continue collecting the same evidence monthly.

Review new services before launch, not at audit. Monitor VAT, payroll, distributions, withholding, transfer pricing and foreign permanent-establishment exposure separately. Neither status exempts a company from being a well-run taxpayer.

Compare eligibility probability, permitted revenue, required Georgian substance, salary burden, profit distribution, dividend treatment, accounting cost and downside if status is cancelled. Run the ordinary LLC model alongside both regimes.

If the benefit depends on describing the business differently from how customers and developers experience it, the regime is not a fit. The strongest application is a truthful explanation of a business that already qualifies.