Reverse tax liability (reverse charge)
Reverse charge VAT in Georgia explained: when foreign services trigger 18% VAT, who declares it, input VAT recovery, and common SaaS examples.
definition
Reverse VAT is a tax procedure in which it is not the service provider but the service recipient who pays the sales tax. For Georgian companies that provide B2B services to foreign clients, this means: no obligation to collect or pay sales tax.
How it works
Standard sales tax
- Provider charges service fee + 18% VAT
- Client pays the total amount
- Provider transfers the VAT to the tax office
Reverse Charge
- Provider only charges the service fee (no VAT)
- Invoice contains the note 'Tax liability of the beneficiary of the beneficiary'
- Client declares and pays VAT in their own country
- Georgian company has no VAT obligation
prerequisites
- Client is based outside Georgia (B2B)
- Client has a VAT identification number
- Performance is digital or intellectual
- Georgian company is registered for VAT
Invoice example
INVOICE #2026-001
To: Client GmbH (USt-IdNr.: DE123456789)
Service: web development
Tax liability of the beneficiary in accordance with Article 196 of EU Directive 2006/112/EC
Example: German company
Development of a tailor-made CRM system for a German GmbH (VAT number: DE123456789), invoice amount: €25,000.
- Invoice: €25,000 (no VAT shown)
- German company declares 19% VAT (€4,750) in Germany
- Georgian company receives full amount of €25,000
- No VAT obligation for the Georgian company
Reverse Tax Liability in Georgia: How It Works
The reverse charge mechanism shifts VAT responsibility from the foreign supplier to the Georgian recipient in qualifying cases. When a Georgian business buys services from a foreign company that is not established in Georgia, the Georgian recipient may need to calculate, declare, and pay Georgian VAT directly instead of receiving an invoice with Georgian VAT charged by the supplier.
The standard VAT rate in Georgia is 18%. For VAT-registered businesses, reverse charge VAT may be assessed and then deducted as input VAT when the purchased service is used for taxable activities. For non-VAT-registered businesses or non-deductible use, the same 18% can become a real cost.
Frequently asked questions
Source: Georgia Business & Technology Glossary by Del-Ops Technology & Consulting Team. Last Updated: February 2026.