Georgia vs Latvia: where should you start your company?
Georgia promises 1% in taxes. Latvia offers 0% on reinvested profits, Stripe, EU membership and the euro. Here are the facts.
Why everyone is talking about Georgia
Georgia has become the darling of "financial freedom" influencers. The pitch is compelling. But reality is more nuanced than the YouTube videos suggest.
The compelling pitch
1% in taxes, incorporation in one day, ultra-low cost of living. On social media, it is the latest tax haven in vogue. The marketing is effective.
The reality on the ground
The 1% regime is reserved for sole proprietors earning under 500,000 GEL (~€175,000), with restricted activities. For standard structures (LLC), the combined rate on distributed profits reaches approximately 20%. And the practical obstacles are rarely mentioned: no Stripe, no SEPA, no EU.
Georgia vs Latvia: the full comparison
| Criteria | Georgia | Latvia |
|---|---|---|
| CIT on reinvested profits | 0% | 0% |
| CIT on distributed profits | 15% (~17.65% effective) | 20% |
| Dividend withholding (individuals) | 5% | 0% (included in the 25%) |
| Combined dividend rate | ~20% | ~25% |
| VAT | 18% | 21% |
| Social contributions | 2% + 2% (pension) | 23.59% + 10.50% |
| EU Member | No (accession frozen) | Yes (since 2004) |
| Schengen Area | No | Yes |
| Eurozone | No (Georgian Lari) | Yes (since 2014) |
| OECD | No | Yes (since 2016) |
| Stripe | Not supported | Supported |
| SEPA (EUR transfers) | No (SWIFT only) | Yes (free/instant) |
| PayPal (receiving) | Very limited | Full support |
| Tax treaty network | Limited (no EU framework) | 60+ treaties (EU framework) |
| Currency | Lari (GEL), volatile | Euro (€) |
| Company incorporation | 1 day | 2 days |
| Minimum share capital | 0 GEL | €2,800 |
| Incorporation cost | ~€37 (GEL 100) | ~€150 |
| GDPR protection | No | Yes |
| Tax stigma | Growing | None |
| Dedicated support | No | Yes (Balt Partners) |
No Stripe, no SEPA, no business
This is the blind spot of every influencer praising Georgia. Stripe does not support Georgia. PayPal is severely limited. And without SEPA, every European bank transfer costs €25 to €65 in fees.
Georgia
- Stripe: not supported
- SEPA: not available
- PayPal: send only, receiving limited
- Wise Business: partial access
- Revolut Business: unavailable
- Shopify Payments: not available
Latvia
- Stripe: full native support
- SEPA: free and instant transfers
- PayPal: full send and receive support
- Wise Business: full access, EUR IBAN
- Revolut Business: full access
- Shopify Payments, Adyen, Mollie, GoCardless
Beyond rates: what Georgia cannot offer
European Union member
Latvia has been an EU member since 2004. Freedom of movement, single market of 450M consumers, European law. Georgia's accession process was frozen in 2024 due to democratic backsliding.
Latvia's tax treaty is stronger
Both countries have tax treaties with major economies. But Latvia's treaties benefit from the EU arbitration framework, meaning stronger dispute resolution, more bank trust, and less scrutiny during audits. Georgia's treaties lack these EU-backed protections.
Euro vs Georgian Lari
Latvia has used the euro since 2014: zero currency risk, zero conversion fees. The Georgian Lari (GEL) has fluctuated between 2.7 and 3.5 GEL/EUR over 5 years. Every conversion eats into your margins.
Client perception
An invoice from a Georgian company raises questions with European clients. A Latvian invoice is unremarkable. It is an EU, Eurozone, OECD country. No procurement or compliance department will question it.
Yes, Georgian rates are lower
We will not hide it: on paper, Georgia has more advantageous rates. The combined dividend rate is approximately 20% in Georgia versus 25% in Latvia. But rates are only part of the equation.
