The rise of digital currencies has prompted many countries to update their tax systems. Georgia has become one of the more attractive jurisdictions for crypto-related businesses, offering a clear tax framework and the possibility to defer taxation under the corporate income tax model. The Georgian Tax Code, alongside ministerial rulings, establishes how income from crypto transactions is taxed for legal entities.
Taxation of Income from Crypto Assets
For legal entities, income derived from crypto activities, including the exchange of crypto assets and crypto mining, is subject to taxation under the general rules of the Georgian Tax Code.
Georgia applies the Estonian-style corporate income tax model, under which profits are not taxed when earned but only upon distribution. This means that income generated from the supply or exchange of crypto assets, as well as income derived from mining activities, is not immediately taxed, provided that such profits are retained or reinvested within the company.
Corporate income tax is triggered at the moment of profit distribution and is applied at a rate of 15%. In addition, dividends paid to shareholders are subject to a 5% withholding tax at source.
VAT Treatment of Crypto Transactions
The Georgian Tax Code also clarifies how crypto-related activities interact with Value Added Tax (VAT).
Since VAT applies only to the supply of goods or services, and crypto assets are treated similarly to monetary funds, the conversion of crypto assets into national or foreign currency does not create a VAT obligation. Therefore, common activities such as buying, selling, or exchanging cryptocurrencies are not subject to VAT in Georgia.
However, a different regime applies to crypto mining. According to a public decision of the Minister of Finance, mining is defined as the supply of computational power for the purpose of generating crypto assets. Unlike exchange operations, this activity is not considered a financial transaction but rather a service, and therefore falls within the scope of VAT.
The VAT treatment depends on the location of the recipient of the service. If the service is provided to a person established outside Georgia or without a permanent establishment in Georgia, the transaction is not subject to VAT in Georgia. If the service is provided to a person established in Georgia, the transaction is subject to VAT. In most cases, of course, the recipient of mining is either unknown (in the case of decentralized blockchains) or a nonresident.
VAT paid on goods and services used for mining activities may be credited in accordance with the general VAT rules.
Regulation of Virtual Asset Service Providers (VASPs)
Georgia has introduced a regulatory framework for Virtual Asset Service Providers (VASPs), aligning with international standards, including anti-money laundering requirements. Oversight of VASPs is carried out by the National Bank of Georgia.
A VASP is a business that provides services related to virtual assets on behalf of third parties. These services may include:
- Exchanging crypto assets into national or foreign currency or into other digital assets;
- Facilitating transfers of virtual assets between users;
- Safekeeping or administering wallets and instruments that provide control over digital assets;
- Managing portfolios consisting of virtual assets;
- Operating trading platforms for digital assets;
- Offering loans backed by or denominated in digital assets;
- Conducting initial offerings of tokens or other crypto assets.
Most of these activities may be classified as financial operations. Under the Georgian Tax Code, financial operations are exempt from VAT without the right of deduction. This means that VASPs generally do not charge VAT on their core services but are also not entitled to recover input VAT on related expenses. However, certain services provided by VASPs may still be subject to VAT if they do not fall under financial transactions exemptions, such as intermediary services.
In practice, the absence of detailed guidance from the Revenue Service may create uncertainties, and therefore, careful analysis of each activity is required.
Practical Considerations for Businesses
Companies engaged in crypto activities in Georgia should carefully assess the nature of their operations, particularly in relation to profit distribution and VAT treatment. While the Estonian model allows for deferral of corporate income tax, businesses must ensure proper structuring of transactions and compliance with reporting obligations. For VASPs, regulatory compliance and licensing requirements also play a significant role in ongoing operations.
Georgia offers a competitive and flexible tax environment for crypto-related businesses. The ability to defer corporate income tax until profit distribution, combined with VAT exemptions for crypto transactions and a developing regulatory framework for VASPs, creates favorable conditions for companies operating in the digital asset sector.
At the same time, businesses must carefully monitor tax and regulatory developments to ensure full compliance with Georgian legislation.
Disclaimer: This article is based on Georgian legislation and publicly available information as of March 2026 and is intended for informational purposes only. It does not constitute legal or tax advice.