Economic Substance
Economic substance criteria for Georgian companies with 0% corporate income tax. Physical presence, personnel, activities and required documentation.
definition
Economic substance describes the minimum level of genuine entrepreneurial activity that a company must demonstrate in order to prove that it is actually and substantially economically active in Georgia. This proof is a prerequisite for tax benefits such as virtual zone person status with 0% corporate income tax.
The framework ensures that companies are not mere letterbox companies but actively contribute to the Georgian economy through genuine business activity, employment and value creation — in line with OECD BEPS action plans.
legal framework
- Georgian Tax Code, Article 99 — Definition of Virtual Zone Person
- Tax Office Order No. 994 (2019) — Economic Substance Criteria
- OECD BEPS Action Item 5 — Compliance with Harmful Tax Practices
criteria
Physical presence
- Registered office in Georgia (virtual offices NOT accepted)
- Real workplace: own office or coworking space
- Operational infrastructure: computers, Internet, communication
Qualified personnel
- At least 1 full-time employee in Georgia
- Employees carry out core business activities
- Georgian tax residency required
- Employment contracts and payslips
core activities
- Revenue generating activities are managed from Georgia
- Strategic decisions are made locally
- Software development and project management are carried out locally
Success story
Turkish entrepreneur relocates his web development agency to Tbilisi and serves EU clients.
- Renting a coworking space in Saburtalo (350 GEL/month)
- Hiring a full time Georgian developer
- Opening a TBC Concept account
- Project management from Tbilisi
- Monthly spending: starting at 1,500 GEL
Frequently asked questions
Source: Georgia Business & Technology Glossary by Del-Ops Technology & Consulting Team. Last Updated: February 2026.