Virtual Zone or International Company: the two IT regimes, and the rule that you cannot hold both

The status is granted to a legal entity engaged in information technology activities. The exemption from profit tax, including on profit distributions, applies to profit from supplying information technology created by that entity outside Georgia. Two words in that sentence do most of the work: created by the entity, and outside Georgia. Reselling someone else's software, or serving Georgian clients, is not what the status was written for, and an adviser who skips over those conditions is selling you a simplification rather than a plan.

The status is for a Georgian enterprise supplying listed services abroad and earning income only from them, with ancillary income tolerated below 2% of principal-activity income. The permitted list includes software development, IT and computer servicing, web hosting, supplying images, text and information, and certain commercial and technical services by shipowners. Tax then runs at 5% corporate income tax on dividend distributions and on deductible expenses that are subject to corporate income tax, dividends are exempt from withholding tax, salaries carry a 5% withholding with the company acting as tax agent and filing monthly, and property other than land used for the permitted activities is exempt from property tax. Only entities under the current corporate income tax model qualify, and the status cannot be set up inside a Free Industrial Zone.

A Free Industrial Zone entity has income from permitted activities inside the zone exempt from corporate income tax, imports into the zone free of customs duty and VAT, zone operations VAT-exempt, and zone property exempt from property tax; a 4% charge applies on consideration for goods supplied to a Georgian-registered person or on the market value of goods received from one, with transactions between zone enterprises excluded, and employees self-report personal income tax. A Special Trading Company, granted status by the tax authorities for selling and re-exporting foreign goods, has profit distributions from those permitted activities exempt from profit tax, though profit from supplying a fixed asset used in the business for over two years is not.

Mostly by not applying. Letting flats, running tours and hosting guests are not on the International Company list and are not information technology, so a Georgian operating company doing that work sits in the ordinary distributed-profit system, and the preferential statuses are irrelevant to it. Where they do come up is for owners whose income is split: a software business abroad funding a flat here, or a developer with a separate product arm. In that case the question is which entity holds which activity, and the restriction that Virtual Zone status cancels International Company status means you choose once rather than stacking them. None of this is a substitute for advice from someone who will sign their name to it.