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In recent years, Georgia has been rapidly gaining popularity among foreign IT companies as a convenient and accessible jurisdiction. One of the key reasons was the Virtual Zone of Georgia (Virtual Zone) - a special tax regime that allows IT businesses to pay virtually no profit tax if simple conditions are met.
Many compare this status with classic free economic zones (FEZ). Let's find out what the difference is and why a virtual zone is a better choice in some cases.
📍 What is a Virtual Zone?
A virtual zone is a special legal status granted to software development and IT services companies registered in Georgia.
- The status is granted by the Ministry of Finance of Georgia.
- It is suitable for both local and foreign founders.
- The activity should be oriented towards export of IT services.
⚖️ Differences from classic FEZs
| Characteristic | Georgia Virtual Zone | Free Economic Zones (FEZ) |
|---|---|---|
| ❌ Physical office requirement | Not required | Obligatory |
| 🌍 Working with non-residents | Permitted | Restricted or requires approval |
| 📦 Type of business | IT/PO/digital services only | Any (manufacturing, logistics, etc.) |
| 💰 Income tax | 0% for export | May be reduced, but not always 0% |
| 🏗 Administrative burden | Minimal | High: audit, office, management |
| 📄 Ease of obtaining status | Very simple (online, no office) | More complex (includes infrastructure requirements) |
| ⛔ Customs and logistics benefits | Not applicable (not commodity business) | Yes (if the business is manufacturing/import/export) |
🚀 Benefits of a virtual zone for IT companies
1. Zero profit tax rate
If services or software are supplied outside Georgia, the profit tax is 0%.
This is officially confirmed by the Tax Code of Georgia and the decision of the Ministry of Finance.
2. No need to rent an office
You do not need an office, employees or equipment on the territory of Georgia to obtain the status. This is especially convenient for distributed and remote teams.
3. Simplified administration
No need for complex reporting, auditing, or participation in zone development programs as is often required in a BMS.
4. Flexibility for international business
You can sell services to any country, accept payment in foreign currencies and build cross-border chains without restrictions.
5. Real savings
With the right structure – a company can pay only 5% on dividends. No value added taxes when exporting IT services.
🛑 When is BMS better?
LEZs are more suitable for manufacturing or logistics companies that have:
- physical warehouses and equipment
- employees and offices in the zone
- commodity export
- need for customs benefits
For IT businesses, these peculiarities are usually irrelevant. But there is more bureaucracy.
💼 How VZ.com.ge can help you get the status of a virtual zone
We accompany the whole process from A to Z:
- We register a legal entity in Georgia.
- We prepare the application and submit it to the Ministry of Finance.
- We advise on tax optimization and accounting.
- We help with account opening, including without a visit.
- We provide support for non-residents and expats.
📞 Want to pay 0% income tax and work from anywhere in the world?
Get a virtual zone status in Georgia.
Leave an application on the website - and we will help you set up your business with maximum benefit and without unnecessary bureaucracy.
We work with freelancers, startups, international IT teams.