The 1% regime is a trap
It only applies to sole proprietors (not LLCs), with restricted activities and a cap of ~€175,000 in revenue. Consulting is excluded or limited. And sole proprietor status means unlimited personal liability: your personal assets are on the line.
Hidden banking fees
Without SEPA, every incoming transfer from a European client costs €25-65. Over 50 invoices per year, that is €1,250 to €3,250 in fees you do not pay in Latvia.
The cost of the Stripe workaround
To accept online payments, you will need to set up a US LLC ($500+ via Stripe Atlas) and manage dual bookkeeping. In Latvia, you connect Stripe and you are ready to go.
Currency risk
With EUR-paying clients and obligations in GEL, every Lari fluctuation impacts your cash flow. 1 to 2.5% bank spread on each conversion.
A low tax rate is worthless if you lose the difference in banking fees, workarounds, and time spent managing the complexity.
The real cost of payment fees in Georgia
For a freelancer billing €10,000/month to European clients, here is what Georgia actually costs in hidden fees.
Incoming SWIFT: ~€40 per transfer x 5 invoices/month
GEL-to-EUR conversion: 1.5% bank spread on €120,000/yr
Stripe workaround: US LLC + US accountant
Local processor surcharge: BOG iPay 2.8-3.5% vs Stripe 1.4%
Total hidden fees in Georgia. In Latvia with SEPA + Stripe + native EUR: €0 of these fees. The ~5% tax gap between the two countries is entirely absorbed by Georgia's operational costs.
Your clients will trust you less with a Georgian company
When you send an invoice from Tbilisi, your European clients and partners will have questions.
"Why Georgia?"
That is the first reaction from a procurement department or a B2B client. With a SIA in Latvia (EU, Eurozone): zero questions, it is normal.
No intra-community VAT number
You cannot invoice under the EU reverse-charge mechanism. Every invoice is treated as a non-EU supply, with all the associated complications.
Large clients will refuse
Companies with compliance processes do not easily work with suppliers outside the EU/OECD. A freelancer invoicing a European consultancy from Georgia is a red flag for the legal department.
The final score
Georgia wins on 3 criteria (taxation, speed, cost). Latvia wins on 9, including every one that matters day-to-day.
Frequently asked questions
Is Georgia in the European Union?
No. Georgia applied for membership in 2022, but the accession process has been frozen since 2024 following the adoption of the "foreign agents" law and democratic backsliding. The timeline for entry is unknown. Latvia has been an EU member since 2004, part of the Schengen Area, the Eurozone, and the OECD.
Can you use Stripe with a Georgian company?
No. Stripe does not include Georgia in its list of supported countries. The common workaround is to create a US LLC via Stripe Atlas ($500+) and manage a dual structure. In Latvia, Stripe works natively: you create your account and start collecting payments in EUR.
Is the 1% regime in Georgia available to everyone?
No. The "small business" status at 1% is reserved for sole proprietors (not LLCs) with annual revenue under 500,000 GEL (~€175,000). Certain activities are excluded or limited, including consulting. For a standard LLC, the combined rate on distributed profits is approximately 20%. And note: sole proprietor status means unlimited personal liability.
Do major European countries have tax treaties with Georgia?
Yes, several European countries (UK, Germany, France, Netherlands) have tax treaties with Georgia. However, Latvia's treaties are significantly stronger in practice because they benefit from the EU arbitration framework. This means mandatory dispute resolution, greater trust from banks and clients, and more predictable outcomes in case of a tax audit. Georgia's treaties exist but offer less protection when things get complicated.
Will my European clients accept an invoice from a Georgian company?
This is a genuine concern. Procurement and compliance departments at European companies may question a Georgian entity: association with tax optimisation schemes, non-EU country, no intra-community VAT number. A Latvian company (EU, Eurozone, OECD) raises no credibility issues whatsoever.
Georgia or Latvia? Let's talk.
30 minutes, free, no commitment. We compare both options based on your specific situation.